Business Strategy for Easyjet

Table of Contents 1. Introduction 2 2. Mission statement, Aim & Objectives 2 3. PESTEL Analysis 2 3. 1 Political 2 3. 2Economic 3 3. 3Social 3 3. 4Technological 3 3. 5Legal 3 3. Environmental 3 4. SWOT Analysis 4 4. 1 Internal Analysis 4 4. 2External Analysis 4 5. Porter’s five forces 4 6. Porter’s value chain 5 7. Stakeholders Mapping 6 8. Ansoff Matrix 7 9.BCG Matrix 7 10. Strategy position and selected strategy 8 11. Conclusion 11 12. Appendices 12 13. Reference 15 1. Introduction Easyjet Airline Company is a British airline headquartered at London Luton Airport which operating domestic and international scheduled services on 500 routes between 118 European, North African, and West Asian airports (Theairdb, 2005).The company was founded in 1995 by Stelios Haji-loannou. And currently the management of easyjet is formed by Andrew Harrison as CEO, Cor Vrieswijk as COO and Jeff Carr as CFO (Easyjet, 2009). Up to 2009, easyjet had nearly 7000 employees throughout Europe. Apart from low-cost tickets, easyjet has improved in network quality, lower cost deals with key suppliers and enhancements to easyjet. com and so on (Easyjet, 2009). 2. Mission statement, Aim & Objectives Mission statement of easyjet is â€Å"to provide customers with safe, good value, point-to-point air services.To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes† (Easyjet, 2002). The company will develop its people and establish lasting relationships with its suppliers. Vision| Easyjet’s vision of the future is built on developing its strength to be the largest and best low cost airline in Europe (Bized, 2002). | Value| 1. Safety 2. Teamwork 3. Pioneering 4. Passionate 5. Integrity (Easyjetcareers, 2010)| The aim & objectives of Easyjet are similar to its mission statement.The company underpins its long-term prospects matter its business with safety, customer satisfaction, future f inancial performance, people and environment (Easyjet, 2009). 3. PESTEL Analysis 3. 1 Political The political environment includes tax policy such as Air Passenger Duty and carbon tax. â€Å"APD tax is raised about ? 2. 4bn for government every year. The airline Easyjet also supported for a green tax on air travel based on carbon produced (BBC, 2007). Increasing tax is not effective for customers to pay more but â€Å"easyjet has realized it and apologized to customers† (Easyjet, 2007).Cheap first and expensive later is what Easyjet always does. According to appendix 1, more immigration coming to UK gives easyjet more marketing opportunity. However, national insurance puts employees wage up so that increases company’s costs (Telegraph, 2010). 3. 2 Economic According to appendix 2, â€Å"some experts predict that the UK interest rate will increase to 3% in 2010 and 2011† (Marketoracle, 2010). Customers may pay higher for tickets if they borrow money. Meantime, a ccording to appendix 3, it is bad for easyjet because â€Å"some experts assert that Euro may depreciate in the next 6 months from January, 2010† (Marketvector, 2010).People maybe fail to choose easyjet up to this viewpoint. Additionally, it gives a burden to the company as fuel price may go up year by year (see appendix 4). 3. 3 Social Attitude of customers impact on easyjet’s business. According to appendix 5, more customers prefer to travel by air these years and it hits 2000 million in 2004 (Grida, 2007). The phenomenon makes easyjet arrange more flights. Meantime, â€Å"nearly 28% people choose to search tickets information online everyday so that the company’s business online can be developed quickly† (Alexa, 2010). 3. 4 TechnologicalThere are nearly 200 airplanes in the company and easyjet is working closely wth all the relevant airframe and engine (Easyjet, 2009). The safety can be guaranteed. The company also offers online check-in system for bag gage with codes and buying tickets which is pretty convenient to customers (Azureholidays, 2009). 3. 5 Legal The company follows mostly European law such as safety law. But there is a piece of bad news recently that easyjet needs to pay 1. 4m euros in damages for violating French labour laws (BBC, 2010). It is not only negative to financial condition but also to reputation.At the same time, the company supports carbon law that cut carbon emissions. 3. 6 Environmental The global standards for aircraft that can lead to carbon emissions of aviations being cut by 40%, Easyjet seeks the legislation for cleaner aircrafts is demanded by his firm to stop the flight of old and inefficient planes (Gray, 2009). It is good for passengers’ health. Meantime, the average aircraft age is 2. 2 years which makes up the youngest, cleanest and quietest fleets in the world (Easyjet, 2009). 4. SWOT Analysis 4. 1 Internal Analysis Strengths| Weakness| Leading airline with low-cost flights which acr oss most big city in Europe such as Berlin, Milan, Paris and so on (Easyjet, 2008). * Being seen as an innovative and flexible organization and has a strong e-business which offers full and fast price plan to customers. * Image, differentiation on price and brand (Mayer, 2007). * Quick turnarounds at the airports with more flights, better productivity. * Internal job mobility (Kernchen, 2007). | * Low frequency of routes. * More outsourcing might affect customer satisfaction (Kernchen, 2007). Sometimes longer flights without frills might be hard to implement successfully like no food service (Fifield, 2007). | 4. 2 External analysis Opportunities: Low-cost airline industry has a promising future. If Easyjet can establish itself as the low-cost number 1 airline, Easyjet will continue its success with its strong position and prove takeover opportunities (Kernchen, 2007). Threats: Economic downturn may lead to a decrease in casual flyers (Businessteacher, 2006). Increased competition l eads to greater difficulties in demanding incentives from communities such as low fees Easyjet received at Luton (Mayer, 2007).To enter new markets like Germany and France, Easyjet also end to spend much money than in the UK (Kernchen, 2007). The cost is pretty higher. 5. Porter’s five forces The threat of substitutes = Low The threat of substitutes for easyjet comes from other transport tools such as trains, cars, boats and so on. Minimal threat from train and car on domestic routes (Mayer, 2007). Eastjet does not need to worry too much about other transports tools if easyjet improves online system continually. The threat of entry = low It is difficult for a new company to enter in the low-cost airline industry. Easyjet has quite a comfortable position in the UK low-cost market as the biggest operator. High capital requirements also negate threat to some extent for easyjet† (Mayer, 2007). The threat of buyers = Moderate Customers will often choose better price particul arly with the online tickets system (Capon, 2008). Customer loyalty is necessary so that easyjet must keep a regular check on prices all the time (Mayer, 2007). The threat of suppliers = High Easyjet have no power to alter the price of fuel as an individual company (Mayer, 2007).Without Boeing and Airbus, Easyjet lose planes so that Easyjet must keep good relationship with them. Sometimes, airports also easily raise charges to airline. The threat of competitive rivalry = Moderate It is pretty rivalrous with many competitors who also operate short-haul market in the European such as Palmair, Germanwings, Ryanair and so on (Which, 2010). A numbers of tour operators like Thomas Cook may threat the market by selling scheduled seats (Subiotto and Snelders, 2007). All in all, â€Å"the growth of individual airlines and the expectation that competition among low-cost airlines will intensify† (Chris, 2010). . Porter’s Value Chain As a low fare airline, Easyjet makes the most o f its assets and its competencies to develop advantages and create much value compared with other airlines Inbound Operation Outbound Marketing Sales Tickets sales online After-sales service Ticketless service Catering Internet Fuel Aircraft Baggage handling Maintenance Inbound * Easyjet uses outside catering supplier to offer in-flight service (Dfnionline, 2007). * Easyjet spent a great deal of money on fuel. * Easyjet buy or rent airplanes mainly from Boeing and Airbus (Easyjet, 2009). There is another company who is mainly responsible for respire easyjet’s airplanes (Viploan, 2005). Operations and Outound * With ticketless service, customers just need a code and bring it to airport for boarding number (Ciao, 2000). * Internet is more important for Easyjet than call centre. * Easyjet does well in online check-in facility with hold baggage (Easyjet, 2009). Marketing and Service Easyjet has its own marketing department to publicize the company. And the company mainly focuses on lost baggage and speedy boarding for customers (Easyjet, 2009). . Stakeholder Mapping Low Interest High Interest | Suppliers: Boeing and AirbusCustomersCommunity Groups| | InvestorsGovernment AgencyShareholders: Stelios Haji-Ioannou who owns 22% shares. | Low Power High Power It is obviously that Boeing and Airbus has lots of interest so that they cooperate with Easyjet frequently. Customers prefer to low-cost tickets and convenient online system. However, they have less power as Easyjet can buy or rent planes from other airline. The company also has founded its largest UK airline position.Investors are really into Easyjet’s service and its growth markets, and they also have powers to buy shares to make its share price up. For shareholders, Stelios Haji-Ioannou owns 22% of the whole company (Easyjet, 2009). He gets big power. 8. Ansoff Matrix Market Penetration: Easyjet can make the most of its existing products to achieve growth of market share such as â€Å"put ticket p rices to some domestic destination down continually and add more seats in planes† (Columbia, 2008). Market Development: Easyjet hopes to get growth by using its existing product to into new markets.The company is launching new flights to Australia, Romania and Germany which have been travel spotlights with its low-cost tickets and frequent flights (Easier, 2007). Product Development: Easyjet is adding flights and developing new flight routes to more places across the European even northern Africa (Easyjet 2009). Therefore, it develops the product range. Diversification: Easyjet is not only operates airline service but also does other related transportation service such as easycar, airport parking. Apart from transportation field, the company is also responsible for hotel booking, travel guide and so on.Diversification makes easyjet consolidate existing market and accmulaing experience for new fields. 9. BCG Matrix StarSpeedy Boarding| Question MarksBaggage terms| Cash CowsClub cards| DogsFood| Star: An enhanced version of its fast boarding service attracts more customers (Travel Trade Gazette, 2007). It is a high growth market. Question Marks: There is baggage allowance that Easyjet offers to speed its market up. Cash Cows: Customers get club cards of Easyjet so that they can get savings for credit purchasing of tickets (Travel Trade Gazette, 2007).Interest rate generally affects this so that there is not any growth. Dogs: Easyjet gets little money in catering according to the annual report (2009annualreport, 2009). 10. Strategic position and selected strategy The strategic position of Easyjet is similar to the aim & objectives. â€Å"Turn Europe Orange† that Easyjet expands its employer presence across Europe (2009annualreport, 2009). The company aims to cut more carbon emissions and add more seats in the planes so that improving quality of its service (2009annualreport, 2009).The objective has covered SMART because up to now Easyjet has been the largest airline in UK and the second largest airline in Europe 10. 1 Identify and evaluate alternative strategies * Easyjet can develop new routes from local airports in UK to Romania in 2011. This strategy meets Easyjet’s network position for refreshing new routes all the time. It covers suitability, feasibility and acceptability well. Suitability| The strategy conforms objectives of easyjet and makes the use of company’s resources on providing cheaper short-haul service within Europe (Pender, L. nd Sharpley, R. 2005). | Feasibility| It is achievable as Easyjet has been the second biggest airline around Europe so that passengers may choose because of its good reputation (Pender, L. and Sharpley, R. 2005). | Acceptability| Low-fare airports with cost-benefit and more marketing opportunities. | * Easyjet will offer British Airways Executive Gold card holders free speedy boarding plus (priority check-in and boarding) on the days that BA crew strike. Most passengers wish to use this free offer on that day (Easyjet, 2010).This strategy meets Easyjet customers proposition for building appeal to business travelers. By the way, it is also a kind of marketing campaign to offer more speedy boarding to customers. It covers suitability, feasibility and acceptability well. Suitability| It is profitable for the company to reduce check-in time and sell seats for leisure customers. Make the most of resources to earn money. | Feasibility| It is easily achievable that passengers who hold British Airways Executive Club Gold Card wish to accept this free offer (Easyjet, 2010). | Acceptability| | Easyjet is going to work closely with CAE which is a good flight school to use 5000 Series simulator for A320 pilots training at CAE’s Burgess Hill facility (Atwonline, 2008). The strategy meets Easyjet safety requirements to improve pilots training. It covers suitability, feasibility well but not acceptability. Suitability| Providing customers with well-trained pilo ts and good safety system. | Feasibility| CAE helps with qualified training simulators so that the quality and service can be guaranteed (Krishnan, A. 2008). | Acceptability| Easyjet spends money to make agreements with CAE.It may give additional strain on staff. | 10. 2 Select one strategy and describe the implementation & monitoring plans In my opinion, it is appropriate for Easyjet to develop new routes to Romania. There are only two routes which departure from Madrid and Milan to Romania (Easyjet, 2010). It is not enough. Firstly, Easyjet is the UK’s largest airline measured by the number of passengers flown (Easyjet, 2010). But in the Europe, there are several competitors such as Ryanair, BMI and so on. More people choose to go on holidays to Romania which known as the â€Å"Paris of the East† (Easyjet, 2009).Developing new routes gives rise to more marketing opportunities. Secondly, choosing low-fare airports such as Bucharest meets the organizational objectives. The company is able to make good use of its resources of new aircrafts and employees. Thirdly, developing new routes which departure from native airports in UK gives local people opportunities to go on holidays to Romania directly. Thus, it helps Easyjet to consolidate its UK largest airline. Implementation The route starts from UK airport such as Liverpool, Bristol, Stansted, it is necessary for Easyjet to make good deal with the airports.The company needs to pay a sum of money for airport fees which involves aircraft parking, administration fees and airport parking, airport lounges for passengers (Easyjet, 2007). The native airports in UK offer low cost parking such as ? 4 per day at Bristol. The airports in other European cities such as Milan, Paris will cost a little more for these fees (Easyjet, 2007). Then Easyjet may prepare how many flights will departure from each route with arranged pilots, in-flight staff and the first departure date. The company needs to publicize the n ew routes to passengers in time online with detailed ticket price include or exclude tax.For example, many people are attracted by the Bucharest’s architecture (Easyjet, 2009). The company can develop a route from Liverpool in summer vacation or winter vacation, 2011. Thus, there will be more customers who would like to have a view of Romania during holidays. Monitoring Plan In order to operate these new routes better, the company is able to monitor the routes carefully. To ensure every flight should be arrived to the airports on time, using global online service to anticipate weather-related delays at departure and destination airports (Metoffice, 2010).Work out optimizing schedules and scan customers’ feedback carefully so that if there is someone who feels bad for easyjet’s service, the company can improve immediately. If the new routes are operated well with lots of numbers of passengers and minimizing level of delays times, Easyjet can consider opening more new routes across Europe. It is appropriate for easyjet to operate 70 new routes in 2010 (Easyjet, 2010). The company can add more routes departure from different local airports such as Luton, Bristol to Romania and then add some routes which departure in other countries such as Paris to Romania.Therefore for customers at any places, there will be more choices. 11. Conclusion In order to become the largest low-cost airline in Europe, Easyjet also needs to enhance its online system and â€Å"fly outside Europe† strategy. This may give rise to more marketing opportunities. However, up to now, Easyjet operates successfully and gets profit up to 80 million pounds with 9% up of market shares in 2009 (2009annualreport, 2009). The company must be growing continually and has a promising future. 12. Appendices Appendix 1 Appendix 2 Appendix 3 | | Irish Pound to US Dollar Currency Exchange Rate Forecast|Appendix 4 Appendix 5 13. Reference Books Capon, C. (2008), Understanding Strategi c Management, Prentice Hall: Essex. Fifield, P. (2007), Marketing strategy: the difference between marketing and markets (3rd Edition), Elsevier: Oxford. Krishnan, A. (2008), War as business: technological change and military service contracting, Ashgate Publishing Limited: Hampshire. Kernchen, N. 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Dollar to Euro Currency Exchange Rate Forecast, [Online] http://www. marketvector. com/exchange-rate/euro. htm (02/04/2010). Telegraph, (2010 ), Election 2010: George Osborne says easyjet would be hit by ‘job tax’ on airport visit, [Online] http://www. telegraph. co. uk/news/election-2010/7560181/Election-2010-George-Osborne-says-easyJet-would-be-hit-by-jobs-tax-on-airport-visit. html Read also: My Ambition Is To Become a Collector