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Small Business Enterprise - Assignment Example

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With growing complexities in the industry, airline companies today are striving for the development of an efficient operation system to promote customer satisfaction and obtain competitive advantages thereon. Air transport has emerged as among the most important services, which…
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Small Business Enterprise
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Small Business Enterprise Table of Contents Introduction 3 Performance of Small Business Enterprise 4 1. Strengths and Weaknesses of Easy Jet andRyanAir 5 1.2. Advantages and Disadvantages of Small Business Enterprise on Their Performance Measures 6 Task 2 7 2.1. Recommended with Justification, Appropriate Actions Required to Overcome the Indentified Weaknesses in the Business 7 2.2. Analyse Ways in which Existing Performance Could Be Maintained and Strengthened 9 2.3 Recommendations for New Business Area Expansion 10 Task 3 11 3.1 An Assessment of Existing Business Objectives and Plans 11 3.2 Revise of Business Plans to Incorporate Appropriate Changes 12 3.3 Action Plan to Implement the Changes 12 Task 4 14 4.1 Impact of the Proposed Changes on Business and Personnel 14 4.2 Planning of Managing the Proposed Changes in Business 15 4.3 Monitoring Improvements in the Performance of Business 15 Recommendations 16 Conclusion 17 References 18 Bibliography 23 Appendix 24 Figure 1: Revenue per seat of EasyJet 24 Figure 2: Net Profit Growth of RyanAir 24 Figure 3: Quality and Value Comparison of EasyJet and RyanAir 25 Introduction With growing complexities in the industry, airline companies today are striving for the development of an efficient operation system to promote customer satisfaction and obtain competitive advantages thereon. Air transport has emerged as among the most important services, which has resulted in both social and economic benefits of a country, further aiding the industry with adequate political and economic assistance. In growing market of aviation, transportation networks have been observed as playing a crucial role for business development across the globe, wherein every airline has optimized schedules for months in advance. Replicating the increasing demand for airline services, this particular facet tends to maximize the profit and accordingly, forms a major part in the strategic corporate plan, which helps the airlines to make necessary decisions for better outcomes aimed at attaining greater competitive advantages (Ashgate Publishing, n.d.). Apparently, configuration of the market structure along with the continually changing consumer demands have shaped the strategic operations executed by airline companies largely in the current phenomenon, which has further made it more challenging for the comparatively smaller companies to ensure higher degree of competitive advantages (Wiltshire, 2013). In this study, a comparative analysis will be conducted with due consideration to two airlines companies, i.e. EasyJet and RyanAir, grounded on various theoretical models. Correspondingly, a revised business plan and change management impacts for EasyJet will be interpreted in this study. 1. Performance of Small Business Enterprise EasyJet is one of the leading European Airline companies. The company mainly operates in 2000 routes and is connected with over 30 countries. The company holds a unique position in the country, nurturing a culture of innovation wherein it believes in the finding of new ways and ideas, which helps the company to make the experience easier and affordable (EasyJet plc, 2014). RyanAir, considered as an ultra low cost carrier, provides the lowest fares on air transport within Europe. The company believes that it has touched the masses with such strategy and accordingly, intends to continue with the same in the future. The company however, pays strict attention to make no compromise on the quality and value that it is entitled to provide to its customers (RyanAir, 2014). As apparent, EasyJet and RyanAir, even though operates in the same industry and periphery has unique managerial systems and ideologies. Correspondingly, their ideologies also differ substantially in their strategic management initiatives, which further raises gaps in their functionalities and causes differences in their advantages and disadvantages. 1.1. Strengths and Weaknesses of Easy Jet and RyanAir Company Strengths Weaknesses EasyJet Since its recent past performances EasyJet has been successful in attaining continuous growth in terms of its capacity and progress load factor, increasing the number of passengers by approximately 7% in 2012, which is visible through its net profit growth (refer to figure 1) EasyJet has also managed to secure customer loyalty to a substantial extent providing better experience and convenience to its customers in a consistent manner EasyJet is also enjoying a certain amount of advantage in its financial resources owing to its continually accelerating profit margin (Easy Jet plc, 2012) Extra overhead costs incurred by the company in order to suffice the growing demand of the customers, EasyJet has been facing increasing pressure on its revenue structure External pressures such as increasing fuel cost has made the company suffer largely in its recent practices The company has also been facing disruptions in gaining the desired returns from advertisement investments, wherein most of its advertising practices have been failing (Easy Jet plc, 2012) RyanAir RyanAir has always maintained low cost labour and have managed to control its variable costs rewarding it with greater financial assistance, further facilitating its profit margin (refer to figure 2) (Karaian, 2014) RyanAir has also managed to increase the number of routes for the passengers and focused to secure customer satisfaction to a substantial extent (Karaian, 2014) The company has also been focused on increasing its total capacity, rewarding the company with a superior positioning in the market (RyanAir, 2013) One of the major weaknesses of RyanAir is the increasing gap between its quality and value with comparison to that of EasyJet (refer to figure 3) (Dobrin, 2013) Notably, in the current phenomenon, huge investment is required for the organisation to increase the route and number of frequency in its air-transport services to gain competitive advantages (RyanAir, 2013) 1.2. Advantages and Disadvantages of Small Business Enterprise on Their Performance Measures The Key Performance Indicators (KPIs) used in EasyJet include its compliance with safety measures, affordability of its services to majority of its key customers, time-efficient performance standards, staff turnover, network development and financial strengths (Easy Jet Plc., 2013). In comparison, the KPIs followed in RyanAir can be observed as much simpler with principle focus on its financial performances and risk management efficiencies (RyanAir, 2013). In this context, it can be observed that while EasyJet’s performance measurement technique offers it with better control on its quality and value accreditation prospects, it also increases the disadvantages of huge investment and managerial complexities in the process. For instance, technology failure may cause massive disruptions for EasyJet being highly focused on technology upgradation on a continuous basis. On the contrary, its performance measurement technique also assists it in maintaining adequate level of quality in its service procedure, which is again a disadvantage for a comparatively simpler performance measurement process followed in RyanAir (Martinez & et. al., 2004; Amaratunga & et. al., n.d.). Task 2 2.1. Recommended with Justification, Appropriate Actions Required to Overcome the Indentified Weaknesses in the Business Threat of New Entrants: The airline market is currently observed as quite structured and operating in a systematic manner with high entry and exit barriers. As the market is a capital-intensive one with rigid industry norms, threat of new entrants can be observed as moderate to low for EasyJet (Fageda & et. al., 2007). However, it is recommendable for the company to preserve its competencies and differentiating features to restraint new entrants in the industry. Threats of Substitute Products: EasyJet faces high competition from its substitutes, as there are numerous rivals functioning in the market attempting to gain control on pricing structures. Notably, with high price differences, the substitution effects may also be observed as high for EasyJet in the current phenomenon (Fageda & et. al., 2007). To overcome this particular challenge, the company should emphasise gaining price control to ensure higher opportunity costs for buyers to purchase its substitutes. Bargaining Power of Customers: With a few recognised service providers and increasing volume of customers, buyers in the airlines industry enjoy greater bargaining power today (Shrager, 2007). To overcome this particular challenge, the company has already initiated price-cutting strategies, which has yielded greater volume in its return on investment (The Economist, 2013). It is thus suggestive that the company also delivers due attention towards raising the opportunity costs for its buyers, not only through price control mechanisms but also through quality control to overcome the rising bargaining power of its consumers. Bargaining Power of Suppliers: The airline industry and its operation mainly depend on aviation fuel, which is proportionally related to the cost of its services. Owing to this particular factor, and substantially because of the lower number of quality suppliers in the market, EasyJet shall have to face problems related to high bargaining power of the suppliers (Cordle,n.d.). In this regard, it is suggestive that the company initiates allies with its suppliers to minimise their bargaining power on the services. Competitive Rivalry: Intensity of competitive rivalry market is one of the major concerns for EasyJet also. As observed, the company has been able to maintain a substantial competitive position in the market with advantages over its major rivals, like RyanAir (Dobrin, 2013). However, to keep hold of its competitive position, the company should emphasise on continuous innovation and service improvements to differentiate from its top-most rivals. [Developed for the purpose of the Strategy] 2.2. Analyse Ways in which Existing Performance Could Be Maintained and Strengthened Strengths: In order to preserve its competitiveness and ensure continuous growth, EasyJet should focus on talent development within its workforce, which will not only promote innovation but also guarantee better change adoption. The company believes that new talents add new ideas that may further help EasyJet to take prior decisions, which will assist the company to gain better profit margin (EasyJet plc, 2011). Weakness: EasyJet’s competitive positioning has also been affected due to its limitation to provide low-cost services as compared to its rivals. Accordingly, being highly depended on technology aspects, EasyJet has also made huge investments in maintenance and the systems failure related recovery measures causing huge impacts on the competency of the company (Noakes, 2013). It is thus recommendable that the company should emphasise reassessing and modifying its cost management strategies for better efficiency. Opportunity: As the passengers’ migration across the globe has increased, EasyJet has lowered its price to offer the services in mass, rewarding it with better profitability. For instance, when in 2010, the price of the fuel was comparatively low, which assisted the company to obtain a larger profit (BBC, 2010). This further implies that the company should focus on gaining price control to secure its competitive position. Threat: Threats of substitutes, such as the low-cost airlines and rising competitive forces in the industry context, constitute the fundamental threats for EasyJet (EasyJet plc, 2001). It is thus recommended that the company focus on differentiating its services by developing those on a continuous basis to retain its competitive position in the international market. 2.3 Recommendations for New Business Area Expansion Based on the competitive and strategic position of EasyJet, it can be suggested that the airline company can expand its business by entering into the new area of airline management services. Notably, this particular business area mainly deals with providing a broad assortment of specialised flight-support services to the passengers, resulting in generating greater customer value and improved profitability (Ashgate Publishing, n.d.). As EasyJet possesses a dynamic pricing structure, implements newer technologies, utilises the accessible resources effectively and operate in diverse regions throughout the globe, the airline company can expand its business in the new business area of airline management services. Task 3 3.1 An Assessment of Existing Business Objectives and Plans Based on SOSTAC framework, the existing business objectives of EasyJet are identified to be concentrated on providing easy as well as affordable transportation facilities to the airline passengers and preserving its position as the most preferred short-haul airline carrier in entire Europe (EasyJet Airline Company Limited, n.d.). In order to attain these business objectives and compete with one of its chief business market competitors i.e. Ryanair, EasyJet has adopted certain strategies that include making deliberate efforts towards ensuring safety of the passengers, working in a collaborative method, establishing greater communication with every personnel associated with the company and sharing diverse ideas, opinions or decisions. Specially mentioning, EasyJet has also adopted certain effective global marketing tactics in order to attain the above discussed existing business objectives. Amongst these strategies, the prime ones include offering low costs for its services and following an efficiency-driven business operating mechanism among others. Based on the situational analysis of SOSTAC framework, it can be affirmed that the competitive position of EasyJet has been quite high as compared to others such as Ryanair due to the use of effective promotional strategies, broader political support and greater economic growth in certain nations wherein EasyJet operates. Specially mentioning, the airline company controls its varied operational functions by incessantly monitoring and performing routine checks of its operations (EasyJet Airline Company Limited, n.d.). 3.2 Revise of Business Plans to Incorporate Appropriate Changes It has been quite apparent that EasyJet has set its own business objectives and incorporated certain effective strategies in order to attain competitive targets. However, in this present day context, the business market competition is mounting rapidly due to certain crucial factors like increased level of internationalisation and gaining momentum of globalisation among others. Thus, with this concern, the airline company needs to make certain appropriate changes in its business plan, specifically relating to marketing mix elements, in order to compete with major rivals like RyanAir and sustain in this competitive landscape. This has been described in the following section. 3.3 Action Plan to Implement the Changes As per the action plan developed, the company will have to analyse the business market environment, as it is incessantly changing in this present day context due to wider execution of pioneering technological advancements. In addition, the airline company also needs to evaluate the preferences as well as the likings of the customers, as these are also viewed to be changing owing to the increasing level of globalisation. After analysing and evaluating the above-discussed aspects, the airline company might upgrade or develop its existing operational procedure, ensuring that maximum level of security is provided to the passengers (Slideshare Inc., 2014). These can be better understood with the help of the following pictorial illustration. [Developed for the purpose of this paper] It can thus be affirmed that EasyJet might face certain issues or challenges while implementing changes in its business plans that could be addressed and mitigated by providing effective training to the organisational members working within the company. Accordingly, an effective action plan towards implementing the changes particularly linked with varied marketing mix elements has been depicted in the following. Price: As it has been observed that the current pricing strategies of EasyJet has proved beneficial to balance its sustainability and profitability motives, it is recommendable that the company should continue with its present low pricing strategy to retain its leadership position in the long-run (Slideshare Inc., 2014; EasyJet plc, 2013; EasyJet plc, 2012; EasyJet plc, 2009). Product: From a comparative point of view concerning its product designing, EasyJet can offer no-frills air transportation system to the passengers, ensuring greater safety for them, which will also suffice its competitive needs to a certain extent (Slideshare Inc., 2014; EasyJet plc, 2013; EasyJet plc, 2012; EasyJet plc, 2009). Place: Relating to place, EasyJet’s online website might prove to be quite beneficial, acting as a major distribution channel for its varied services. Accordingly, social network promotions and continuous innovation in its virtual presence may further help attracting a larger volume of customers from the global market place (Slideshare Inc., 2014; EasyJet plc, 2013; EasyJet plc, 2012; EasyJet plc, 2009). Promotion: Concerning its promotion strategies, EasyJet can largely use the notion of digital media, such as in the form of social networking sites for promoting its diverse services to its large customer base throughout the globe (Slideshare Inc., 2014; EasyJet plc, 2013; EasyJet plc, 2012; EasyJet plc, 2009). Task 4 4.1 Impact of the Proposed Changes on Business and Personnel It is quite apparent that the above-proposed changes would certainly impose both positive as well as negative impacts on the business and the personnel of EasyJet. On a positive note, it can be affirmed that the proposed changes might assist the business of the company towards attaining superior competitive positioning as compared to its chief business market participants like RyanAir. This could be measured in terms of enhancing profitability, raising market share and sustaining in this competitive landscape for longer period. These would ultimately assist the personnel of the company to develop their respective operational performance and work better towards the completion of organisational targets. From the standpoint of negative impacts, it can be stated that the proposed changes might raise certain business risks, which could hamper the profitability of the company and the operational performance of the personnel at large (Papulova & Papulova, 2006). These negative impacts might further cost huge for EasyJet to acquire superior competitive position over RyanAir and other major competitors. 4.2 Planning of Managing the Proposed Changes in Business Managing the proposed changes in a business is quite vital as this may lead towards success and help reaping several significant benefits. Thus, certain changes have been proposed to EasyJet, relating to varied marketing mix elements, so that it can compete with its major business market participants like RyanAir and sustain in this tough as well as competitive landscape. However, certain risks may appear affecting the overall performance of the airline company for which the proposed changes in business is ought to be managed in an effective manner. In this respect, it can be suggested that the company might make effective planning for managing the proposed changes in its business through efficient utilisation of the accessible resources and making extensive improvements in design along with the implementation of the proposed changes. Apart from these, greater level of commitments from the senior officials along with the top management team of the airline company are required so that effective decisions are taken immediately to address and mitigate the risks that would appear while implementing the changes (Crown, 2007). Thus, managing the proposed changes in business following the above-discussed aspects would certainly provide active support to EasyJet in attaining success, gaining superior competitive position over others like RyanAir. 4.3 Monitoring Improvements in the Performance of Business Observing and measuring the improvements of business performance over a specific timescale are quite crucial, as these aids in ensuring that the conduct of the efforts or the business results aligns with the intended business objectives. It can be apparently observed in this similar context that the companies belonging to this modern context often monitor the improvements in their respective business performance for various purposes. These purposes may commonly include maximising the effectiveness of the improvement efforts and attaining the alignment made between organisational targets and objectives. Similarly, relating to the case of EasyJet, monitoring improvements in its business performance may be expected to help the company in balancing profit, control along with growth, attaining short-term results, strengthening long-term capabilities and maximising growth opportunities among others. Correspondingly, while monitoring, improvements in the business performance of EasyJet can be mainly determined through various aspects that encompass identifying growth, profitability as well as risk factors, creating value along with differentiation feature, setting priorities for generating customer satisfaction and supporting organisational changes (Kellen, 2003). These aspects along with a given timescale have been presented in the following. Recommendations It has been mentioned earlier that the business environment is incessantly changing and the business market competition is augmenting rapidly in this modern day context, due to which, EasyJet might face certain issues while conducting its business. It is thus anticipated that the business market would become much complex in future owing to the reasons of rapid pace of industrialisation and changing preferences as well as the likings of the customers. Thus, it is recommended to EasyJet that the company must adopt certain significant strategies in order to address as well as mitigate such adverse situation and sustain in this competitive landscape for a longer time. In this similar context, the company is required to make certain changes in its varied marketing mix elements by taking into concern the position of the present business market setting and the forecasting the subsequent situation of the same in future. Apart from this, it is also suggested that EasyJet may constantly monitor its overall business performance, which would not only support towards enhancing its brand image but will also support in acquiring a sustainable position in this competitive landscape. Conclusion Based on the above discussion and analysis, it has become quite clear that EasyJet and Ryanair differs in numerous aspects including strategies adopted that can be reflected in their respective operational performance in every fiscal year. One of such aspects can be apparently noted as controlling the operational costs by Ryanair, which EasyJet failed to attain in recent years. It is worth mentioning in this regard that making appropriate changes in business plans would certainly impose both positive as well as negative impacts on EasyJet. Thus, the airline company needs to manage the above described changes for the purpose of attaining its predetermined business targets, which can be mainly performed making extensive improvements in designing along with the implementation of the proposed changes and utilising the accessible resources efficiently among others. Conclusively, monitoring improvements in the entire business performance would certainly aid EasyJet towards mitigating business risks and identifying growth opportunities at large. References Amaratunga, D. & et. al., No Date. Performance Measurement Applications in Facilities Management: An Investigation into the Future Directions. Research Institute for the Built and Human Environment. [Online] Available at: http://usir.salford.ac.uk/9924/1/performance_measurement.pdf [Accessed May 25, 2014]. Ashgate Publishing., No Date. Introduction to Airline Management. Challenges of airline management. 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[Online] Available at: http://corporate.easyjet.com/about-easyjet.aspx?sc_lang=en [Accessed May 25, 2014]. EasyJet Airline Company Limited, No Date. About Us. Home. [Online] Available at: http://corporate.easyjet.com/default.aspx?utm_source=ej_CMS&utm_medium=en_Homepage&utm_term=CompanyInfo&utm_content=StaticLink_AEJ1&utm_campaign=Footer [Accessed May 25, 2014]. EasyJet plc, 2001. Low-Cost Airlines an Increasing Threat to "Traditional" Carriers. Media. . [Online] Available at: http://corporate.easyjet.com/media/latest-news/news-year-2001/13-08-01-en.aspx?sc_lang=e [Accessed May 25, 2014]. EasyJet plc, 2009. Business Review. Home. [Online] Available at: http://2009annualreport.easyjet.com/business-review/strategy-and-KPIs.html [Accessed May 25, 2014]. EasyJet plc, 2011. Corporate Responsibility. People strategy. [Online] Available at: http://2011annualreport.easyjet.com/downloads/PDFs/Corporate_responsibility.pdf [Accessed May 25, 2014]. EasyJet plc, 2012. Strategic Framework. 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RyanAir Just Reported Its First Fall In Profit In Five Years, So Why Are Its Shares Soaring. Profit and Loss. [Online] Available at: http://qz.com/210840/ryanair-just-reported-its-first-fall-in-profit-in-five-years-so-why-are-its-shares-soaring [Accessed May 25, 2014]. Karen, M. F. & Amy R. P., No Date. Airline Operations Managers: An Introduction to the Third Leg of the National Air Transportation System. Introduction. [Online] Available at: http://www.atmseminar.org/seminarContent/seminar6/papers/p_043_TFO.pdf [Accessed May 25, 2014]. Kellen, V., 2003. Why Measure Business Performance. Business Performance Measurement. [Online] Available at: http://www.kellen.net/bpm.htm [Accessed May 25, 2014]. Martinez, V. & et. al., 2004. Impact of PMS on Business Performance: A Methodological Approach. Centre for Business Performance. Noakes, G., 2013. EasyJet Systems Failure Was ‘Not Caused By Hackers. News. [Online] Available at:http://buyingbusinesstravel.com/news/1621509-easyjet-systems-failure-was-%E2%80%98not-caused-hackers%E2%80%99 [Accessed May 25, 2014]. Papulova, E. & Papulova, Z., 2006. Strategic Approach. Competitive Strategy and Competitive Advantages of Small and Midsized Manufacturing Enterprises in Slovakia, pp. 1-8. RyanAir, 2013. Final Annual Report 2012. Investor. [Online] Available at: http://www.ryanair.com/doc/investor/2012/final_annual_report_2012_310712.pdf [Accessed May 25, 2014]. RyanAir, 2014. Welcome to Ryanair. Useful information. . [Online] Available at: http://www.ryanair.com/en/about/ [Accessed May 25, 2014]. Shrager, J., 2007, The Success of easyJet and Other Low Cost Airlines is Due to Their Focus on Pursuing a Pure Low Cost Strategy and the Subsequent Ruthless and Effective Management of their Value Chain. Competitive Advantage. [Online] Available at: http://edissertations.nottingham.ac.uk/1524/1/06MAlixjs12.pdf [Accessed May 25, 2014]. Slideshare Inc., 2014. Marketing Strategy. Case Study: EasyJet. [Online] Available at: http://www.slideshare.net/esteewu/easyjet-presentation [Accessed May 25, 2014]. Slideshare Inc., 2014. New Marketing Strategy. Ryanair: Strategic Analysis. [Online] Available at: http://www.slideshare.net/LorcanN/ryanair-strategic-analysis [Accessed May 25, 2014]. The Economist, 2013, Plane Dealing, Business travel. [Online] Available at: http://www.economist.com/blogs/gulliver/2013/06/easyjet [Accessed May 25, 2014]. Wiltshire, J., 2013. Airport Competition. IATA Economics Briefing No 11. [Online] Available at: http://www.iata.org/whatwedo/Documents/economics/airport-competition.pdf [Accessed May 25, 2014]. Bibliography PWC, 2013. Tailwinds: 2013 Airline Industry Trends. Publications. [Online] Available at: http://www.pwc.com/en_US/us/industrial-products/publications/assets/pwc-tailwinds-airline-industry-trends-issue-1.pdf [Accessed May 25, 2014]. Shaw, S., 2012. Airline Marketing and Management. Ashgate Publishing. Wensveen, J., 2010. The Airline Industry: Trends, Challenges, Strategies. The University of Sydney. [Online] Available at: http://sydney.edu.au/business/__data/assets/pdf_file/0010/67789/johnw-presentation.pdf [Accessed May 25, 2014]. Appendix Figure 1: Revenue per seat of EasyJet Source: (Easy Jet plc, 2012) Figure 2: Net Profit Growth of RyanAir Source: (Karaian, 2014) Figure 3: Quality and Value Comparison of EasyJet and RyanAir Source: (Dobrin, 2013) Read More
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