Those airlines are more dependent on business travel, which many analysts forecast might not fully recover from the pandemic until 2024if it ever recovers at all. EasyJets no frills strategy does not only mean a cut in Cabin crew and denial of food, but also allows for a faster pre-flight preparation, thereby reducing the time grounded as well maintaining fare. 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. There is national pride, not to mention jobs and pension payments, resting on their wings. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. Get the best reports to understand your industry. Ties are banned except for pilots! They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. You can tailor the resources of this strategy type to focus on positive brand images. 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. 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. 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. 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. Just two EasyJet aircraft were in the air, one en route from Londons Gatwick Airport to Lyon in France; another from Belfast to the English Channel island of Jersey. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). The sales process is efficient, as EasyJet sells directly to customers, instead of using external sales teams. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. They assess the different risks throughout all areas of the EasyJet business. To enjoy unlimited access to our journalism, subscribe today. easyJet holidays will continually optimise yields on packages sold, whilst developing the cities proposition allowing easyJet holidays to reduce the cyclical disparity of a traditional tour operator. 6. Risk 2: Geopolitical instability. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Deliver strong on-time performance, which is consistent with the focus on slot constrained, congested airports. Yield management is a form of risk management and therefore, adds value. The fourth force is the bargaining power of buyers. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. 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. Advantages: A bigger market share New target market The barriers to enter are higher Predatory pricing Strategic Issues facing the airline Industry 8.2. easyJets future 9. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. 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. In an interview with LondonsEvening Standard newspaper in January, Lundgren sounded down, admitting he missed frequent trips to the Spanish island of Majorca, where he owns a house and where he and a friend also own a recording studio. By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. The company negotiated with trade unions to move more of its pilots and cabin crew on to seasonal contracts, which would allow the company to better match its expenses to periods, such as the summer, when it generated moreprofit. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. Also, only one type of aircraft is used, in order to minimise maintenance costs. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. 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. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. 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. The risks are Customers reaction to a product Change in market dynamics Providing product differentiation Convincing need for your product/service Many startups/new business ventures fall in this segment. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. 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. 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 Product Development. But the surge in new, more transmissible and potentially vaccine-resistant strains of the virus has placed these forecasts in doubt. easyJet is building a network of key cities, broadening their presence across Europe. 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. It takes up to last extend in the time. It has been a value-for-money proposition rather than trying to be the cheapest in the market.. Powered and implemented by Interactive Data Managed Solutions. Procurement and firm infrastructure as a support activity does not add much extra value. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. 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. 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? Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. It is evident that having only one collaborate is risky due to the possible delays in time. Under pressure from airlines, it later lifted this policy for some European destinations, only to reimpose it as infection rates soared again in Spain and France. Front and center was the existential risk of the coronavirus. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. 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. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. This results in a very strong competitive rivalry in the industry. Threats are also in terms of legislative environmental laws regarding pollution and use of more environmentally friendly fuel, which are at premium prices. 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. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. The first step in the risk analysis process is identifying risks you think could affect your project. The idea of remote working can also result in co-ordination and control weaknesses. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. WebeasyJet is aiming to become the worlds most data-driven airline. e-commerce) and support activities such as fir infrastructure (e.g. 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. But in the past, he says, most budget airlines have fallen down on execution, unable to make package holidays a profit-driver. In practice, this means EasyJet has little chance of beating Ryanair or Wizz head-to-head on routes and pricing. Cost advantages might be achieved because of EasyJets efficient use of airports. Decisions must be made on the trade-offs inherent in development of a strategy. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. The airline has differentiated itself from other budget carriers by serving top-tier European airports. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. Lundgren says he likes the site because it keeps airlines honest: When customers can see that their inbound aircraft hasnt even taken off from its previous destination yet, theres no point in feeding them the bad news with an eyedropper, as airlines traditionally had done, gradually announcing slightly longer delays. Objectives To assess the psychological distress, anxiety, depression, coping strategies, Firstly, threats in terms of new & existing competition. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. They have focused on expanding into new markets in Eastern Europe. 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