Easy Jets Strategy in Action - Strategic Management - Essay Example

Running Head: Easy Jet Easy Jets Strategy in Action-Strategic Management of Introduction As “Low-cost airlines are all the rage in Europe. With rock-bottom fares that entice travellers from the chillier north to places” across Europe (questia.com), EasyJet is one of the most successful and growing low-cost, no-frills airlines in European market that is expanding around by the day. The airline is credited for introducing in the airline market some innovative marketing strategies that has changed the way air products sold in the European market. EasyJet has really come from a no-where point starting with a high-operation, low-cost airline. It sent to dust the old market strategies of low cost companies that only ran for marginal routes in which large companies were not interested. These companies then ran almost scraped ships, and so on. On the other hand, EasyJet applies an efficient, cost-effective strategy that spreads in all racks of its management operations, that is, from boardroom to cockpit. Though being a large-scale airline operator that manages busy routes with modern aircraft, EasyJet is still low-cost company that has boomed in the market in a very short time. For the customers the EasyJet offers a safe, friendly airline that is, all the more, efficient for very low fare prices. With the growth of the company’s assets (its moving from a private venture to a public company, for example), has alerted other brands in the airline industry and a very intense air of competition is what can be seen soaring the European airline industry. As such other such giants as the British Airways and Ryanair are coming up with more solid strategies as well that give EasyJet a hard time as the “British Airways implementation of a low-cost strategy on its European network has put easyjet under pressure from a "full-service" airline on one side and Ryanair, the "no-service" airline, on the other” (proquest.umi.com). As such it is a challenge for the EasyJet to be in the market with the similar nature of being a low-cost no frills airline that is growing by the day and also on the constantly upward-moving curve of high profits, monopoly of its own modern kind, goodwill among the customer for safe and secure airline service, and most of all of being a low-cost, high-quality operator in Europe and elsewhere. In this regard, we can see that EasyJet is coming heavy as the company merger with GO airline is a milestone and it was analysed that “EasyJet/Go would become a bigger player overnight through its merger” (myphlip.pearsoncmg.com). Thus, in the following part of the paper, it seems wise to look for the kinds of strategies that EasyJet is applying to date to remain the giant in the European airline industry brining more and more quality services and products in the market uplifting its trust among the customers and the shareholders. Stelios Haji-Ioannou: The Prime Cause of EasyJet’s Success When I reviewed literature extensively on EasyJet, I could not but stop on the most frequently quoted name of its founder: Stelios Haji-Ioannou. He is considered to be the one who is the root cause of EasyJet’s present success. This person is unique himself. He says he doesn’t want to make money; otherwise he would be playing oil baron in Russia: He want to create new brands, bring innovation to the market setting new trends. He is not afraid of failures. He mingles with people and flies in his own EasyJet planes by standing in the queues with other people. Stelios Haji-Ioannou “wears his wealth lightly. Nothing about him is flash”. He says that Its all part of not trying to offend people, trying to blend in and make others feel more comfortable with you” (EASY Does It). It is this humbleness or staying low quality of Stelios that is reflected in the management structure of the company as the culture is revealed on the official website of the company: “easyJet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. All office-based employees are encouraged to dress casually. Ties are banned - except for pilots! Remote working and hot-desking have been characteristics of easyJet since the beginning” (easyjet.com). Thus, according to my own analysis, Haji-Ioannou is the key man for the success of EasyJet and the kinds of proactive strategic management that the company has introduced in the market over a period of time. EasyJet’s Internet Business Model Whereas most companies just go about publicising their product via a website, EasyJet is the one company that has made the straightforward use of the Internet regarding it product sale. “EasyJet claim to be the webs favourite airline and have the statistics to back up this rather extravagant claim.  With over 78% of seats sold over the internet in September 2000 they rank as one of the UK’s biggest internet retailers (macdermott.net). This is seen one major contribution of EasyJet to business world due to the general customer hesitation to book and buy anything online. One thing else that gives high trust of customer to EasyJet is that on the website, every possible prospect that is in favour of the customer about fare and booking is explored in most convenient manner. Thus, “Fares are quoted one way, which means that the best price for the most convenient flight can be obtained both ways, optimising the round-trip cost for the passenger” (aatl.net). This is one approach that has yielded favourable results for EasyJet. The room for market growth for inflexible pricing and ticketing packages offered by other ‘conventional’ air companies is narrowing by the hour. As of today, the airline giant EasyJet is now taking very high strides as it aims to become the very first “Web-Only” airline in the entire world. This is what they call “doing away with telesales (something already achieved by easyRentacar). Its aircraft no longer carry the telephone booking reservation number, but only its website address” (aatl.net). Operational Model of EasyJet The giant business strategy that takes EasyJet higher in the sky or reputation and business than the conventional airline marketing strategy is its unique operational model in which the company introduced policies that were “based on keeping costs to a minimum to allow the airline to offer the lowest fares possible. The airlines operational model focused on moving people from point A to point B in the best and cheapest possible way, stripping out all unnecessary costs” (icmr.icfai.org). EasyJet also came forward with a bundle of marketing strategies that worked on the other side of the operations of the company. That is, the company put away with wasteful expenses that appeared to be more like a burden. In this regard, the credit goes to the founder and presently highest shareholder of the company, Stelios, who credits most of EasyJet’s success to two basic strategic imperatives. The first is “sweating the assets”. This means to make sure that the EasyJet planes are one full to the most possible level, two, the planes are flying for as much time as possible. This single move gave EasyJet a high sale turnout on both the sides, keeping the maxim of mass production and low cost intact. The other strategic move is: “a sophisticated yield management system which could set an infinite number of fares for a given flight, based on the demand and supply position for that flight. The prices for the seats fluctuated depending on the demand for them at a particular time” (icmr.icfai.org). Safety When it comes to marketing and business management strategies of EasyJet, we can see that it is one of the fastest growing airlines in the market that finds opinion in the common circles of people due to its high-quality, low-cost offering. There are certain areas where EasyJet has put immense concentration that has won it the opinion. As such the prime priority area of EasyJet’s marketing strategy is the high-safety measures for its customers as EasyJet is “not content simply to operate aircraft to the currently accepted safety standards, but wishes to further enhance safety wherever the opportunity exists” (aatl.net). It seems obvious that any airline has to bring high-safety measure so as not only to stay in business, but also to ensure the safety of the travellers who fly by it. However, the measures that EasyJet takes to ensure the high standards of safety are of a sophisticated nature. It makes constant use of new technological advances in the area of navigation, surveillance, and communication. As well as, it seems determined to apply new procedures to ensure high-safety standards for example EasyJet’s adopting the Head Up Guidance system, first airline company in the UK, for its fleet (aatl.net). If we look at the press releases, we will find material quite in abundance that make public EasyJet’s going for newer techonology and software for the norm of High-Safety business. One such is the eFlight­TM information management system that EasyJet adopted on 2nd Feb, 2005. Ray Webster, CEO EasyJet, then said about this product’s usability that: “This solution will support easyJets strategic objectives to enable sustainable growth, operational efficiency and lower costs," said Ray Webster, CEO easyJet. "The solution also moves easyJet towards a paperless cockpit and facilitates the efficient and accurate transfer of data between aircraft and airline” (shareholder.com). However, when it comes to adoption of new technology, EasyJet is always a step forward from its competitors. This gives the company an edge over the rival companies. These moves are two-fold in nature. EasyJet also focuses on its “strategic objectives to enable sustainable growth” from these steps (shareholder.com). Adherence to Low-Cost Slogan If we look at operations other than the online booking, selling, safety, marketing, and so on, of EasyJet, we will find that certain creative steps have always been at the priority list of EasyJet. In this regard on very glaring example is the soaring fuel prices time in the international oil market last year. We see that EasyJet is the one company in Europe that clung to its low-cost slogan at this very hard time when “global oil prices hit record levels of more than $(US)75 a barrel”. This was the time when such big companies as British Airway introduced fuel surcharges on both long haul and short haul services late last year” (Daily Post). However, EasyJet remained an easy thing for its more supported common traveller as it was told then that “Easyjet has taken out insurance to protect it against rising oil prices” therefore winning more customers in the market and gaining stronger trust and high reputation with, of course, a huge profit turnover in the time to come (Daily Post). EasyJet and New Entrants EasyJet strategies have been really effective when it comes to competition that is growing intense by the day as more and more new low-cost airlines arrive in the market with glaring strategies and a determination to fight. However, Easyjet’s team is committed to grow even beyond the airline business as Stelios wants to make the orange colour of the company the easy brand found on most moving products in the market. None the less, there are certain findings through studies that show that how a company like EasyJet can stay healthy in the tight air of competition as it applies most effective strategies as better quality service that an entrant finds difficult to provide; low-cost for a quality product; and main route instead of sub-routes, and so on: “an airline (or any other firm) can only deter entry of other airlines by launching a service with a quality that is higher than her own and higher than the entrant’s. [Full service carriers] could follow this strategy, but it would be costly to launch flights with higher quality. Quite on the contrary, they are trying to lower their costs and so their quality” (fep.up.pt). Thus, today, at least full service carriers find it extremely difficult to fight the low-cost companies like EasyJet. One very prominent example of falling behind this race of creative competition is Italian carrier, Alitalia. Therefore the regional general manager of EasyJet Mr Kohlsaat, who is responsible for EasyJet’s operations in Gernamy, the Baltics, Central and Eastern Europe (CEE) and Denmark, said in an interview about the Italian airline: “Look at Alitalia, it’s a disaster” (cbw.cz). EasyJet’s Overall Strategy Exploring the overall picture of the EasyJet’s management and the application of the strategies on the whole of the market functions, we find that there are five basic stands of strategic management that the company’s managers make use of. These are:  Strategic vision and mission  Set Objectives  Craft a strategy to achieve objectives  Implement and execute strategy  Monitor, evaluate and take corrective action (answers.google.com) Conclusion At the end of the paper, we can state that our examination has revealed the key areas of EasyJet’s strategic management that has taken the company to sublime heights. The key person in the operations of the market is seen to be the founder and highest shareholder, to date, is Stelios Haji-Ioannou, who has made it possible to for EasyJet to become one single low-cost, no-frills airline that enjoys prestige and high turnover of profits however being one of the lowest-cost airlines. EasyJet’s strategic management includes removing as many as possible barriers from the business operations as possible. Then its prime focus moves toward high-quality service and low-cost for the services and product that it has to offer. EasyJet is now the one airline that has introduced the trend to sell its tickets online and is now planning to become the sole Internet-based seller of its product: thus setting another trend in the arena of creativity and innovation. With Stelios Haji-Ioannou’s determination of making Easy the everyday life brand, there is no doubt that perhaps we will find Easy everywhere moving around with the lowest possible cost offering endangering the future of high-cost lord-standard brands. Reference questia.com - Urs Binggeli , Lucio Pompeo: Hyped hopes for Europes low-cost airlines. Retrieved February 5th, 2007 from proquest.umi.com – EasyJet: Marketing. Retrieved February 5th, 2007 from myphlip.pearsoncmg.com – EasyJet takes a difficult route. Retrieved February 5th, 2007 from Byline: DAVID BUTCHER: EASY Does It; despite Recent Financial Problems at His Low-Cost Airline, easyJet the Jolly Orange Giant Known Simply as Stelios Wont Rest until His No-Frills Brand Has Taken over the World. The Mail on Sunday. Publication Date: June 20, 2004. Page Number: 24. easyjet.com – Company Overview. Retrieved February 5th, 2007 from madermott.net – Strategic management information. Retrieved February 5th, 2007 from icmr.icfai.org – EasyJet: the ‘Easy’ Way to succeed. c aatl.net – Kim O’Neil: The EasyJet Internet business model. Retrieved February 5th, 2007 from aatl.net – Kim O’Neil: Head up guidance at EasyJet. Retrieved February 5th, 2007 from shareholder.com – Rockwell Colling delivers eFlight­­TM information management solution to easyjet. Retrieved February 5th, 2007 from Tony McDonough - Rival airlines vow: no fuel hikes; Ryanair and Easyjet have pledged to absorb soaring fuel oil costs. Daily Post. Publication Date: May 10, 2006. Page Number: 8. fep.up.pt - Cristina Barbot: Entry and accommodation in airline markets: Easyjet caught in the middle on the London-Grenoble Route. Retrieved February 5th, 2007 from cbw.cz – Martina Mareckova. EasyJet: Old hub model is obsolete. Retrieved February 5th, 2007 from answers.google.com – Strategy. Retrieved February 5th, 2007 from Read More