Analysis of the Easy Jets mission statement's significance - Essay Example

The EasyJet was founded by Sir Stelios Haji-Ioannou in 1995, and he and his family are the major shareholders in easyJet PLC . Sir Stelios separatelyowns easyGroup IP licensing Ltd , the company that owns the “easy” brand and licenses it to the airline but also other companies. There are no "cross shareholdings" between easyJet and these other easyGroup licensee companies. easyJet PLC operates independently from the other companies, although some "cross-marketing" agreements do exist on arms length terms. easyJet currently has operating bases throughout the UK and mainland Europe. It is a truly European operation and was one of the few airlines to take advantage of the reforms offered by the single European aviation market. easyJet keeps costs low by eliminating the unnecessary costs and frills which characterize traditional airlines.1 Analysis of the Easy Jet’s mission statements significance to current circumstances The mission statement of an organization can very crucial for a number of reasons. This can be a very effective tool for getting senior managers to talk about their differences and thrash out a common viewpoint. Mission statements are more usually an expression of a companys purpose and ambition. The mission statement of a company is a sort of company flag to rally round and a signpost for all stakeholders. Mission statement defines the values and behaviour standards for managers and stakeholders. A good mission statement is an influential document designed to give lucidity and evoke an emotional response. A mission statement must not be too far ahead of the current situation or it will be dismissed with If they think thats how we work around here, they are as crazy as I always thought they were.2 Hence, one of the salient objectives of the mission statement of an organization is to spell out the purpose of the organization. A mission statement also guides a signpost for the stakeholders. Mission statement of EasyJet: “To provide our customers with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To achieve this we will develop our people and establish lasting relationships with our suppliers.” It is evident from the mission statement of EasyJet that the company’s target segments are the people who travel for pleasure and the business people who travel from one city or country to another city or country for business purposes. Segmentation of market can be defined as splitting the overall market into smaller submarkets that have more in common with one another than with the overall market. Subdividing the market helps a company identify the needs and satisfy those needs of individuals or originations within the chosen segments. Segmentation also permits a firm to concentrate on its strength against the weaknesses of its competitors.3 EasyJet has segmented the market in terms of usages of the services provided by it. For instance, the purpose of travelling can be business, pleasure etc. It is also apparent that Easyjet strives to provide reliable and point to point services providing value for money of its target customers. EasyJet also puts emphasis on development of its human resources. Last but not least, EasyJey intends to maintain a very good relationship with its suppliers. Analysis of EasyJet’s internal and external environment: More than one hundred low cost and low fare airlines are now operating across the European continent. The success of the low-fare strategy is significantly dependent on the maintenance of a low cost base. Ryanair and EasyJet are maintaining high margins in spite of reducing yields through disciplined cost management. Lower costs are the only competitive advantage in the short-haul economy sector since air travel is effectively a commodity product.4 Apart from the full service airlines, EasyJet’s main competitors are Ryan Air and Air Berlin. Marketing Audit A marketing audit is a comprehensive, systematic, independent, and periodic examination of a companys -- or business units -- marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the companys marketing performance. A major principle in marketing audits is to start with the marketplace first and explore the changes that are taking place and what they imply in the way of problems and opportunities. Then the auditor moves on to examine the companys marketing objectives and strategies, organization, and systems. Finally the auditor may move to examine one or two key functions that are central to the marketing performance of that company in more detail. A full marketing audit as having six major components; 1) Marketing environment audit 2) Marketing Strategy Audit 3) Marketing organization audit 4) Marketing systems audit 5) Marketing productivity audit 6) Marketing function audit.5 Market environment audit of EasyJet: EasyJet is operating in an increasingly competitive business environment with augmentation of popularity of the budget airlines across Europe. As the main competitor of EasyJet, Rayanair is expanding its networks. So, to remain competitive Easyjet has to take initiatives to remain competitive. Marketing Strategy Audit of EasyJet: EasyJet is currently pursuing the strategy of paperless operation, ticket-less travel, efficient use of airports, and use of internet. The strategies followed by the EasyJet seem to be in line with its goals. Now approximately 95 % of all seats are sold over the Internet. However, EasyJet should try to make 100% of its tickets on the internet to further reduce cost. Marketing organization audit of EasyJet: EasyJet favours an informal company culture with a very flat management structure. So, it stands to reason that EasyJet’s marketing, sales, promotion and other departments collectively and harmoniously towards the marketing goal in particular and the organizational goal in general. Marketing systems audit of EasyJet: The marketing audit reveals that marketing is being carried out with adequate systems of planning, implementation, and control on sales forecasting, sales goal and quota setting, marketing, planning, marketing control Marketing productivity audit of EasyJet: The main of marketing productivity audit is to find out whether marketing cost could be reduced without loosing profit. EasyJet seems to be doing a good job here. Marketing function audit of EasyJet: Advertising themes, media, and timing of EasyJey do not seem to be as effective as its main competitor and are not evaluated for their effectiveness. SPACE analysis Strategic Position and Action Evaluation (SPACE) (Rowe et al., 1989) analysis considers industry strength and relates this to competitive advantage and financial strength of a firm. SPACE analysis sums up a great number of strategic issues on a few dimensions. It plots dimensions of the firm (its financial strengths and competitive advantages) against industry dimensions (environmental stability and industry strength). Environmental volatility is seen as being counterbalanced by economic strength of a business. Industry strength focuses upon attractiveness of the industry in terms of growth potential, profitability. A firm operating in the industry needs to have a competitive advantage. SPACE analysis involves rating a firm and its competitors on various factors. EasyJet has a largely aggressive quadrant posture and enjoys major advantages; nonetheless it is likely to encounter threats from competitors like Rayan Air, Air Berlin and so on. A competitive posture is typical of a business with a significant advantage in an attractive industry. Nevertheless, the firm’s economic strength is insufficient to balance the environmental volatility. Such a firm obviously needs more financial resources to maintain its competitive position. A conservative posture is typical of a company operating in mature markets where the dearth of need for investment has generated financial surpluses. A firm with a defensive posture is evidently defenceless. It has little residual strength to fight competition.6 SWOT Analysis: Business strategy is equated widely with crafting and maintain a profitable fit between a commercial venture and its environment. SWOT analysis, which enquires into strengths, weaknesses, opportunities and threats (SWOT) is the traditional means of searching for insights into ways of realizing the desired alignment.7 The strengths, weaknesses, opportunities and threats of EasyJet are being discussed below. Internal factor External factor Favourable factors Favourable work atmosphere, High employee motivation, Reliable technology, (Strengths) Strong brand image, Growing popularity of budget airliner, (Opportunities) Unfavourable factors Family owned (may cause poor corporate governance), Limited destinations, (Weaknesses) Aggressive competition, Entry of potential market player, (Threats) Marketing objectives of EasyJet: Marketing objectives are the centre of managerial action, providing direction to the plans. An objective will make sure that a company knows what its strategies are expected to achieve and when a specific strategy has accomplished its purpose. Without objectives, strategy decisions and all that follows will take place in a vacuum. An objective contains the following three elements: The attribute chosen as a measure of efficiency, eg market share; The yardstick or scale by which the attribute is measured, eg operating period (by end of Year 3) T he value on the scale which the organization seeks to attain, eg 25 per cent market share.8 The marketing objective of EasyJet is to be the industry leader in terms of profitably and market share. The company intends to become this objective within the next years by way of expanding its existing network and offering differentiated customer-need-focused services. In the medium term, the objective of EasyJet is to increase its market share by at least 15%. Core strategies of EasyJet: The goal of a strategic plan is to select which market segments offer the highest profit potential and then determine and fund the resources needed in those market segments so as to build competitive brands. The objective of the operating plan is to translate these resources into business strengths to make the brands competitive. Business strengths mean factors such as quality, price, method of distribution, packaging, and marketing effectiveness. Competitiveness means brands equal to the competition in performance.9 The core strategy of Easy Jet is to reduce cost in all possible way to be able to provide its services to its clients at a highly competitive price. The also carry out promotional sales activities and offer airfares much lower than original tariff. Since the price of the product is the most significant factor in the budget airline industry, it is not surprising that EasyJet mainly focuses on cost reduction. It is done in a number of ways as follows: Use of the Internet to reduce distribution costs: easyJet is one of the first airlines to embrace the opportunity of the Internet when it sold its first seat online in April 1998. Now approximately 95 % of all seats are sold over the Internet, making easyJet one of Europes biggest Internet retailers. Maximize the utilization of the substantial assets: Maximizing utilization of each aircraft significantly reduces the unit cost. Ticket-less travel: Passengers instead receive an email containing their travel details and booking reference when they book online. This helps to reduce significantly the cost of issuing, distributing, processing and reconciling millions of tickets each year. No free lunch: Passengers can purchase food on-board and. No food is served free on board. Efficient use of airports easyJet flies to main destination airports throughout Europe, but gains efficiencies through rapid turnaround times, and progressive landing charges agreements with the airports. By reducing turnarounds to 30 minutes and below, easyJet can achieve extra rotations on the high-frequency routes, thereby maximising utilisation rates of its aircraft. Paperless operations Since its launch easyJet has simplified its working practices by embracing the concept of the paperless office. The management and administration of the company is undertaken entirely on IT systems which can be accessed through secure servers from anywhere in the world enabling huge flexibility in the running of the airline.10 Implementation and control: EasyJet will carry out a wide range of marketing activities with a view to achieving its marketing objectives. All employees of Easy Jet will be made aware of their individual responsibility as well as the overall strategic plan of the company. The promotional activities will particularly be carried out focusing the targeted market segments. Periodical evaluation will be conducted to make sure that the devised plan is being implemented to produce the intended results. References Books Luther, W. M., 2001, Marketing Plan : How to Prepare and Implement It. New York: Amacom, P. 40 McDonald, M, 2002. How Come Your Marketing Plans Arent Working? : The Essential Guide to Marketing Planning. London: Kogan, P.82 Paley, N, 2001, Marketing Strategy Desktop Guide, London: Thorogood, P. 124 Proctor, T, 2000, Strategic Marketing: An Introduction, London: Routledge, P. 75 to 77 Journals Campbell, A, 1997, Mission Statements, Long Range Planning, Vol. 30, No. 6, pp. 931 to 932 Kotler, P, Gregor, W. T, Rodgers, W.H, 1977, The Marketing audit comes of age, Sloan Management Review, Vol. 18, Issue 2, P. 25 Valentin, E.K, 2001, SWOT Analysis from a resource based view, Journal of Marketing theory and practice, Vol. 9. Iss.2 P. 54 Internet http://www.easyjet.com/en/About/Information/ http://www.researchandmarkets.com/reportinfo.asp?report_id=222300 http://www.easyjet.com/en/About/Information/ Read More