Strategic Analysis: Brexit's Impact on EasyJet's Operations

This report provides a strategic management analysis of the impact of Brexit on the UK airline industry, with a specific focus on EasyJet. It begins with an introduction outlining the context of Brexit and its implications for the airline industry, particularly EasyJet, a low-cost carrier. The report conducts an external analysis using PESTLE to assess the political, economic, social, technological, legal, and environmental factors affecting the UK airline industry, including recent developments and challenges faced by Thomas Cook. An internal analysis of EasyJet is performed using the VRIO framework, evaluating its valuable, rare, inimitable, and organized resources and capabilities. The report then explores strategic choices for EasyJet, applying the Ansoff matrix to identify potential growth strategies such as market penetration, market development, diversification, and product development. The strategy evaluation section concludes that product development is the most effective strategy for EasyJet in response to Brexit. The report also includes a brief evaluation of EasyJet's competitors, highlighting key differences in their service offerings and pricing strategies. The conclusion summarizes the key findings and implications of Brexit for the airline industry.

STRATEGIC MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Impact of BREXIT on UK airline industry. ................................................................................1
External analysis..........................................................................................................................2
Internal analysis...........................................................................................................................3
STRATEGIC CHOICE ...................................................................................................................4
STRATEGY EVALUATION .........................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................8

INTRODUCTION
Brexit is the exit of UK from European Kingdom. Easy jet airline company is a low cost
airlines company which is headquartered in London. It operates on domestic as well as
international schedules. The study will highlights the impacts of Brexit on airline industries. The
study will perform PESTLE analysis of the UK airline industry including recent development in
Thomas Cook and further report will do internal analysis of Easy Jet by performing VRIO
analysis. Moreover the report will do analysis of strategic capabilities of easy jet. Study will do
evaluation of two competitors to easy jet (Morden, 2016).
Executive summary.
The study is about the Brexit. Impact of Brexit on air lines industries. The study is highlighting
the issues which are been faced by the airlines company. The major issue which is discussed in
the report is that the due to Brexit people flights are not allowed to enter in the UK boundaries.
Flights are stopped which results in the loss of business. Another issue which report is
highlighting is that strict laws have been made by UK governments. High prices are charged by
the UK government if they don't follow the laws. Another issue in the report is that the
operational cost of flights are not recoverable due to Brexit. Level of tourism has been decreased
in the country due to brexit (Hill, 2017). By Brexit people stops travelling in the flights which
results in the loss of revenue generation for the company. The study reveals that VRIO model
value of the company is known ie, the financial basis of the company is strong, company uses
digital platform. The HR management very good as by that skilled employees are recruited by
the organisation. The brand name makes the customers trust towards the company. Study
summaries that there many issues faced by the organisation but main issue is that the less
revenue is generated by the company.
Impact of BREXIT on UK airline industry.
As in Brexit, Britain has withdrawal from Euro pion Union. This impacted the EasyJet in
such a way that people have limited their trips. As due to Brexit people have stop travelling
which results in a loss for the company(Ginter, Duncan and Swayne, 2018). no. of flights which
were flying on daily basis are not flying which is resulting in freat loss for company. Many
people who have made their bookings but due to Brexit flights wont fly and now they are
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customers are demanding back the money for tickets. So this becomes liability for EasyJet.
Travelling of tourist have become less which results in financial loss for the company. Aircraft
operators from UK will is considered third operators and require authorization. Brexit impacted
the overall trade of the Easy Jet as various laws and regulations are made by UK Govt. that if
their flight enters UK boundaries they have to pay prices which are mentioned the law. Strict
restrictions are made by UK which results in loss of business. EasyJet sales are declined in a
drastic manner. As people stops travelling and the goods which were transported by airlines are
also stops (Lasserre, 2017). As the oration cost of the air lines are same but there their flights are
not flying which results in such a way that the expenses are as same but no revenue is generated,
which increases liability of EasyJet, in this sense it impacted the air line industries.
External analysis
Pestle analysis of UK Airline industry including recent development in Thomas Cook
Recent era of economic depression affected various industries and airline industries was
no other exception (Zahari and Romli, 2019). There are various challenges faced by airline
industries. So, it became extremely important for organizations in this industry to analyse the
factors that had affected their business. PESTLE analysis is a kind of strategic method that helps
in weighing all kinds of external factors that affects an organization’s business.
Political factor: Because of Brexit, regulations for airline industry has been changed and has
become stricter. Other than this, various policies have been devised for passenger protection.
Because of this airline industry organizations need to pay higher tax which is demotivating
organizations like Thomas Cook. Because of these changes in policies and tax Thomas cook has
changed their packages that they provide to their customers and has laid more emphasis on their
customer’s stay so that this change in taxation cost can be covered.
Economic factor: growth rate of GDP growth in UK is also helping airline industry to establish
themselves and accept changes in taxation positively. This has helped Thomas Cook to focus on
their travel and tourism business more positively (Trigeorgis and Reuer, 2017
).
Social factor: Nowadays consumers have become more demanding and because of this airline
industries need to focus on providing more services at lower price to their customers because of
which their profit has changed. This has been a benefit for Thomas cook as this lowering of price
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of airline industry and providing more services to customers has increased Thomas Cook
profitability.
Technological factor: Competition in airline industry has increased because of which
organizations in this industry need to use advance technology but by maintaining airline
operational cost (Szydlowska, 2018). Thomas Cook has used it as an advantage as they can
promise their customers of better and improved service at lower cost.
Legal factor: Because of strict rules, regulations and polices law suits against airline industry has
increased from both workers and customer’s side. As a result, they are focusing more on their
customer’s safety, flight delay, employee’s benefits. Because of this Thomas Cook has also
brought some changes within their policies so that effect of such law suits does not affect their
business and their efficiency can be increased.
Environmental factor: Because of environmental changes today customers are becoming more
environment conscious. As a result, airline industry is forced to adopt green flying and pay more
attention to climatic changes. Because of this Thomas Cook has started to focus on passengers’
comfort and if because of any issue passenger’s flight get cancelled then for such situation
Thomas Cook has focused on improving their backup options for their customers.
Internal analysis
VIRO analysis of easy jet
There are various kinds of strategy capabilities tools that can be used for analysing
internal analysis of easy jet. VIRO analysis is a kind of strategy capability tool which stands for
Value, rate, inimitability and organization (Tran, 2019). This framework helps in analysing the
level of sustainability within organizations.
Valuable Rare Inimitable Organization
Capabilities and resources
Digital platform
of easy jet
Yes  Yes 
Financial base-
strong
Yes  Yes 
HR
management
Yes  Yes  Yes 
Great airport Yes  Yes 
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locations
Core competencies
Better
relationship
with
stakeholders
Yes  Yes  Yes  Yes 
Customer
experience
Yes  Yes  Yes  Yes 
Brand name Yes  Yes 
STRATEGIC CHOICE
Amid the uncertainties EasyJet have various strategic choices for achieving future growth
which can be identified and analysed by applying Ansoff matrix. Through the evaluation of
model EasyJet can have 4 possible choices for growth which are as follows:
Market penetration:
With this growth approach organisation can penetrate in existing market by using its
existing products or strategic capabilities. Market penetration strategy aims at increasing market
share for achieving growth objectives. For instance in present scenario EasyJet can start some
low cost flights or allow its passengers to book instant tickets so that it value and market share
can be increased. Organisation can adopt this strategy by incorporating innovation and quality
improvement in its services and products.
Market development:
Another strategic choice available for EasyJet is development of new market by offering
existing services to new market segments, geographic and users. After Brexit airline may require
to operate in new geographical boundaries and thus this growth strategy is also suitable for the
organisation. However it can be challenging for company to assess the needs of new market and
thus it may involve higher extent of risk.
Diversification:
This strategy is considered to be most risky growth choice for the companies. With this
strategy organisations enters into new market with completely new products or services
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(Gurcaylilar-Yenidogan and Aksoy, 2018). Though it involves highest amount of risk it is not
chosen in the unstable market situation such as observed in UK due to Brexit.
Product development:
For enhancing the market share organisation also has growth choice in terms of
developing a new product or service. The new products are developed in the exiting markets only
so that new customers can be attracted.
STRATEGY EVALUATION
Among all the discussed growth choices above in response to Brexit scenario and
optimum future possibilities product development seems to be highly effective and most
profitable strategy for EasyJet. As UK market is facing various issues related to market stability
it will not be beneficial for the airline to determine the scope in a new market segment. The
diversification strategy can become more risky in this environment and company may find hard
to overcome its consequences. However after Brexit there are possibilities that due to changes in
regulations there may be need of new services. In such situation EasyJet have higher probability
to enhance its success and market share. Another reason for choosing this growth strategy is that
it involves moderate extent of riskAnsoff and et.al., 2018. Thus another advantage which is
achieved by adopting product development strategy is that it can assist in improving brand value
and to enhance the bond between customer and service providers (Dawes, 2018). In order to
develop new products or services organisation will analyse the various service quality issues
faced by its existing customers. Thus by emphasising on overcoming those issues for product
development organisation will be increasing its revenue as well indirectly. The suggested growth
strategies will also use the existing brand value and service quality of the company for
developing strong customer base.
Evaluation of two competitors-
One of the competitor of east jet is Flybe, as one flight provides complimentary foods to
customers where is another flight provides ear phones and other facilities(Ansoff and et.al.,
2018). Easy jet offers best deals to customers. Easyjet charged high prices to customers but
offers best quality to the customers where as other bransd charges cheap prices and the services
provided are also not so very high class, this is the major difference between two companies.
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CONCLUSION
From the above study it is concluded that Brexit results in losses for air lines industries,
flights are running by which less tourism is there in the country and air lines industries have
suffered a great loss. Further the study has done PESTLE analysis which help in assisting out
that what are the factors which impact the business and how further it can be improved.
Moreover study contains VRIO analysis of easy jet which details that how company is valuable,
rarity of firm, inimitable and organisation.
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REFERENCES
Books and Journals
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Ginter, P.M., Duncan, W.J. and Swayne, L.E., 2018. The strategic management of health care
organizations. John Wiley & Sons.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Morden, T., 2016. Principles of strategic management. Routledge.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal. 38(1). pp.42-63.
Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. But
with Two Logical Problems (February 27, 2018).
Gurcaylilar-Yenidogan, T. and Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix To
Innovation Classification. International Journal of Innovation Management. 22(04).
p.1850039.
Szydlowska, K., 2018. International Business of the Airline Industry. Strategic Alliance and the
Business Tool" PESTLE". GRIN Verlag.
Tran, Y., 2019. Challenges the airline industry faces at present (Doctoral dissertation).
Zahari, A.R. and Romli, F.I., 2019. Analysis of suborbital flight operation using
PESTLE. Journal of Atmospheric and Solar-Terrestrial Physics. 192. p.104901.
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