Easy Jet Airline Company - Essay Example

?Easy Jet Airline Company Table of Contents Introduction 3 2.Brief of EasyJet Airline-211 4 3.Swot Analysis 4 4.Competitive Environment(Porter’s Five Forces) 6 5.Conclusion and Recommendations 9 6.Reference 11 1. Introduction Modernisation of trade and business has increased the scope of business activities. Many new industries have been emerged since last two decades. Industries can be categorized as per their nature of business activities. Primarily, there are two major kinds of industries that include the manufacturing industries and services industry. The manufacturing industries are engaged in production using multiple of resources and they deal with tangible products. Services industries primarily provide intangible products to customers by offering services. Retail, transports, food services etc are the example of services industries (Pezzullo, 1998, p.194). The marketing activities in services sectors are known as services marketing. Marketing is one of the major activities in business organisations and its importance and necessity have been multiplied with increasing completion and market size. There are certain differences between marketing activities of manufacturing industries and services industries. For example, in services marketing there are 7 Ps instead of 4 Ps which include product, price, promotion, place, people and physical evidences (Jobber and Fahy, 2008, p.177). Therefore, managing the marketing activities in service business is difficult as management has to consider many aspects at the same time. This paper will attempt to assess an organisation engaged in services business using various management models and tools for offering a set of conceivable and effective recommendations. In this respect, at first, a brief description of the company will provided to understand its nature of business and other aspects. In order to analyse the company’s business environments management analytical tools will used. Finally, based on the research findings, conclusion and recommendations will be made. 2. Brief Description of EasyJet Airline-211 EasyJet is a UK based airline company and it is one of the leading airline services providers in entire Europe. This airline company aims to become a low cost airline service provider in Europe. Stelios Haji-Ioannou, a Greek business started an airline business with two leased aircraft and he named this airline ‘EasyJet’. The growing importance of airlines services and EasyJet’s efficient performances, made this airline as a one of the market leaders. By the end of 2009, EasyJet became pan airline that operated with “over 400 routes with over 175 aircraft in 27 countries” (EasyJet Plc-a, n.d.). Its efficient business and services strategies have led to increase the popularity of the company, and during 2009, nearly 50% of its total passengers were recorded as non-UK people. The business model of EasyJet includes five major values that have enhanced its business activities and these values are safety, teamwork, pioneering, passionate and integrity. Its present headquarter is in Luton, England and it has “over 7,300 people including 1,900 pilots and 4,300 cabin crew” (EasyJet Plc-b, n.d.). In order to manage its sustainability issues, it has also included its responsibilities towards society, corporate, environments and community. Due to efficient managements and growing market size, the financial position of the company has become stronger in UK airline industry. 3. Swot Analysis In order to access a company’s internal & external position and external opportunities and strengths, SWOT is one of the most widely used tools. SWOT analysis is very helpful in providing a summary concept of various internal and external factors which are very important for strategic managements and decision making process. Carlock and Ward has been able to identify the importance of SWOT analysis and in this respect they have commented that “the SWOT analysis helps to capture data in order to qualitatively plot the firm on the capabilities/environment framework” (Carlock and Ward, 2001, p.154). SWOT model has been used to assess the various internal and external factors of EasyJet. Strengths and Weakness: The primary strength of the company is its core strategy. It follows the low cost leadership strategy for attracting consumers. Besides, the company has been successful in creating value for its passengers as it is committed to safety and high quality services. The company has developed it strong brand image in European market. Its well-organized multi base network has made its operational activities very efficient (Williamson, 2002). The internet marketing of EasyJet plays very significant role in customer services. Since last fifteen years, the company’s performance is growing at decent pace. It has experienced 11.5% and 330.9% of growth in its total revenue and profit before margin. The flowing table shows the key financial indicators of EasyJet. Figure 1: Financial Performance of EasyJet (Source: EasyJet Plc-c, 2010) The major weakness of the company is that its speed of customer complains resolution is slower than the requirements. Besides, the company is unable to achieve upper hand position in cost leadership in market because it is unable to reduce its cost. Opportunities and Threats: The UK airline market has greater opportunities as more number of people is now using airline services for transport services. During the global recession of 2007-2008, the airline industry experienced a drastic decline. However, the International Air Transport Association (IATA) has predicted that with the recovery of economy, the aviation industry is expected to receive $2.5bn earnings. The IATA also expects that in coming years the demand for airline services will grow by 7% (Milmo and Connolly, 2010). The increasing demand of this industry raises the competition level. Most of airline companies are trying to achieve cost leadership and it is very crucial threat for EasyJet. Besides, increasing cost of airline operations and fuel are major issues for the company in maintaining low cost services. The political issues and terrorism is very serious issue for the entire aviation industry. Recently, British transport authorities reported that “al-Qaeda is considering an attack against a U.K. airport or other airline industry target in a threat described as credible” (Kirka, 2011). Therefore, security related issues pose a critical threat to the entire airline companies including EasyJet. 4. Competitive Environment (Porter’s Five Forces) Understanding of competitive environment is very necessary to analyse degree of competition within an industry. In this respect, Michel Porter identified five major forces that determine the competition within an industry. This model is known as Porter’s Five Forces and these five forces are bargaining power of buyers and suppliers, threat from new entrants and substitutes and rivalry from competitors. The following figure shows the five forces model. Figure 2: Porter’s Five Forces (Source: Society for Human Resource Management (U.S.), 2006, p.38) As per the above model, five forces of an industry have been analysed for UK airline industry in respect of EasyJet. In order to attract more number of passengers, most of airline companies are trying to achieve cost leadership and hence, the consumers’ switching cost is very lower. In case of domestic airline services, the bargaining power of UK people is lower than international airline services. The supplier groups of UK airline industry include the aircraft manufacturer, fuel suppliers and employees for airline services. However, the number of aircraft manufacturers is very few. EasyJet buys its aircrafts from Airbus and Boeing, and these two suppliers have very high bargaining power. Due to increasing cost of fuel, the fuel suppliers bargaining power is also quite substantial. Airline is the fastest transport service and technically, there is no substitute available for airline services. However, in case if domestic airline services, the land transports like railways and roadways may be considered as potential threats. Airline industry requires high technical expertise with very high amount of investments. It poses a high entry barrier for the new entrants in this industry. Besides, the UK airline companies are very efficient in term of operation and marketing activities. They have developed their loyal consumers by creating brand image in market and it is also greater barrier for new entrants. However, multinational companies may enter into the market as they have sufficient experience in this industry. The entire European airline industry is crowded with a number of companies like British Airways, Ryanair, Air France, Lufthansa, and Southwest Airlines etc. Among these, Ryanair and British Airways are the key competitors for EasyJet. Ryanair is the leader in cost leadership and brand image of British airways is very high. Most of the companies are trying to offer cheap airline services. The flowing figure shows the airfares of EasyJet and its key competitors. Figure 3: Travel Fares of Airline Industries (Source: Jyske Bank, 2010) The flowing table shows that financial performances of the EasyJet and its key competitors. Table 1: EasyJet and Key Competitors (Source: Jyske Bank, 2010) The above table shows that the companies providing lower cost fare have the higher market position and this makes the industry highly competitive. 5. Conclusion and Recommendations This paper has dealt with analysis of EasyJet Airline Company using various models. EasyJet is one of the leading low cost airline services providers and it has gained a higher position in the industry. The company’s business models and strategic framework strive to gain higher market share by offering lower cost services. SWOT analysis has identified its major internal and external factors that determine its growth structure. The degree of competition in UK airline industry is quite high as there are a large number of airline services providers. The most of the companies are trying to achieve cost leadership and the data have disclosed that lower the cost higher the market share. Therefore, EasyJet must try to maintain its low cost and moreover, it should also implement multiple cost cutting measures to cope up with increasing operational and fuel cost. However, the cost cutting measures should not affect its services quality. The consumer relation is also very necessary in airline industry and hence, it should implement integrated marketing communication in its marketing activities. 6. Reference Carlock, R. S. and Ward, J. L. 2001. Strategic planning for the family business: parallel planning to unify the family and business. Palgrave Macmillan. EasyJet Plc-a. No date. Overview. [Online]. Available at: http://corporate.easyjet.com/about-easyjet/our-journey/Overview.aspx. [Accessed on January 25, 2011]. EasyJet Plc-b. No date. About EasyJet. [Online]. Available at: http://corporate.easyjet.com/about-easyjet.aspx. [Accessed on January 25, 2011]. EasyJet Plc-c. 2010. Annual Report. [Pdf]. Available at: http://corporate.easyjet.com/investors/results-centre/~/media/Files/E/easyJet/pdf/media/latest-news/2010/2010-11-16.pdf. [Accessed on January 25, 2011]. Jobber, D. and Fahy. J. 2008. Foundations of Marketing. 3rd ed. Tata McGraw-Hill. Jyske Bank. May 10, 2010. RYANAIR – BUY. [Pdf]. Available at: https://jyskebank.gi/wps/wcm/connect/b627f98042e588a5899affe695d2818c/333055_100510ryanair.pdf?MOD=AJPERES&CACHEID=b627f98042e588a5899affe695d2818c. [Accessed on January 25, 2011]. Kirka, D. January 07, 2011. U.K. Gov't Warns Air Industry of Threat. [Online]. Available at: http://www.time.com/time/world/article/0,8599,2041266,00.html. [Accessed on January 25, 2011]. Milmo, D. and Connolly, K. June 07, 2010. Airline industry body IATA predicts profits of $2.5bn this year. [Online]. Available at: http://www.guardian.co.uk/business/2010/jun/07/airline-industry-profits-british-airways. [Accessed on January 25, 2011]. Pezzullo, M. A. 1998. Marketing financial services. 5th ed.Kogan Page Publishers. Williamson, D. April 2002. EasyJet plc: a basic analysis of the company. [Pdf]. Available at: http://www.duncanwil.co.uk/pdfs/easyjet.pdf. [Accessed on January 25, 2011]. Society for Human Resource Management (U.S.). 2006. Essentials of strategy. Harvard Business School Press. Read More