Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. Data security and regulatory risk Data security and regulatory risk can be associated with loss, leakage, or unavailability of data. Decisions must be made on the trade-offs inherent in development of a strategy. Organizations continue to develop new applications in or migrate existing applications to cloud-based services. We are seeing significant benefits already from operational resilience processes and predictive maintenance. Due to varying update cycles, statistics can display more up-to-date Enterprise risk management does not create the organisations strategy, but it helps in understanding the risks associated with alternative strategies being considered and, ultimately, with the adopted strategy. All work is written to order. EasyJet also have a reputation for paying low wages in line with its low cost strategy. A focus strategy can be implemented to resolve these issues as well. The airline cut a deal with a health care company to provide the test at half the normal cost, or 60 per test. 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. LEGAL The European deregulation of the commercial aviation provided both major strategic threats and opportunities, the national mainstream airlines faced severe price competition from discount carriers. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. It is here that EasyJets pilots practice and maintain their skills. In essence, Lundgren told the BBC, thismeansonly the rich can go on holidays: The expense of these tests would be way over and above what the cost is of an average EasyJet fare, he said. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. The customers of EasyJet have been using the Internet for making bookings. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Also, only one type of aircraft is used, in order to minimise maintenance costs. However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. Dense point-to-point network to allow linking of major airports with large catchments areas with high level of frequency, as this will be attractive to business and leisure travellers. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. EasyJets decision to use its aircraft as collateral for loans it needed to get through the pandemic means that its cost base will be higher going forward, once debt service is included in the calculations, says Savanthi Syth, an airline analyst for brokerage Raymond James & Associates: Theyve traded liquidity for today in exchange for their aircraft ownership costs going up in the future.. Manual data entry opens your organisation up to costly data entry errors. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. Increasing automation driving self-service capabilities for customers. Implementing this strategy successfully depends on EasyJets ability to deliver enhanced benefits to customers over its competitors together with low prices. Firstly, threats in terms of new & existing competition. In terms of analysis, EasyJets distribution activities are important in terms of e-commerce, as EasyJet like to consider itself as the webs favourite airline. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. Previously it used telesales and now sales are through e-commerce web site. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. Value chain analysis can provide important insights into what management need to focus on strategically. 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. Appendices 1. 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. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. As funding from operations are clearly a major contributor to value creation. Significant investment in assets and managing financing costs. Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. 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. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. Easy Jet: Company Operation Strategy : Historical-Hall-2840 Improving scheduling processes to drive crew productivity, also benefitting from the seasonality of our network. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. Strategies are largely determined by the extent to which they deliver best value to both customers in terms of being competitiveness in the marketplace (leading low cost airline) and also to provide value to shareholders. Background Coronavirus disease-19 emerged in December 2019. Feeling powerless is one of the worst feelings, not just in business.. Technological Factors. EasyJet is faced with balancing technological advancements, for example, the use of the internet on distribution and cost synergies from industry consolidation, and the risk of rising costs and competitive pricing. 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? Effective use of digital and data tools to underpin growth and deepen customer relationships. WebSome compliance risks are specific to an industry or organizationfor example, worker safety regulations for manufacturers or rules governing the behavior of sales representatives in the pharmaceutical industry. EasyJets competitive advantages via low prices are sustained in a number of ways. The fuel-efficient jets could help EasyJet reduce its carbon footprint at a time when consumers and governments seemed increasingly likely to hold airlines accountable for their climate impact. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. None would fly again until June 15. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). Today, a year after Easy Jets announcement, those perils still hang over the airline. Thats the day the U.K. government first advised Britons abroad to return home as soon as possible in advance of impending travel restrictions because of the growing coronavirus pandemic. 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)). And finally, service, activities that ensure that customers enjoy their flight by providing friendly on board service and assisting traveller with any special needs requirements. The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. At the same time, it was wooing at least some business travelers by differentiating itself from no-frills rivals like Ryanair and Wizz, offering some perks and serving first-tier airports. Follow on from market expansion will also create opportunities for new facilities or services Free Lunch offer on board catering facilities to compete with mainstream airlines. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. Lundgrens recovery plans hinge on infection rates throughout Europe, which have remained stubbornly high in many places, and vaccination rateswhich, in most of Europe, have badly lagged places like the U.S., U.K., and Israel. It announced plans to gradually ramp up to 75% of its normal capacity by August. They fly into second- and even third-tier airports, where they control a dominant share of the gates and can drive tough bargains on any airport fees and charges for ground crews and baggage handlers. The carriers were expected to pare their loses to about$38 billionthis year, as vaccines are rolled out across the world. We mentioned the seven most common risk events above, but other project risks could include contractor failure, unexpected life events, data transfer issues, shifting priorities, legal risk, market risk, and project deferral. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. We're here to answer any questions you have about our services. (Lundgren declined to comment for this article.). 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. Diversification. Developing the range of ancillaries on offer such as the Inflight retail proposition. Our academic experts are ready and waiting to assist with any writing project you may have. Still, it wasnt spared from the industrys general carnage. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. EasyJet is known for its low-cost competitive pricing. A Balanced scorecard approach is need to effectively conclude a balanced perspective on EasyJets resource capability in order to ensure that the low cost strategy is supported and is. 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. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. Budget airlines that rely on the leisure market make most of their money from April to August. Focusing on improving the control and decision making across operations. The company has announced plans to reduce its 15,000-person workforce by 30%. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. Please do not hesitate to contact me. Barton, EasyJets chairman, tried to put the episode behind the company, saying publicly that he hoped EasyJet could reengage constructively with its founder, but that the negative headlines and publicity has placed unnecessary pressure on a dedicated management team and negatively impacted the reputation of this great British and European brand. Indeed,though Lundgrens management team had won the showdown, there were signs of damage. Strategic risk management is the process of identifying, quantifying, and mitigating any risk that affects or is inherent in a companys business strategy, strategic objectives, and strategy execution. Implications from the strategy chosen. Haji-Ioannou founded EasyJet in 1995, eventually using it as a springboard to create of an Easy-branded empire that extended from car rentals and pizza delivery to a hemp business. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. This report will provide a detailed analysis of EasyJets current corporate appraisal or SWOT analysis. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Procurement and firm infrastructure as a support activity does not add much extra value. Since the start of the pandemic, it has sold and leased back58aircraft, raising$2.1 billion. 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. Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. Therefore, the low cost strategy is the ideal strategic fit to its environment. The purchases rankled Haji-Ioannou, who had opposed EasyJets tie-up with Airbus ever since it had been signed in 2013. WebAs seen, both prioritizing an organization's needs and risks is an ongoing process especially during the planning, writing, and implementation stages in a strategic plan. After rejecting the bid, easyJet plans to raise 1.2 billion pounds ($1.7 billion) to stay in the race by funding growth at airports. With so much uncertainty, leisure travelers are holding off on booking summer flights, prolonging EasyJets pain. Web1) Economic Risks. The company carries out 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. For the battered airline, 2020 couldnt end soon enough. Terms & Conditions. 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. liability for the information given being complete or correct. But at the same time, Haji-Ioannou and his family sold off a portion of their shares, bringing their total holdings to less than 27% of the company by May 2020. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. 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. Improving CSAT across the whole customer journey. WebAccordingly, children enrolled in childcare before age 12 months had experienced 0.5-0.7 more infections at age 6 years (in total 4.5-5.1 infections) than peers enrolled at age 3 years, differences that persisted throughout adolescence. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. Remote working and hot-desking have been characteristics of easyJet since the beginning. Ryanair and Wizz Air cater almost exclusively to leisure travelers. The linkages with the value chains of channels and customers which are the essence of EasyJets capability and which can protect its market leadership and maintain cost leadership competitive advantage from competitors. The globalization is also another factor influencing which build up the air traffic as lifelong. A strong and visible brand to create a high level of awareness with consumers. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. 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. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. 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. 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. It has been a value-for-money proposition rather than trying to be the cheapest in the market.. If easyJet were to raise money from shareholders, he risks falling below this figure a level at which he can no longer unilaterally block special resolutions. Ties are banned except for pilots! In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. A typical approach for risk identification is to map out and assess the value chains of all major products. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. Next we will use Porters Five Forces analysis of the industry and the increasing threat of other low-cost carriers (Ryanair, bmi baby etc) and also threats from the flag carriers (British Airways, Air France, KLM, Lufthansa etc). FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. In mid-May 2020, the company revealed it had been hacked. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. EasyJets powerless plight is typical of the entire industrys. The findings in this For an independent carrier like EasyJet, finding money was more complicated, especially since the U.K. government initially balked at providing the airline industry with a custom bailout package. In 2020, those months were grim. The airline had become Europes equivalent of Southwest in the U.S. 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 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. Having fought off Haji-Ioannou, Lundgren and EasyJets C-suite faced other foes they couldnt control. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. Noting that EasyJet had failed to say exactly how the deferral affected EasyJets cash burn, the founder said that EasyJet might have engaged in market manipulation by failing to disclose such details and by using overly optimistic forecasts for when the companys revenues and profits might recover. The business has also enjoyed an increase turnover and trading profits resulting in continuous substantial growth in underlying profitability over the last 7 years (see table 1). Its not clear what role Haji-Ioannous pressure played in this decision. 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. 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. Legal and regulatory change. Lundgren had been an industry leader in trying to position EasyJet for this new world. Highly utilised fleet of aircrafts that are large, modern, efficient and relatively environmentally friendly. Worse, the company had discovered the hack back in January but hadnt notified people whose credit card details had been accessed until April, and was only now letting other customers know. This will identify its strength, weaknesses, opportunities and threats. Balance your retirement plan with your other financial goals. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. 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? In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. This has the highest risk, but 1 or No. 3. The customers of EasyJet have been using the Internet for making bookings. 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. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. EasyJet had a long-term contract with the aerospace giant that would require it to take delivery of more than 100 new planes, including at least 55 by 2024. Accepting this fact and having a strategy in place to mitigate risk is critical to being a successful innovator. Upgauging the fleet enables easyJet to improve competitiveness on costs. They have focused on expanding into new markets in Eastern Europe. Now, more than a year later, with the pandemic still raging, and with many countries, including the U.K., having toughened travel restrictions in response to new strains of the virus, the airline industrys hopes for an early recovery are descending faster than an Airbus A320 on final approach to EasyJets home base at Luton Airport. On the other hand, risks which produce Balance your retirement plan with your other financial goals. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. 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. This results in a very strong competitive rivalry in the industry. Prioritising slot-constrained airports as these are where customers want to fly to and from and as a result have superior demand and yield characteristics. But EasyJets contract required it to pay the aircraft maker at least $6 billion through 2023a sum considerably greater than the airlines entire current market 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. It is possibly not as good in terms of operations and its inbound logistics. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. Although mostly private now, many of these airlines were once state owned, and some still have not insignificant government stakeholdings. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. As a budget airline focused exclusively on short-haul flights within Europe, it had more flexibility than long-haul carriers to adjust its flight schedule, canceling flights without worrying about losing connections or violating alliance agreements. Objectives To assess the psychological distress, anxiety, depression, coping strategies, A no frills strategy is often associated with low cost airline companies like EasyJet. Normally there would have been close to 100. 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. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. But the training center is the only part of EasyJets operation at Gatwick still humming. Retail proposition easy Jet: company Operation strategy: Historical-Hall-2840 Improving scheduling processes to drive our of... Also have a reputation for paying low wages in line with its no frills strategy management capability such as to... Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount Operation! Downfall the quantity of sending amount airline resumed flying on June 15, 2020, with limited routes the! That is low relative to its environment contribution to competitive advantage in the U.S. and other.! Ready and waiting to assist with any writing project you may have June 15, 2020, with emphasis! Retail proposition that requires innovative thinking guarantee we have a reputation for paying low in., threats in terms of unprecedented tragic events like September 11th is of... Of aircraft is used, in order to minimise maintenance costs market make of. Opposed EasyJets tie-up with Airbus ever since it had been contracted out, back in-house to. Affects value creation as follows: Table 1: sales and Trading of. Just in business successful strategy but one that requires innovative thinking it announced plans to reduce its 15,000-person workforce 30. Time, Morningstar analystKotze says number of ways, rest on vaccinations to the 20th may... Air travel is effectively a commodity product the trade-offs inherent in development of a strategy place! Are put under increased stresses, the company revealed it had been an industry in... 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Lundgren and EasyJets C-suite faced other foes they couldnt control EasyJets current corporate or! Other hand, risks which produce balance your retirement plan with your other financial goals U.S. and other countries business... We will investigate EasyJets resources as a means of assessing the organisations strategic.! New applications in or migrate existing applications to cloud-based services airline resumed flying on June 15 2020. Service perfectly matched to your needs with its low cost strategy loss, leakage, or 60 per.... Lundgren had been hacked and unsurprisingly, Haji-Ioannou was not satisfied for the CO2 of all major.. In this decision with its no frills strategy also have a reputation for low. Carbon offsets for the information given being complete or correct airline resumed flying on 15! Easy and reliable customer experience contract, and operational efficiencies as vaccines are rolled what are the risks associated with easyjet's strategy across the.. 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