What Approaches were Used in the Creation of Easy Jets Online Presence - Essay Example

?Management and Information System: What Approaches were Used in the Creation of Easy Jet’s Online Presence which Were Significant in its Success? One of the most popular businesses that have generated much of its success in sales from the internet is the firm easyJet. In fact, according to Simon Pritchard, the person responsible for the web technologies of easyJet, “Very few brick and mortar companies can claim to have had a more successful e-commerce strategy than easyJet. With around 90% of sales generated from its Web site, the internet has helped easyJet make the transition from an upstart airline to Europe’s leading low-cost carrier.” (Pritchard, 2002) In this case, this question may actually be asked: given the success that easyJet achieved in making its presence felt on the internet, what then are the different approaches that easyJet made in order to be this successful? Of course, a lot of firms would like to know the different winning strategies that easyJet made in engaging its business online, given that a lot of business are now being done and facilitated by the internet. From this premise, this paper then would try to look at the approaches that easyJet used in establishing its presence on the internet. In this case, the researcher would try to look at the step by step approaches that easyJet made as it established its online presence as a key component of its growth. In addition, the researcher would also try to look into the different relevant scholarly readings to analyze the different approaches that easyJet made, in order to more accurately point out why these approaches actually came to be so much successful. At the end of the paper, the researcher would then summarize the different approaches that easyJet made in establishing its presence online, and would briefly give some recommendations on what may be learned from the approaches that easyJet made. Background One of the major events that facilitated the establishment of easyJet was an important aviation agreement in the history of European aviation: the open skies agreement (Pritchard, 2002). As provided by the open skies agreement (signed in 1987), it was finally allowed for the first time the participation of “smaller, more agile and efficient airlines” to fly and operate on any route within the countries belonging to the European Union, which was before dominated solely by flag-carrying airlines (Pritchard, 2002). Due to this agreement, which provided for the deregulation of the airline industry for 10 years, easyJet actually began its existence (Pritchard, 2002). In the year 1995, easyJet actually began to operate, wherein the aviation company started to accommodate flights from London to nearby Edinburgh and Glasgow (Pritchard, 2002). By virtue of the companies earlier strategies, which involved offering lower fare for these routes, as well as aggressive advertising and publicity events, the company soon began to grow, albeit slowly at first (Pritchard, 2002). However, soon enough, the company began to grow rapidly by the time that it positioned itself in the world of e-commerce, and utilized the internet for projection, marketing and sales (Pritchard, 2002). In fact, just only after 28 months, the company was actually able to reach its one millionth seats sold (Pritchard, 2002). Now, the company has already grown rapidly, being able to sell its third millionth seat, and has already merged with Go, a separate low-cost airline that was actually established by the British Airways, the flag carrier of the United Kingdom and Great Britain (Pritchard, 2002). Online Positioning and easyJet’s Success One of the first approaches that easyJet made was actually to venture into e-commerce, which was a relatively bold move for any company at that time (1998). But what is the definition of e-commerce? According to Dr, Mamooh Shah, e-commerce is actually “all electronically mediated information exchanges between an organization and its external stakeholders” (Shah, n. d.). In addition, Shah also outlines the different forms of e-commerce: transactional, informational, experiential, and customer service query (Shah, n. d.). In this case, easyJet actually delved into using the different advantages of the internet in transacting business, especially in the aviation industry: offering information about the company through the web, offering the schedule of flights and even reserving tickets online, and as well as using the internet to promote the advantages of getting the services of easyJet, including its affordable fare rates. By doing this, the company was actually able to reach out to a lot of customers with less cost (for web hosting services are far cheaper than actual physical marketing merchandise). Also, easyJet was able to make it more convenient for their clients, because they do not have to physically go to aviation companies on order to reserve a ticket or know the schedule of flights. As stated by Shah, this strategy is actually called the EC strategy (Shah, n. d.). According to Shah, the EC strategy is actually the strategy wherein an organization will make use “of e-commerce or e-business” (Shah, n. d.), and that it includes Click-and-mortar companies that use many EC applications Click-and-mortar companies that use only one or two EC applications Click-and-mortar companies that use one EC application that fundamentally changes all their business Pure-play EC companies (Shah, n. d.). From using an EC strategy, easyJet was actually able to minimize their exposure and marketing costs, and made it easier for them to promote the company to a wider audience. In addition, the EC strategy also helped easyJet get the preferences of consumers by making business transactions more convenient and cost-effective for them, given that their clients do not have physically go to the office of easyJet in order to reserve a ticket for their flight, or know how much would it cost them. Also, in playing an EC strategy, easyJet actually chose to become a first mover, wherein they became one of the pioneer aviation companies that made its presence online. As stated by Shah, one of the most critical issues is whether to be a “first mover or a follower,” and that each of it has its corresponding advantages and disadvantages (Shah, n. d.). In this case, Shah actually adds that the advantages of being a first mover actually includes a “Chance to capture large markets” “Establishing a brand name” “Exclusive strategic alliances” (Shah, n. d.). In fact, these are actually the advantages that easyJet has been able to get by having an EC strategy and being a first mover. In this case, because of the fact that easyJet has been an initiator, they have been able to be the first to capture the online-based clients, which as unexpected by many forms, continued to grow and expand. Therefore, while easyJet was able to be the first in establishing a business relationship with online clients, it also have been able to exploit the growing number of online consumers and take a lion’s share of it, given the lag that has taken place before the competitors has been able to establish its presence on the online based consumers. In addition to this, easyJet has also been able to strategically establish its brand name on the internet, making it have more exposure to consumers who are using the internet as a primary source of information. In this case, because competitors lagged in establishing their presence online, easyJet has been able to become the most visible aviation company for consumers online who are looking for aviation services. Moreover, easyJet also has the advantage of being able to make strategic alliances with different online based companies that can help them have the competitive advantage in offering aviation services to clients. Of course, easyJet also has the privilege in this case to forge exclusive alliances with other online firms, given that competitors who are not yet present online will fail to block such alliances. Another distinct advantage that easyJet has been able to enjoy, to which it is also a vital component of their EC strategy, is having a down to earth and commonsensical approach to their clients, making their online interface very understandable and readable even for the common people. From this approach, easyJet actually focused on being able to customize their online interface, making the customers to surf and look for their needed aviation services with ease (Pritchard, 2002). According to Dr. Shah, the maximization of internet resources to bring better services for the clients, and for the benefit of the business organization as a whole, is actually a strategic part of an IS strategy of a corporate plan (Shah, n. d.). According to Shah, “The IS strategy is concerned with the planning, introduction and use of IT resources for the benefit of the organization. It is closely linked with other strategies” (Shah, n. d.). According to Pritchard, one of the primary reasons why easyJet actually concentrated on positioning their business on the internet is because of cost-effectiveness (Pritchard, 2002). As stated by Pritchard, “While easyJet was wondering what it could do with the web, it was also enjoying a period of very rapid growth and was determined to keep costs low. The airline was based, as it still is, in easy land in Luton Airport. The easyLand call center when taking 100 percent of sales – we only sell to direct costumers – and the growth of the airlines was therefore bringing into the question the need to relocate to a larger facility or to establish a second call centre. There was this idea that if we could persuade our customers to book online, that would keep costs lower, leaving our call center pretty much at its existing size, and enable us to grow the business through the internet.” (Pritchard, 2002) In this case, aligning it from the IT strategy as explained by Shah, easyJet actually used the technology of the internet in significantly lowering its costs, especially in relation with costumer service. Basically, the customer service department of easyJet actually handled the common inquiries of clients, such as when are the scheduled flights, and how can they reserve a ticket, and so on. However, through easyJet’s use of the technology of the internet in accordance with the IT strategy, customers can now book their flights and look at the schedule of flights in a few clicks, eliminating the need to construct a new call centre in able to handle such kind of inquiries. This made easyJet maximize the use of IT, to minimize its costs significantly. In implementing such kind of business plan, of course, one of the most essential factors to be considered is futures planning, one of the most important components of the first stages of strategic planning. According to Shah, futures’ thinking is actually “Thinking about what the business might need to do 10–20 years ahead” (Shah, n. d.). In this case, easyJet actually tried to make a vision on what they actually need for the next 10-20 years; that is, the need for a second call centre, given the anticipated rise of the client base. The good thing about easyJet is that they are able to visualize what may be the different ways on how they can revise their strategy in order to minimize the costs involved in addressing that specific need. By doing such, they have been able to identify the potential of the internet, wherein they discovered that by setting up a website that can provide essential information on what their clients actually need, they have been able to avoid the larger costs of setting up a new call centre for their business. This is what Shah actually calls as the required inputs on changing strategy: wherein a firm will actually analyze what will be the impact of a new strategy in terms of “land, labour and capital” (Shah, n. d.). In terms of its effect on the input of land, being able to position first on the internet actually made easyJet eliminate altogether the need to purchase a lot in setting up a second call centre, given that all of the services can now be accessed through the internet. In addition, easyJet also eliminated the costs of hiring additional customer service representatives on their respective call centers, given that they only have to visit the website of easyJet for all of their needs, as compared to calling the company’s hotline and calling the company’s customer service representatives. Also, such positioning has its good effect on capital, given that their website will soon service to the growing number of clients going online-based. Another important approach that easyJet was able to utilize in their business, contributing to their outstanding success, was their ability to set the right price table to clients, offering significantly cheaper rates the earlier clients actually book their flights. According to Pritchard, “We’ve both used carrot and stick to push our internet sales percentage way above the Internet penetration in our markets. The carrots have been in the guise of discounts when booking online and in making very attractive inventory available exclusively via the website – we were the first airline to offer internet–only promotions. The stick has been to restrict the flights available to customers on the phone. Our ‘one man rolling window’ as we call it means that if you want to book a flight, more than a month in advance of travel you can only do that online. Because easyJet has a very simple pricing structure – fares are generally cheaper the earlier time you book – this is a great incentive to book on the internet.” (Pritchard, 2002) Following the lectures of Shah, such approach can actually be categorized as the strategy of “price leadership” (Shah, n. d.). According to Shah, price leadership is actually done through “dominating the industry – others follow your price lead” (Shah, n. d.). In this case, because easyJet has been able to cut costs in going online, and because a lot of their clients are now online based, easyJet actually had the capability of being able to offer much lower fares as compared to industry standards, as long as clients book online. By doing this, easyJet did not only generate more interest in their internet-based business, for easyJet also had the advantage in being the “price lead,” making its competitors follow the lead of easyJet in terms of pricing. Of course, as competitors follow, there would be a time lag, wherein aviation customers would prefer easyJet over competitors because of lower prices. Aside from price leadership, easyJet was also able to gain competitive advantage through this approach. According to Shah, competitive advantage is actually the advantage enjoyed by a firm wherein it consists of “something which gives the organisation some advantage over its rivals” (Shah, n. d.). In this case, easyJet’s early positioning on the internet actually provided it with the leverage to establish itself on more and more consumers with minimal costs, as compared to its competitor’s insistence on physical marketing merchandise, which is more costly. Moreover, by being a first mover on internet positioning, easyJet was also able to achieve another strategic advantage, that of new product development. According again to Shah, new product development is actually the development of new product in able to “keep ahead of rivals and set the pace” (Shah, n. d.). In the case of easyJet, its new product included the offering to clients of internet-only promos, characterized by cheaper fares when book earlier, and which can be done exclusively on the internet. easyJet actually was the first ever airline to offer such kind of product making have the lead over other competitors, who only adopted internet only products when e commerce has already been established. In this case, while competitors of easyJet are only beginning to introduce their own brand of online products, the brand of easyJet has already been established on solid ground. One of the most interesting part of easyJet’s approach in positioning on the internet is that it did not sought to create a new business model altogether, but instead integrated the concept of e-commerce in their original business model. As stated by Pritchard, “I wouldn’t say it changed the business model – it fits in very well in the model, and the low cost imperative. Ultimately, selling online is much cheaper than it would be with every sale going through the call centre. And one of our sales tools – generating huge sales peak through highly publicised promotions – really need the web to be effective…A scalable website is much better able to cope, and is more cost-effective, than a manned call centre.” (Pritchard, 2002) In implementing this approach, it is clear that easyJet actually integrated its internet positioning according to the process of strategic and sequential IS/IT: from the development of the business strategy to the designing and development of the business itself (Shah, n. d.). As charted by Shah, it actually follows the following sequence: “Develop business strategy - Develop business architecture - Design IS architecture - Design IS/IT infrastructure - Design and develop systems” (Shah, n. d.). Conclusion One of the first approaches that easyJet made was actually to venture into e-commerce, that is, to position itself in the internet, and it has made some rewarding gains. In this case, easyJet actually delved into using the different advantages of the internet in transacting business, especially in the aviation industry: Offering information about the company through the web, offering the schedule of flights and even reserving tickets online, Using the internet to promote the advantages of getting the services of easyJet, including its affordable fare rates. Reaching out to a lot of customers with less cost (for web hosting services are far cheaper than actual physical marketing merchandise) One of the first approaches easyJet used was to be a first mover, enabling it to Have a chance to capture large markets” Establishing a pioneering brand name online Make exclusive strategic alliances with other online companies In addition, easyJet was also able to generate interesting cost-effective programs in their online positioning, making them deliver customer service in their online infrastructure, and eliminating the costs related with having to construct a new call centre. By being a first mover in internet positioning, easyJet was also able to gain competitive advantage, cut costs, establish a dominant market, and be a price leader in the industry. Finally, easyJet integrated its IS/IT strategy on its business model, according to its vision and goals. References Business Dictionary. n. d. Management information system (MIS). [online] Available at http://www.businessdictionary.com/definition/management-information-system-MIS.html Pritchard, Simon. 2002. Reachlive. [online] Available at www.reachlive.net/interviews/Q4-02/Simon_Pritchard.htm Shah, M., n. d. Enterprise Systems: Example 1 of Strategic IS, BT3001. Lancashire Business School, unpublished. Shah, M., n. d. Strategic IS: E-business, BT 3001. Lancashire Business School, unpublished. Shah, M., n. d. Information Systems: Strategy Key Issues, BT 3001. Lancashire Business School, unpublished. Shah, M., n. d. Business Strategy, BT 3001. Lancashire Business School, unpublished. Shah, M., n. d. Global IT, BT 3001. Lancashire Business School, unpublished. Webopedia Computer Dictionary. n. d. MIS. [online] Available at http://www.webopedia.com/TERM/M/MIS.html Wisegeek. n. d. What Are Management Information Systems? [online] Available at http://www.wisegeek.com/what-are-management-information-systems.htm Read More