Decisions must be made on the trade-offs inherent in development of a strategy. To accomplish that, Lundgren has taken drastic steps. Looking for a flexible role? 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. Given that they were doing almost nothing before, there is a big opportunity to move from zero to something, he says of the holiday tours. EasyJet may be prepared and has to a large extend engaged in price war with competitors via its lower cost structure (economies of scales due to its larger operations) and also has the financial resource capability to fund short to medium-term losses with the aim of driving out competitors in the longer terms. This will involve retention of best salespeople supported by HR management, engineering support in terms of maintenance of the web page supported by technology development to ensure that web site has the latest prices and route and flight information. 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. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. Ive always said the four core markets are where we want to put our focus on U.K., Germany, France and Italy, he told the World Travel Market conference in 2018, shortly after the Air Berlin deal concluded. Accepting this fact and having a strategy in place to mitigate risk is critical to being a successful innovator. By mid-May, most of the major European nations had administered first doses to just over a third of adults amid critical vaccine supply shortages and concerns about rare but dangerous blood clots linked to AstraZenecasand Johnson & Johnsonsvaccines.Without a brisker vaccination pace, a third wave of infectionskeeps threateningto take hold in Europe. Free resources to assist you with your university studies! Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. 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. This results in a very strong competitive rivalry in the industry. The Matrix outlines four possible avenues for growth, which vary in risk: Market Penetration. We need to focus on the things we can control. There is national pride, not to mention jobs and pension payments, resting on their wings. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. 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. Offers may be subject to change without notice. From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. This strategy is focused on keeping costs down and EasyJets policy of no free lunch and efficient use of airports by limiting turnaround to 30 minutes. Although mostly private now, many of these airlines were once state owned, and some still have not insignificant government stakeholdings. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. Savings made from e-commerce is another source of value creation. Managing for value involves managing both value activities and cost drivers. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Normally there would have been close to 100. Background Coronavirus disease-19 emerged in December 2019. It is possibly not as good in terms of operations and its inbound logistics. Easy Jet: Company Operation Strategy : Historical-Hall-2840 Our mission to make business better is fueled by readers like you. This involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. Finally, EasyJet has sustained its price-based advantage by focusing on market segments where low fares are critical and valued by customers. Lundgren had been an industry leader in trying to position EasyJet for this new world. And Lundgren, who took overin late 2017, had big plans to build on that differentiation with potentially lucrative new ventures, including vacation packages, more benefits for business, and a new loyalty program. Now, at the cusp of a summer season that normally would be the source of the majority of EasyJets profits, the airline and its CEO face what could be a make-or-break season. 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. EasyJet raised $1.5 billion by selling seven-year bonds, with a 1.875% annual interest rate. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. But with new, more infectious variants of COVID-19 spreading rapidly in Europe, in October renewed lockdowns were imposed across many parts of the U.K. and from Helsinki to Tel Aviv. At a budget carrier, you need to be aggressive and ruthless and abrasive, says Joachim Kotze, an airline industry analyst for financial research firm Morningstar. All rights reserved. But nothing has been normal for EasyJet since March 23, 2020. 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. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. Terms & Conditions. The company has announced plans to reduce its 15,000-person workforce by 30%. Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. Improving CSAT across the whole customer journey. 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. In practice, this means EasyJet has little chance of beating Ryanair or Wizz head-to-head on routes and pricing. 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. (The others are rival budget airlines Ryanair and Wizz Air, as well as Southwest Airlines in the U.S., on which EasyJet originally based its business model. Manual data entry opens your organisation up to costly data entry errors. This has the highest risk, but WebThere are two types of strategies taken in account in the Easy jet such as differentiation strategy which is the strategy in which the industry has the particular rules and EasyJet is forever trying to attain a cost level that is low relative to its competitors. If COVID doesnt ease more quickly, and leisure travel doesnt rebound as hoped,EasyJetshole will only get deeper, and its plans to grow could be spiked indefinitely. EasyJet says the funds will give it the firepower to grab slots at premium airports like Paris Orly, Lisbon, Milan Linate and London's Gatwick. To enjoy unlimited access to our journalism, subscribe today. Brand Awareness is another strength that is attributable to the company In November 1999, selected as a business super brand by the Super Brand Council, recognising EasyJet as an outstanding brand name. No plagiarism, guaranteed! Porter through the use of the value chain illustrates how resources should be utilised to enhance least-cost production or differentiation strategies (the generic strategies suggested by Porter). easyJet has a cost advantage over its major competitors on the primary network that it operates. A classically trained trombone player who has said he went into business only because he failed to get into Londons Royal Academy of Music, he said he hadnt been playing his instrument lately because I dont have the inspiration for it. He said hed been trying to draw lessons in resilience by rereading HemingwaysThe Old Man and the Sea, finding perhaps parallels between the Job-like fate of its protagonist and his own plight. With Ryanair maintaining high margins despite reducing yields through strict cost management. Not that he was going away. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. At the end of March 2020, EasyJet grounded its entire fleet. The fourth force is the bargaining power of buyers. Therefore, demand led with proprietary yield management system. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. The UKs second-largest union has slammed easyJet flight cancellations in a scathing email obtained by Euronews. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. EasyJet also have a reputation for paying low wages in line with its low cost strategy. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. Diversification. 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. When EasyJets board did not accede to his demands, Haji-Ioannou carried through on his threatrequesting a special meeting to vote on the removal of board member Andreas Bierwirth, a former Austrian Airlines and Lufthansaexecutivewho Haji-Ioannou termed a friend of Airbus. When the board tossed out this request on a technicality, Haji-Ioannou resubmitted his call and asked for the removal of the chief financial officer, Andrew Findlay, too. Low price/low added The EasyJet brand is established in the European market, but brand awareness is required outside the continent. If your specific country is not listed, please select the UK version of the site, as this is best suited to international visitors. EasyJet through its use of an overall cost leadership strategy can use internet-based technologies to reduce value chain costs in a variety of ways: On-line bidding and order processing to eliminate the need for sales calls and decrease sales force expense. At the same time that it was offloading planes to raise cash and placing others into long-term storage in boneyards, the company still took delivery of 14 brand newAirbus A320 and A321 Neos. A prime example of this was the subsequent takeover of Go by EasyJet. WebeasyJet is aiming to become the worlds most data-driven airline. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. 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