Strategic Management: EasyJet

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................6

INTRODUCTION
Strategic management is basically the process of planning as well as the development of
the strategic vision, fixing the objectives and thus formulating these strategies to achieve the
organization's goals. EasyJet Airline Company Limited is predominately the British airline,
founded in 1995 and placed in Luton, England. It is listed in London Stock Exchange and thus is
the constituent of FTSE 250 Index. This report addresses Brexit impact on airline industry of
UK, PESTEL analysis of UK airline industry, SWOT analysis, competitor's evaluation, Future
growth of the EasyJet after Brexit and Strategic issues faced by EasyJet.
MAIN BODY
BREXIT IMPACT ON AIRLINE INDUSTRY OF UK
The impact of Brexit on the airline industry of UK has been significant and has
revolutionized their entire operations. The prolonged as well as the uncertain withdrawal of UK
from the EU membership has influenced the aviation industry in a great way and has compelled
them to reduce the prices if their tickets which has eventually declined their overall sale. Besides
this, the departure of UK from EU has also affected the trading where the aviation industry has
faced a recent brunt. This has decreased their revenues as the large number of goods are
generally shipped through the airplanes and has thus drive up their fuel costs. The result of UK
referendum have built uncertainty on the working of UK airlines thus after the termination of
EU, the aviation sector in UK has seen an overhaul in terms of the legislation and air fares.
According the recent report, The fluctuations of the Brexit have provided the passengers with
relative bargains in comparison to the previous following years due to which the air fares have
fallen down to half (Ansoff, H. I and et.al.,2018). This has caused the airline industry to launch
some new strategies through which they can gain more profit. Apart from this, with the
termination of UK from EU various holiday companies has recently slashed their prices fro the
trips to different destination like Malta, Algrave which has impacted the aviation industry to a
great extent. Due to the profound effect of Brexit, the inter-EU operations of the UK registered
airlines has stopped and this has been catastrophic for them because of the raised fuel cost.
Along with this, due to the negotiation of EU to the open skies agreement with UK, all the air
traffic that exists between UK and US has stopped which has led the UK airlines to struggle for
the increasing passenger number.
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EXTERNAL ANALYSIS
External analysis is the analysis in which external factors are taken under consideration
for the effect of it towards the result of the company or profitability of the company.
Political factors
The laws and regulations will change due to conflict between UK and Brexit which will
lead to non friendly policies towards the non Brexit and this will lead fall in the revenue and rise
in the cost. There is also a positive aspect of it in which the jobs for the locals will increase.
Economical factors
The interest rate will rise due to economic slowdown and this will directly result in
falling in the currency value and rising in the product value or inflation. Jet Airways will be
affected due to this by paying more for the same product.
Social factors
There will be fall in the population or customers of the Easy Jet and the same will result
in fall in the revenue of the company (Moutinho, L., & Vargas-Sanchez, A. (Eds.). 2018). But
there is also a positive side of it where if the company focuses towards the group which can be
give higher income then Easy Jet can generate higher level of income and this will lead to rise in
the profit.
Technological factors
The technological factors are the factors which will affect Easy Jet by giving competitive
advantage to the company. For example if the company will use the technology known as AI
boot cap this will make Easy Jet more technologically advance. If the company not uses the
advanced technologies then this will give other companies competitive advantage.
INTERNAL ANALYSIS
For doing the internal analysis SWOT analysis is used. SWOT analysis takes into account
the internal factors and how the Easty Jet can get advantages from the external opportunities.
Strength
The strength of Easy Jet is cutting prices in the flights which is giving the company
advantage to attract more and more customers. This is helping the company to generate higher
revenue.
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Weakness
The weakness of Easy Jet is declining in the staff from the non Brexit community which
is leading to decline under the talented employees. This will lead to decline in making strategic
decision such as fall in sales of air ticket (Lasserre, P. 2017).
Opportunities
In order to increase the sale there is a big opportunity for the Easy Jet to focus on Asian
Market in which the company can increase its advertisement and selling budget. This will lead to
drive more sales and revenue for the company (Aguinis, H., Edwards, J. R., & Bradley, K. J.
2017).
Threat
The threat for Easy Jet is declining in the relationship between UK and Brexit will lead to
change in policies and the same will lead to fall in the sales of the air ticket. The taxation policy
may change in which the company may be charged higher price of the ticket due to rise in the
cost of the air ticket.
TWO COMPETITORS EVALUATION
The two competitors of Easy Jet falls under the top five companies of UK and are as
follows:
Factors Easy Jet British Airways Fly be
Global Ranking on the
basis of points
6.2 is the points for
this Airways and falls
under the last category
if compared with the
other two Airways. In
UK this airways is
having 5th rank (Hill,
T. 2017).
7.7 points are there for
this Airways which is
the highest if
compared with the
other two airways. The
rank if taken from UK
point of view is 2nd.
Fly be is having 7.6
points securing the 2nd
position if it is
compared with the
other. Overall the rank
of this Airways is 3rd
in UK.
Quality of service The quality of service
provided by this
The quality of service
of British Airways is
Very good service is
provided by Fly be but
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airways is good but,
the company needs to
focus on providing
premium quality of
business class and also
after sales services to
customers.
great but it must focus
on quality of food and
staff training.
is must focus on
behaviour of
employees and extra
facilities such as
cultural programs.
Cost The cost charged by
the company is fair but
needs improvement in
order to gain more
customers and the
same can be done by
offering more
discounts to the
customers.
As the airlines in
owned by the British
government the prices
charged are low and
there are various
discount offers
availability at different
seasons in this
company.
The cost are high for
the business class and
the same can be
improved by lowering
the price at pre
booking options
availability (Meyer, G.
D., Neck, H. M., &
Meeks, M. D. 2017).
Safety and Healthcare Safety is given priority
under this airways in
which the company
focuses on providing
various safety benefits
such as seat belt, fire
extinguisher and many
more.
Under the British
Airways proper care is
given to the safety
example a separate
jacket is given to its
customers for the
jumping in case the
plane crashes.
There are facilities
available in which the
Aeroplane
automatically starts
giving altert in case if
there is any danger.
This also makes the
employees as well as
the customers alert
about the situation.
After the evaluation it is found that Easy Jet needs to improve in various sectors such
offering more discounts in order to attract more customers. There is also a need to imrove the
quality of service in which the company must focus on quality food and advanced Airo alert
tools.
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STRATEGIC CHOICE
Future
Strategic choice in order to overcome the Brexit loss, there are various options available
for Easy Jet such as the company must focus on generating revenue from the Asian Market by
increasing its budget towards the marketing. The company must also focus on offering discount
on various occasion such as Diwali, Holi etc. this will lead to more customer attraction and more
revenue generation to the company (Morden, T. 2016). The other choice for the company is to
increase its discounting promotion for the Brexit in which the company can do promotion on
special occasions such as summer discounts available only for European customers and only
special things such as special offer is valid only for the European customers.
Current
Easy Jet can not run in loss even in the present so in order to overcome such situation the
company must focus on alternative ways so that the revenue of the company remains constant
(Morschett, D., Schramm-Klein, H., & Zentes, J. 2015). There are ways such as taking fund from
the British government fund for the purpose of correcting the present situation and the same fund
can be used for the investment.
STRATEGIC EVALUATION
Porters five forces are selected as a strategy under the Easy Jet in which the analysis is
done on the basis of following five factors:
Competition in industry
As per this analysis the more the competition in the industry the more it will lead to fall
in the power of the Easy Jet. This leads to competition offering better price for the deal and this
leads to more chances of shifting of customers (Michael, S., Storey, D., & Thomas, H. 2017). In
the Airlines industry there is a great amount of competition in which the company must be
careful towards the charging of prices to the customers.
Potential of the entrance which are new
The entrance of the new competition in the airline industry is less. So it is a advantage for
Jet Airways to charge prices which are reasonable and also negotiate terms and conditions which
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are better by providing better deals to the customers which attracts them and drives the customer
to buy the product.
Power of the suppliers
Under this the how much easy it is for the company to switch to the other supplier in
order to buy the input of the product and also how much the cost of the switching from one
product to other. If the suppliers are less then this will lead to more dependency towards the
supplier by the company (Steiss, A. W. 2019). In the Airline industry it is not so in which there
are many suppliers so the Easy jet will be having more chances of negotiation using which the
best deal can be adopted by the company.
Power the customers
It is all about how much is the customer the company have and what is the cost of finding
a new customer. If the customers are few it means they are having more negotiation power and
can make negotiation in the price but if the customer are higher which is there in the Easy jet
then there are low chances that the price will get negotiated.
Substitute threat
It also depends a lot on substitute available for the company if there is high substitute
then there will be charging the customer competitive price. If the substitute are lower than this
will result in charging higher prices by the Easy jet for the same product. Under the Airlines
industry there are high substitute availability so Easy jet must take care of it by charging the
price which is reasonable otherwise the customers will shift to other airline which are charging
lower prices. So it is must for Easy jet to check the prices charged by the other companies what
are the chances that the prices will go up or down.
CONCLUSION
It has been summarized that Brexit had the significant impact on airline industry of UK
which compelled them to lower their air fares and thus increased the fuel cost due to which the
trading became complicated for them. Besides this, there are various factors which has impacted
this industry like political, legal, environmental etc and has affected them in one or the other
way. Through the analysis of their strength and weakness as well as the opportunities and threats
available in the market, they have been able to review their overall performance and operations.
Apart from this, there are two competitors of the EasyJet which has impacted a great impact on
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their operations. To achieve the competitive advantage, organization should focus on the Asian
market which will bring more customers for them.
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