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Easyjet: A No Frills Airline

Aim of project

The goal of this article is to analyse and measure the competitive strategy that Easyjet have utilised in order to develop their current competitive position in the low price no frills flight market.

Objectives

  • Definitions of competitive strategy
  • Explain Porters generic strategy
  • Analyse the competitive strategy of Easyjet
  • Evaluate the competitive strategy of Easyjet
  • Recommendation for the future of Easyjet

Methodology

Porters common strategy

Investigate the strategy clock

Find out edge and disadvantages by making a SWOT examination of Easy Jet

Theories on Easyjet competitive strategy

The Competition

Various Suggestion for Easyjet's future

Where the info was found?

  • University library
  • Internet
  • Journals
  • Newspapers
  • Books

Overview

From this report, Easyjet can be seen as one of the main airlines in its market, and although it offers some hard competition Easyjet is now stronger. Its competitive strategies are prior to the competition and are being very successful. That is proven through various ideas such as Porters universal strategy, the strategy clock and a SWOT analysis of Easyjet's competitive strategy.

Introduction

Background

Easyjet is one of the best known European good deal no-frills airlines. Which begun in 1995 by Greek businessperson Stelios Haji-Ioannou. He intended to 'make flying to Europe affordable for more and more people'. Easyjet now calls itself the webs favourite airline'. (Thompson, Strategic Management, 2001) The airline is based at Hangar 89, a dazzling orange building adjacent to the main taxiway at Luton International airport. Within an industry where corporate and business HQs are generally considered to be the ultimate position symbol, it's the very embodiment of the Easyjet low-cost ethos.

Objectives

To identify and analyse the competitive strategy that Easyjet have utilised in order to build up their current position. To critically evaluate the competitive strategy that Easyjet have utilised in the introduction of their current completive position. Also make appropriate advice regarding Easyjet.

Competitive advantage

Competitive advantages is the means by which an organization can outperform its competition and more profits. (Lomax & Raman, 2006)

The ability to produce more monetary value than competition (Barney, 2010)

Competitive gain is more generally based on the stableness and continuity in romantic relationships between different parts of the organisation (Lynch, 2008)

Design is a kind of competitive benefit Good design allows things to operate better, smoothly, and easily for the consumer Customers appreciate good design. While they can not necessarily explain what specifically makes it good, they know it feels better. Which visceral interconnection. They are prepared to pay for it, if you give them a great experience. (Hackett, 2009)

Porter's Common Strategies

This set of strategies involves three: segmentation strategy, differentiation strategy and cost leadership

Cost management strategy concerns mass creation of standardized products to lessen the cost. Manufacturing the product in high volumes or by large would lower the expenses of the merchandise because set costs are maximized.

Differentiation strategy means creating products that are being packaged as unique. Customers believe the features of the products are incomparable and superior in comparison to others hence the reason for its uniqueness.

Segmentation strategy means products are focused on few, decided on market or the specialized markets. The business creates the merchandise to match the tastes or requirements of a particular market.

(Porter, 1998)

Main Findings

Analyse Easy Jet's competitive strategy

Easy jet which is the UK's leading low priced airline, currently functioning in over 400 routes with over 175 aeroplanes in 27 countries is a no frill flight, the concept started in the beginning of the 1970's in america and then this idea was accompanied by Airlines in Europe, and the rest of the world.

Easy jet is known as No-frills airlines, where airlines that have offer low fares but eliminate all unnecessary services Easy Plane offers a no frills service at low fares. EasyJet's common strategy is an average cost leadership strategy. The business enterprise school of thought of easyJet is the fact that money can be made on any road in which a carrier can travel three times every day to a low-cost air-port, based on a minimum market size. The foundation of commercial success for such strategy is keeping a 30-40% cost benefits over set up airlines.

Easyjets low prices strategy can be explained as "A minimal price strategy seeks to achieve a lesser price than competitors whilst trying to maintain a similar recognized product or service advantages to those proposed by rivals" (Johnson, 2005) They consider to achieve competitive advantage through this plan, the business need two basic alternatives, one is to find a section where main competitors are not interested in. The other one is find this segment attracts price sensible consumers. (Johnson, 2005)

They use this by doing the following;

Easyjet is a Solution less flight which mean All you have to to soar is your passport (or suitable photographic Identification on domestic plane tickets) and there confirmation number, based on their time of check in at the international airport, this establishes the order where they panel the plane (Easyjet. com).

Efficient use of air-port. Easyjet flies to main vacation spot airports throughout Europe, but increases efficiencies through quick turnaround times, and progressive landing charges agreements with the airports

By reducing turnarounds to thirty minutes and below, Easyjet can achieve extra rotations on the high regularity routes, by increasing usage rates of its aircraft.

There's no such thing as a free lunch Easyjet does not offer free food from company, people are given the selection as to whether they wish to buy themselves refreshments or goodies from the in air travel. (McCosker, 2003)

The lack of business course means gaining seats and maximizes capacity. Though EasyJet will not supply the same kind of versatility as business class in traditional airlines, it is possible to change flights for a premium of 10, plus the difference in cost. Punctuality is a priority

Direct marketing and Internet sales - Stelios regarded the prospect of sales on the Internet before it possessed become widely available. Initially a call center allowed customers to reserve over the telephone, a far more familiar communication channel available to all. By offering savings for Internet bookings, Stelios shaped his customer's purchasing habit with the result that 80% of reservations were made on the web in 1998. It reduces syndication charges from travel agent commissions and computer reservation system costs.

Easyjets strategy was modelled on Southwest air, but Stelios said he had been influenced by Richard Branson and Virgin Atlantic. His approach to customers and folks mirrors that of Branson. He flies by himself planes some three or four times weekly and week speak to the passengers. He's regularly present at Luton (his head office) and prepared to revolve traveler problems. (Thompson, Strategic Management fourth editon, 2001)

Easyjet favours an informal company culture with a very flat management structure, which eliminates pointless and wasteful levels of management. All office-based employees are encouraged to dress casually. Ties are prohibited - aside from pilots! Remote working and 'hot-desking' have been characteristics of easyJet since the beginning.

One of the strategies which easyJet is persuading is an expense authority. In persuading cost advantages, the purpose of the company is to be the cost innovator in its industry or industry section (Offer, 2002)

The Easyjet product is, the truth is, a package of service, many subcontracted in. Easy plane supplies the planes and their crews, and marketplaces and the offers the flights. As being a company, it is focused. Check-in and information services, appetizers (for people to by before they table the aeroplane), baggage handling and fleet maintenance are all bought in from specialists. (Thompson, Strategic Management, 2001)

Competition for customers in this sector of the marketplace is extreme, Virgin communicate and Soar Thomas make meals are simply a few from many have low-price, no frills subsidiaries, neither of which is reputed to be profitable. The greatest of the rivals is Ryanair, over 25 years old and based in Dublin, having over 75 million people yearly.

When Stelios proven the positioning of the Easyjet as one of leading low priced airline in Europe by "adopting an efficiency driven operational model, creating brand recognition and maintaining a higher levels of client satisfaction" (where we are now) he took a step further in his perused of the strategy "to provide low cost airline to public' (where you want to be) which is based on key talents (how we going get there) (Easyjet: The Web`s Preferred Airline, 2002)

Another of the strategies persuaded by creator of Easyjet is seen, as "strategy is perspective, that is, perspective and course. " (Mintzberg, 1994)

Evaluate Easyjet competitive strategy

Competitive advantage increases out of value a company is able to create because of its potential buyers the exceeds the firm's cost of creating it (porter, 1985)A business relative position within an no frill Flight industry is distributed by its competitive advantages which is cost control and differentiation, from other frills flight companies and using its selection of competitive scope. Introducing new systems new or moving buyer needs the emergence of a new industry portion and availableness changes in government laws are competitive advantages. Where Differentiation is the firm's product, associated services, and alternative activities impact its buyer's activities. All the activities in the value chain contribute to buyer value, and the cumulative costs in the chain will determine the difference between your buyer value and producer cost. (Porter, 1985) Easy jet gains competitive advantages by performing strategically important activities more cheaply or better than its opponents. (Easyjet. com) Competitive edge can come not only from great products, but from anywhere along the worthiness chain. To comprehend how a company fits into the overall value system includes the value chains of its suppliers, channels, and buyers. General strategies are of help because they characterize strategic positions at the easiest and broadest level. Porter keeps that company reaching competitive advantages requires and makes an option about the sort and opportunity of its competitive advantage. (Porter, 1985)

Concerning competitive benefits, Easyjet concentrates on costs therefore achieves overall cost control. It inhabits an inexpensive Specific niche market position.

"The reduced cost airlines developed sufficient lead times and competitive benefit to limit any new entrants to niche positions - and we still do not think that the full service airlines have the culture to successfully develop sustainable in house low fares subsidiaries" (Binggeli, 2002)

However, there are problems associated with the idea of lasting cost authority as this entails that Easyjet gets the lowest cost weighed against competitors over time. This is improbable to be performed simply by cutting back costs however their competitors i. e. Ryanair can do this too.

The search of the cost-leadership strategy will require Easyjet to have a strong give attention to cost management, scale economies, and also have experience curve cost advantages through the maintainer of volumes. In reality, it can be questioned whether cost leadership is a separate strategy. (Distinct 1991) mentioned, 'having an expense advantage is only a facilitator to differentiate, usually on price', adding that low-cost form looks for to eliminate bases for differentiation, in order to offer a general service to the complete market, therefore reducing differences between segments.

Another kind of strategy persuaded by Stelios Haji Ioannou is express by phrase (Casell, 2002)

It could be argued that cost command can be a precarious strategy, which may speed up the move towards a item market in which; ultimately, no one benefits (Partridge, 1994)

Strategy Clock

The 'Strategy Clock' is based upon the task of Cliff Bowman. It's another Appropriate way to investigate a company's competitive position compared to the offerings of challengers. Much like Porter's Common Strategies, Bowman considers competitive gain with regards to cost advantage or differentiation advantages. Easyjet are situated highly in proper option 1 (good deal, low added value)

The eight central strategic options are:

1. Low price/low added value - Likely to be section specific.

2. Low price - Threat of price battle and low margins/need to be always a 'cost innovator'.

3. Hybrid - Low cost foundation and reinvestment in good deal and differentiation.

4. Differentiation - (A) Without a price high grade: perceived added value by individual, yielding market share benefits.

(B) With a cost top quality: Perceived added value sufficient to bear price superior.

5. Concentrated differentiation - Perceived added value to a 'particular portion' warranting a premium price.

6. Increased price/standard - Higher margins if competition do not value follow/risk of burning off market show.

7. Increased price/low beliefs - only possible in a monopoly situation.

8. Low value/standard price - Loss of market share.

The strategy clock diagram

http://htmlimg3. scribdassets. com/9l9911lw1u1cczk/images/2-2c81643482/000. jpg (Scribd. com)

Easyjet SWOT analysis

Strength:

Easyjet has a solid brand in the low cost flight industry; the business also owns the overall acceptance among customers, business or leisure, for its low fares and high efficiency

Most seats can be purchased through Internet. Ticketless airline makes Easyjet not the same as rivals.

Flattened composition and informal culture give efficiency in general management and procedure. Easyjet is frequently able to take advantage of the latest technology and working tactics.

Efficient use of international airports and airplane is another critical durability of Easyjet. The sound network helps the company to cut costs.

Paperless operation has simplified and given the huge flexibility in the management working procedures.

Easyjet standardise about the same aircraft type and buy new aircraft in bulk, in that way minimizing maintenance costs.

The merger of Go accelerates the business growth

Weakness:

Easyjet is limited currently to regional operations, which will not allow it to create a more balanced profile of services.

Although EasyJet's benefits from the offer with airbus in many ways, it also causes a challenge - the company will are powered by a merged Boeing/Airbus fleet. Staff training and coordination in future are necessary to the move

For the elder people or the people who do not make an online search, it isn't convenience to book on line. They should have more ways to book

There is not any business course in aircraft of EasyJet, which makes it lose some business travellers

Opportunities:

From a political point of view, the deepening and widening of EU provides new opportunities industry extensive. New routes can be launched to those countries that will sign up for EU in forseeable future. Furthermore, Airlines can now operate basics out of any Western european Country, gives a lot more opportunities for expansion.

Comparing to US market, the Western european market is still an immature market, which provides opportunities to all players.

General slump forces most companies and individual keep in a good budget, therefore low priced airlines will have more chance to struggle their expensive rivals.

Threats:

The low-cost carriers are facing growing costs, especially in the regions of fuel, air port charges and earnings.

Unpredictable happenings (e. g. Iraqi battle, SARS) give uncertainties in energy source, customers' sentiment, etc.

Competition from competitors is another risk, including new businesses duplicating 'low price no frills' strategy

Recommendations

This report has shown that Easyjet did very well since it begun in 1995, it is dong almost everything correctly using their competitive strategies to achieve success and stay before their rivals. Even though the huge profitable company it has become, it is important that they do not become over assured, and be alert to what their competition are doing, they should have sufficient capital to those to make radical changes if needed to. There are a number of ways in which Easyjet could improve to take the organisation ahead and make the business more profitable and increasing performance.

Firstly Easyjet could cooperate with other easy business, such as Easycar which could do deals on move and car parking at international airports, Easyfinance could provide a special rate for loans used on flights. Easyhotel could give savings on hotels round the airports. This could not only help easyjet and which makes it better for customers but also increase other easy businesses.

It could be very good for Easyjet to construct alliances with transatlantic operations. This would build an improved marriage with the transatlantic businesses meaning it might create more routs. Easyjet have over 400 routes which means they have many more routes that they could add. This would mean getting more customers that couldn't reach places before in which other airlines went to.

As fast as the internet has grown during the last few years, not everybody has it or know how to use, more regularly its elder people, whom could put in a bigger market if Easyjet may find out ways to reach them and make a better way of buying flights to them. Although Easyjet do have a phone number to book flights it has been mentioned "Telephone bookings are more expensive and are not encouraged" (Lowfareflights) which is very off adding. Possibly free phone calls or some sort of broacher sent through the post could allow people without internet learn about Easyjet and become able to acquire with no inconvenience.

As the amount of low cost providers is growing another possibility could be created some kind of loyalty scheme such as devotion credit card or member card. The client would then gather points every time they travel with Jeasyjet, which would add up and when they have enough items, they could acquire some kind of reward such as a discount on flights, free plane tickets etc. This might profit Eeasyjet as well as the clients because the customer would want to travel with Easyjet instead of another company because they know they can save details and be compensated with Easyjet. Major companies in the united kingdom such as Tesco using clubcard who created it in 1994 to get customers commitment, it proved to be very successful, making customers from other stores switch to Tesco as they realized they would b rewarded with this scheme. David Sainsbury, then chairman of J Sainsbury plc, turned down the idea of introducing a similar scheme. However, the effect that Clubcard got on Sainsbury's sales led to the reversal of that decision, with the start of the Sainsbury's Pay back Cards in June 1996. (Randall, 1996-06-23) This can therefore stop customers transitioning to Easyjets rivals.

From this article, Easyjet is seen as one of the main airlines in its market, and even though it offers some difficult competition Easyjet is now more powerful. Its competitive strategies are prior to the competition and are being very successful. No enterprise is ideal and always need advancements therefore Easyjet could become ever more successful and dominate the marketplace despite of the stiff competition.

Reference List

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