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Strategic Management of Easyjet

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Added on  2020-07-22

Strategic Management of Easyjet

   Added on 2020-07-22

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Running head: STRATEGIC MANAGEMENTSTRATEGIC MANAGEMENT
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2STRATEGIC MANAGEMENTTable of contentsIntroduction......................................................................................................................................2Background information..................................................................................................................2External: Airline Industry analysis..................................................................................................3Competitor analysis.........................................................................................................................5Internal: Strategic capabilities.........................................................................................................5Strategic Direction options..............................................................................................................6Strategic selection and Justification.................................................................................................8Future Recommendations and Conclusion......................................................................................9References......................................................................................................................................10
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3STRATEGIC MANAGEMENTIntroduction Strategic management process is an essential aspect for business organization as business organizations are able to achieve competitive advantage for success and growth with the help of this strategic management process. It is worth saying that, the process of strategic management helps to avoid stagnation through experimentation and continuous self examination. A number ofstudies show that, with the help of this concerned strategic management process, business organization becomes able to scan the environment so that, the company will be able to get critical information to improve the work methods. For this purpose, the aim of the study is to focus on the strategic management analysis for Easyjet which is one of the top airlines companies in United Kingdom. Background information Easyjet is a British airline based at London Luton Airport and operates under the low cost carrier model. As mentioned by Hill, Jones & Schilling (2014), the company now operates domestic and international scheduled services in more than 30 countries. Based on the statistics of the year 2016, the annual revenue of the company is near about £ 4.7 billion and operating income is more than 500 million. It employs near about 11,000 people and holds 34.62% share from the market. Therefore, it can be stated that, the company is one of the top listed company and has that potential to give tough competition to the other airlines. Besides this, the strategy of the concerned company to develop business in terms of work pattern is different from the other company. As mentioned by Wheelen & Hunger (2017), easyJet focuses on establishing strong positions in Europe’s leading airports through cost effective fares. The company is able to offer more affordable fares to the customers because of some of the factors that include Aircraft configuration able to hold a higher number of seats per aircraft Higher load factor Point to point model drives aircraft utilization
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4STRATEGIC MANAGEMENTExternal: Airline Industry analysisTo understand the market condition and strategic decision of a company, Porter’s five forces can be used as a tool and therefore, this tool helps to build sustainable competitive advantage for easyJet Plc in Travel and Leisure industry. Threats of New Entrants New entrants in this industry bring new ways of doing things, innovation and put pressure on the concerned company through reducing costs, lower pricing strategy and new value proposition to the travellers. Therefore, the company has to manage all these issues so that, the company will beable to build barriers in order to safeguard the competitive advantage. In the year 2015, profit margins in case of airline industry was near about 4% which is equal to £5.90 per each of the customer (Theriou, 2015). Ways to tackle such threatsBy innovating services and products so that, the company will be able to attract new along with old customers By developing economies of scale to lower the fixed cost per unitDeveloping abilities to spend money on research and building. Bargaining power of buyers The airline industry at present time is composed of two types of customers. The first type of customers is single flyers and the reason of their buying tickets is either private or business related. This category is diverse. However, in the second category of buyers there are online portals and travel agencies. It is worth saying that, this kind of buyer plays as an intermediate between travellers and airlines. It can be seen that, the buyers want to buy a lot and get best services by providing a minimum price. This put pressure on the concerned company in the long run. According to the viewpoint of Rothaermel (2015), smaller and powerful customer base of this company has the higher bargaining power to seek enhancing offers and discounts. Ways to tackle the bargaining power By developing a large base of customers By innovating new products New products have that ability to reduce the defection of existing buyers of the concernedcompany to its rivals. Bargaining power of suppliers
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