WebEasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. easyJet has a cost advantage over its major competitors on the primary network that it operates. The increase growth of world tourism will offer opportunities in terms of undertaking joint venture with local/foreign travel companies; hence, Going places and Thomas Cooke are already providing such services to growing number of holidaymakers each year. Webcomputing risks Let us look at five different types of risks and how they apply or vary by cloud deployment models. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. This will provide an evaluation of the external business environment in which the company operates. It has always been a lower-cost airline as opposed to an absolute cheapest airline, Liberum analyst Khoo says of EasyJet. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Lundgrencomplainsthat the British governments travel rules remain too onerous. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. Also, mainstream airlines are now lowering fares to engage in price competition. 1 or No. Advantages: A bigger market share New target market The barriers to enter are higher Predatory pricing Strategic Issues facing the airline Industry 8.2. easyJets future 9. A PESTEL analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well. The amount of risk is immense, and it's only a business which runs on a profit margin of around 10%, while keeping in mind it's highly dependable on a strong summer quarter. easyJet's updated framework continues to build on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - positioning easyJet to deliver sustainable and disciplined growth and returns for shareholders. Ryanair continues to lower costs, which enables it to persist lowering fares aggressively. As a result, it finished 2020 with more aircraft in its fleet than it had at the beginning of the year, despite the pandemic-induced travel doldrums. There are potential opportunities in terms of new routes and expansion of services offered, EasyJet has already launched a number of new European routes, how about expansion into the Asian Pacific? Most of Europe was in the yellow category, requiring 10 days of self-isolation when coming back, and with the U.K. government still advising against leisure travel. Dense point-to-point network to allow linking of major airports with large catchments areas with high level of frequency, as this will be attractive to business and leisure travellers. The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. Cost advantages might be achieved because of EasyJets efficient use of airports. The concept of the value chain is particularly useful in understanding an organisations strategic capability since its concentrates on value activities and the linkages between activities rather ran just resources. In 2020, sales cratered more than 50% to $4.2 billion, and the airline recorded its first ever annual loss: a jumbo jetliner-size blast of red ink totaling nearly $1.8 billion before tax. Haji-Ioannou insinuated that this was evidence of the corruption hed long alleged. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. Before a new business starts making profits, it needs to be kept afloat with money. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. As a budget airline focused exclusively on short-haul flights within Europe, it had more flexibility than long-haul carriers to adjust its flight schedule, canceling flights without worrying about losing connections or violating alliance agreements. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Competitive pressure. Therefore, demand led with proprietary yield management system. Risk 2: Geopolitical instability. The focused network strategy can be summarised as follows: easyJet recognises that the continued evolution of our product portfolio represents a significant opportunity to build on spend per customer, delivering enhanced sustainable returns. In an interview with LondonsEvening Standard newspaper in January, Lundgren sounded down, admitting he missed frequent trips to the Spanish island of Majorca, where he owns a house and where he and a friend also own a recording studio. The greatest dangers, however, may be the market leaders need to manage its evolving Still, the connection was critical for airlines. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. A prime example of this was the subsequent takeover of Go by EasyJet. Finally, in February 2021, the company took advantage of a sudden uptick in investor confidence on the news that vaccinations in the U.K. might allow international travel to return by late summer. Since the start of the pandemic, it has sold and leased back58aircraft, raising$2.1 billion. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. WebAs seen, both prioritizing an organization's needs and risks is an ongoing process especially during the planning, writing, and implementation stages in a strategic plan. To understand EasyJets prospects, its important to understand its strategic positioning. Since March 2020,European governmentshave provided more than$32.2 billion in bailouts to the airline industry,through a mix of grants, loans, and debt-for-equity deals, according to a report from HSBC. No plagiarism, guaranteed! Normally there would have been close to 100. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Study for free with our range of university lectures! Those airlines are more dependent on business travel, which many analysts forecast might not fully recover from the pandemic until 2024if it ever recovers at all. The pandemic, of course, wiped out business and leisure travel alike. Yet Lundgren says his strategy is still valid, telling trade publication Travel Weekly that holidays are going to lead the recovery. Liberum analyst Khoo says the move into packaged holidays made strategic sense. Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. And he was not a happy shareholder: For a decade, he had sparred with a succession of EasyJet CEOs and boardsfaulting them for overly ambitious and costly expansion plans and for ordering too many new aircraft from manufacturing giant Airbus. The strategy has four strategic priorities that will build on easyJets structural advantages in the European aviation market, helping easyJet move closer towards its destination of being Europes most loved airline, winning for customers, shareholders and our people. Potential threats in terms of changing social trends like holidays outside Europe (many now want to experience the eastern cultures and travel to holiday destinations like China and Japan) and also travelling via the EuroStar to Paris etc. EasyJet is known for its low-cost competitive pricing. Many of those airlines are limping along on government funding they might never be able to repay, says Leah Ryan, managing director of Alton Aviation, a leading industry consultant. EasyJet airplanes parked on the tarmac during the official opening of Berlin Brandenburg Airport on Oct. 31, 2020. WebSome compliance risks are specific to an industry or organizationfor example, worker safety regulations for manufacturers or rules governing the behavior of sales representatives in the pharmaceutical industry. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. EasyJet is forever trying to attain a cost level that is low relative to its competitors. The airline cut a deal with a health care company to provide the test at half the normal cost, or 60 per test. The purchases rankled Haji-Ioannou, who had opposed EasyJets tie-up with Airbus ever since it had been signed in 2013. In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. When rival European budget carrier Air Berlin went belly up in 2017, Lundgren spent$48 millionto buy its operations at several German airports and take on 25 of its airplanes. Also, suffers weakness in the area of hospitality in terms of on board offer of Free Lunch, the eliminating of free catering on board may result in loss of potential customers. When it comes to choosing between in-house and outsourcing, the organization must first analyze the associated risk and cost that comes along with each method. WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. EasyJet has other advantages over its full-service rivals too. Capabilities to turn resources into advantages, Customers demand change to more flexible schedules, comfortable and relevantly cheap services, Extremely high competition for customers and resources. And the government has said the second of these has to be a more accurate PCR test, which can cost as much as 219 ($302) per passenger. As Internet transactions have a lower cost associated with it EasyJet encourages its customers to book on-line by offering them a discount for on-line ticket reservations. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. The customers of EasyJet have been using the Internet for making bookings. The first is to reduce the bottom line costs of operation (low cost strategy) and the second is to increase the value of the organisation and its reputation to customers, so that they will demand more or pay more for what they receive (differentiation strategy) (ACCA Paper 3.5 (2001)). EasyJet raised $1.5 billion by selling seven-year bonds, with a 1.875% annual interest rate. Noting that EasyJet had failed to say exactly how the deferral affected EasyJets cash burn, the founder said that EasyJet might have engaged in market manipulation by failing to disclose such details and by using overly optimistic forecasts for when the companys revenues and profits might recover. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. With so much uncertainty, leisure travelers are holding off on booking summer flights, prolonging EasyJets pain. And at least one key holiday localeTurkeywound up on the red list, meaning those traveling there would have to quarantine in a hotel for 10 days. The Matrix outlines four possible avenues for growth, which vary in risk: Market Penetration. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. After rejecting the bid, easyJet plans to raise 1.2 billion pounds ($1.7 billion) to stay in the race by funding growth at airports. Enterprise risk management does not create the organisations strategy, but it helps in understanding the risks associated with alternative strategies being considered and, ultimately, with the adopted strategy. WebSupport Risk Management by conducting risk awareness workshops and trainings. Findlay said only that after almost six years with EasyJet, it will be the right time to pass the financial reins to someone who will help take EasyJet into its next chapter, and Lundgren said he was sorry to see [Findlay] leave.. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. easyJets strategy will seek to continue to lead the market in sustainability, working with our partners to achieve our Net Zero Roadmap and the decarbonisation of the aviation industry. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. Get the best reports to understand your industry. Consumers are optimistic and the travel and tourism industry are now booming again. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. We will consider the value chain for EasyJet in more detail later in our discussion. And the simulators have been kept busy virtually around the clock, even during the pandemic, as EasyJet has sought to keep its pilots properly certified so they will be ready when flying returns. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. The business has also enjoyed an increase turnover and trading profits resulting in continuous substantial growth in underlying profitability over the last 7 years (see table 1). The globalization is also another factor influencing which build up the air traffic as lifelong. Objectives To assess the psychological distress, anxiety, depression, coping strategies, This form of strategy combines a low price, low perceived service benefits (no free lunch) and a focus on a price-sensitive highly competitive market segment. Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Finally, the key to sustaining high levels of growth is the scalability of the operations. None would fly again until June 15. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). Developing the range of ancillaries on offer such as the Inflight retail proposition. EasyJet is forever trying to attain a cost level that is low relative to its competitors. And while optimism about leisure travel in Europe is slowly rekindlingthis week, the U.K. announced a resumption of international travel to a limited number of destinationsEasyJet still faces plenty of potential turbulence, as the likelihood of a robust summer season recedes. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. The company carries out These are set out below: easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market. He said he had discovered a secret meeting in Switzerland, arranged by Airbus, between top EasyJet executives and a lawyer who, according to documents revealed in the Panama Papers leak, may have helped clients evade international sanctions through offshore shell companies. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. 8. on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - positioning easyJet to deliver sustainable and disciplined growth and returns for shareholders. All Rights Reserved. The existing competition also have strong brand image globally, EasyJet is recognised nationally and within the European markets, however, national airlines like British Airways is recognised worldwide and has stronger brand awareness. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. The management of the element of working capital. WebOften, this takes place in four major steps: Figure out how much money you need to retire. Appendices 1. It hoped these measures allow the public to feel confident flying again. 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