Strategic Management Report: Analyzing EasyJet's Business Strategy

This report provides a strategic review of EasyJet, a low-cost British airline. It begins with an introduction to the airline industry and EasyJet's business model, followed by an external analysis considering political, economic, social, and technological factors. An internal SWOT analysis evaluates EasyJet's strengths, weaknesses, opportunities, and threats. The report then applies strategic direction tools, specifically the Ansoff Matrix, to explore market penetration, market development, product development, and diversification strategies. The strategy selection and justification section explains EasyJet's approach to maximizing flights, competitive advantages, and cost reduction through strategies like higher seat numbers, fleet deals, and a point-to-point model. The report concludes with recommendations, suggesting customer-oriented services, online operations, and improved management structure to enhance efficiency and achieve business goals. The report also references the company's focus on expanding its fleets to maximize space, and the strategic choice to operate in high-demand routes.

Strategic Management

Table of Contents
Introduction......................................................................................................................................1
External Analysis of Airline Industry..............................................................................................1
Internal analysis (SWOT) of EasyJet Airlines business strategy.....................................................2
Strategic directions tools for EasyJet...............................................................................................3
Strategy selection and justification..................................................................................................3
Recommendation and Conclusion...................................................................................................5
References........................................................................................................................................6

Introduction
There are certain businesses which prevails in business environment and every day there
is introduction of the new one. With aim of earning profit and to expand their market each of
them have a business strategy which considered as an outline map of the activities which has to
be performed by the organisation so that they can achieve all the business goals and targets. This
report will be dealing with strategic review of Easyjet which is an small scale airline company
(Freeman, 2010). There will be analysis of its internal and external environment thus evaluating
the strategic choices of the company.
EasyJet is a British airline which comes under low cost carrier model. It operates
domestic and international scheduled services on over 820 routes in more than 30 countries.
They have the employee number of 11000 people who are from different parts of Europe mainly
from UK. This company has grown through certain collaboration which it has done with
different organisations. They have the revenue of £4.669 billion and an operating income of £495
million. They have been successful in gaining income of £427 million in year 2016. They use the
business strategy or business model taken from South-west Airlines. They have adopted this
model so that they can also adopt cost cutting measures like not selling connecting flights or
giving complimentary snacks on board (David, 2011). EasyJet is the only airline in UK who is
offering such services at such low cost and most of their competitors are from different parts of
the world. Delta Air Lines, Southwest Airlines, Ryanair Holdings and American Airlines Groups
are some of the major one. They can get tough competition from substitutes like train and car on
the domestic routes.
External Analysis of Airline Industry.
Political:- The airlines industry is highly affected by political regulations both in the
terms of operations and the ownership as some of them are also owned by national governments.
There might be dispute among two countries so it will be harder for the airlines to fly over the
another country which does not have good relation (Stead and Stead, 2013). As UK has voted in
favour of Brexit which will impact the airlines industry as there might be changes in “Freedom
of the air” between the countries which was adopted by EU legislations. EU has been focusing
on the practice of overbooking by the flights and this will impact the business of low cost flights
like EasyJet.
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Economic Issue: The airline industry is very much dependent on the world economy and
when their will be crisis in the economy there will be decrease in the number of business class
and first class passengers. Increase in the economic activity brings pressure on the airlines to
increase the wages of the labours. The oil prices impacts the airlines economies as this increased
the operating costs.
Social Cultural Issues:- In earlier time air travel was seen as and expensive and was not
easy for the lower and middle class income groups but with the low cost revolution has made air
travel across Europe available to the larger public through lower fares (Hair and et. al., 2012).
This can be said that the perception of air travel as changed drastically.
Technological Issues:- This is the most impacting factor for the airlines macro
environment. Introduction of internet and other technological characteristics and features like
videoconferencing has given a hike to the airlines industry.
Internal analysis (SWOT) of EasyJet Airlines business strategy.
Strengths:- They have diverse range of European Routes and also have strong cash flow
position. There has been substantially increase in the turnover and the trading profits. Due to this
their balance sheet has become strong. They have been successful in becoming the Europe's
leading low cost airline and people are well aware of them as they have good brand image in the
customer's mind (Hodgkinson and Healey, 2011). They offer online booking so the customer
does not have to wait in longer lines. Customers don't need to travel with the tickets as they give
the option of ticket less travel. EasyJet is using the airports in quite effective way and they have
the capabilities to convert resources into advantages.
Weaknesses:- People have the perception that EasyJet provide low quality service and
does not provide free lunch which is part of their low cost cutting strategy. Talking about the
their management they don't have good management as they practice management structure.
They practice remote working.
Threats:- There are threats from new and the current competitors in the market and
increase in the oil prices is impacting their operating costs. They are still facing the consequences
of the oil crisis. With the economic recession many people avoid travelling through airlines and
markets has shifted to globalisation. There has been expansion in the Asian flights who is also
offering budget travel all around the world. There has been extremely high competition for
consumers and resources.
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Strategic directions tools for EasyJet.
Ansoff Matrix is used to focus on the EasyJet existing status, products and markets that is
consumers.
Market Penetration:- EasyJet group continuous to attain growth with its current
products i.e., delivering services at rock bottom prices (Molina-Azorin, 2012). Through
following this business strategy the market share continuous to grow.
Market Development:- They are looking for the growth by targeting their current
product to new market segments. For example; EasyJet is focusing on targeting business
travellers with the low cost airfares and frequent flights to the popular destination which are
important for the business purpose (Ackermann and Eden, 2011). The best way they can achieve
this is through gaining the competitors customers and the other ways they can develop their
market which include attracting non-users of yours product or convincing existing clients to use
more of their services. They can focus on advertising or other promotional activities. Market
penetration can be considered as the least risky way for a company to grow.
Product Development:- EasyJet group has grown by introducing new flights routes thus
developing their product range.
Diversification:- They are coming up with new business ideas for their current market
segment such as easy internet cafe, and the latest venture easy money.
Through the Ansoff Matrix model allows them to know the ways through which they can
expand their business with the help of current and new products in the current or the new
markets. This will assist EasyJet in deciding the action which has to be taken for their current
performance in the market. The EasyJet started their journey through providing flights to Europe
at low cost. They are delivering their services to approx. 18 million passengers a year flying
EasyJet and they have to establish the concepts through which they can grow and expand
(Poister, 2010). They are continuously focusing on penetrate the current air transport market at
low costs flights. With the market penetration strategy they are offering lower costs to the
consumer thus allowing them to access the most of the market where they don't have existence.
With the market development they are including this in growth strategies.
Strategy selection and justification
Easy Jet is having their focus to develop a strong market position which can help to them
to make a better grip. They are having target to maximise their flights on those airports which are
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having a huge rush which can help to them to take a full flight to destinations. They are having a
tough market position and they are believing to provide a better services in low prices. On the
other side their main competitors are taking high fairs which is a competitive advantage. They
are having specialised configuration in their aircraft which is designed to increase number of
seats in the aircraft (Keupp, Palmié and Gassmann, 2012). They are using their aircraft according
to the passengers loads to maximise their utilisation of their flights.
Company is focusing on the decreasing their operational cost by which they can decrease
the fare of the tickets by which they can manage their competitive advantage. Some of the
significant points are here of the strategy of the company;
Higher number of seats: They are having a specific design in the aircraft so that they
can travel more number of passengers at a time which can help to them decrease their travel cost
and divide it to in more number of consumers of their services which can help to them to
decrease the price of their tickets (Noland and Phillips, 2010). It supports to increase their
number of customers on airports. Most of the people are booking their tickets by using online
methods so decrease in the fares can directly advertised and promoted by the company on their
Websites which can help to them to attract more customers.
Fleet deals: It is an another method which is used by the company to decrease their cost
and investments in their air flights. They are using the bulk deals to purchase air planes by which
they can decrease the price of the plans directly impacts on their operational budget. It is a
positive vision of the company because it decrease their investments in their assets which can
help to them to make a better services for their customers by using their funds .
Point to point model: They are using po8int to point model in which are they are
aligning their more number of flights in those air ports which are having a huge rush which can
help to them to take more passengers at a time and it helps to them to interact with more number
of passengers in a day which can help to them to increase their number of customers taken their
services (Priem and Carr, 2012). It is better to use high number of flights on rushy roots with low
fare rates, it is supporting to the organisation to attract more number of customers.
As the company wants to develop strong market position so they are providing low fare
rates which is increasing their competitive advantage which supports to them to interact more
number of customers. The strategy of the company is totally justified in the favour of the EASY
JET.
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Recommendation and Conclusion
EasyJet Group can attain more profits through selling shares in the businesses or through
adopting the franchising the brand to their partners. They should make sure that their services
should be totally customer oriented and try to look for the ways and methods through they can
increase their profit margins and it is important as their all the services are focusing on delivering
budget services to the customers. They should try to reduce the staff number at airports and try to
put their services all online thus ensuring them efficiency at the operations.
As they are adopt the model of flat management which is one of thing which is
hampering their growth in the market. They should make sure that they give some roles so that
for any operation certain or specific person can be held responsible for. All the business strategic
should focus on brining efficiency in the way of doing operating so that they can easily attain the
goals and objectives. In future to beat the new upcoming Asian players who will be also giving
budget travel to the passengers so that they can attain competitive advantage they are designing
their fleets in a way that they can use maximum space of the flight to make seats more. Other
than this they are only delivering their services on the routes where there is high rush thus
increasing their demand by the passenger.
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References
Books and Journal
Freeman, R. E., 2010. Strategic management: A stakeholder approach. Cambridge university
press.
David, F. R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Stead, J. G. and Stead, W. E., 2013. Sustainable strategic management. ME Sharpe.
Hair, J. F and et. al., 2012. The use of partial least squares structural equation modeling in
strategic management research: a review of past practices and recommendations for
future applications. Long range planning. 45(5). pp.320-340.
Hodgkinson, G. P. and Healey, M. P., 2011. Psychological foundations of dynamic capabilities:
reflexion and reflection in strategic management. Strategic Management
Journal. 32(13). pp.1500-1516.
Ackermann, F. and Eden, C., 2011. Strategic management of stakeholders: Theory and
practice. Long range planning. 44(3). pp.179-196.
Poister, T. H., 2010. The future of strategic planning in the public sector: Linking strategic
management and performance. Public Administration Review.70(s1).
Keupp, M. M., Palmié, M. and Gassmann, O., 2012. The strategic management of innovation: A
systematic review and paths for future research. International Journal of Management
Reviews. 14(4). pp.367-390.
Noland, J. and Phillips, R., 2010. Stakeholder engagement, discourse ethics and strategic
management. International Journal of Management Reviews. 12(1). pp.39-49.
Priem, R. L., Li, S. and Carr, J. C., 2012. Insights and new directions from demand-side
approaches to technology innovation, entrepreneurship, and strategic management
research. Journal of management. 38(1). pp.346-374.
Molina-Azorin, J. F., 2012. Mixed methods research in strategic management: Impact and
applications. Organizational Research Methods. 15(1). pp.33-56.
Online
EasyJet warns of tough market from rising competition., 2017. The various technologies and its
roles. 2013. [Online]. Available Through: <https://www.ft.com/content/43e36540-
6d2d-11e7-b9c7-15af748b60d0>. [Accessed on 14th November, 2017].
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