P1 Impact of Macro Environment on EasyJet

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Business Strategy
Table of ContentsINTRODUCTION...........................................................................................................................1PART A...........................................................................................................................................1LO 1.................................................................................................................................................1P1 Impact of macro environment on easyJet and its strategies..............................................1LO2..................................................................................................................................................3P2 Analysation of easyJet's internal environment and capabilities........................................3PART B............................................................................................................................................4LO3..................................................................................................................................................4P3 Application of porter's five forced model for evaluating competitive forces...................4PART C............................................................................................................................................7LO4..................................................................................................................................................7P4 Application of porter's generic strategies and Bowman's strategy clock for choosingstrategic direction..................................................................................................................7CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
INTRODUCTIONPlanning is considered as first step in the process ofachieving set objective. Businessstrategy 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 andexternal environment on the business model of company. This report is based on easyJet, aBritish airline company headquartered in London (Blackburn, Hart and Wainwright, 2013). Theyare operating in UK and around 30 countries best known for their low cost carrier services. Inthis project, corporate strategy manager will make use various tools for organising internal andexternal analysis. Increasing competition is challenge for all the companies who are operating inthis industry. Porter's five force model will be used for conducting competitive analysis that playcrucial role in providing an edge to easyJet over their competitors. Few models like Porter'sgeneric strategies will assist in analysing strategic direction of the enterprise.PART ALO 1P1 Impact of macro environment on easyJet and its strategiesBusiness enterprises can control internal factors of their company but they cannot ruleexternal environment. easyJet is among leading airlines of UK and understanding extrinsicenvironment is important for developing future strategies for the organisation to prosper incompetitive business environment. Below is PESTLE analysis of company:Impact of political factors– Brexit can be considered as most popular political incidentof this decade. Britain took the decision of leaving UK and created an environment ofuncertainty in whole country. All British airline companies lose major intra-European routes dueto Brexit and will be going to impact their growth in negative way. They would not enjoy samefreedom while operating in Europe which they were getting earlier (Verbeke, 2013). Thebusiness model of easyJet rely on two aspects, low price and more sale. In upcoming years, theirrevenue 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 ownedorganisation. 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 of1
passengers. Brexit is bringing more challenges in-front of the enterprise but its negative impact isgetting compensated by above mentioned two macro economic elements. Profit of easyJet wentdown 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 lowrate and they should move in same direction because many economic factor are working in theirfavour. 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 strikebecause of labour reforms which was done by Socialist government. Dispute between both sidesresulted in cancellation of many flights and reduced profits of easyJet which they were going toearn fromthis country. Although, company cannot control culture of any nation but analysis ofshared beliefs and attitude assist enterprise in understanding demand of service users.Organisation can make their future plans by considering various social elements like classstructure, demographic condition, skills in population etc. If firm will understand culture of aregion 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 ofeasyJet. Earlier customers have to wait in queues for getting tickets but now they can easily bookit online. Cashless payments also reduces the complexity in payment process. Better services toclients 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 technologicaladvancement in executing their current plans in an effective way.Impact of legal factors– Their are various regulations relating to aviation industry andcompany'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 ofcompensation. This type of incidents result in financial loss to the enterprise and it also taint theirimage in market. Corporation can ask every employee to follow government laws andinstructions which is given by company so they can develop effective strategic and proceed inright direction.Impact of environmental factors– Adverse weather is a big concern for all the Airlinesbut it impact easyJet in much negative way because their profit margins are low compared totheir 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 of2
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