Business Strategy and Competitive Advantages of Easy Jet Plc - Case Study Example

Business Strategy and Competitive Advantages of easyjet plc Introduction Business strategy indicates a set of techniques and conceptual frameworks of business through applying which a business organization aspires to achieve its long term objectives. Business strategy is a part of strategic planning process, formulated by the top management of the organization, taking into consideration current business scenario, prevailing industry practices, technological modifications and present financial and non-financial status of the organization itself (Cook, 2007). However, only formulation of business strategies does not facilitate the organization to achieve its short or long term business objectives. Success of business depends upon efficient implementation of the incorporated strategies (Kourdi, 2010). Therefore, the management is required to monitor and review the implementation process over a certain time interval to analyse the strategic gap and should take immediate action for rectifying the situation. This is important because fail of strategy implementation process causes the organization to encounter huge loss (Hitt, 2009). In this paper, the business strategies and competitive advantage of easyJet Airline Company Limited, a low cost carrier based out of London will be analysed in details. Evaluation Question 1: Strategic Changes Initially, the business model and competitive factor of low cost carriers such as easyJet plc was based only on price consideration. In subsequent period, when easyJet plc understood that driving business on the basis of a single competitive strategy can prove to be risky for long term, the company emphasised on developing strategies with the objective of ensuring robustness of business in the competitive UK airlines industry (Belobaba, Odoni and Barnhart, 2009). Business strategies of easyJet plc concentrate on various other areas of business apart from price leadership such as merchandising, improving customer services, application of best and latest technologies etc. easyJet plc also concentrates on multi channel strategies in order to increase strategic partnership for expanding business through penetrating into new markets and acquiring those technologies and services that are inadequate in the company(International Transport Forum, 2014). In the next segment, strategic changes of easyJet plc will be evaluated through Kotter’s model of strategic change. Kotter’s Model of Strategic Change On the basis of systematic study of hundreds of organizations, their strategic planning process and capability of bringing changes in the existing strategies, Dr. Kotter has developed strategic change model, following which a company can accomplish big opportunities relying on the market segment in which it is operating (Ganesh, 2009). Create Sense of Urgency: easyJet plc is one of the first airlines companies that had initiated the concept of low cost carriers in the UK airlines industry. The strategy has gained considerable consumer response because of their cost leadership model. As a result of introducing air tickets with lowest possible cost, those customer segments that did not consider travelling through flights and always used to opt for various substitutes, they also started availing flights (Kotter International, 2015). Build Guiding Coalition: Rather than depending solely on the only cost leadership strategy, easyJet plc also took initiative for further strengthening its business and focused on building strategic alliances. For instance, in 2007, the company purchased entire share capital of its rival company GB Airways to capture the loyal customers of this airline company. The deal of £103.5 million also enabled easyJet plc to establish a base at Manchester Airport. Purchasing 40% stake of Swiss charter airline named TEA Basle also helped easyJet plc to penetrate into the airlines industry of Switzerland (Aviation Economics, 2014). Form Strategic Vision and Initiatives: Apart from all these existing strategies, whenever easyJet plc senses the urge of bringing transformation for aligning their business with contemporary technological and operational changes as well as modification in the regulations imposed upon the UK airlines industry, the company strives to form new strategies (Bush, 2009). For example, when easyJet plc witnessed continuously incrementing cost of fuel, the company took the strategy of providing excellent customer services. In this way, more and more customers started preferring their airline and they become capable to maximise their customer base and enhance revenue in order to compensate on their rising production cost and continued to provide cheap flying solutions as before (Kotter International, 2015). Enlist Volunteer Army: The management of easyJet plc has been able to strategically transform their business according to the market demand and prevalent situation of the macro-economic variables only because before formulating strategies, the strategic management team of the company tends to identify the changes in the contemporary business world, specific to the industry. Then, they enlist the identified factors where strategic changes need to be implemented (Bush, 2009). Figure 2: Kotter’s Model of Strategic Change (Kotter International, 2015) Enable Action by Removing Barriers: easyJet plc through its cost leadership strategy, has enabled the large portion of the consumers to enjoy the experience of travelling through airlines. The business model of the airlines company also enables it to keep its operating cost low through charging extra for priority services such as priority boarding or baggage and food holding etc. Generate Short Term Success: With a target of maximising its revenue, easyJet plc. have taken the strategy of expanding its business across international borders through entering into long haul services as well. Taking the advantage of Global Distribution System (GDS), easyJet plc has been able to establish their existence in the global airlines market and generate revenue of £4,527 million in 2014 (International Transport Forum, 2014). Sustain Acceleration: The low cost carrier has understood well in advance that relying only on short hauls and concentrating solely on domestic market can never ensure sustainability of business. Therefore, easyJet plc took the initiative of penetrating into international market through adopting hybrid business strategy. Institute Change: All such strategies have enabled easyJet plc to institute a pure low cost airline with excellent customer services, more flexible and convenient schedules as well as a route structure of a full-service carrier. Implementation Strategy: 5C Analysis Strategic implementation process of easyJet plc will be discussed in the light of 5C’s Analysis. Coordination Efficient coordination among all the internal and external stakeholders of easyJet plc and fulfilling the needs of the company’s target customers is the biggest strategic initiative of the company. Communication At the time of determining strategic choice, the company evaluates its own potential and capabilities and communicate it with all its employees so that they strive for further improvement and organizational growth (easyJet plc, 2013). Command easyJet plc always hold the command to lead the industry from the front. Such command has made the company one of the biggest into the US airlines industry (easyJet plc, 2013). Control easyJet plc being one of the leading companies in the industry segment, takes control over all external stakeholders (easyJet plc, 2013). Conflict The company has the tendency of avoidance of conflict situation. Even if it gets along in any such situation, its strong management control implements efficient strategic control to recover the organization from such situation (easyJet plc, 2013). Implementation Issues: Strategic Drift In spite of formulating strategies taking into consideration the outcome of all the strategic techniques, companies still encounter certain issues regarding the implementation process of strategies. In this context, the concept of strategic drift must be analysed. Strategic Drift may be defined as the tendency for strategies to develop incrementally on the basis of historical and cultural influences but fail to keep pace with a changing environment (Hitt, 2009). Considering the case of easyJet plc, the company has safeguarded itself from the situation of strategic drift though the strong visionary of the management. Such long-term approach has enabled the company to comply its strategic choices with the technological and socio-economic changes in the external environment and evolve as the most efficient company in the airlines industry segment (easyJet plc, 2015c). Question 2: Competitive Advantages Cultural Strategies of easyJet plc The organizational culture of easyJet plc is highly performance oriented. Therefore, the company emphasises on establishing employee well- being, as the core strategy of easyJet plc is to channelize their obtained strategies through their efficient human resources by ensuring employee satisfaction. In the next segment, how organizational culture in easyJet plc has facilitated the company to promote growth and achieve competitive advantage will be evaluated through incorporating the organizational cultural theory developed by famous behaviour scientist Robert A. Cooke (easyJet plc, 2015b). Constructive Organizational Culture According to Robert A. Cooke, depending on the prevailing practices and behaviour norms within the organization, broadly three types of organizational culture can be experienced viz. constructive culture, passive culture and aggressive culture. The cultural practices in easyJet plc is said to be constructive depending upon the following parameters. Achievement The main sign of a constructive organization is to be achievement oriented. The main aim of such organizations is to obtain realistic organizational objectives and formulate strategies for achieving such objectives on time. Such task oriented organizations are experienced to acquire highly challenging projects with an aim to deliver high quality outcomes (Krausert, 2009). Analysing the organizational culture of easyJet plc, it is prominent that the company is highly growth oriented. High performance orientation of the company conducts frequent training sessions and skill development programs so that the employees put their 100% effort to accomplish the task delegated to them within the stipulated time frame (easyJet plc, 2015c). Self-actualization Self-actualization in organizational culture may be defined as realization of the full potentials of the organization and accordingly drive for further organizational expansion depending on the comprehended strengths and capabilities (Krausert, 2009). The management of easyJet plc is always engaged into reviewing the skills and capabilities of the company and arranges various methods for enhancing the potential of the company as well. Once the top management understands that easyJet plc has acquired extended potential, beyond their current requirements, they tend to formulate strategies to expand the organizational activities. For example, when the management experienced that easyJet plc is enjoying high competitive advantage in the UK and European airlines industry and has also gained superlative knowledge and skills to perform in the international market as well; they took initiative for international expansion (easyJet plc, 2015c). Human-encouraging Human-encouraging is the most important driver of the organizational culture of easyJet plc. The company is well-known for understanding employees’ concerns and accordingly take actions to mitigate that. Such positive approach toward employees has facilitated the company with an employee-turnover ratio as low as 6.5% in 2014 (easyJet plc, 2015e). In fact, easyJet plc incorporates annual salary review programs based on constructive performance appraisal. Apart from that, strategy of the company to provide performance driven reward packages, employee stock ownership plans and many other flexible benefits helps the management to keep the employees to stay focused on their primary objective to perform efficiently (Krausert, 2009). Affliative easyJet plc is an airline company that can be exemplified for its affiliation with its employees and its efforts to establish employee well-being. The “Benefits4me” programmes along with many other flexible savings programs and lifestyle benefit curriculums initiated for the employees of easyJet plc clearly indicates the company’s inclination towards employee-affiliation. Together, all such constructive practices make the company attractive in the industry segment and their uninterrupted endeavour to motivate and improve employees’ skills and motivation helps easyJet plc to achieve competitive advantage in the UK and European airlines industry (easyJet plc, 2015e). Decision making and Cultural Changes As easyJet plc gives huge importance to strategic alliances and organic growth, cultural change is inevitable for the company. When the company acquires other companies, those companies bring a completely different cultural aspect along with its financial and physical resources. Therefore, easyJet plc experiences the requirement of decision making in two contexts. At the time of acquiring other company in the same business line and next is in the time of implementing changes. Therefore, the company tends to evaluate all possible alternatives as well as long term consequences of such strategic changes and accordingly makes decisions for such cultural changes. For controlling internal changes, easyJet plc creates provisions for training and development programs and establishes effective evaluation and control system in order to monitor the effectiveness of changes and bring measures of rectifications if any deviation is witnessed (easyJet plc, 2015b). Leadership Style In order to bring excellence in their operational activities, easyJet plc aims to incorporate the most dynamic talents from the UK and Europe in various departments of their human resource team. Such capable human resource team of easyJet plc has aided many efficient leaders to evolve over a period of time. Moreover, expansion and growth of the company is highly dependent on the vision of the leaders of the company who have shown their brilliance in every field of operations associated with the airline business. Transactional and transformational leadership practices has been experienced in this organization through bottom-up flow of communication, employee participation in decision making process and unbiased delegation of responsibilities. Sir Stelios Haji-Ioannou, the founder of easyJet plc himself has shown commendable leadership skills in indentifying business opportunities in the UK airlines industry and at the same time recognizing business challenges that the company may encounter. With all such understandings, he along with the management group had been able to design strategies that have aided the easyJet plc to perform in such constructive way (Krausert, 2009). Carolyn McCall, the present Chief Executive Officer of the company has shown his leadership skills and rightly identified the critical success factors such as easyJet plc’s proclivity towards safety controls, punctuality and reliability, its efficient customer services, customers’ acceptance and the capability of the company to operate in the international market. Based on his valuable insight, in 2014, easyJet plc introduced three A319 aircraft and declared to operate on 15 additional routs. Such capacity expansion is a reflection of strong leadership practices of easyJet plc. In fact, the organization frequently conducts management development programs in order to infuse the sense of leadership among its existing employees (easyJet plc, 2015e). Innovation easyJet plc has come up with a large number of innovative ideas in both technological and non-technical avenues of airlines business which can be attributed as the reason behind the company to enjoy competitive advantage (easyJet plc, 2015g). For instance, easyJet plc is considered to be one of the initial companies that have brought the concept of short haul, low cost carriers into the UK airlines industry. Recently in 2014, easyJet plc has announced an innovative deal with a travel management company, Business Travel International (BTI) in which easyJet plc has delegated the access of its booking inventory and certain back office activities to this travel company with an aim to achieve more corporate booking (easyJet plc, 2015f). Social Impact easyJet plc puts immense emphasis on its corporate responsibilities in order to reduce negative impact of their airlines business on the society and the stakeholders associated with the company. Safety of the external stakeholders such as passenger is considered to be the first priority of easyJet plc (easyJet plc, 2015d). Such safety culture has influenced the airline company to undertake Fatigue Risk Management System (FRMS) in order to ensure high degree of safety measurement from the company’s perspective (International Transport Forum, 2014). Moreover, easyJet plc understands that airlines business creates negative impact on the stakeholders through emission of CHG gasses and exploitation of critical resources which are finite in the environment. Such activities in turn affect the society as well. Therefore, easyJet plc has addressed such environmental and social issues by reducing 15% carbon-di-oxide emission and 3% fuel consumption by replacing their own aircrafts with newly purchased, fuel efficient A320neo aircraft (easyJet plc, 2015d). Social consideration of easyJet plc is also reflected from the company’s effort to establish equity in the organization and elimination of any unethical practices such as bribery, corruption or political donation. The company is directly related with raising money from its internal and external stakeholders including employees and customers for helping the distressed people, especially children through UNICEF (easyJet plc, 2013). Question 3: Overall Assessment Business strategy and competitive advantage are two complementary concepts. A company cannot achieve competitive advantage without efficient formulation and implementation of business strategies. From the above analysis, it is prominent that easyJet plc has been able to perform efficiently in the competitive UK airlines industry through its expertise in developing efficient business strategies. Such strategic consideration is reflected in all the internal and external activities of easyJet plc, its organizational culture, leadership practices, inclination towards innovation as well the company’s initiative to protect social and environmental consideration. Incorporation and administration of strategies in all such business aspects together has helped the company to achieve competitive advantage and expand its business in international market. From this analysis, it is evident that such efficient strategy formulation has facilitated easyJet plc to identify certain key success factors, depending upon which, it is experiencing competitive advantages. Such factors can be attributed as the capability of the company of attracting customers though initiating the low-cost airlines model, technological inclination of the company and procuring fuel efficient aircrafts, its proclivity towards corporate social responsibilities and strategic alliances etc. easyJet plc is already enjoying the leading position in the UK and European airlines industry; if the company continues to design the business strategies in such efficient way, it will definitely evolve as the market leader in the international airlines industry over the period of time. Reference List Aviation Economics, 2014. Low-cost airlines: Stimulation effects wear off. [online] Available at: [Accessed 20 May 2015]. Belobaba, P., Odoni, A. and Barnhart, C., 2009. The Global Airline Industry. New Jersey: John Wiley & Sons. Bush, H., 2009. The development of competition in the UK airport market. [PDf] Available at: [Accessed 21 May 2015]. Cento, A., 2009. The Airline Industry: Challenges in the 21st Century. Berlin: Springer Science & Business Media. Cook, A., 2007. European Air Traffic Management: Principles, Practice, and Research. Farnham: Ashgate Publishing, Ltd. easyJet plc, 2013. Annual report and accounts 2013. [PDf] Available at: [Accessed 21 May 2014]. easyJet plc, 2015a. easyJet wins marketing category at Airline Business Strategy Awards. [Online] Available at: [Accessed 21 May 2014]. easyJet plc, 2015b. High Performance Culture. [Online] Available at: [Accessed 21 May 2014]. easyJet plc, 2015c. A Culture Of Wellbeing. [Online] Available at: [Accessed 21 May 2014]. easyJet plc, 2015d. Corporate Responsibility. [Online] Available at: [Accessed 21 May 2014]. easyJet plc, 2015e. Leadership Management and Development. [Online] Available at: [Accessed 21 May 2014]. easyJet plc, 2015f. easyJet wins Innovation Award at Business Travel Show. 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Bibliography Kumar, K., Subramanian, R. and Strandholm, K., 2001. Competitive strategy, environmental Scanning and performance: A context specific analysis of their relationship. International Journal of Commerce and Management, 11(1), pp. 1–33. Louche, C., Idowu, S. and Filho, W., 2010. Innovative CSR: From Risk Management to Value Creation. London: Greenleaf Publishing. Mayer, F., 2007. A Case Study of EasyJet and the Airline Industry. Munchen: GRIN Verlag. Oswald, S. L. and Flouris, T. G., 2012. Designing and Executing Strategy in Aviation Management. Farnham: Ashgate Publishing, Ltd. PWC, 2014. Airlines & Airports. [Online] Available at: [Accessed 19 May 2015]. Sabre Air Solutions, 2011. The Evolution Of The Airline Business Model. [PDf] Available at: [Accessed 21 May 2015]. Starkie, D., 2008. The Airlines Industry in a Competitive Environment: A United Kingdom Perspective. [PDf] Available at: [Accessed 21 May 2015]. The Telegraph, 2014. easyJet maintains low-cost model despite business and frequent flier focus. [Online] Available at: [Accessed 21 May 2014]. The Telegraph, 2014. Low-cost airlines have come a long way. But who will win the battle? [Online] Available at: [Accessed 19 May 2015]. Vidović, A., Štimac, I. and Vince, D., 2013. Development Of Business Models Of Low-Cost Airlines. International Journal for Traffic and Transport Engineering, 3(1), pp. 69 – 81. Appendix easyJet plc is one of the significant low-cost airline carrier in the United Kingdom. Widespread network of the company has integrated more than 32 national and international countries through approximately 700 routs. In 2014, easyJet plc has become the largest airline company in the United Kingdom through capturing 20% of the domestic market share. The company has been able to control such broad network and the operational activities associated with this through the contribution of an efficient and skill-enriched human resource team of 8,900 people, mainly from Europe and United Kingdom (Ford, 2009). Such efficient management systems and various strategic initiatives have facilitated the company to acquire revenue of £4,527 million. Apart from the UK market, easyJet plc has gained considerably large market share in France (26%), Germany (62%), Spain (13%) and Netherlands (9%). Success of EasyJet plc can be attributed to the capability of the company to formulate superlative business strategies that help the company in determining long term business objective and through implementing the strategies effectively. Considering the business strategies, EasyJet plc is engaged in corporate restructuring i.e. merger and acquisition since inception in 1995 in order to gain competitive advantage in the UK as well as international airlines industry. Other business strategies involve launching e-ticketing system, e-check in facilities, inclusion of fuel efficient aircraft, continuous capacity expansion and other latest technologies. Efficient implementation of all these strategies have facilitated the company to enjoy huge competitive advantage and achieve the position of second largest low cost carrier in Europe and the largest short-haul carrier in the United Kingdom in 2014 (easyJet plc., 2013). Read More