Analysis of Business Strategies and Models

The provided document is a compilation of various sources related to business strategy and models. It includes books, journals, and online resources that discuss concepts such as Porter's Five Forces, generic competitive strategies, business model innovation, and sustainability. The assignment likely requires students to analyze these concepts and apply them to real-world examples or case studies, possibly in the context of the airline industry or low-cost carriers.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
LO 1.................................................................................................................................................1
P1 Impact of macro environment on easyJet and its strategies..............................................1
LO2..................................................................................................................................................3
P2 Analysation of easyJet's internal environment and capabilities........................................3
PART B............................................................................................................................................4
LO3..................................................................................................................................................4
P3 Application of porter's five forced model for evaluating competitive forces...................4
PART C............................................................................................................................................7
LO4..................................................................................................................................................7
P4 Application of porter's generic strategies and Bowman's strategy clock for choosing
strategic direction ..................................................................................................................7
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Planning is considered as first step in the process of achieving set objective. Business
strategy means working plans which help an organisation in moving forward toward their vision.
It concentrate on optimising financial performance by considering impact of both internal and
external environment on the business model of company. This report is based on easyJet, a
British airline company headquartered in London (Blackburn, Hart and Wainwright, 2013). They
are operating in UK and around 30 countries best known for their low cost carrier services. In
this project, corporate strategy manager will make use various tools for organising internal and
external analysis. Increasing competition is challenge for all the companies who are operating in
this industry. Porter's five force model will be used for conducting competitive analysis that play
crucial role in providing an edge to easyJet over their competitors. Few models like Porter's
generic strategies will assist in analysing strategic direction of the enterprise.
PART A
LO 1
P1 Impact of macro environment on easyJet and its strategies
Business enterprises can control internal factors of their company but they cannot rule
external environment. easyJet is among leading airlines of UK and understanding extrinsic
environment is important for developing future strategies for the organisation to prosper in
competitive business environment. Below is PESTLE analysis of company:
Impact of political factors – Brexit can be considered as most popular political incident
of this decade. Britain took the decision of leaving UK and created an environment of
uncertainty in whole country. All British airline companies lose major intra-European routes due
to Brexit and will be going to impact their growth in negative way. They would not enjoy same
freedom while operating in Europe which they were getting earlier (Verbeke, 2013). The
business model of easyJet rely on two aspects, low price and more sale. In upcoming years, their
revenue will go down because of low sales and it will stop company in achieving set objectives.
If they want to avail old benefits then they have to move their headquarter or become EU owned
organisation. This strategic management decision can help firm in moving right direction.
Impact of economic factors – Interest rates and fuel prices in UK is going down i.e.
affecting business of easyJet in positive way. It has helped company in increasing number of
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passengers. Brexit is bringing more challenges in-front of the enterprise but its negative impact is
getting compensated by above mentioned two macro economic elements. Profit of easyJet went
down last year but record number of passengers availed their services same year (Schrader,
Freimann and Seuring, 2012). Company should not change their strategy of selling tickets at low
rate and they should move in same direction because many economic factor are working in their
favour. These elements can be used in making strategy for forthcoming time.
Impact of social factors – Last year, Air traffic controller (ATC) of France went on strike
because of labour reforms which was done by Socialist government. Dispute between both sides
resulted in cancellation of many flights and reduced profits of easyJet which they were going to
earn from this country. Although, company cannot control culture of any nation but analysis of
shared beliefs and attitude assist enterprise in understanding demand of service users.
Organisation can make their future plans by considering various social elements like class
structure, demographic condition, skills in population etc. If firm will understand culture of a
region then they can include some crucial points in their short and long term strategy.
Impact of technological factors – Fast changing technology is working in the favour of
easyJet. Earlier customers have to wait in queues for getting tickets but now they can easily book
it online. Cashless payments also reduces the complexity in payment process. Better services to
clients by using latest technology can reduce company's operational cost (Woerner and Wixom,
2015). Low pricing is a crucial part of easyJet's strategy and they can use technological
advancement in executing their current plans in an effective way.
Impact of legal factors – Their are various regulations relating to aviation industry and
company's like easyJet also have to follow other laws which prevail in domestic environment.
This firm was fined by London Country Court Judge because they breach a contract of
compensation. This type of incidents result in financial loss to the enterprise and it also taint their
image in market. Corporation can ask every employee to follow government laws and
instructions which is given by company so they can develop effective strategic and proceed in
right direction.
Impact of environmental factors – Adverse weather is a big concern for all the Airlines
but it impact easyJet in much negative way because their profit margins are low compared to
their rival (Spender, 2014). They earn money by using the concept of economies of scale.
Although, an organisation cannot predict natural climates but if firm will reschedule timings of
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their flights by considering reliable weather report then they can come close to their objectives.
Strategic management decisions in right time is important for attaining desired results.
LO2
P2 Analysation of easyJet's internal environment and capabilities
Internal analysis of an organisation can be done by conducting SWOT analysis. Every
firm has own strengths & weaknesses (Ghezzi, 2013). They have various growth opportunities
but company also have to face different threats. Below is SWOT analysis of easyJet:
Strengths
 Low cost model of company help them
in capturing more market share. easyJet is a leading brand in many
European countries like UK, Italy etc.
Weaknesses
 easyJet is the UK based company and
they are getting vulnerable because of
the loss of intra-European routes.
 This organisation do not offer free food
to their customers. Now, they are
considering it a big weakness of the
firm because almost every rival of
easyJet is offering free food.
Opportunities
 Corporation can expand their business
in other parts of Europe. They can also
offer tour and travel packages to the
customer at low price. Development of airports through
partnership is another business
opportunity.
Threats
 Increasing competition and entry of
new player is big threat of enterprise.
 Airport fees are continuously increasing
and it is creating new challenges for
easyJet.
On the other hand, capability evaluation is set of statics and calculation optimised to
evaluate the standard requirements determined by an organisation (Chen and Jermias, 2014).
VRIO analysis is used for evaluate technical brilliance of company's resource in order to
determine competitive advantages. Human resource and renowned brand name are two
capability/resource of easyJet which are getting considered at the time of conducting VRIO
analysis.
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Value – Employees are key asset of company and they are valuable because it is not easy
to find right person for a job in such a competitive marketplace. Human resources are expensive
but workers are backbone of easyJet. They are capable of making effective strategy and
employees selection should not be outsourced (Li-Hua and Lu, 2013). This organisation is
among top players of the aviation industry and its brand value is high. Their are many airline
companies who are struggling to get desired investment but this enterprise use their image for
raising funds.
Rare – The skills present in middle and lower level is management not too rare but
easyJet has few people on important position who are rare asset for company. They make long
term plans and provide right direction to whole staff. HR may not provide competitive advantage
to the corporation but it also means that enterprise is not worse than their rivals (Lawton, 2017).
This organisation has a different brand image i.e. they are known as low-cost carrier airlines and
their position is ''rare'' in this industry.
Imitability – Imitation of easyJet's HR policies & strategies is possible but their
competitors cannot find people with exactly same set of skills. Human resource is valuable but
not rare. HR approach of company is easily imitable. Firm can make changes in it so other
cannot copy it. Brand value of organisation cannot be imitated by any rival (Sako, 2012). It
comes with experience and continuous achievement of high customer satisfaction. If imitation of
enterprise's brand value become possible in future then easyJet will lose competitive advantage.
Organisation - Brand value can be considered as core competency of the company.
Human resource cannot differ this firm from others but if brand name is used in appropriate way
and it is promoted in organised manner then it will help easyJet in facing upcoming challenges
that can happen because of Brexit. Their brand value differentiate them from others.
PART B
LO3
P3 Application of porter's five forced model for evaluating competitive forces
Analysing competition which is present in an industry is very important for every
company. They make future plan by considering present condition and it include evaluation of
all the major aspects like new entrants, rivalry in industry etc. Porter's five force model is used
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for checking the impact of key 5 forces on profitability of a firm. Porter's five force analysis of
easyJet is mentioned below:
Bargaining power of buyers – Customers always want better service at low rate and it
create new challenges to a company who sell ticket at minimum price possible. Buyers have high
power and if they would not get satisfied with the service of enterprise then they can easily
switch to other airline organisation (Klophaus, Conrady and Fichert, 2012). Increasing
competition and more discount offers is the main reason behind high bargaining power of
customers. easyJet can concentrate on couple of things in upcoming three to five years. First is to
swiftly develop innovative products so they can shifts consumer focus from discounts to other
facilities. Another option for company is to enhance their consumer base, it can play an
important role in reducing bargaining power of buyers and improve position of organisation in
market.
(Source: Porter's Five Forces, 2018)
Bargaining power of suppliers – Suppliers in airlines industry have high power because
they are dependent on few vendors for important work like consumer services. Aircraft
manufacturers are limited and changing suppliers is not an easy process. If easyJet have to buy
Aeroplanes then they have to sign a long term agreement with companies like Airbus. They do
not order a single aircraft, company have to sign billion pounds deal which have several
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Illustration 1: Porter's Five Forces, 2018

Aeroplanes. Switching to other vendors can be a complicated and expensive process. An
efficient supply chain with more than three suppliers can minimise dominance of sellers. This
strategy can be used for 3-5 years but for long term, easyJet should concentrate on finding a
dedicated vendor whose business in dependent on this low-fared airlines.
Threats of new entrants – Entry of new players in aviation industry of UK is very
difficult. If a business organisation want to start their airline services then first they have to
invest huge amount of capital and seek permit from Civil aviation authority of United Kingdom.
It is not a big threat for easyJet and other players of the industry. Continuous innovation in every
aspect of business can reduce the probability of entering new firm in aviation sector (Chaffey,
2015). This organisation is running their operations for more than 20 years and fresh entries
cannot pose any severe challenge for easyJet.
Threats of substitution – Airlines service do not have any major threat of substitution.
Product of firm who are running their business in aviation industry cannot be replaced by any
other option because no viable innovation provide the facility of travelling thousands of miles in
few hours or days. Hyperloop system can be considered as a big challenge for domestic business
of easyJet and their rivals. It can travel with a speed of 1200 Kmph and cover a distance of
around 600 kilometres in less than 40 minutes. They may not be seen as a threat for international
services for upcoming 3-5 years because of cost and technical issues. Although, Hyperloop
cannot make a huge impact on business of easyJet but they can still make changes in their
strategy. Company should become service oriented instead of product oriented. This will help
them in getting much stronger position with time.
Industry rivalry – Aviation industry is going through fierce competition. Ryanair, British
Airways, Virgin are some of the key competitors of easyJet. This firm is getting advantage of
their image i.e. low-cost airlines but because of new and more innovative ideas by rivals,
company is struggling to retain their permanent customers. Enterprises like British airways are
targetting buyers of different segments i.e. from premium to economy. easyJet should start a new
division for business class/premium segment, they can charge high price from customer by
providing them expensive and quality services. Low cost airlines is providing an edge to the
company against their rival but they cannot solely depend on it (Vidović, Štimac and Vince,
2013). Launching better products will allow enterprise to increase their profit margin.
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PART C
LO4
P4 Application of porter's generic strategies and Bowman's strategy clock for choosing strategic
direction
Strategic direction can be termed as the course of action which direct to the goals
achievement of a company's strategy. Business organisations set objectives in order to move
forward toward their mission. easyJet want to become number one airline service provider in
domestic market and other routes where they are operating their business. Their are various
strategies which company can adopt for achieving set targets. Porter's generic strategies will
provide different options to the organisation. Generic strategies for easyJet is mentioned below:
Cost leadership - The main focus of this strategy is on developing efficiency of company
so as to become the lowest cost producer in the industry. Under this, the company tries to
produce high volume of products so that they can gain advantage of economies of scale. These
products are sold at relatively low price and is being sold to a very large customer base. In order
to apply this strategy, easyJet is required to continuous search for cost reductions in all aspects of
business. Through this, company is able to earn a good amount of surplus which is further
reinvested in purchasing modern business related equipments and employing latest technologies
as well. These kinds of reinvestments will help easyJet in maintaining its cost leadership
position.
easyJet planes are flying more in traditional airline companies so as to cover their cost.
They also land their planes at out of the way airports since their the landing taxes are
comparatively less. So, it can be assumed that easyJet is more focussed on cost leadership
strategy but they need to develop it more so as to beat their biggest competitor RyanAir who is
the market leader at present. This strategy concentrate on becoming lowest cost producer in the
sector. easyJet is continuously increasing their number of customers and if company's overall
expenditure will be least in industry then they can sustain their competitive advantage for a long
period of time (Buzzavo, 2012). This organisation is already concentrating on economies of scale
and cost leadership that will allow them to cope up with the unpredictable challenges which
Brexit will bring in the industry.
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Differentiation – easyJet can add new products or services for customers as it will differ
them from other players of the industry. This company should spend money in research and
innovation, if they will offer different types of products like free magazines and books to the
service users then they can differ themselves from their competitors. easyJet want to become
leading firm in domestic and operating markets. They cannot stuck to single strategy for
attaining desired objectives. They have to adapt according to market where they are operation.
This company can use this strategy where the target customer segment are not very much
price sensitive. It means, market is either competitive or saturated because consumers are having
very specific requirements that are highly under-served. In order to apply this strategy, easyJet
needs to come up with unique products or services which are totally distinct from entire industry
for establishing their monopoly at marketplace. For example; selected firm can change their
reservation policy by making it more effective and easy to understand. Simple and short
procedure of booking tickets become one of the major reason behind selection of customer
whomsoever are busy in their regular life.
Cost Focus - According to this element, an organization needs to concentrate on their
pricing policy in order to cope up with current changes such as; consumer choice, competition
henceforth. For example; easyJet needs to minimize the prices of their tickets as per the
occasion, customer demand, inflation or deflation rate and so on. It means company is
minimizing their prices for attracting customer who belongs to a particular segment. Cost focus
concept concentrate on various seeking advantage on the basis of ''cost'' in its target section.
easyJet can start a new scheme for business travellers, they can ask them to buy a plan where
consumer are allowed to travel any place in Europe for 25 times in 1 year. Company can charge
lump sum amount from business travellers and promote the scheme by advertising that it will
cost less amount of money to the customers who will lie in this segment (Malighetti, Paleari and
Redondi, 2015).
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(Source: Porter's Generic Competitive Strategies (ways of competing). 2018)
Differentiation focus – Every consumer has different needs and company has to fulfil it
in order to retain them. Differentiation focus strategy will help easyJet in exploring other target
segments where they are not concentrating in present moment. This enterprise can start new
services for urgent travellers. Currently, customers have to book their ticket few days/months
ago before travelling but in new segment, they can get a flight ticket before few hours of take off.
This emergency facility will allow company to charge more price from buyers and increase their
revenue in long run. easyJet cannot reach number one spot by adopting single strategy i.e. to run
low cost airlines. Firm have to offer different types of products to various segments.
Above mentioned are few strategic priorities which is available to the organisation. They
can go with any strategy but differentiation focus will be best for them as it will allow them to
expand their business with a better rate and they can approach new customers which are not
currently prevailing their services.
Bowman's Strategic Clock is a model which can be used for exploring strategic position.
Proper recommendation can be given to easyJet by using this model.
Bowman's Strategic Clock
Low price, low value added – This is a bargaining based strategy where customers do not
perceive much value and an organisation try to remain competitive by selling product & services
at cheapest price possible.
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Illustration 2: Porter's Generic
Competitive Strategies (ways of
competing).

Low price – Under this strategy, company sell their services at low price and try to
become low-cost leader in the market. Their profit margin is less compared to others but they can
earn higher profits by having high volume output. easyJet is currently working in this direction.
Hybrid – This is a position where prices are low but product/services have some
differentiation. This tactic convince customers for buying differentiated commodity at a
reasonable price.
Differentiation – This strategy is used by an organisation when they try to offer highest
perceived value at a relevant price. Benefits of differentiation technique is that it assist in
increasing brand loyalty and awareness.
Focused differentiation – When a company charge high price for their goods and make
different types of products for particular segments then it means that they have adopted focused
differentiation strategy. Luxury brands use this positioning and target higher profit margin.
Risky high margins – If a company is offering their products at higher price and they are
not providing an extra value to customers then it means that they are ''doomed to failure''.
Monopoly pricing - This is a situation where an organisation do not have any competitor
and the value perceived by customers from a product does not matter for company. An enterprise
can set price of their products according to own wish but normally monopolies in regularly
watched by regulators.
Loss of market share – Not a single organisation would like to follow this strategy
because it assure failure to a company. Charging middle level price for low perceived value
cannot convince customers to use firm's service.
Justification and recommendation of strategic directions
In present scenario, easyJet is moving forward by choosing ''low price'' strategic
direction. They can continue with same strategy corporation that can also go with other options
like focused differentiation in order to target those segments which are currently not generating
much revenue for enterprise. Launching more flights in premium segment for business travellers
can assist easyJet in attaining more market share. In future, economic conditions can bring more
challenges to company but if they will keep their services different from each other and target
customers of all the segments then it can deliver better results to organisation in unstable
situation. Advancement in technology is another areas where easyJet should concentrate (Taneja,
2017). They can develop mobile application which provide complete details of all the services
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that is provided by corporation. Company should also find an appropriate supplier who
completely depend on easyJet. It will help them at the time of expansion of business.
CONCLUSION
At the end, it can be concluded that impact of external factors can get minimised by
making proper strategies. An organisation has to work on their weaknesses if they want to grab
opportunities in future. Managing power of suppliers and buyers can help company in earning
competitive advantage. Tools like Bowman's strategic clock and Porter's generic strategies can
be used in making middle and long term plans.
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REFERENCES
Books and Journals
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Buzzavo, L., 2012. Strategy innovation as business model reconfiguration.
Chaffey, D., 2015. Digital business and e-commerce management. Pearson Education Limited.
Chen, Y. and Jermias, J., 2014. Business strategy, executive compensation and firm
performance. Accounting & Finance. 54(1). pp.113-134.
Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management Decision. 51(7).
pp.1326-1358.
Klophaus, R., Conrady, R. and Fichert, F., 2012. Low cost carriers going hybrid: Evidence from
Europe. Journal of Air Transport Management. 23. pp.54-58.
Lawton, T. C., 2017. Cleared for take-off: structure and strategy in the low fare airline business.
Routledge.
Li-Hua, R. and Lu, L., 2013. Technology strategy and sustainability of business: Empirical
experiences from Chinese cases. Journal of Technology Management in China. 8(2).
pp.62-82.
Malighetti, P., Paleari, S. and Redondi, R., 2015. easyJet pricing strategy: determinants and
developments. Transportmetrica A: Transport Science. 11(8). pp.686-701.
Sako, M., 2012. Business models for strategy and innovation. Communications of the ACM.
55(7) pp.22-24.
Schrader, C., Freimann, J. and Seuring, S., 2012. Business strategy at the base of the pyramid.
Business Strategy and the environment. 21(5). pp.281-298.
Spender, J. C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Taneja, N. K., 2017. Simpli-Flying: optimizing the airline business model. Routledge.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
Vidović, A., Štimac, I. and Vince, D., 2013. Development of business models of low-
costairlines. ijtte-International Journal for Traffic and Transport Engineering. 3(1).
p.69.
Woerner, S. L. and Wixom, B. H., 2015. Big data: extending the business strategy toolbox.
Journal of Information Technology. 30(1). pp.60-62.
Online
Porter's Five Forces. 2018. [Online]. Available
through:<https://www.strategicmanagementinsight.com/tools/porters-five-forces.html>
Porter's Generic Competitive Strategies (ways of competing). 2018. [Online]. Available
through:<https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-
strategies/>
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