Strategic Management of Easyjet

Added on - 21 Jul 2020

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Running head: STRATEGIC MANAGEMENTSTRATEGIC MANAGEMENT
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
3STRATEGIC MANAGEMENTIntroductionStrategic management process is an essential aspect for business organization as businessorganizations are able to achieve competitive advantage for success and growth with the help ofthis strategic management process. It is worth saying that, the process of strategic managementhelps to avoid stagnation through experimentation and continuous self examination. A number ofstudies show that, with the help of this concerned strategic management process, businessorganization becomes able to scan the environment so that, the company will be able to getcritical information to improve the work methods. For this purpose, the aim of the study is tofocus on the strategic management analysis for Easyjet which is one of the top airlinescompanies in United Kingdom.Background informationEasyjet is a British airline based at London Luton Airport and operates under the low costcarrier model. As mentioned byHill, Jones & Schilling(2014), the company now operatesdomestic and international scheduled services in more than 30 countries. Based on the statisticsof the year 2016, the annual revenue of the company is near about£ 4.7 billion and operatingincome is more than 500 million.It employs near about 11,000 people and holds 34.62% sharefrom the market. Therefore, it can be stated that, the company is one of the top listed companyand has that potential to give tough competition to the other airlines. Besides this, the strategy ofthe concerned company to develop business in terms of work pattern is different from the othercompany. As mentioned byWheelen & Hunger(2017), easyJet focuses on establishing strongpositions in Europe’s leading airports through cost effective fares. The company is able to offermore affordable fares to the customers because of some of the factors that includeAircraft configuration able to hold a higher number of seats per aircraftHigher load factorPoint to point model drives aircraft utilization
4STRATEGIC MANAGEMENTExternal: Airline Industry analysisTo understand the market condition and strategic decision of a company, Porter’s fiveforces can be used as a tool and therefore, this tool helps to build sustainable competitiveadvantage for easyJet Plc in Travel and Leisure industry.Threats of New EntrantsNew entrants in this industry bring new ways of doing things, innovation and put pressure on theconcerned company through reducing costs, lower pricing strategy and new value proposition tothe 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, profitmargins in case of airline industry was near about 4% which is equal to£5.90 per each of thecustomer (Theriou, 2015).Ways to tackle such threatsBy innovating services and products so that, the company will be able to attract newalong with old customersBy developing economies of scale to lower the fixed cost per unitDeveloping abilities to spend money on research and building.Bargaining power of buyersThe airline industry at present time is composed of two types of customers. The first type ofcustomers is single flyers and the reason of their buying tickets is either private or businessrelated. This category is diverse. However, in the second category of buyers there are onlineportals and travel agencies. It is worth saying that, this kind of buyer plays as an intermediatebetween travellers and airlines. It can be seen that, the buyers want to buy a lot and get bestservices by providing a minimum price. This put pressure on the concerned company in the longrun. According to the viewpoint ofRothaermel(2015), smaller and powerful customer base ofthis company has the higher bargaining power to seek enhancing offers and discounts.Ways to tackle the bargaining powerBy developing a large base of customersBy innovating new productsNew 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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