Create a retirement strategy that diversifies your assets and manages risk. A prime example of this was the subsequent takeover of Go by EasyJet. 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. 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. It was enough to make any airline CEO play the blues. 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. Free resources to assist you with your university studies! From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. And, finally threats of any takeover bids from national airlines. Porter comments on cost leadership as the low-cost producer in its industry must find and exploit all sources of cost advantage (Porter M.E (1980)). 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. To enjoy unlimited access to our journalism, subscribe today. 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. But what are the internal weaknesses suffered by EasyJet? To use the Matrix, plot your options into the appropriate quadrant. And while optimism about leisure travel in Europe is slowly rekindlingthis week, the U.K. announced a resumption of international travel to a limited number of destinationsEasyJet still faces plenty of potential turbulence, as the likelihood of a robust summer season recedes. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. 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. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Focusing on improving the control and decision making across operations. The idea of remote working can also 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. He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. In fact, Haji-Ioannou continued to press his allegations that corruption underpinned the Airbus contract, raising the matter at EasyJets general meetings in July and December. The threats are in terms of alternative holidays Disneyland Paris via Eurostar (Euro tunnel) and P&O cruise. Its current cash flow position is also strong, with cash flow from operating activities increased by 61 percent between the six months ended 31st March 2003 to six months ended 31 March 2004. Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. 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. The Essay Writing ExpertsUS Essay Experts. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. 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. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. The first step in the risk analysis process is identifying risks you think could affect your project. Difficulties associated with a specific risk are transferred to another party, often insurance companies for coverage like cybersecurity liability insurance.Examples of risk transfer include: buying business interruption insurance to handle unplanned expenses in the aftermath of a cyber attack; reducing the likelihood of project These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. 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.. Do you have a 2:1 degree or higher? The airline couldnt simply abandon it without jeopardizing any chance of a quick recovery when the crisis ended.Lundgren also thought the contract made long-term strategic sense. 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. When the risks are specific to a certain activity the risks will be managed, and maintained 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. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. These risks may include: Shifts in consumer demand and preferences. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. Research expert covering mobility and logistics. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. The EasyJet brand is established in the European market, but brand awareness is required outside the continent. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. 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. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. 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. Lundgren, who arrived at EasyJet after leading European package holiday company TUI Group, has also tried to expand the airline into the packaged-tour business. Furthermore, a lifetime history of D Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. When it comes to choosing between in-house and outsourcing, the organization must first analyze the associated risk and cost that comes along with each method. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Normally there would have been close to 100. quick order processing). Value chain analysis can provide important insights into what management need to focus on strategically. This is intensified as a result of little or no differentiation in the service offered. EasyJet is known for its low-cost competitive pricing. This text provides general information. WebEasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. 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! 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. But the training center is the only part of EasyJets operation at Gatwick still humming. Statista assumes no Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. EasyJet was able to operate at only 18% of its 2019 capacity. Enabling risk management through a 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. 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. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. For the battered airline, 2020 couldnt end soon enough. The development of the next generation aircraft will also lead to technological opportunities in term of fuel efficiencies. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. These are set out below: easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market. Managing for value involves managing both value activities and cost drivers. Thats better, but still a big burden on, say, a family of four. A focus strategy can be implemented to resolve these issues as well. It also offers passenger a few more extras, such as allowing them to check in at the airport without charge (Ryanair charges passengers who dont check in online) and a loyalty program that confers priority boarding privileges. The same figure for Ryanair was 2.25 pennies, while it was about 5 for British Airways and 5.37 for Air France and KLM. easyJet's updated framework continues to build 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. The world economy is however, now on the up post September 11th. Deliver strong on-time performance, which is consistent with the focus on slot constrained, congested airports. Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). Making it easy, enjoyable and affordable to travel again and again for business and holidays. EasyJet cost efficiency is achieved in a variety of way as shown in the following diagram: The success of low-fare (cost) strategy is primarily dependent on the maintenance of a low cost base. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. Figure 2: Five Forces Model ACCA Paper 3.5 (2001). But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. 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. The U.K. is doing well: It had approved two vaccinesone from Pfizer and one from AstraZenecain December and a third, from Moderna, in early January; by mid-May it had given 68% of the adult population at least one shot. Therefore, demand led with proprietary yield management system. The threats are in terms of fines and rise in cost of raw materials. Continuing to deliver strong productivity, easyJet Airline Company Limited Registered in England with Registered number 3034606; subsidiary of easyJet plc Registered in England with registered number 3959649 Registered Office: Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF, Additional ESG information - Financial Year 2021, Directors' interests and substantial interests. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. 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 competitive advantages via low prices are sustained in a number of ways. The findings in this The fourth force is the bargaining power of buyers. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. If it failed to do so, he threatened to call a vote to remove one director from the board every seven weeks, until the board acquiesced. 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. EasyJet denied this dinner took place. 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. The pandemic, of course, wiped out business and leisure travel alike. An Internal and corporate analysis in terms of strength, weaknesses, opportunities and threats (SWOT) will assist in gaining an understanding of where EasyJet is currently in terms of strengths and where improvement is required within the business and what outside environmental threats it may face as well as what new opportunities are available to the company in the short and medium term. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. 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. 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. Kotze compared Lundgren to his rival CEO, Michael OLeary, who runs Ryanair and has a reputation for being merciless at containing expenses and being generally combative. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. Most theories argue that strategic success and improved wealth generation stem from two strategies. All office-based employees are encouraged to dress casually. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. Our mission to make business better is fueled by readers like you. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. Healthcare workers were exposed to this highly infectious virus during the pandemic and suffered several social and psychological consequences, such as anxiety, psychological distress, and burnout. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. 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. WebThere is one main reason which influences these economic factors is the recession in the Easy jet. 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. We will consider the value chain for EasyJet in more detail later in our discussion. The amount of risk is immense, and it's only a business which runs on a profit margin of around 10%, while keeping in mind it's highly dependable on a strong summer quarter. Consumers are optimistic and the travel and tourism industry are now booming again. It can restore the reputation of a brand. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. But EasyJets contract required itto paythe aircraft maker at least $6 billion through 2023a sumconsiderably greater than the airlines entire current market capitalization. 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. Finally, EasyJet has sustained its price-based advantage by focusing on market segments where low fares are critical and valued by customers. Supported by innovative and effective advertising. 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. However, by year 2000 it has not only managed to survive but also increased its market shares and assets of aircrafts to 74 and servicing 105 routes and carrying over 20 million passengers a year. This will identify its strength, weaknesses, opportunities and threats. Although mostly private now, many of these airlines were once state owned, and some still have not insignificant government stakeholdings. Once a saver, always a saver: Warren Buffett says generational wealth isnt what it used to be in his annual letter Salesforce is paying Matthew McConaughey reported $10 million a year for creative help despite laying off 8,000 CA Notice at Collection and Privacy Notice, Do Not Sell/Share My Personal Information. To what extent does EasyJets concentration on Balance your retirement plan with your other financial goals. In 2020, sales cratered more than 50% to $4.2 billion, and the airline recorded its first ever annual loss: a jumbo jetliner-size blast of red ink totaling nearly $1.8 billion before tax. Value involves managing both value activities and cost drivers to grab additional and... Fares are critical and valued by customers the up post September 11th for the battered,. Every stage and is continuously working to enhance the customer experience that strategic success and wealth. And holidays what are the risks associated with easyjet's strategy Lundgrens plans receded still must be monitored by leadership to ensure the plan 's goals are achieved! Of may 2020 that strategic success and improved wealth generation stem from two strategies the same as its... Of worldwide destinations are now booming again include: Shifts in consumer demand and preferences Balance your retirement with. 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