Evaluation of Easyjet Company - Case Study Example

EVALUATION OF EASYJET COMPANY Evaluation of EasyJet Company Strategic management forms the backbone of success for eachbusiness hence should be considered to hold great importance. However, there are several strategic management approaches that can be employed in a bid to gain competitive advantage and this is dependent on the individual entity. Additionally, the differences in strategic management techniques are dependent on the particular industry in play. For instance, the strategic management techniques used in the hotel industry may differ from those employed in the aviation industry. A highly competitive industry such as aviation requires excellent techniques in order to gain competitive advantage. Taking a more specific approach, EasyJet Airline in the United Kingdom (UK) can act as a good platform for strategic management analysis by evaluating its key business strategies. EasyJet is the largest airline in UK operating more than 600 routes in more than 30 countries. Additionally, EasyJet has over 200 Airbus aircrafts with employment levels of over 8000 people, flying approximately 60 million passengers annually based on 2014 figures (EasyJet plc). This implies that EasyJet has experienced great success over the years making it worthwhile to study its key business strategies. Some of the major strategies employment by EasyJet include a strategic location, excellent layout, and quality management among others. The location strategy plays a great role towards the success of any particular business. This is because location of a business determines accessibility and availability of different the factors required for success. These factors include customers, workers, infrastructure, and raw materials among others. Additionally, making a location selection requires a critical look at the specific business’s needs and objectives. This implies that a good location should conform to the needs and objectives of the business. Moreover, location determination is heavily dependent on the nature of the industry in which the business belongs. This is because different industries have different requirements especially with regard to resources and government policies. In making location selection there is also the factor of size. In this context, size refers the space required by the business with regard to both the long term and short term expansion goals of the business. With this in mind, it is evident that the location of a business is of great importance especially in relation to success. As such, it is important for any business to invest deeply in location determination. The responsibility of making location selection may be carried out by internal personnel or employment of external experts. External experts may come in especially if the internal personnel has no vast experience in location selection. Generally, a good location ensures that the firm will maximize opportunity while minimizing costs and risks. EasyJet is one such firm and its success has greatly been boosted by strategically picking the right locations for its operations. Making a comparison between EasyJet’s and Ryanair’s approaches towards location selection shows efficiency of the location strategy. EasyJet mainly flies to the primary airports of the cities where its operations cover. This strategy makes its suitable for many passengers due to convenience of accessing primary airports. For example, EasyJet’s operations in Paris are based at Charles de Gaulle Airport and Orly Airport. In Rome, EasyJet uses Leonardo da Vinci–Fiumicino Airport, which is a primary airport in Rome. EasyJet’s choice of airports is suitable since they are located in areas that are easily accessible hence gaining passenger preference. Additionally, since these are the primary airports and easily accessible, it is highly likely that they are widely known and will be selected by most passengers especially those visiting the cities the first time. Accessibility is highly important since the distance and time of travel play a crucial part in decision making (Karakas 2012, p.10). Conversely, Ryanair uses secondary airports in its areas of operations in a bid to reduce operation costs lower charges For example, in Paris Ryanair flies to Beauvais-Tillé Airport located 53 miles from Paris. This is relatively a long distance especially for passengers whose main interests are located within the city. Additionally, it is seemingly inconvenient since passengers have to take an additional 75 minutes if travelling by bus to Paris after the flight. Ryanair’s flights to Rome use Ciampino–G. B. Pastine International Airport, which is also a secondary airport. The difference in location between Ryanair and EasyJet can be considered one the factors contributing to EasyJet’s increased flights and passenger turnout. EasyJet ensures low costs for its flights, which can be attributed to employment of strategies that reduce travelling costs significantly. For example, EasyJet does not sell connecting flights and also does not provide complementary snacks. This strategy is similar to Ryanair’s and they are both able to maintain low price. However, Ryanair is seemingly cheaper compared to EasyJet but this is facilitated by use of secondary airports in most of its operational areas. Additionally, EasyJet’s business strategies are focused on utilizing aircrafts to maximally due to implementation of quick turnaround times. Like Ryanair, EasyJet flies a young fleet of aircrafts with an average age of five years. This implies that they hardly experience mechanical problems from the aircraft. Additionally, newer aircrafts are significantly more effective in relation to maintenance and the general performance. At the start of its operations, EasyJet did not allocate seats to its passengers but rather passengers took any available seats. This strategy was aimed at ensuring speedy boarding with passengers striving to pay first in order to get the best seats. However, in 2012 EasyJet took a different approach of issuing seat numbers since this reduced boarding time and increased revenue. Increased revenue is facilitated by the layout of EasyJet aircrafts. For example, passengers pay extra for the seats in the front rows and also overwing seats since they have an extra legroom. As such, they are deemed to be more comfortable and this extra fees have increased revenue in comparison to the speedy boarding strategy. ERP is a widely implemented strategy across various organizations globally. ERP is an information system that integrates different functions in an organization into one for easy management and control. As such, ERP plays a vital role in management and control by guiding decision making about operations of the business. For example, an ERP system is used to give guidance on which goods to produce and or order and when to produce and or order them. Hence an ERP system can be considered to provide an integration between the supply chain and production. This can be attributed to the fact that an ERP system increases communication between different business functions hence ensuring commonality of data. Since data is common in different databases, an ERP system eliminates chances of error hence can be relied upon during decision making. Although some studies have shown reduced internal control effectiveness and audit quality of ERP system settings, ERP is still more effective than most systems (Brazel & Agoglia, 2007). Moreover, an ERP system is secure hence organizations are assured of data safety. However, an ERP system is relatively expensive to purchase and implement since it requires customization to suit a specific organization’s information. For example, ERP systems sold by AG and Oracle Corporation cost approximately 15 million and take up to 21 months to implement (O’Leary, 2000, p.3). Implementations of an ERP system may require changes in the organization’s processes and activities some that may be major. With this in mind it is important to note that not all companies can adjust to the required changes hence cannot employ ERP. Making considerations on the pros and cons of ERP, EasyJet is seemingly adamant to its implementation unlike many other airlines such as British Airways. EasyJet does not use an ERP system and according to Trevor Didcock, EasyJet CIO, there are no plans of implementing it (Chillingworth, 2011, para. 3). This can be attributed to the view that an ERP system is relatively expensive yet its functions have an alternative. EasyJet has a much smaller IT team managing its systems compared to British Airways yet EasyJet is bigger. Instead of an ERP system, EasyJet has other systems managing its various departments. For example, it is dependent on Savvis for WAN and telecommunications supply and on Agresso for financial management. Despite reduced applications of ERP by EasyJet, there is constant delivery of quality services. This can be attributed to high levels of quality management in EasyJet. This is clearly through the success of decisions made by EasyJet’s management team such as strategies to cut travelling prices. Quality management is dependent on maintaining the best services at relatively low costs hence gaining customer preference. EasyJet has managed to offer quality services over the years at relatively reduced prices. For example, use of primary airports may be considered a way of offering quality service since it is convenient for most passengers. Additionally, EasyJet allows passengers to carry out online bookings at relatively low prices. Moreover, effective quality management ensures consistency of the products and services produced. From the beginning, EasyJet has maintained low prices and despite the changes in operations, there has not been any major price change. For example, elimination of speedy boarding strategy only affected prices for passengers seeking luxury while travelling. In relation to management, EasyJet has an effective management team that is able to analyze available options keeping customer interests in mind. For instance, foregoing adoption of ERP is a great strategy for maintaining low costs and consequently reduced prices. Furthermore, despite use of different strategies compared to other organizations, EasyJet has been able to maintain quality services. The key indicator of effective quality management is continued growth and development. An analysis of EasyJet shows continued growth and development judging on the many expansions advanced such as establishment of new routes. This implies that quality management is essential for the success and development of any business. Conclusively, the success of businesses is heavily dependent on combining relatively many factors such as decision making. Decision making is seemingly the backbone of every business hence making the management a vital player in any business. For example decisions surrounding location selection are critical to success of a business. EasyJet concentrates its operations on primary airports thereby enhancing passenger convenience. Additionally, EasyJet’s decision to neglect ERP is an indication of good decision making. This is because it already has a workable strategy that is cost effective and despite ERP’s efficiency, EasyJet can still manage to deliver quality services. Quality management is dependent on maintaining the best services at relatively low costs hence gaining customer preference. A combination of these strategies is essential in establishing and maintaining a successful business. References Brazel, J. & Agoglia, C. (2007). An examination of auditor planning judgments in a complex accounting information system environment. Contemporary Accounting Research, 1059–1083. Chillingworth, M. (2011 November 3). CIO Profile: EasyJets Trevor Didcock on budget discipline and the sexiness of airlines. CIO. Retrieved from http://www.cio.co.uk/profile/trevor-didcock/3-11-2011/ Easyjet plc. (n.d). About us: At a glance. Retrieved from http://corporate.easyjet.com/about-easyjet.aspx?sc_lang=en Karakas, B. (2012) “Marketing Business Tourism in Suburban Areas”. International Journal of Hospitality and Tourism, 1(2): 6-18. O’Leary, E. (2000). Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce, and Risk. Cambridge, U.K.: Cambridge University Press. Read More