Marketing Communications: Brands, Experiences, and Participation - No Frills Airline - Case Study Example

EasyJet A No frills Airline Contents Executive Summary 4 EasyJet plc 5 Objectives 5 Business Level Strategy 6 Competitive Advantages 6 Main Findings8 Identification of current competitive strategy utilized by EasyJet in the development of their competitive position and their actions to accomplish the strategy (task 1) 8 Less value added facilities 8 Customer’s attraction 9 Expense reduction 9 Efficient use of airports 9 Free services 10 Turn around 10 Evaluation of the current competitive strategy used by EasyJet in the development of their competitive position (task 2) 10 Advantages 12 Outperform competitors: 12 Economies of scale: 12 Long term value: 13 Disadvantages 13 Price wars: 13 Less value added facilities 13 Conclusion 14 Recommendations for ways forward for the organisation (task 3) 14 References 16 Executive Summary All these information are derived from books, journals etc. Advantages of Easyjet airlines reap from its cost leadership strategies to be discussed in detail. They are as follows: 1. Its cost leadership strategy helps to create a strong market. 2. Economics of scale help it to deliver different services at a low cost. 3. Its strategies provide long term value to the company. Disadvantage of Easyjet’s strategies are as follows: 1. Company faces prices war for its low price strategy. 2. Its cost cutting strategies do not provide any extra facility to its customers. Recommendations 1. The effectiveness of carrying out its cost leadership strategy. It can work on some other factors as well. 2. Financial cost reduction. 3. Implement strategies for handling rising fuel cost. . Introduction EasyJet plc EasyJet is a British airline company having its headquarters in Luton. This airline carrier company operates low cost business process. EasyJet is the largest airline company of UK by its number of passengers. The company is operating its service both in domestic and international route in 30 countries of the world. The company has around 8945 employees as on September 2013. The firm is focusing on European market. This airlines company deals with more than two hundred aircrafts. EasyJet is present in different parts of UK like France, Italy, Switzerland, Spain, Germany and Portugal (Assael, 2005). Objectives The main objectives of this report are as follows. Identify and highlight the competitive strategy that Easyjet have utilized for developing their competitive position. Examples of their actions are given to for accomplishing competitive strategy of Easyjet. Competitive strategy of Easyjet is evaluated for developing its competitive position. Advantage and limitation of strategy in the current business environment are mentioned. Appropriate recommendations are given to the organization based on different findings in the case study. Business Level Strategy Business level strategy means the vital decisions which are implemented by the company for a long period of time. It affects the business operational activities. These strategies help the company to gain competitive advantages in the market. Companies can focus on individual customers by implementing this strategy (Assael, 2005). Competitive Advantages The advantage which companies get by implementing different business strategies in the competitive market is known as competitive advantage. EasyJet low cost business process provides many competitive advantages to the business. “No frills” strategy helps this airline company to earn a good amount of profit from its business. It attracts a large number of passengers, who contributes a lot in business growth of the company. A model of competitive advantage will show a clearer picture. The diagram below shows resources coupled with capabilities and competencies will lead to cost advantage which in turn paves the path of value creation. The study has used Porter’s generic strategy model to evaluate the effectiveness of the current strategy used by the company and to recommend strategic plan for the company. Main Findings Identification of current competitive strategy utilized by EasyJet in the development of their competitive position and their actions to accomplish the strategy (task 1) The competitive strategy used by EasyJet contributes a lot in its growth and success of the company. By this strategy the firm improves its performance and makes its performance better than its competitors. It helps the company to earn more profit. This competitive strategy of the firm creates high economic value which beats its competitors (Assael, 2005). EasyJet low cost strategy offer low fares service to its customer. In its generic strategy the company follows cost leadership process (Assael, 2005). Less value added facilities The company believes in the thing that it can make money flying its aircraft three times a day by maintaining low cost (Baker and Hart, 2008). For this reason the firm operates its flight service approximately in 600 routes covering 30 countries. It operates its business in a limited market space. This competitive strategy contributes a lot in developing its business position in the market. EasyJet operates its business in a large scale. This helps the company to lower its business cost for economies of scale. The firm has expanded its market for globalizing its business operation. Its primary market is Europe, but the company provides its airlines service to many other countries for attracting more customers (Carpenter and Hamilton, 2008). Easyjet has achieved the strategy of competitive advantage by operating in many countries across the globe. Customer’s attraction The company provides various other services, at a very low price which attracts many customers. For developing its competitive position the firm has made partnership with Gate Gourmet. It benefits this airlines company to get flight merchandise at a low cost. Europcar is also a partner of EasyJet and it provides very affordable car services to its customers. Moreover, EasyJet have done agreement with many holiday companies which provides low cost services like transfer and accommodation for EasyJet. The customers of EasyJet are provided with travel insurance by Aliva and UK Holidays (Gelder and Woodcock, 2003). The company can offer its service at a low price for all of these agreements. Expense reduction By providing low fare offer the company eliminates all unnecessary services to its customers. For lowering its cost it does not provide its customers print tickets. The customers only have to show their confirmation number which this airline company has provided for taking flight service. They receive all the booking details in their mail which helps EasyJet to save paper (Hooley, Piercy, and Nicoulaud, 2012). This process has a huge contribution in saving much cost and reconciling huge number of transaction every year (Joshi, 2005). Efficient use of airports Airports are efficiently used by this company which reduces many of its costs. Rapid turnaround time of its flights helps the company to gain its efficiency in its business process. This influences the firm to develop its competitive position. The company has made agreements with different airport for adjusting the charges of progressive landing (Keller, 2008). It is known that airports indulge a charge for using their services. So the company has to bear that charge as long as their flights use the services of the airports. Easyjet has moved into strategic coordination with airports from across the world which helps to reduce the costs. It has implemented strategic measures so that the turnover time of the flights is less and they can use optimal use of resources. Free services Free service is not provided by EasyJet. Customers have to purchase foods and drinks in flights. All of these cost effective and cost controlling measures influence EasyJet to hold a competitive position in the current market scenario. The company makes maximum utilization of its resources and assets. Turn around The air craft of this company flies very intensively with less turnaround time which helps the company to reduce its unit cost (Ulwick, 2005). The firm also do not have the facilities of providing cargo service to its customers. By these things EasyJet maintain low production cost. The passengers of this airline company have to offload their luggage in every stage of their journey as the company do not provide the service of transferring their luggage between flights. This is another cost reduction measure implemented by EasyJet (Wintzer, 2007). The objective of Easyjet has been maximization of the assets and the company is taking is every other measure to help its cause. Thus by reducing the turnaround time it contributes on the balance sheet in a positive fashion. Evaluation of the current competitive strategy used by EasyJet in the development of their competitive position (task 2) Cost leadership strategy is implemented by EasyJet for developing its position in the competitive market. This strategy has helped the company to generate more revenue and attract more customers. Cost leadership strategy is a part of Porter’s generic strategy model (Barney, 2006). EasyJet has got many competitive advantages by implementing this theory. By maintaining cost leadership business process the company develops a wide range of business opportunity (Onkvisit, and Shaw, 2009). EasyJet provides mass flight service very efficiently at a low cost which influences the company to use internet effectively. This process helps the company to reduce its distribution cost. The process of online ticket selling helps EasyJet to reduce its major operational cost. EasyJet differentiate its service quality on the basis of this strategy. It helps the company to establish a unique brand image (Dahlen, 2009). The following diagram will show a clearer picture. The three angles of the triangle have been named as cost leadership, focus and differentiation. It shows the combined effects of the three strategies lead to strategic wilderness. Sometimes incorrect implementation of the three strategies as discussed above will lead companies to get stuck in the middle. (Porter, 2008). Figure 1: Porters three Generic Strategies (Source: Meek, Meek and Bwsor, 2003) There are some problems associated with EasyJet’s cost leadership process. It hampers sustainable development of the company. The company only works on objectives of lower its business cost. Strategies are developed on the bases of this idea. (Fill, 2013). Advantages Outperform competitors: Cost effective leadership has a strong advantage on the airlines business of EasyJet. It helps the company to hold a strong positing market by challenging its competitors. Its strong market position acts as a barrier against the small companies in entering into the business of airlines industry (Alba and Hutchinson, 2008). Its low cost of tickets attracts many customers and influences them to purchase its services (Ulwick, 2005). The competitive world brings in competition in every business affair. Easyjet is not free from competition. The only way to cement its market is by outperforming the existing competitors. Easyjet focuses on providing the best customer facilities and services to its passengers so that they choose their flights on their next visit. In this way they can gain reputation in the market and develop a large passenger base. The sales as well as profit levels will take the steep rising curve and Easyjet will be at a much stable position than its competitors. Economies of scale: EasyJet gets the benefit of economics of scale for providing huge services (Wintzer, 2007). Strategic alliance and partnership are done by EasyJet which helps the company to provide high quality of services to its customer at a low price (Henry, 2011). Since Easyjet operates in many countries it is easy for them to achieve economies of scale. They can offer passengers good quality services at affordable rates. This is also a way to reduce the operational expenses. Long term value: Cost effective leadership creates a long term value chain for the company. EasyJet provides almost equal quality of services like other airlines companies, but at a low price which differentiate the brand among other (Hoskisson, Hitt, Duane and Harrison, 2007). Disadvantages Price wars: Low cost strategy of EasyJet leads to generate price war. Different other airlines also try to cut down its prices like EasyJet. By this process, these companies will offer tickets at a low price. As a result, almost all the companies will maintain a low priced fare. It will lead to generate price war in airlines industry. A minimum change in price will create a huge effect on Airline Company (Lasserre, 2012). Less value added facilities Cost leadership strategy only focuses on cutting down its cost. Therefore it prevents the company to give extra facilities to its customer. As a result, the value added facilities of this company is very low. For this reason, the company loses many customers who prefer in getting various value added services in flights (Mcfarlin, and Sweeney, 2008). This strategy is effective in the short term. But in the long run, the company will face various problems for reducing its different operational costs. Airline industry has a very strong competition. Now a day many airlines companies are applying this strategy. So, the customers are getting many options regarding their choice of flight service (Porter, 2008). Conclusion This paper deals with the airline company EasyJet. This British company has its strong presence in UK and provides its flight services in many countries of the world. The firm has a large customer base. It maintains a low cost strategy which helps the company to gain maximum number of customers. The company has adopted different strategies and policies for delivering its different services to customers at a very affordable price. The service of Easyjet is differentiated on the basis of cost leadership strategy. The firm reduces its different unnecessary expenses for making its business process simple and cost effective. The main focus of the company is to provide good quality of service at a low price. The Cost leadership strategy of EasyJet provides different competitive advantages to the company. It helps the company to generate more revenue in recent years. Its tickets are prices very low which attract huge number of customers. Recommendations for ways forward for the organisation (task 3) The success of EasyJet Company lies in the effectiveness of carrying out its cost leadership strategy. For improving its business position the company can work on some other factors which will contributes more its business process. EasyJet have to focus on Airbus A319 and Boeing 737 for securing competitive rates which will benefit the company in maintaining its cost (Ulwick, 2005). It will help to reduce financial cost of the company. The company should also increase its focus on reducing its different cost of ground handling (Peng, 2013). It must continue to reduce costs. The cost of fuel is rising day by day which creates a strong impact on Airlines Company. Therefore it is recommended to EasyJet in implementing different effective strategies for hedging. It will help the company to get fuel at an affordable price which will match its cost leadership strategies (Proctor, 2014). References Alba, J. W. and Hutchinson, J. W., 2008. Dimensions of consumer expertise. Journal of Consumer Research, 24(3), pp. 411-454. Assael, H., 2005. Consumer behaviour. New Delhi: Dreamtech Press. Baker, M., and Hart, S., 2008. The marketing book. Great Britain: Routledge. Barney, J.B., 2006. Looking inside for competitive advantage. Academy of Management Executive, 23(2), pp. 197-245. Carpenter, G. S. and Hamilton, A., 2008. Handbook of marketing strategy. Stamford: Cengage. 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