Business Performance and Marketing Strategy - Assignment Example

?Strategic Management Analysis Table of Contents Strategic Management Analysis Table of Contents 2 0 Introduction 4 2.0 Task A 5 2 PESTEL Analysis 5 2.1.1 Political Aspects 5 2.1.2 Economical Aspects 5 2.1.3 Social Aspects 6 2.1.4 Technological Aspects 7 2.1.5 Environmental Aspects 7 2.1.6 Legal Aspects 7 2.2 Five Forces Analysis 8 2.2.1 Threat of New Entrants 8 2.2.2 Bargaining Power of Suppliers 8 2.2.3 Bargaining Power of Buyers 8 2.2.4 Threat of Substitute 9 2.2.5 Rivalry 9 2.3 Critical Success Factors 10 2.4 Opportunities and Threats 11 2.5 Summary of Part A 13 3.0 Task B 14 3.1 Value Chain Analysis of easyJet 14 3.2 Value Network Analysis of easyJet 18 3.3 Competitive Advantage of easyJet 19 3.3.1 Financial Resources / Competencies of easyJet 19 20 3.3.2 Human Resources/Competencies of easyJet 22 3.3.3 Unique Resources/Competencies 22 3.4 Evaluation of Sustainable Competitive Advantage of easyJet 23 3.5 Summary of Task B 23 4.0 Task C 24 4.1 Strategic Direction of easyJet 24 4.2 Strategic Fit of easyJet 26 4.3 Summary of Task C 28 References 29 Appendix 35 Appendix A: PESTEL Analysis 35 Appendix B: Porter’s Five Forces Analysis 37 1.0 Introduction The package holiday is a blend of transport and tourism which is sold by the tour operators through proper advertisements. The task of tour operators is to manage proper blend of aircraft, hotel, and tourism spots to make the holiday experience of customers easy, reasonable and expedient. They provide customers a variety of choices for spending on the holidays. In the year 1950, UK had first experienced inexpensive holiday package and since then this industry has become quite vast in the international market. Many big tour operator companies compete with each other for providing inexpensive holiday packages for family customer segment. In the study, the company which has been considered is easyJet. easyJet Holidays encompasses together the easyJet, an UK-based airline company and one of the foremost planners of accommodation in the UK lowcostbeds.com. The prime aim of easyJet Holidays is to provide immense ‘value for money’ beach holidays and city breaks to each destination’s of easyJet. easyJet Holidays offers a collection of around 100 destinations to select from and also provides air travels from around 13 airports of the UK with supreme choice, value as well as flexibility. easyJet Holidays also provides custom-made holiday tours along with availability of more than 10,000 hotels of quality in travel destinations arraying from 2 stars to 5 stars for its customers (easyJet Holidays, 2011). The package holiday is enormously popular for British tour creators. The package holiday industry provides people ranges of customised holiday packages to choose from (TUI UK Retail Limited, n.d.). 2.0 Task A 2.1 PESTEL Analysis PESTEL analysis helps to determine the external macro–environmental factors that can impact on the package holiday industry as a whole. 2.1.1 Political Aspects The political condition of any country can influence the laws of business. The political factors include the rules and laws of government and legal problems for operating a business. The political condition in the UK is relatively stable. Factors which can manipulate the package holiday industry are essentially the war and taxes on aviation among others. The UK government is currently trying to impose extra duty on aviation which can impact on the package holiday industry. easyJet, which is one of the biggest airline companies of the UK, had concluded that the hike of taxes on aviation can affect millions of customers and thus it can affect the profit of easyJet. The easyJet had already faced enormous tax increase for family trip i.e. tax had increased by 33%. It can affect the package holiday industry and the employment factor in the UK (Pierre, 2011). 2.1.2 Economical Aspects The economic factors can determine the purchasing power of people which affect the airline and package holiday companies’ offers. The economic condition includes the GDP growth rate, the unemployment rate and the inflation rate that can have an impact upon the package holiday industry in the UK. The UK is renowned as 6th biggest economy internationally. It is the second wealthiest nation in European Union. The British people have ‘high standard of living’ and the tourism market is developed and diversified. The global recession in the year 2008 had affected the UK economy and it had improved by positive GDP development in 2010. The unemployment rate of the UK is quite low. According to 2010 statistics, the unemployment rate was only 7.7% (U.S. State Department, 2010). The average purchasing power parity of the UK is 20410.79 USD. The low unemployment rate can increase the spending on travel and tourism (Trading Economics, 2011). The UK has low inflation rate. According to figures of May 2011, the inflation rate was 4.5% (Trading Economics, 2011). The positive economic condition can probably increase the growth of residential package holiday industry of the UK. 2.1.3 Social Aspects The social factors include the fashion or trends of people. In the UK, people prefer to access the internet and shop online. Majority of people prefer to spend their weekend by watching television or movies. For entertaining themselves British people prefer to stay at home rather than to go to a tour. It has been seen that the trend of spending on holiday in abroad had decreased in among British citizens. According to ONS (Office for National Statistics) report, the number of people travelling in the 2008 was 69 million which had dropped by 15% in 2009 to almost 58.6 million. However, the tourists’ arrival from abroad to the UK has increased. In the year 2008, the earnings from foreign tourists were almost ?16.3 billion which had increased to ?16.6 billion in 2009 (Office for National Statistics, 2009). 2.1.4 Technological Aspects The UK is prominent for advance technology which had affected the package holiday industry as well. The introduction of new technology had changed the mode of package holiday industry’s business. People can access different holiday packages from internet and choose according to their preference. Technology provides people to book tickets for holiday trips from online at home. This changing business environment needs rapid reaction to compete in the business environment. The technology helps the air travel companies to provide similar innovative services as other rivals. 2.1.5 Environmental Aspects The environmental factor includes weather and the climate. The changes in weather can impact the tourism. In the UK, the major environmental challenge is the global warming which is a major concern for companies such as easyJet because the VOC (Volatile Organic Compounds) and NOx emission has greater impact on O3 (Ozone) layer which impacts on global warming. The increasing awareness of environment protection can result in imposing more tax in aviation travel which can have an impact on the package holiday industry (Whitelegg, 2000). 2.1.6 Legal Aspects The legal factors are associated with government laws. The changes in law can create an impact upon aviation companies and travelling industry. 2.2 Five Forces Analysis 2.2.1 Threat of New Entrants The threat of new entrants in the package holiday industry is low. Aviation industry is a money intensive industry. Companies who want to enter in this segment need expensive equipment, facilities and money. Thus, the preliminary cost of entry is quite large. Besides, the new entrants also require enormous operational capital to absorb the preliminary costs for several years and also expense regarding campaign. easyJet had entered this business by taking loan of ?5 million and 2 flights with rent. The additional ?50 million is hoisted by debt and equity. Within two year easyJet had expanded its business and purchased 4 new flights (BOKEE, 2005). 2.2.2 Bargaining Power of Suppliers The bargaining power of suppliers in the package holiday industry is moderate. The cost of fuel is directly connected with flight operating cost. Thus, easyJet does not possess much power over suppliers of fuel. The producers of flight components are other suppliers of easyJet. easyJet had started its business with two flights and at present it has almost 92 flights. Thus, easyJet has good deal with aircraft suppliers and it benefits both. In this view easyJet possesses ‘higher bargaining power’ on the suppliers (BOKEE, 2005). 2.2.3 Bargaining Power of Buyers The bargaining power of buyers in the package holiday industry is quite high because customers prefer to seek for low cost travel, specially those airlines which provide inexpensive package holidays. As vast use of internet has made available for customers to compare the packages of every company and choose the most suitable one, thus, to remain competitive the package holiday operators such as easyJet need to check the prices of their products frequently. easyJet had implemented ‘Right Now Service’ in their website to manage the European customers. It has also provided inexpensive travels which attract many people to choose easyJet’s service (BOKEE, 2005). 2.2.4 Threat of Substitute The threat of substitute in package holiday industry is low. The major substitutes of aviation tourism industry are the other transports such as railway and car for domestic travels. Though the domestic travel are comparatively inexpensive compared to aviation travel, aviation travel package is much comfortable and flexible than train or other vehicles. The high speed luxury train transport is close substitute of aviation. The major benefit of using train transport over aviation is the side scenery which cannot be enjoyed in aviation travel and the chief drawback is the time (BOKEE, 2005) 2.2.5 Rivalry In the package holiday industry there are many competitors of easyJet. The competitors of easyJet with regard to holiday package industry are ‘JMC Holidays’, ‘First Choice’, ‘Expedia’, ‘Holiday Hypermarket’, and ‘Ryanair’ who also provide cheap holiday tour packages to customers. Among these four competitors, the Ryanair is the closest competitors of easyjet with regard to providing inexpensive flights. While easyJet costs ?45 per 600 KMs, Ryanair costs only ?34 per 600 KMs (Burns, n.d.). 2.3 Critical Success Factors Inexpensive Travel: The major reason for success of easyJet is the offer of low cost travel holiday packages. From 1998, easyJet had provided customers with exceptional holiday tour packages by online booking system. The increasing use of internet had become the primary source of sales for easyJet. Majority of booking of easyJet is done through company’s own portal. Technology: The use of technology is the other factor for success for easyJet. It has revolutionary IT systems which provide easy customer handling, quick response and rapid problem solving which result in reducing the operation time and increase performance. Starting from 1995 to 2006 the customer base of easyJet was estimated at 30 million per year (Capacital Ltd., 2006). Network: The major differentiator of easyJet is the system of network. easyJet is available in the most important routes of Europe and it is present in the most sensitive airports in the world. easyJet effectively manages its network by careful distribution of route and optimization of the airborne program. In 2009, easyJet had stopped 28 low performing routes and introduced 115 new routes. The good management of network is a critical success factor for easyJet (easyJet plc, 2010). 2.4 Opportunities and Threats Opportunity: In the travel and tourism industry there are many opportunities near easyJet. The European Deregulations had resulted in scope to enter in the emerging markets for low cost carriers. The inexpensive packages of easyJet can promote tourism industry and lead to economic growth. Threat: The major threat for easyJet is the other competitors who also provide low cost package holidays. The tactics implemented by competitors for attracting customer can impact on the passengers of esayJet on their most profitable routes. The continuous hike of ignition fuel is another threat. easyJet does not have oil prevarication policy which can result in the company to be at risk due to high oil prices (Air Scoop, 2007). For almost 39 years the cost of fuel has impacted on the cost of holiday packages. The cost of oil has showed a growing trend from 1999 to 2010. The following graph shows the rise of oil per barrel in the UK. Source: (Taskforce, 2010). Thus, the increase in fuel prices is a potential threat for easyJet as it can increase the cost of travelling. 2.5 Summary of Part A From the above analysis, it can be seen that the package holiday industry in the UK is profitable and market is perfectly competitive where there are many players and many customers. The rivalry among companies is much higher for attracting tourists. Though there are number of factors that influence the package holiday industry, the UK is a good preference for many foreign tourists. Thus, the UK package holiday industry has great prospect in near future as it has the adequate infrastructure and condition for growth of tourism sector. 3.0 Task B 3.1 Value Chain Analysis of easyJet Primary Activities Outbound Logistics: easyJet primarily operates in minor airports and not at the major hub airports. Many aviation companies operate in hub system which makes people to use two flights to reach a place. Unlike other flights, easyJet follows direct route because it provides less emission than dual flight of major hub airports. This helps easyJet to maintain its image. easyJet always seeks to ignore the congested hub airports because using minor airports instead of major airport is more convenient for people (easyJet plc, 2006). Inbound Logistics: One of the bases for easyJet’s success is its inbound logistics. Though the maximum business operations of easyJet are performed by their portal and internet, easyJet also gets maximum inbound calls for airport ticket and customer enquiry. easyJet works with their existing as well as new suppliers which help the company to recognise cost saving techniques. The suppliers of easyJet are also competitive and they endow with inclusive invoice inspection service that helps easyJet to correct any fault in case any invoice error occurs (Smith Bellerby Ltd, 2003). Operations: The major aim of easyJet’s operation is to minimise the costs. Almost 95% of sales of easyJet are performed by internet booking. Its internet booking system is designed in such a way that provides customers a variety of price choices to select and thus it minimises the distribution expenses. The customers’ of easyJet are emailed with travel specifications and booking locations. This operation procedure can save the expenses of issuing, processing and merging millions of tickets per year (Cengage Learning, 2007). Marketing and Sales: easyJet considers the travellers’ needs and preferences and has developed marketing strategies which fulfil the needs of target customer segment. easyJet’s marketing helps the company to differentiate its offers from other competitors. For selling their products, easyJet rely on internet. The travel agents also serve as sales agents for easyJet’s various tourism package offering. Service: easyJet avoids the free cookery which reduces the cost. easyJet provides travellers to buy meal and drink on the flight. easyJet also provides freedom of seating. The travellers can seat at anyplace they prefer. This system helps to reduce the complication and accelerate the boarding procedure (Cengage Learning, 2007). Support Activities Procurement: A few airplanes of easyJet are taken by rent and majority of airplanes are purchased by easyJet. This helps easyJet to save the expenditure of rent. Unlike other companies, easyJet operates limited variety of airplanes, for example, in the year 2006, easyJet had almost 71 ‘Airbus A319’ model airplanes and 32 ‘Boeing 737 – 700’ model airplanes. This can help to accomplish greater ‘economies of scale’ and proper management of expenses by using similar models of airplanes (Shrager, 2007). Human Resource Management: easyJet recruits its employees according to talent. Every year easyJet experiences change in its leadership pattern. easyJet recruits people who are enthusiastic to seize opportunities and can impel the company forward in any complex situation. easyJet provides training to the managers for improving the technical and managerial skills. Technology: easyJet has advanced technology in almost every operation such as flight operations, booking, and weather detection and employee information among others. Infrastructure: easyJet has strong infrastructure. The financial resources support the expansion plan. It has different divisions for marketing, human resource and finance that deal with their respective fields. easyJet avoids any needless organisational structure in an attempt to provide simplicity and quick decision making. Fig 1: Value Chain Analysis of easyJet 3.2 Value Network Analysis of easyJet The value network is the relationship by which a value is formed. easyJet has effective human resource management system. The organisational customs of easyJet is open for all. It has good relationship with all of their stakeholders. easyJet extracts the full prospective of value chain suppliers. The strong relation with employees and suppliers helps easyJet to improve its business performance and introduce new aircrafts (Hui, 2011). Fig 2: Value Network Analysis of easyJet 3.3 Competitive Advantage of easyJet The major competitive advantage of easyJet is that it provides inexpensive holiday packages. The cost of holiday package is below compared to the maximum of the competitors of easyJet in the travelling industry. For example, the family holiday package of easyJet starts from only ?250 per person for 7 nights. Other holiday packages include Spain Holiday Package for just ?97.07 per person for 7 nights, Egypt Holiday Package costing ?206.61 per person for 7 nights, Berlin City winter holiday package for ?98.50 per person for 3 nights among others (easyJet, n.d.). Another competitive advantage is its advanced technology. easyJet’s booking system is completely IT oriented which provides higher competence. The online system is one of the resources which make easyJet a strong player in package holiday industry. It provides prosperous elements in their websites which make the customer experience much better (IVIS Group Ltd, n.d.). 3.3.1 Financial Resources / Competencies of easyJet Table 1: The Financial Condition of easyJet Source: (easyJet plc, 2010). From the above table, it can be seen that the easyJet has strong financial competency. Its revenue and profit margin had increased by 11.5% and 4.7 points considerably from 2009 to 2010. Thus, it is proved that easyJet has strong demand of its products (easyJet plc, 2010). Financial Health of easyJet 2010 2009 Current Assets Liquidity Ratio= Current Liabilities 0.08833 0.0975 Net Debt Leverage Ratio= Net Assets 0.0267 0.0350 (easyJet plc, 2010). In comparison to other performers of this holiday package industry, easyJet’s financial health is quite good. For example, Thomas Cook is another strong performer of package holiday industry. It has strong financial position in this sector. The following figure shows the financial performance of Thomas Cook. Source: (Thomas Cook Group, 2010). It can be seen that revenue of Thomas Cook had decreased by 4.1%, whereas the revenues of easyJet had increased by 11.5%. The financial health of Thomas Cook is as follows: 2010 2009 Current Assets Liquidity Ratio= Current Liabilities 4.791 5.625 Net Debt Leverage Ratio= Net Assets 0.4611 0.3799 From the above figure, it can be seen that the liquidity ratio of Thomas Cook is higher than 1 which points out that the financial status of Thomas Cook is intricate and the evaluation of account and revenue is very critical. In case of leverage ratio, it can be seen that Thomas Cook had high leverage ratio than easyJet in 2009 and 2010. It indicates that Thomas Cook has high debt than the asset and it has larger risk compared to easyJet in the market. Thus, in conclusion it can be said that easyJet is better performer than one of its other competitors in the package holiday industry (University of Notre Dame, 2011). 3.3.2 Human Resources/Competencies of easyJet easyJet has good human resource policy for its employees. easyJet concentrates on recruiting appropriate individuals for the company irrespective of the race or nationality. It is the responsibility of human resource department of easyJet to make sure that the employees performs collaboratively. For ensuring better human resource competency, easyJet provides training to their employees. In the year 2010, it had organised almost 465 training sessions for improving the skills of its pilots. easyJet successfully balances between the personnel and customer service (easyJet plc, 2010) 3.3.3 Unique Resources/Competencies The following table shows the unique resources and competencies which help easyJet to get competitive advantage against other competitors. Table 2: Unique Resources/Competencies of easyJet 3.4 Evaluation of Sustainable Competitive Advantage of easyJet The key competitive advantage of easyJet which is inexpensive travelling is derived from its elements of value chain i.e. good inbound and outbound logistics system, good operation management and proper use of resources. Its value chain helps to strengthen the brand image of easyJet. The above value chain elements help easyJet to obtain correct material for its business operations and meet the assurance made by the company to the customers. 3.5 Summary of Task B The major strength of easyJet is its management procedure which helps to maintain the costs of company’s operations. For instance, the technologies of easyJet help to increase the efficiency of management and save the additional expenses. easyJet had successfully maintained its brand image as a low cost holiday travelling package provider. The regularity is another aspect of easyJet. easyJet is extremely punctual with regard to response time of any customer enquiry and flight arrival & take off time (Hui, 2011). The major weakness of easyJet is the modification of organisational structure which is needed for long-term advantage for the company, but it can also lead to high expenses. Constant maintenance of cost advantage might be difficult for easyJet in near future because price focus with convenience which is one of the major success factors of easyJet is attaining its limit. The power of buyer is high in this industry, thus in case easyJet fails to provide inexpensive holiday travel packages it can result in loss of customers for their package holiday tours (Air Scoop, 2007). 4.0 Task C 4.1 Strategic Direction of easyJet The strategies of easyJet are aimed at maintaining the expenses to be minimum which allows the company to offer low-cost holiday packages. easyJet utilises a variety of strategies to avoid unnecessary expenses and provides best services with minimum cost. The strategy of easyJet has five directions which are: Exclusive Branding Strategy: easyJet spends huge money on public relation and advertisement to develop a strong brand image towards customers. The ‘easy’ brand represents simplicity, innovative, entrepreneurial, honesty, fairness and value for money (Air Scoop, 2007). Revenue Strategy: easyJet’s strategy is directed toward profitable growth and higher return. Thus, the management team of easyJet aims at controlling revenue and expenses. In the medium term, easyJet focuses on accomplishing 15% ‘return on equity’ (easyJet plc, 2009). In the year 2010, the returns of easyJet had increased by 43 pence/seat. easyJet carefully manages its expenses so that it can persist to offer competitive holiday packages. The returns from hotel and vehicle declined in 2010 compared to 2009 because of fuel hike, however easyJet is trying to be on the track of providing inexpensive holiday packages to the travellers. To regulate the expenses easyJet stays connected with government on several cost related factors which can help the company in future (easyJet plc, 2010). The operating expenditure of easyJet is low, but the operating margin is lesser than its competitor Ryanair. The reason is that easyJet spends much in advertising and public relation activity which makes its travelling charges higher than Ryanair i.e. almost €20 higher than Raynair (Smith, n.d.). Networking Strategy: easyJet focuses on operating in tourism spots and low cost to attain maximum travellers. The main growth strategy of easyJet is to increase the regularity of flights unlike Ryanair which focuses on increasing its network. easyJet performs in almost 289 routes from 79 airports. Employee Strategy: To make sure that the employees are at the utmost level and facilitate the progress of company, easyJet provides training to their employees in their private institute. The training helps easyJet employees to ensure that they are advanced with most recent industry reports. easyJet also provides ‘Induction Programme’ so that the new employees can understand the customs and significance of easyJet and contribute towards the success from the beginning. With regard to customs, easyJet follows the informal customs and flat organisational structure that reduces the redundant and inefficient management layer. Customer Service Strategy: easyJet follows the strategy of providing best service. The customer satisfaction level of easyJet is above standard. There are no weight margins on hand bags; the restriction applies only on the size of bags. It also provides facility of accommodating a passenger who had missed his/ her plane on the next plane with an additional fee of only ?35 (Air Scoop, 2007). 4.2 Strategic Fit of easyJet One of the major strategic fit that has been identified in easyJet is its yield management. Its superior network strategy and competitive holiday packages has helped the company to increase market share in the package holiday travelling industry. Over many years, easyJet had successfully showed best revenue performance and increases its customers in spite of decline in travelling of the UK citizens. easyJet’s revenue strategy helps to provide low cost to customers and capture high yield in each holiday travelling package. The strength of easyJet is the computerised ‘Yield Management System’ which helps to increase the revenue on every flight. This system is developed only for easyJet which is synchronised according to its operation. This system guarantees that the proper stability of passenger is fulfilled (Cengage Learning, n.d.). However, the main weakness that has been found in the strategic fit of easyJet is that it does not have any plan for preserving customers and making loyal customers. Though easyJet provides attractive holiday package for travellers, it has no such attractive packages for frequent customers or business customers. In order to survive in the competitive business environment easyJet needs to focus on other customer segments and introduce new offers for securing its position. In term of package holiday industry, there are other emerging and vast market besides Europe, such as Asia, Middle East and Russia where it can easily expand its holiday tourism business. It will provide a new customer base for easyJet. Table 2: Strategic Fit of easyJet Opportunity/Threat Fit? Comment Expansion of Business easyJet has good financial condition and good network, thus it can expand its business outside of usual routes Customer Retention ? easyJet has no strategy for retaining as well as making loyal customers Government Taxes ? Government taxes can easily impact on the package holiday services of easyJet and it does not have any substitute for countering this issue Customer Attraction easyJet upholds good culture and its provides priority to the security issues which can attract more customers Critical Success Factors Fit? Comment Cost Leadership easyJet’s major advantage is that it provides low cost services by proper management strategy Innovation - easyJet needs to constantly innovate its services and packages to sustain in the package holiday industry Employee Relation Through their own institution, easyJet provides training to their employees to increase the performance and effectiveness 4.3 Summary of Task C easyJet has superior and unique business strategy. easyJet is aggressive in business performance and it pursues ostentatious marketing strategy. It has effective fuel management techniques, unique networking system and better holiday offering. In terms of factors such as expansion of business and customer attraction easyJet has strategic fit. It has strong cost leadership and good employee relation that have provided the company with sustainable competitive advantage. easyJet knows the customers’ needs and preferences and accordingly make their holiday offers for maintaining customer satisfaction. easyJet’s employees are prepared in such a way that they can deliver maximum performance and good customer service. References Air Scoop, 2007. SWOT Analysis of easyJet. Bird’s Eye View. [Online] Available at: http://www.air-scoop.com/downloads/SWOT_easyJet_Air-Scoop.pdf [Accessed July 07, 2011]. BOKEE, 2005. Report of easyJet Strategy Analysis. Stir Media. [Online] Available at: http://stirmedia.bokee.com/1415635.html [Accessed July 07, 2011]. Burns, P., No Date. Case Studies in Entrepreneurship. easyJet. [Online] Available at: http://www.palgrave.com/business/burns/students/pdf/12%20easyJet.pdf [Accessed July 07, 2011]. Capacital Ltd., 2006. Success Story. Case Studies. 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Appendix Appendix A: PESTEL Analysis Political Aspects Impact Comment Terrorism 5 of 5 The Impact of terrorism in the package holiday industry is high. Any terrorism activity in a certain country can reduce the sales of package holiday in that country Duties and Taxes 3 of 5 The impact of duties or taxes in the package holiday industry is moderately high as it can increase the cost of holiday packages provided by the package holiday companies Economical Aspects Impact Comment Purchasing Power 4 of 5 The purchasing power of people affects the package holiday industry. Higher purchasing power of corresponding country leads to introduction of exclusive holiday packages GDP Growth Rate 3 of 5 The GDP growth rate in the UK can impact on easyJet, as it determines the financial condition of a country. If the financial condition is strong, then it is likely to benefit easyJet Unemployment 2 of 5 The unemployment is another economical issue of the UK. Higher unemployment rate can reduce the spending on holidays. It impacts on the domestic holiday spending, but the international holiday spending is unaffected Social Aspects Impact Comment Trend 3 of 5 The trend towards package holiday is a major social aspect for easyJet. People’s preferences towards spending on holidays can impact on the package holiday Technological Aspects Impact Comment Internet Facilities 4 of 5 Internet has introduced new ways of accessing package holiday schemes. People can compare schemes of various companies through internet which increases the rivalry Innovative Technology 2 of 5 The innovative technology can help to differentiate the services of holiday packages and thus helps to gain competitive advantage Environmental Aspects Impact Comment Climate Change 3 of 5 The major environmental aspect that can impact on package holiday is the climate change. VOC and NOx emission by airlines can contribute to the global warming and might lead to imposition of high duty on aviation travel Legal Aspects Impact Comment Government law 2 of 5 The changes in any law can impact on the package holiday. In the UK the government is stable, thus esayJet has less impact from legal issues in the UK. Wage 5 of 5 The rules or regulations on minimum wages can have an impact upon a package holiday company such as easyJet because it can increase the cost of package holiday and also impact on demand Appendix B: Porter’s Five Forces Analysis Threat of New Entrants (Low) Comment High Capital Requirement A company that wants to enter in the package holiday industry needs high capital for buying expensive equipments, implementing advanced technology and providing good facility Bargaining Power of Supplier (Moderate) Comment Fuel Supplier The cost of fuel cannot be controlled by package holiday companies, thus it has no power over fuel suppliers Flight Component Supplier easyJet is a strong company and both the components suppliers and easyJet can be benefitted by the package holiday business. Thus, easyJet has power over the suppliers of flight components. Bargaining Power of Buyers (Moderately High) Comment Compare Packages There are many companies that provide package holiday services and with the increase of internet people can seek for most suitable packages Threat of Substitute (Low) Comment Weak substitute Compared to package holiday products of easyJet, the other substitutes such as train or vehicle tourism services are less comfortable and flexible. It has no match with services of easyJet. Rivalry (High) Comment Competitors There are many competitors of easyJet in the package holiday industry that strive to provide similar packages with almost similar prices and facilities. Thus, the competition among rival companies is high Read More