To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. Table below provides an analysis of EasyJets sales revenue and profitability ratio since 1998. The third force is the threats from the bargaining power of buyers, is this strong for both EasyJet and the entire airline industry with a large number of alternative suppliers, hence, the aggressive pricing strategy. Transfer the risk. This involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. Lundgren has pulled every financial lever available to him to keep EasyJetaloft. For the battered airline, 2020 couldnt end soon enough. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. This analysis will highlight the fundamental changes that the airline industry is undergoing, especially; in defence to the turbulent environment it faces from exogenous forces (terrorism, oil prices, SARS etc) and endogenous forces. This has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution, processing and reconciling tickets. Another major industry wide threat is the volatility in price of fuel Oil price record high of $53 a barrel. this was the headline in the business pages of all the newspapers last November. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. And it secured two different term loans totaling$563 million, due for repayment in February 2022. A lack of real-time reporting makes it easy to miss the signs of an approaching catastrophe. Therefore, demand led with proprietary yield management system. The attackers stole more than 9 million customers e-mail addresses and travel details and also accessed credit and debit card details of more than 2,200 customers. 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)). The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Adjust your investments to EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. Its not clear what role Haji-Ioannous pressure played in this decision. 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. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. Bills will pile up, suppliers will need payments, and your employees will be expecting their salaries. As it turned out, it wouldnt need those flights. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. EasyJets competitive advantages via low prices are sustained in a number of ways. This will help the companies decision makers understand where the organisation is now. Clicking on the following button will update the content below. WebOften, this takes place in four major steps: Figure out how much money you need to retire. Highly utilised fleet of aircrafts that are large, modern, efficient and relatively environmentally friendly. British Airways. Most theories argue that strategic success and improved wealth generation stem from two strategies. Where normally there would be the roar of engines and the trundling rumble of buses and baggage carts, the whistling wind is often the only sound. Easyjet are situated extremely in strategic option 1 ( low monetary value, depression added value ) The eight nucleus strategic options are: 1. 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. This eliminates the need to any commissions to external sales agency. To accomplish that, Lundgren has taken drastic steps. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. 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. Over time, a brand may experience enough negative interactions that its reputation is placed into a vulnerable position. *You can also browse our support articles here >. But what are the internal weaknesses suffered by EasyJet? Firstly, threats in terms of new & existing competition. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. 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? After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. 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 risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. )The crisis has also posed complications for the 54-year-old Lundgren that his competitors dont face, including some particularly unwelcome excess baggage in the form of Stelios Haji-Ioannou. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. 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. As opposed to cost leadership, in which businesses rely on reducing costs to gain a significant market share, a differentiation strategy is typically Facebook: quarterly number of MAU (monthly active users) worldwide 2008-2022, Quarterly smartphone market share worldwide by vendor 2009-2022, Number of apps available in leading app stores Q3 2022. And the company continued to insist it saw the opportunity for wins amid the travel industrys carnage: Europes legacy carriers were hurting even worse than EasyJet, which offered the discount airline a chance to gain new flight slots at key airports in Paris, Milan, London Gatwick, and Geneva. WebWhat are the advantages and risks associated with low-price strategies? After listing the risks and putting them in a risk matrix, the report will then aim to explain how the risk will affect easyJet and justify the position of it in the risk map. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. Appendices 1. Step 1: Identify and document risks. In 2020, it transported a A typical approach for risk identification is to map out and assess the value chains of all major products. Background Coronavirus disease-19 emerged in December 2019. We will consider the value chain for EasyJet in more detail later in our discussion. Terms & Conditions. The Essay Writing ExpertsUS Essay Experts. 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. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. Statista assumes no Consumers are optimistic and the travel and tourism industry are now booming again. Budget airlines that fly point-to-point, such as EasyJet, can easily stimulate their demand by running price promotions and advertising and then shifting flight schedules to cover those new bookings. 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. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. Effective use of digital and data tools to underpin growth and deepen customer relationships. And, finally threats of any takeover bids from national airlines. Not that he was going away. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. It is here that EasyJets pilots practice and maintain their skills. That move also diluted Haji-Ioannous stake in the companys stock from more than 34% at the beginning of 2019to just under 30%, making it easier for EasyJets board to ignore the demands of its querulous founder. The U.K. requireseven those returning from green countriestake COVID-19 tests before boarding a plane to return to the U.K. as well as within two days of returning. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. Whats more, it included maintenance and avionics support for EasyJets existing fleet. Enabling risk management through a In this way, it has positioned itself as a more direct competitor to Europes traditional airlines.Lundgren says he wants EasyJet to be the No. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. It is also anticipated that Ryanair will continue to lower costs, which will allow it to continue to engage in a price war, by lowering fares aggressively. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. Yield management is a form of risk management and therefore, adds value. Supported by innovative and effective advertising. Front and center was the existential risk of the coronavirus. 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