what are the risks associated with easyjet's strategy

It also offers passenger a few more extras, such as allowing them to check in at the airport without charge (Ryanair charges passengers who dont check in online) and a loyalty program that confers priority boarding privileges. As hard as it has tried to inoculate itself against the pressures of the pandemic and to convince passengers it will be safe to fly, its fate remains up in the air, subject to unexpected and unwelcome turbulence. This is done in order to maximise the yield from a flight, as many of the costs associated with running a flight are fixed relative to the number of passenger on board. Ryanair continues to lower costs, which enables it to persist lowering fares aggressively. From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. This eliminates the need to any commissions to external sales agency. Diversification. The threats are in terms of alternative holidays Disneyland Paris via Eurostar (Euro tunnel) and P&O cruise. Currently, around 12% of boarding passes issued by easyJet are mobile passes, although this can be as high as 50% for some flights. On the other hand, risks which produce The value chain analysis will show the total value added by the airline industry and EasyJet. TECHNICAL Changes in retailing methods as such ticket sales via the Internet is now a common place in air travel, passengers receive an email containing their travel details and booking reference when they book online. Implications from the strategy chosen. The customers of EasyJet have been using the Internet for making bookings. Finally, opportunities may also exist in the area of innovation and alliances, how about a joint venture scheme with Ryanair to maintain and enforce the low cost competitive advantage. He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. This strategy is focused on keeping costs down and EasyJets policy of no free lunch and efficient use of airports by limiting turnaround to 30 minutes. This will provide an evaluation of the external business environment in which the company operates. Implementing this strategy successfully depends on EasyJets ability to deliver enhanced benefits to customers over its competitors together with low prices. In 2020, it hemorrhaged the same amount. Also, mainstream airlines are now lowering fares to engage in price competition. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. EasyJet in its pursuing of low-price strategies may be prepared to accept the reduced margin either because it can sell more fares than competitors. Many of EasyJets competitors in Europe are national flag carriers: Air France, KLM, Lufthansa, SAS, Iberia, TAP Air Portugal, Swiss Air, and British Airways. But these savings barely stanched the arterial bleed of cash gushing from the companys coffers:In 2019, the airlines operations had generated more than $1 billion in cash. Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. liability for the information given being complete or correct. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. We will consider the value chain for EasyJet in more detail later in our discussion. The airline founders misgivings had only mounted after the aircraft maker agreed in January 2020 to deferred prosecution agreements with the U.S., France, and the U.K. and to pay billions of dollars in fines stemming from charges that it had for years routinely bribed airline executives to secure contracts.When the pandemic struck, the aggrieved founder saw an opportunity to force EasyJet to abandon the deal. Lundgren and the board were frustrated. Appendices 1. The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. Our mission to make business better is fueled by readers like you. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Yield management is a form of risk management and therefore, adds value. This analysis will highlight the fundamental changes that the airline industry is undergoing, especially; in defence to the turbulent environment it faces from exogenous forces (terrorism, oil prices, SARS etc) and endogenous forces. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. Porter through the use of the value chain illustrates how resources should be utilised to enhance least-cost production or differentiation strategies (the generic strategies suggested by Porter). EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. We are seeing significant benefits already from operational resilience processes and predictive maintenance. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. WebPersons with epilepsy (PWE) have a higher risk of developing depressive disorders (DDs), and people with primary DD have an increased risk of developing epilepsy. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Feeling powerless is one of the worst feelings, not just in business.. Therefore, demand led with proprietary yield management system. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. This results in high levels of asset utilisation and reduced unit costs. The company carries out It takes up to last extend in the time. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. As funding from operations are clearly a major contributor to value creation. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! The attackers stole more than 9 million customers e-mail addresses and travel details and also accessed credit and debit card details of more than 2,200 customers. The way the report has classified the risk is whether the risk is a generic risk that will affect the whole industry of whether the risk is specific to the company. The findings in this And, finally threats of any takeover bids from national airlines. Having considered the possible future opportunities what are the potential threats that EasyJet needs to bear in mind? EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. Product Development. But with new, more infectious variants of COVID-19 spreading rapidly in Europe, in October renewed lockdowns were imposed across many parts of the U.K. and from Helsinki to Tel Aviv. The threats are in terms of fines and rise in cost of raw materials. easyJets strategy will seek to continue to lead the market in sustainability, working with our partners to achieve our Net Zero Roadmap and the decarbonisation of the aviation industry. Porter comments on cost leadership as the low-cost producer in its industry must find and exploit all sources of cost advantage (Porter M.E (1980)). This time, he succeeded in scheduling a showdown vote for May 22, 2020. LEGAL The European deregulation of the commercial aviation provided both major strategic threats and opportunities, the national mainstream airlines faced severe price competition from discount carriers. And he was not a happy shareholder: For a decade, he had sparred with a succession of EasyJet CEOs and boardsfaulting them for overly ambitious and costly expansion plans and for ordering too many new aircraft from manufacturing giant Airbus. EasyJets decision to use its aircraft as collateral for loans it needed to get through the pandemic means that its cost base will be higher going forward, once debt service is included in the calculations, says Savanthi Syth, an airline analyst for brokerage Raymond James & Associates: Theyve traded liquidity for today in exchange for their aircraft ownership costs going up in the future.. By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Risk 2: Geopolitical instability. All office-based employees are encouraged to dress casually. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. EasyJet also have a reputation for paying low wages in line with its low cost strategy. At the same time that it was offloading planes to raise cash and placing others into long-term storage in boneyards, the company still took delivery of 14 brand newAirbus A320 and A321 Neos. Savings made from e-commerce is another source of value creation. The concept of the value chain is particularly useful in understanding an organisations strategic capability since its concentrates on value activities and the linkages between activities rather ran just resources. We mentioned the seven most common risk events above, but other project risks could include contractor failure, unexpected life events, data transfer issues, shifting priorities, legal risk, market risk, and project deferral. 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