But these savings barely stanched the arterial bleed of cash gushing from the companys coffers:In 2019, the airlines operations had generated more than $1 billion in cash. Managing for value involves managing both value activities and cost drivers. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. 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. Enabling risk management through a Get in touch with us. Improving CSAT across the whole customer journey. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. 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. Remote working and hot-desking have been characteristics of easyJet since the beginning. EasyJets powerless plight is typical of the entire industrys. Having fought off Haji-Ioannou, Lundgren and EasyJets C-suite faced other foes they couldnt control. If your specific country is not listed, please select the UK version of the site, as this is best suited to international visitors. Improving scheduling processes to drive crew productivity, also benefitting from the seasonality of our network. Before a new business starts making profits, it needs to be kept afloat with money. Many of those airlines are limping along on government funding they might never be able to repay, says Leah Ryan, managing director of Alton Aviation, a leading industry consultant. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. In the long term, this is concerned with the extent to which the organisation is operating profitably. Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). The airline had become Europes equivalent of Southwest in the U.S. While it is often lumped into the same European budget airline category as Dublin-based Ryanair and upstart Hungarian carrier Wizz Air, there are some key differences between EasyJet and those other airlines. Implications from the strategy chosen. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. Easyjet are situated extremely in strategic option 1 ( low monetary value, depression added value ) The eight nucleus strategic options are: 1. Making it easy, enjoyable and affordable to travel again and again for business and holidays. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. Significant investment in assets and managing financing costs. 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. *You can also browse our support articles here >. This involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. 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. We're here to answer any questions you have about our services. Focus on seasonality improvements such as season contracts and bases. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. The threats are in terms of fines and rise in cost of raw materials. Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. In the May showdown vote, the disgruntled founders effort was roundly defeated, with 99% of the shares not held by the entrepreneur and his family casting ballots against removingthe directors. 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. This results in high levels of asset utilisation and reduced unit costs. 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. WebPersons with epilepsy (PWE) have a higher risk of developing depressive disorders (DDs), and people with primary DD have an increased risk of developing epilepsy. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. EasyJet also have a reputation for paying low wages in line with its low cost strategy. The company carries out 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. 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. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. Web1) Economic Risks. 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. 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. Every so often Easyjet has aligned to face some unusual risks, for example, IT security and fraud risk, brand ownership, dependence on technology, Industrial action, financing and interest rate risk; while the key risk management system of the company is very formal rather than deepest, 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. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. It hoped these measures allow the public to feel confident flying again. Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. WebeasyJet is aiming to become the worlds most data-driven airline. Firstly, threats in terms of new & existing competition. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. 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. Product Development. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Our mission to make business better is fueled by readers like you. 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. 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. The airline founders misgivings had only mounted after the aircraft maker agreed in January 2020 to deferred prosecution agreements with the U.S., France, and the U.K. and to pay billions of dollars in fines stemming from charges that it had for years routinely bribed airline executives to secure contracts.When the pandemic struck, the aggrieved founder saw an opportunity to force EasyJet to abandon the deal. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. We will consider the value chain for EasyJet in more detail later in our discussion. Brand Awareness is another strength that is attributable to the company In November 1999, selected as a business super brand by the Super Brand Council, recognising EasyJet as an outstanding brand name. 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. If you need assistance with writing your essay, our professional essay writing service is here to help! EasyJet appears to have developed competences in supporting much higher levels of business from the same asset base than other rival airlines. All work is written to order. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. To enjoy unlimited access to our journalism, subscribe today. 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. Lundgrencomplainsthat the British governments travel rules remain too onerous. 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. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. Budget airlines that rely on the leisure market make most of their money from April to August. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. 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 is here that EasyJets pilots practice and maintain their skills. easyJet holidays is on track to meet the medium-term target of 100m+ PBT. 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. By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. Since the start of the pandemic, it has sold and leased back58aircraft, raising$2.1 billion. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. 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. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. 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. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. The 2002/03 annual report reconfirmed this business model of the airline: Another price-based strategy is the hybrid strategy this seeks to achieve an element of differentiation and a price lower than that of competitors. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. 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. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. This level of disruption and deterioration of the operation cannot continue," the email reads. We are happy to help. WebThere are two types of strategies taken in account in the Easy jet such as differentiation strategy which is the strategy in which the industry has the particular rules and Standardisation in its activities as an airline leads to both economies of scale and a simpler product, which is cheaper and easier to distribute. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. 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. 2023 Fortune Media IP Limited. Therefore, demand led with proprietary yield management system. Previously it used telesales and now sales are through e-commerce web site. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. 2 airline by market share for each airport it serves. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. Value chain analysis can provide important insights into what management need to focus on strategically. 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. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Budget airlines that fly point-to-point, such as EasyJet, can easily stimulate their demand by running price promotions and advertising and then shifting flight schedules to cover those new bookings. This will provide an evaluation of the external business environment in which the company operates. 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. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. The price of EasyJets tickets various as a function of the number of seats remaining, the time until the flight, and historical trends. Many full-service airlines are locked into hub-and-spoke flight networks that limit their scheduling flexibility, BCGs Molenaar says. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Paperless operation, the management and administration of the company are undertaken on IT systems, which are accessed through secure servers; provide flexibility in the running of the airline. EasyJet is forever trying to attain a cost level that is low relative to its competitors. The purchases rankled Haji-Ioannou, who had opposed EasyJets tie-up with Airbus ever since it had been signed in 2013. 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 The company has announced plans to reduce its 15,000-person workforce by 30%. easyJet will maintain its advantageous cost position through continued cost action. Today, a year after Easy Jets announcement, those perils still hang over the airline. Legal and regulatory change. The federal government recently made cloud-adoption a central tenet of its IT modernization strategy.An organization that adopts cloud technologies and/or chooses cloud service providers (CSP)s and services or applications without The global, interconnected nature of the aviation industry means that airlines, lessors, MROs and suppliers are highly vulnerable to external factors out of their control. 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. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. Upgauging the fleet enables easyJet to improve competitiveness on costs. Of popular holiday destinations, only Portugal and Gibraltar were put on the initial green list, with no requirement to self-isolate upon return. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. Statista assumes no 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. 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? The idea of remote working can also result in co-ordination and control weaknesses. TECHNICAL Changes in retailing methods as such ticket sales via the Internet is now a common place in air travel, passengers receive an email containing their travel details and booking reference when they book online. 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. 6. British Airways. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. EasyJet denied this dinner took place. But nothing has been normal for EasyJet since March 23, 2020. 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. Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. Lundgren had been an industry leader in trying to position EasyJet for this new world. 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. 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. As the holidays business grows in scale, easyJet plans to make targeted investments to strengthen the business. EasyJet is an international example, The introduction of Airbus A319 aircraft, combined with the retirement of old generation Boeing 737 aircraft, will result in a two-type new technology fleet, which will commonality and lessen complexity and deliver high level of asset utilisation and reduce unit costs. Bills will pile up, suppliers will need payments, and your employees will be expecting their salaries. It is possibly not as good in terms of operations and its inbound logistics. 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. It was enough to make any airline CEO play the blues. The value chain analysis will show the total value added by the airline industry and EasyJet. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. As it turned out, it wouldnt need those flights. Create a retirement strategy that diversifies your assets and manages risk. The pace of recovery will be determined by vaccination rates, Alton Aviations Ryan says.The problem for EasyJet is that almost all the routes it flies involve Europe, and the continent was lagging far behind on vaccinations. 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. 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. Protecting and building brand awareness and consideration. Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. Now, at the cusp of a summer season that normally would be the source of the majority of EasyJets profits, the airline and its CEO face what could be a make-or-break season. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Finally, the key to sustaining high levels of growth is the scalability of the operations. 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. A typical approach for risk identification is to map out and assess the value chains of all major products. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. EasyJet may be especially good at outbound logistics lined to its marketing and sales operations and supported by its technology development. Due to varying update cycles, statistics can display more up-to-date And the government has said the second of these has to be a more accurate PCR test, which can cost as much as 219 ($302) per passenger. All airline companies within the industry will have similar value chain, which will include activities such as obtaining fuel, designing fare structures, airport facilities, developing co-operative agreements, and providing customer service. The findings in this This is intensified as a result of little or no differentiation in the service offered. Lundgren has pulled every financial lever available to him to keep EasyJetaloft. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. Yield management is a form of risk management and therefore, adds value. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. 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. Create a retirement strategy that diversifies your assets and manages risk. The first step in the risk analysis process is identifying risks you think could affect your project. 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. 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. 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. Weaknesses identified earlier could also offer potential opportunities in terms of development of brand awareness globally. Objectives To assess the psychological distress, anxiety, depression, coping strategies, They have focused on expanding into new markets in Eastern Europe. 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. 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. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. Whats more, it included maintenance and avionics support for EasyJets existing fleet. The way the report has classified the risk is whether the risk is a generic risk that will affect the whole industry of whether the risk is specific to the company. 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. We are seeing significant benefits already from operational resilience processes and predictive maintenance. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. In 2020, it transported a EasyJets competitive advantages via low prices are sustained in a number of ways. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. Exhibit 1 ) in late yield initiatives and differential seat pricing in-house initiatives provides several advantages can! 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