what are the risks associated with easyjet's strategy

what are the risks associated with easyjet's strategy

Meanwhile, the U.K. has announced international travelwill resume as of May 17, but willoperate according to a traffic light system, with arrivals from red-, yellow-, or green-designated countries subject to different requirements. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. As a result, EasyJet occupies a kind of middle groundin both pricing and costsamong European carriers. Given the fact that the company offers WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. Every so often Easyjet has aligned to face some unusual risks, for example, IT security and fraud risk, brand ownership, dependence on technology, Industrial action, financing and interest rate risk; while the key risk management system of the company is very formal rather than deepest, 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. 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 threats are in terms of fines and rise in cost of raw materials. It renegotiated contracts with ground handling firms at several airports helping to lower costs. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. The airline has differentiated itself from other budget carriers by serving top-tier European airports. Whats more, it included maintenance and avionics support for EasyJets existing fleet. Today, a year after Easy Jets announcement, those perils still hang over the airline. With Ryanair maintaining high margins despite reducing yields through strict cost management. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. 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. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. 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. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. 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. Finally, the key to sustaining high levels of growth is the scalability of the operations. While it is often lumped into the same European budget airline category as Dublin-based Ryanair and upstart Hungarian carrier Wizz Air, there are some key differences between EasyJet and those other airlines. liability for the information given being complete or correct. The first step in the risk analysis process is identifying risks you think could affect your project. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. 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. However, if EasyJet could significantly differentiate its service over its competitors then it could obtain higher prices. easyJet is building a network of key cities, broadening their presence across Europe. 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.. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. 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. 3. Get in touch with us. The type of childcare had little impact on infection risks. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. But the surge in new, more transmissible and potentially vaccine-resistant strains of the virus has placed these forecasts in doubt. 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. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. Consumers are optimistic and the travel and tourism industry are now booming again. 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. This will identify its strength, weaknesses, opportunities and threats. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. Making it easy, enjoyable and affordable to travel again and again for business and holidays. Finally the report will examine the extent to which EasyJets current no frills strategy is the appropriate strategic fit to its organisation both in terms of resource capability and business environment. As hard as it has tried to inoculate itself against the pressures of the pandemic and to convince passengers it will be safe to fly, its fate remains up in the air, subject to unexpected and unwelcome turbulence. After overcoming the many hurdles of producing a model with a viable context and associated risk factors, often the user of the innovation is neglected. A focus strategy can be implemented to resolve these issues as well. Investments in assets are also key consideration in value creation in that consideration of the extent to which assets and working capital are being utilised. 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. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. Hover your cursor over an icon and you can see what type of plane it is, which airline it belongs to, where it is flying to and from, even its altitude and airspeed. EasyJet also have a reputation for paying low wages in line with its low cost strategy. EasyJet also enjoys internal strengths in its operations in terms of efficient use of airports by reducing turnarounds to 30 minutes and below, EasyJet can achieve extra rotations on the high frequency routes. In April 2020, the airline was able to negotiate a$845 millionloan through the U.K. governments COVID Corporate Finance Facility for large U.K. employers. This is critical for EasyJet having analysed the competitive rivalry position in the industry. WebThe following operating risks are associated with pursuing sustainability initiatives as part of a marketing plan: Loss in profitability Loss of focus Just as sustainability would seem to be a rallying cry for consumers, some companies have jumped on sustainability as a 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. Research expert covering mobility and logistics. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. Highly utilised fleet of aircrafts that are large, modern, efficient and relatively environmentally friendly. WebeasyJet is aiming to become the worlds most data-driven airline. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. What happens to EasyJet, which had been one of the strongest players in the airline industry before COVID-19, could presage the entire sectors fate: If EasyJet cant come back strong, what airline can? To what extent does EasyJets concentration on *You can also browse our support articles here >. That loan would buy EasyJet some more time. Upgauging the fleet enables easyJet to improve competitiveness on costs. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Still, it wasnt spared from the industrys general carnage. Get the best reports to understand your industry. Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. Overall the analysis will highlight the inherent threats and weaknesses suffered throughout the industry, and also the importance of innovation to maintain low cost advantage, alliances and size to success. Therefore, demand led with proprietary yield management system. Potential negative outcomes include bad publicity and a The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. Within weeks of the vote, Findlay, EasyJets CFO, announced his intention to step down, and analysts speculated that the stress of Haji-Ioannous campaign, on top of that caused by the pandemic, had taken a toll. The idea of remote working can also result in co-ordination and control weaknesses. Legal and regulatory change. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. 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. Protecting and building brand awareness and consideration. It has been a value-for-money proposition rather than trying to be the cheapest in the market.. WebWhat are the advantages and risks associated with low-price strategies? The company has announced plans to reduce its 15,000-person workforce by 30%. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. The world economy is however, now on the up post September 11th. Savings made from e-commerce is another source of value creation. Remote working and hot-desking have been characteristics of easyJet since the beginning. The company carries out EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. To understand EasyJets prospects, its important to understand its strategic positioning. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. To enjoy unlimited access to our journalism, subscribe today. 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. Easy Jet: Company Operation Strategy : Historical-Hall-2840 Low price/low added The development of the next generation aircraft will also lead to technological opportunities in term of fuel efficiencies. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. Organizations continue to develop new applications in or migrate existing applications to cloud-based services. The 2002/03 annual report reconfirmed this business model of the airline: Another price-based strategy is the hybrid strategy this seeks to achieve an element of differentiation and a price lower than that of competitors. 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. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. In 2020, those months were grim. We will start by looking at strengths: EasyJet serves diverse ranges of European routes with principle activities in both Leisure and business markets, offering 60 key European routes. Yield management is a form of risk management and therefore, adds value. Step 1: Identify and document risks. The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. 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. So when the industry was slammed by COVID-19, government was responsive to pleas for help. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. 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. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. 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! The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. WebOften, this takes place in four major steps: Figure out how much money you need to retire. 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. Previously it used telesales and now sales are through e-commerce web site. It is evident that having only one collaborate is risky due to the possible delays in time. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. However, if EasyJet could significantly differentiate its service over its competitors then could. 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