Longitudinal Strategic Development Study Commerce Essay Example

A319. It has 20 bases across Europe, the most of import one being London Gatwick. In 2009, Easy jet carried 45.2 million riders and is the second largest low cost bearer in Europe behind Ryanair.

Strategic Planning of Easyjet Airlines Bing one of the largest low menu air hoses in Europe, had been able to last and turn in this industry even after the company encountered some jobs due to its cost construction. This was because Easyjet implemented different schemes to do the company survive in competition and addition competitory place in the industry.

Easyjet has borrowed its business model from Southwest Airlines, a carrier in the United States. It has then adapted this model for the European market by implementing additional cost-cutting measures like not selling connecting flights and offering complimentary snacks on board. The main focus of this business model is to maximize aircraft utilization, minimize turnaround times, and keep operating costs low. Easyjet primarily operates flights to major airports in the cities it serves. Additionally, it aims to attract business travelers by providing convenient services such as free flight transfers to earlier flights.

All of these services attracted customers from Europe and made the company one of the largest airline service providers in Europe.

Goals and Vision

• To become the largest and most profitable low-cost airlines in Europe.
• Maximize the use of valuable assets.
• Ticketless Travel (Online booking).
• Commitment to safety and customer service.
• Simple menu structure -

book early for low prices.

Strong corporate culture

The goal of Easyjet is to meet the needs of affordable travel. The Critical Success Factors in the airline industry are generally attributed to having the lowest prices, reliability within the market, comfort and service, and frequency. Easyjet maintains low prices by eliminating extras such as in-flight meals, advanced seat assignment, free drinks, and other services found in other airlines. However, it still prioritizes important features like frequent departures, advance reservations, luggage handling, and consistent on-time services.

Easyjet, one of Europe's most successful low-cost airlines, follows several schemes to achieve success. Their pricing structure is simple, with all prices quoted one way and a single price prevailing at any given point. Generally, prices start low and increase closer to the travel date. Easyjet employs three distinct strategies, as discussed below.

• Easyjet does not offer last-minute deals.
• They offer a single class and let price control demand.
• They vary the time at which tickets are first made available for sale.

These first two policies are in contrast to traditional airline pricing strategies, where many airlines offer last-minute deals and control demand through seat allocation in different classes. The main objective of this research is to analyze the optimal conditions for offering last minute deals under the single price policy.

In addition to

studying how consumer characteristics affect ticket sales, we also explore how uncertainty about the business department's availability can lead to last-minute deals and partially-price discrimination within the tourist sector. The same applies to uncertainty regarding the behavior of the business itself - if consumers are unsure whether the business will offer last-minute deals, then in both one-time and repeated transactions, there is a chance that the business will offer such deals. Furthermore, we discovered that for a moderate level of capacity, the longer the period in which tickets are available for sale becomes, as the number of sections increases. The company opted to use only one type of aircraft, reducing the cost of staff training, maintenance services, facility and space acquisition, as well as aircraft scheduling and crew assignment. With their acquisition of Boeing 737 aircraft, the company has been able to increase capacity and reduce the average fleet size.

Hence, Easyjet is able to save money on care costs and avoid the hassle of maintaining outdated European brotherhood equipment on old planes. They reduce their advertising costs by primarily promoting their services on their website easyjet.com. Additionally, they also advertise in national and regional Irish and UK newspapers, as well as on radio and television. Easyjet operates a point-to-point service, eliminating the need for connecting passengers and simplifying their operations. The company also prioritizes on-time departures to maximize aircraft utilization. Furthermore, Easyjet compensates its staff with a performance-based pay structure while maintaining modest wages.

Hence, easyJet encourages its employees to increase the number of sectors flown daily. This approach allows easyJet to maintain productivity and reduce staff costs. As part of the annual strategic process, the

Board has approved the fleet plan outlined below, which will enable easyJet to achieve controlled growth, seize market opportunities in European short-haul aviation, maximize profitability, and generate cash flow beyond the Boeing replacement program. It is expected that easyJet's average annual growth rate, measured in seats flown, will be around 7.5%. One of easyJet's strengths lies in the flexibility of its fleet planning agreements. The Board will continue to review fleet planning decisions regularly, taking into account economic conditions, available market opportunities,andthe business's financial strength.
Source: Data Stream
As indicated in the attached chart (see appendix), since its IPO,easyJet's share price has increased by 345%.This performance surpasses that of its European airline competitors.

The easyJet board is happy to announce that this year's public presentation has surpassed expectations compared to predictions made a year ago. Originally, it was estimated that the pre-tax profit for the fiscal year ending on September 30th, 2010 would be around ?160 million. However, in our interim results statement on May 11th, 2010, we stated that the full-year profit before taxes would fall between ?175 million and ?200 million based on current exchange rates and fuel prices. This estimate was made prior to the recent disruption caused by volcanic ash, which unfortunately resulted in additional costs and a loss of revenue estimated at approximately ?50 million to ?75 million. As a result, the company has adjusted its profit expectations for the year to range from ?100 million to ?150 million considering current exchange rates and fuel prices.

Dividend:
The easyJet board acknowledges Sir Stelios' request for a cash return on his investment in the company. As mentioned during the Annual General Meeting on February 18th, 2010,

the board regularly reviews shareholder returns.

Given the strong implication presented to the public by the company this year, it is believed that the board may be in a position to see some kind of return within a reasonable timeframe.

Size of Fleet:

Easyjet's orders for Airbus aircraft were discussed in 2002 and 2006. The agreements mentioned in those discussions involved input from the entire board and approval from the shareholders. In 2005 and 2007, the board approved the conversion of purchase rights granted under the Airbus contract into firm orders. On December 30th, 2002, the board approved the purchase of 240 Airbus aircraft with 99.4% of the cast votes in favor. Upon the request of Sir Stelios, in spring 2009, the board sought legal advice to assess the possibility of renegotiating or entering into new agreements with Airbus.

Afterwards, the board gained more flexibility in fleet planning agreements. Easyjet announced that the board approved an average annual growth rate of 7.5% in seats flown in June 2009. The minutes from that meeting showed unanimous agreement. This approved plan was later announced to the market on July 29, 2009, as part of a regular interim management statement.

The Easyjet board is committed to ensuring the company achieves a 15% return on equity. They regularly assess capital expenditure programs and fleet planning decisions based on economic conditions, market opportunities, and the financial strength of the business. Until Caroline McCall and Chris Kennedy join as CEO and CFO respectively on July 1, 2010, no future orders will be placed with Airbus. The plans will be reviewed by the board and executive management at that time. This was discussed at the May 5,

2010 board meeting prior to Sir Stelios' resignation.

Functional Capabilities:

Organizational capability refers to a company's ability to accomplish specific tasks and activities. Analyzing capabilities begins with categorizing the company's activities. There are several approaches that can be used to identify and classify a company's capabilities.

Pestel Forces:
The external environment of a company, which includes political, economic, social, and technological factors, is crucial in determining the impact on important variables such as the company's supply chain, demand, and cost. Uncontrolled external factors present significant challenges. Economic circumstances greatly influence an organization's profitability and success as they affect the availability of capital, costs, and demand.

Political: Easyjet needs to take into account political factors, including taxes and consumer protection, as these factors can affect the company.

Economic: The demand for goods and services in Easyjet is influenced by economic factors such as growth, inflation, and interest rates.

Sociable: The social factors that impact Easyjet encompass all cultural aspects related to society.

Various aspects such as population diversity, changing cultural values, household size, and consumer behavior are encompassed in the company's operations.

Technology:

The company recognizes the importance of technology in gaining a competitive advantage.

Environmental Resources:
Easyjet follows an environmental code that includes three commitments:

• To be environmentally efficient in the air.
• To be environmentally efficient on land.
• To contribute to a greener future for aviation, such as through carbon offsetting and innovative aircraft design like the EcoJet.

Aircraft Efficiency in the Air:

Easyjet has optimized their planes to accommodate more passengers per aircraft, resulting in 27% less fuel usage compared to other airlines operating the same type of plane on the same route. The company has invested ?7 billion in cutting-edge technology to ensure their fleet is one

of the cleanest, youngest, and most fuel-efficient in the industry, with an average aircraft age of 2.3 years. This minimizes their environmental impact and provides passengers with modern aircraft. Easyjet also avoids heavily congested airports like Heathrow and Frankfurt while focusing on quick turnarounds with minimal taxing and holding patterns. This approach reduces fuel consumption and carbon emissions.

On the Land:

Easyjet ensures that the planes are emptied, cleaned, refueled, and boarded with riders and baggage as quickly as possible, using fewer airport services compared to other airlines and consuming less energy. This also allows the planes to be more efficient, requiring fewer gates and less airport infrastructure. Easyjet avoids certain practices to maintain efficiency:

• Using air bridges whenever possible
• Using motorized stairs

The cabin crew takes care of cleaning the inside of the aircraft, eliminating the need for a separate cleaning crew and reducing costs. Easyjet also adopts various efficient practices both in its office and onboard operations to minimize waste:

• Implementing near paperless systems
• Recycling paper and office materials
• Avoiding printing tickets or travel documents
• Not providing free food to minimize unnecessary waste

Additionally, Easyjet defrosts its planes using non-hazardous and bio-degradable products. By successfully utilizing all these methods, Easyjet outperforms other companies in the industry and creates a competitive environment through the use of five forces analysis.

Legal:

The legal environment in which the house operates

has undergone many important changes in recent years. Easyjet has taken steps to control CO2 emissions and has purchased credits from UN-certified strategies like Perlabi. The company balances the effect of emissions from their flights by supporting UN certified projects Perlabi and Hydroelectric in Ecuador.

Porter's Five force Analysis:

The porter's five force analysis helps the directors understand the competitiveness and profitability of the company. It provides an overview of the industry's overall performance and position.

Helps the industry to establish the framework of factors that have the most influence on it.

Competition in the Industry:

There is a significant competition in the air hoses industry, as there are many alternative air hoses available. The air hose industry is highly competitive, as rival air hoses offer different facilities and features, or may be much cheaper.

Menace of New Entrance:

A new entry in the air hoses industry always poses a threat to existing companies, as small companies don't survive for a long time and impact the expected returns. For example: Almost all low-cost airlines failed in the US except Southwest, and in Europe Buzz was sold to Rynair for a nominal amount of 15 Million pounds.

Dickering Power of Buyers:

• Companies in the air hose industry face fierce competition and difficult challenges.
• The two main providers of planes worldwide are Boeing and Airbus.
• Switching costs between providers are high.
• The price of air power fuel is directly linked to the cost of oil.
• Airports have limited bargaining power as they heavily rely on one airline.

Dickering Power of Customers:

• Customers are price sensitive.
• Customers are aware of the cost of service.

Menace of Substitutes:

• Customers have no brand loyalty.
• There is no
  

close relationship with customers.

Ansoff matrix:
The Ansoff matrix provides a framework for companies to make decisions about their product and market growth strategies. It helps businesses set objectives and develop future strategies, providing a foundation and direction for companies.

• Strategic Planning
  Ansoff's Matrix - Product-Market Growth Matrix - Expansion Scheme
• Beginning: Coach 2u.net
• Schemes included in ansoff matrix are explained below:
• Market incursion:
• Market incursion is the name given to the growing scheme, opted when the company penetrates the market with its exciting merchandises.
• Increase use by bing clients.
• Supplying the superior quality to clients.
• Secure laterality of growing markets.
• Pulling the attending of non users of merchandise.
• Market development:
  Market development is the name given to growing scheme where the concern seeks to sell its bing merchandises in to new markets. Most of the clip this scheme explores the new market section or more and geographical countries, new merchandise users.

Merchandise development and diversification strategy:

Merchandise development refers to the process of introducing new products into existing markets in order to expand market share. It involves researching and implementing new techniques to achieve this goal. On the other hand, diversification strategy involves entering new markets with new products, either related or unrelated to the current business. Diversification is considered a higher risk strategy.

Strategic Direction for the Future:

The strategy is crucial for assisting

aviation researchers and practitioners in dealing with the current competitive pressure faced by airlines globally. As a key field within administrative sciences, strategy can be seen as a hierarchy that reflects the organizational structure of multi-divisional corporations. Corporate strategy determines the overall direction, in terms of the range and choice of business sectors, that a company will pursue. On the other hand, business strategy focuses on how individual business units compete within their respective sectors. Despite experiencing the worst recession in 70 years, as well as severe disruptions due to snow and volcanic ash that led to a five-day closure of European airspace, easyJet is expected to achieve significant profit growth in 2010. It aims to increase passenger numbers by approximately 10% and improve both output and load factor. This performance can be attributed to strong consumer demand across Europe for its low-cost network, offering the lowest prices to conveniently located airports. The acquisition of Go Fly is also expected to lead to more frequent flights on existing routes and additional flights between existing destinations.

This is what Easyjet refers to as "Joining the Dots," which means they do not plan on adding any new destinations to their website. This strategy will allow them to focus on providing more services to their customers. Easyjet is targeting business class clients rather than economy class, and this approach will help them attract more of these customers. By offering more frequent flights to their destinations compared to other airlines, they aim to gain a competitive edge. Easyjet is one of the top low-cost airlines in Europe and has a large market share. They offer convenient services to many popular

destinations and major airports, which benefits their customers.

Although low-cost travel in Europe is not as widespread as in the US, Easyjet has managed to increase its market share to 345%. However, the low-cost airline industry in Europe faces significant challenges. In 2005, there were approximately 58 low-cost carriers in Europe, though this number fluctuates as new ones are launched and others go bankrupt. The market has been attracted by low interest rates and the use of second-hand airplanes and off-the-shelf software. Successful market leaders have also played a role in enticing newcomers. Recently, on December 14th, 2004, Easyjet entered the hotel and holiday-inn industry through a partnership with hotelopia, offering attractive travel packages to its customers.

Recommendations: EasyJet has a large client base in the concern category across Europe. However, rival company Ryanair has become one of the largest in terms of riders traveled in the economic system category. In order to overcome this and attract more riders, EasyJet has made a change in strategy by acquiring Go fly. They have stated that the planes will not have any new destinations at this time, but will instead focus on providing more services to the current destinations. This will make travel more comfortable and reliable for the concern category. Additionally, EasyJet can attract more riders in the economic system category by offering discounts on menus. This will not affect the business class client base as they are comfortable with the current prices.

Easyjet can attract more customers in the economic system category by offering the best served air hoses for the concern category and low menus for the economic system category. This approach can help reduce

costs on new services, as it is not solely based on the concern category. Additionally, as Easyjet has lifted its weight restriction on manus bag baggage, the economic system category will be more inclined to travel with Easyjet instead of other low-cost air hoses that serve to normal hubs. The difference between Easyjet and other low-cost airlines is minimal. However, Easyjet can overcome this difference by providing more services to the destination using its new Go Fly airplanes.

The economy is recovering from the recession and now is the ideal time to attract a larger customer base.