Strategic Management: Easy Jet - Case Study Example

Running head: strategic management: EASY JET 22nd February Introduction Easy Jet is a United Kingdom based airline company .Its operations are local and international serving over 600 routes in more than 30 countries. Easy jet leaders are John Barton as the chairman and Carolyn McCall as the C E O. The company was founded in1995 and since then it has grown rapidly due to the demand from its customers to open filling stations hence the traveling cost going down (Kotler 2011). Easy jet initially started operating within two routes this is from London to Edinburgh but later they established an international route to Amsterdam. Across Europe, Easy jet has got more than 20 bases and slots in Gatwick being the biggest. The purpose of this paper is to discuss the strategic analysis of Easy jet Airline Company. An analysis on competitive/industry environment Europe has got many airlines hence causing a wide range of competition to the Easy jet. One of the major competitors of Easy Jet is Ryan air (Parmeshwari, 2006). Ryan air is a low cost Irish company that is the greatest rival to easy jet. Ryanair uses a strategy of less cost and still offers the same services that are offered by Easy jet hence more customers and a double profit compared to Easy jet (Macalister, 2010). There is yet another great competitor for Easy jet and this is a Germany based company by the name Air Berlin. Since 2012 Air Berlin has been one world group and also offered it services outside Europe. Due to this stiff competition Easy jet has come up with modified strategies to improve their services (Dacko, 2008). First they assured to be vigilant on the safety of its customers. Additionally, the company values the security of the employees and customers and also improves its sustainability. Routes improvement and focus on building of bases and slots across Europe (Hochbaum et al, 2011). Easy jet also uses a strategy based on travelling from point to point within the airports in Europe at low cost hence making a lot of profit. Easy jet is also committed to engage the public by offering employment hence their strong relation with members of the public as a result increasing their trust in them. Easy jet also implemented a policy called “financial discipline”; this meant giving high returns to its shareholders but still their balance sheets remaining strong. The company also decided to increase the number of its air crafts, they bought a plane worth three million Swiss francs in 1998 that started its operation to franchise, this being the first base out of the United Kingdom (Sahney et al 2010). Later in the year 2002, Easy jet bought yet another craft worth about 375 million Euros. Bristol Airport, London stansted Airport and East Midlands airport where inherited by Easy jet thus making the number of their fights almost to double. During the year 2002, Easy jet opened yet another air base at Gatwick airport (Goldstein and Lee, 2005). The company also opened yet other bases in Italy, Germany and Spain. According to Easy jet’s statement in 2007, there are the leading compared to other European airline operators (Kotler, 2010). In order to operate a base in Manchester Airport Easy jet and GB Airport entered into a deal worth £103.5 million where Easy jet was to purchase all the share capital of GB airport (Scott, 1994). The 11th base at United Kingdom was launched in 2011 at London South end Airport which offered flights to various destinations which included Ibiza, Jersey, Faro, Barcelona, Belfast International, Malaga, Amsterdam, and Alicante. Easy jet’s, Chris Kennedy who its CFO celebrated the promotion of the airline to Financial Times Stock Exchange 100 and later launching the 11th route from Gatwick Airport offering to Moscow direct from London. In Hamburg Easy jet opened its 23rd base consisting of 3 A319 aircrafts. Resources, capabilities and competencies Easy jet just like many other companies go through tough challenges and threats, one them being the increasing of complexity .Airlines business has rapidly grown and its model developing to include unbundled pricing for example dispatching of channels such as GDSS and seating allocation which has added complexity. These could be a threat to the company if the entire managing team does not look at it keenly. Also the increasing price of airport is also another threat to Easy jet (Heffernan, 2014). The company has also borrowed a business model which was popularized by Southwest Airline. The purpose of adapting the model is to cut the cost in the European markets which included offering complimentary snacks to its passengers free of charge and also giving free connecting flights to its customers. Easy jet has made a progress in development of their current completive position. According to Lomax and Raman 2006, competitive advantage is when a company can outperform it task to its competitors and still make a range margin of profit. It can also be, creating a greater economic value than that of your competitor (Barney, 2010). Easy jet is classified as No- frills airline the reason being that it offers a low fares to its customers but it does not offer the unnecessary services. Easy jet also uses a business philosophy which indicates that a carrier can fly as many times as possible in a day to low cost airports basing it operation to the size of the market (David, 1996). The aim of this strategy is to maintain at least 30%- 40% to known airlines over their cost advantage. Low prices strategy in Easy jet can is also used to attract the customers. The company offers low prices to its competitor but still offering the similar products and services to those offered by its competitor (Johnson, 2005). The best way to succeed in this strategy is to mark the key points in which the competitor is not interested in, and the other one is to place a reasonable price to consumers (Johnson 2005). Easy jet uses a strategy that indicates that when you have a passport you can travel to any place within domestic flights. Easy jet has got a great brand name in the airline industry. They also own a great popularity amidst its customers for their efficiency and low fares. The company also uses internet to connect with their customers making them unique from its rivals (Baldauf et al 2014.). Easy jet also uses aircrafts and airport efficiently helping the company to cut its costs. The company has also done away with single aircrafts and purchased bulk aircrafts hence reducing the cost of maintenance. Easy jet does not have business classes in its airlines hence losing travelers customers. The company also does not offer other mode of booking apart from online booking making it inconvenient for the elderly people. Although Easy jet has been able to outdo its competitor there are still some issues that are out of its reach, for instance the rising cost of fuel, increasing charge of the airport and low salaries to its employees (Kerin, 2012). Also other incoming companies are imitating the no frills strategy hence threatening Easy jet company. GB airways currently operating under a brand based in British airways to North Africa and southern Europe had an agreement with British Airways which was under Franchise and it was due to the march 2008 (Laird, 2001). As quoted by Easy jet Chief executive Andy Harrison, the acquisition will help both their customers at London Gatwick which is the largest base and catchment area which is attractive and it will allow Easy jet to establish itself fully through the large numbers of slots (Garrahan, 2004.) Easy jet offered to purchase GB airways these bringing the end to the Franchise agreement to an end. This deal between Easy jet and GB airways was to take duration of at least eight weeks, within that period Easy jet will operate normally but after the deal is done, GB customers will either rebook with Easy jet or they will be fully refunded (Koc, 2002). Easy jet and Hotelopia at the year 2004 came up with an idea of launching a subsidiary first choice holidays. These hotels offer accommodation services to the Easy jet customers across all its networks (Buchanan, 1982). While booking an Easy jet ticket through the internet, the number of hotels to their destination are directed to them, hence the company advertising their hotels (Tungate, 2007). The relationship between Easy jet and Hotelopia grown even further at 2007 and launched Easy jet holidays which offered a trust travel association with a protected packaged holiday which was composed of the accommodation products from Hotelopia and Easy jet flights. Conclusion It is evident that easy jet company has performed greatly since it started back in the year 1995. The company has used strategies that have helped them to be always ahead of their competitors. They have become a great and a huge profitable company, they should know that their rivals are not inactive and are still working hard towards bringing them down (Keddy, 2001). They should also put some marketing spies to investigate on what their rivals are doing and also what they plan to do. In addition to that they should set aside some money to cater for any expansion or to make a change (David, 1988). Easy jet can also expand its business to the growing economy. They can also sign contracts and agreements with these growing economies to expand its operation to these countries. In this way, the company will create its popularity and also achieve great profit margin. Lastly, they should invest in advertising their services to these developing economies. References Baldauf, A. Engqvist, L and Franz J. 2014. Diversifying evolution of competitiveness. Nature Communications 5: 33. Buchanan, E. 1982. Marx and Justice: The Radical Critique of Liberalism. Philosophy and Society Series. Rowman & Littlefield Publishers, Dacko, G. 2008. The advanced dictionary of marketing. New York: Macmillan Publishers. David A. 1996. Marketing Management and Strategies. New York: John Wiley and Sons, 1988 David, A. 1988. Developing Business Strategies. London: John Wiley and Sons. 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