BS7114 Strategic analysis of a case study
Introduction
EasyJet is an airline company which is located in London. It was founded in the year 1995 By “Sir Stelios Haji-Ioannou”. EasyJet used to operate both international and domestic flights over 1000 routes that spanned more than 34 countries. They simply lead airbuses despite of Boeing. EasyJet is also known as the largest airline in the world because it has 308 aircraft and 153 airports for leading its airplanes, and used to operate 1000 routes in 34 countries. There is a discussion about Porter’s five frameworks of the EasyJet Company. The main business strategy that is followed by the4 EasyJet will be discussed in the sections. There is also a discussion of the opportunities and challenges of EasyJet.
Porter’s five forces of EasyJet
Porter’s five frameworks of EasyJet are used to analyse the present competitiveness of EasyJet. All of the five models help to focus on the strategy that determines the competitor of EasyJet. The five frameworks will help to determine the competitors of EasyJet, the supplier of the company, the financial power of the company, and the most important customer of the company (Stingel, H., 2022). Porter’s five forces analysis can help to analyse the competition in the market. The competitors of EasyJet plc can be known from porter’s five force analysis. Hence this analysis is very important to make any strategic decisions. In today’s modern world, this analysis is very much important. This analysis of EasyJet plc focuses on how this organization can make competitive advantage in the “travel and leisure industry”.
Figure 1: Porter’s five forces
(Source: expertprogrammanagement.com)
New entrant threat
New entrants always help to bring innovation to the company. With the help of innovation, lots of new products are manufactured within the organizations. Therefore new entrants can put pressure on EasyJet plc. There are several strategies that are adopted by the new entrants. These are reduction of prices, and providing value propositions to the target customers (Khomyak, et al, 2020). Therefore automatically those rivals can attract the minds of customers. Therefore EasyJet plc should manage all the challenges and an effective barrier should be built by the organization to sustain its business in this competitive market.
Ways to manage the new entrant by EasyJet Company
- By adopting the new innovation in their services or products. It helps to bring new customers.
- By spending the money on the development of the company or on research.
The bargaining supplier’s
There are many organisations in the “Travel and Leisure” industry. All of them buy their required raw materials from many suppliers. The suppliers in the dominant position can easily decrease the earning margin of EasyJet plc (Waltenberger, J. and Ruff-Stahl, H.J.K., 2018). Higher prices are extracted by powerful suppliers. They use negotiation power in this industry. The profitability of the organization can be lowered by the high bargaining power of the suppliers.
Ways to manage the bargaining supplier by EasyJet Company
- By creating an efficient supply chain with the help of multiple suppliers.
- EasyJet always does experiment with their products by using different raw materials because if the cost of raw materials will go up then EasyJet can shift to another one.
The buyer’s power
To attract the buyer different types of innovations always help to attract buyers. In the case of EasyJet, there are different types of innovations is always happened with good quality and it is the best way to attract more and more buyers to buy their products. With the help of innovation in there, there are a large number of buyers is attracted to the product (Izzo, F., 2019). The power of the buyer is the biggest strength of the EasyJet Company. It used to help in two ways it reduces the bargaining power of the buyers and also gives the opportunity for the production process and scales the streamlines. The new products also help set the tough goal for the competitor companies as there are so many new buyers connected with EasyJet it is tough for the competitor to achieve the goal that is set by EasyJet.
Ways to manage the buyer power by the EasyJet Company
- By gaining the trust of the customer and creating a large base of the buyer.
- The innovation in the products can also limit the bargaining of the customer.
Substitute services or product threat
The number of substitutes that is available for EasyJet is very low. And the substitute that is available for EasyJet is not gained so much profit. The substitute that is available in the market with high quality is so expensive (Tiirinki, E., 2022). Because of this buyers are wanted to shift to the substitute product. EasyJet always tries to be oriented in the service base, not the product. There are some substitute is available in the market where EasyJet used to operate. Only a few substitutes are there which are not able to gain a valuable profit for the company. But with the help of good quality in their products, EasyJet is able to manage the loss and even used to gain more profits with the help of their products.
Ways to manage the substitute services or products by EasyJet Company
- EasyJet always tries to be oriented in the service base, not the product.
- By understanding their customer and their needs.
Rivalry among existing companies
There are so many competitors there for EasyJet Company. There are also some companies that are larger than EasyJet Company. It means that it is not easy for EasyJet to be in the market with a large number of competitors in the same field. But EasyJet used some different strategies that make this company strong and also give them strength to fight against the big companies that are there in the market. EasyJet always tries to make different products from others with good quality and low cost (Barqueira, et al, 2022). They also used focus on the action of the competitor companies, always noticed that what are the new things they are doing by which buyers can be attracted to them. This notice always helps to give those new ideas about their new innovation by which buyers are getting attracted to their products. Market research is also done by the EasyJet Company so that they can understand the demand of the market.
Ways to manage the rivalry among existing companies by EasyJet Company
- By using different marketing strategies.
- By increasing the size of the market rather than working with the small market.
Business strategy of EasyJet
One of the main objectives, as well as aim of the company, is to develop its position into the leading airport company of Europe. To fly between the airports, people need to achieve confidence and gain optimism in them. There are various strategies are made by EasyJet in to give them the confidence to give tickets in affordable prices (Ponomarev, D., 2020). There could be various strategies taken by the EasyJet airlines like they can increase the number of seats per air craft and this world increase the capacity of the air crafts.
Figure 2: Business strategy of EasyJet
(Source: corporate.easyjet.com)
A higher load factor could be added and point to point model can be made by the company. An advantaged fleet and younger fleet can be used to deal with and lower the maintenance cost. EasyJet is quite confident about their strategy and in building competitive advantages (Akbar, Y.H. and Kisilowski, M., 2020). Other strategies that could be utilised as the strategies of EasyJet are “efficient low cost model”, making market position, making unparalleled network, making the brand of the company and maintaining strong balance sheet. All these strategies will help to give good returns to the shareholders.
The competitive advantage of EasyJet
EasyJet has a strong competitive advantage as this airline works as a connector between most of the important cities in Europe. EasyJet also has their market position in London as they had their airports in the chief position in the London city. There are various airports in the topmost countries in all over the world like Paris Orly, Geneva, Paris charlesde Gaulle, Milan Malpensa and Amsterdam (Endrizalova, et al, 2018). All these airports in the prime position shows the high competitive advantage of EasyJet. Also the company has a good share in the European market. The market share of the European government is 8 percent and around 32 percent of EasyJet. This company has its branches is any countries like France, UK, Switzerland, and Amsterdam.
Sources of competitive advantages and relevance of this sources
Sources of competitive advantages reflect the sources which helped the commercial airline company EasyJet to gain profit and advantages. To gain a maximum number of connections within the country’s estates and within new hubs, they are easily getting this advantage because of enhancing their fleet size (Alberto, M. and Minh, H., 2019). They maintained their fleet size by launching almost 308 aircrafts. EasyJet earns a perfect position in the market of London because they develop a beautiful strategy of serving meals in the flight with lower costs. The relevance of these sources basically depends on the investment of the company. They easily get the advantages because of proper development of their marketing strategies by maintaining the competition with other airlines.
Future opportunities of EasyJet
Easy jet is one of the leading commercial airlines in the United Kingdom who can further develop their growth through exploring various routes in the states of Europe. EasyJet is fixing their routes in new airports and new runways of the UK and easy jet will also get the proposal for their business growth. They can raise their fleet size in the routes of the United Kingdom so that this could achieve maximum competitive fares in the variation industry. This can also open fresh routes for themselves or can buy new aircrafts for enhancing their business in the aviation market of Europe (https://howandwhat.net).
EasyJet are simply achieving the maximum number of young customers or calls as passengers are choosing to go out on their holidays or weekends. This factor a few times alienates the old travellers. Thus, focusing on various demographics which is certainly “worth the effort”. They get another opportunity in the future when there is a creation of collapse among many commercial airlines and they operate the tours within current proposals of New Year’s. EasyJet is getting new opportunities for receiving a large number of passengers from various states of Europe.
Challenges of EasyJet
As EasyJet is one of the busiest airlines company in Europe, eventually the company has to face some challenges also in the past days and present days also. Among all these challenges, increasing oil price is one of the main challenges faced by EasyJet (Lohmann, G. and Spasojevic, B., 2018). With this increasing rate of oil supply, only mainline airline companies are able to survive, EasyJet is one of them. It is a strong setback for all the existing airline companies as rising fuel price means that the airlines company need to compromise essential component. During the time of growth of the company, the supply of oil increased and therefore they get it at a very low price. For this reason, they don’t have to worry about it. During the time of growth, EasyJet has brought around 20 new aircraft and all of these aircraft were deployed on the runway. But the increasing price of the oil which is the main fuel for the airplanes and jets has slowed down the growth rate of EasyJet.
Figure 3: EasyJet
(Source: www.bbc.com)
Another challenge that EasyJet has to face is an environmental concern. Environmental catastrophe and natural diseases are always present and prominent in the way of taking fly for an airline company (Barrows, S.D., 2019). Being one of the busiest airline EasyJet have to launch their flight in almost every hour. But bad weather condition has made is tough for them and make the flight late. Like a in the recession time a “volcanic ash cloud” have taken over the sky in large number of flight get cancelled due to the natural disaster cause (Jahan, et al, 2019). There are earthquake problem so the plane have to get delayed and have problems executing their operations. Another problem that could be faced by the EasyJet is consumer confidence. The consumer need to get convinced that the services they are getting from EasyJet so of the highest quality and that would ensure that those customers will return to that airline. There are various other competitive airline companies of EasyJet. So to hold on to their customer, EasyJet needs to lose their custom services and reduce the cost of flight. Other than that factor, there are various challenges faced by airline companies including EasyJet like terrorism is one of them. This world affect the confidence of the customers and as a result it would eventually reduce the profit margin of the company.
Recommendation to deal with the challenges and opportunities
Some suggestions that are simply provided to conduct further research by the new researcher. EasyJet should focus on the strong balance sheet which is leading with a credit rating “f Baa1/BBB+ and a net cash position of £396 million”. This thing will permit EasyJet to continue their operations except any competition.
They should also follow their competitors in how they are reducing their fares to get chances in the market of the aviation industry (Neubert, M., 2022). It is important for the commercial airline to always maintain their standard by recruiting established pilots and air stewardesses who are the actual representatives of any airline. EasyJet should become more responsible in representing their air lines in front of passengers by serving best quality variables. It is being recommended to the researchers that the company EasyJet must follow their valuations in the market as per the 2019 records estimated profit is near about £13.34 but after 202 they lose almost 10% of profit. So it is important for EasyJet to focus on their cash flow which can help them to enhance the business profit in the market of the aviation industry of the United Kingdom.
Conclusion
To improve the condition of the airline company EasyJet and to develop its condition further, the company needs to prioritise some prime strategies which will develop the company at an international level. EasyJet is a London-based company and it can develop its position by integrating some business strategies. There are several strategies that are adopted by the new entrants. These are reduction of prices, and providing value propositions to the target customers. This research showed that there are five frameworks of EasyJet that are used for the company’s sustainability and competition. The five frameworks of the company are new entrants, power of the supplier, power of the buyer, substitute services or products, and new revel. The competitive advantages of EasyJet will be discussed in the section. Therefore automatically those rivals can attract the minds of customers. The power of the buyer is the biggest strength of the EasyJet Company. EasyJet always tries to be oriented in the service base, not the product. An advantaged fleet and younger fleet can be used to deal with and lower the maintenance cost.
Reference list
Journals
Stingel, H., 2022. European airline consolidation-acquisition strategy for a potential takeover of JET2 by Easyjet (Doctoral dissertation).
Khomyak, A., Ryanair business strategy analysis in the face of Covid-19 crisis.
Izzo, F., 2019. Management transition to big data analytics: Exploratory study on airline industry. International Business Research, 12(10), pp.48-56.
Tiirinki, E., 2022. Carbon Reducing Initiatives as a Strategy to Achieve Sustainable Competitive Advantage: case study of the airline industry.
Barqueira, A., Quadros, R. and Abrantes, J., 2022. Airline booking applications: the case of Ryanair, Easyjet and tap air Portugal. Aeron Aero Open Access J, 6(1), pp.7-15.
Ponomarev, D., 2020. Consolidation of airlines in Europe: potential acquisition of Norwegian by EasyJet (Doctoral dissertation).
Akbar, Y.H. and Kisilowski, M., 2020. To bargain or not to bargain: Airlines, legitimacy and nonmarket strategy in a COVID-19 world. Journal of air transport management, 88, p.101867.
Endrizalova, E., Novak, M., Nemec, V., Hyrslova, J. and Mrazek, P., 2018. Operating Lease As a Specific Form of Airlines Outsourcing. Business Logistics in Modern Management.
Alberto, M. and Minh, H., 2019. Easyjet Plc Airlines: take-off to new opportunities (Doctoral dissertation).
Lohmann, G. and Spasojevic, B., 2018. Airline business strategy. In The Routledge companion to air transport management (pp. 139-153). Routledge.
Jahan, W. and Kalam, K.K., Impact of Global Pandemic on International Business Operations of AirAsia.
Neubert, M., 2022. A Systematic Literature Review of Dynamic Pricing Strategies. International Business Research, 15(4), pp.1-17.
Barrows, S.D., 2019. Assessing the stock market performances of Eu low-cost airlines. International Journal of Economics and Financial Issues, 9(4), p.95.
Waltenberger, J. and Ruff-Stahl, H.J.K., 2018. Implications of short scheduled ground times for European carriers. International Journal of Aviation, Aeronautics, and Aerospace, 5(3), p.8.
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