The aim of this article is to analyse and measure the competitive strategy that Easyjet have utilised in order to develop their current competitive position in the low price no frills flight market.
Objectives
Definitions of competitive strategy
Explain Porters universal strategy
Analyse the competitive strategy of Easyjet
Evaluate the competitive strategy of Easyjet
Recommendation for the future of Easyjet
Methodology
Porters generic strategy
Investigate the strategy clock
Find out benefits and disadvantages by creating a SWOT examination of Easy Jet
Theories on Easyjet competitive strategy
The Competition
Various Advice for Easyjet's future
Where the information was found?
University library
Internet
Journals
Newspapers
Books
Overview
From this report, Easyjet is seen as one of the key airlines in its market, and although they have some rough competition Easyjet is now more robust. Its competitive strategies are prior to the competition and are being very successful. This is proven through various ideas such as Porters general strategy, the strategy clock and a SWOT analysis of Easyjet's competitive strategy.
Introduction
Background
Easyjet is among the finest known European low price no-frills airlines. Which begun in 1995 by Greek entrepreneur Stelios Haji-Ioannou. He intended to 'make traveling to Europe affordable for more and more people'. Easyjet now calls itself the webs favourite airline'. (Thompson, Strategic Management, 2001) The airline is based at Hangar 89, a excellent orange building next to the primary taxiway at Luton Air port. Within an industry where corporate and business HQs are generally regarded as the ultimate status symbol, it is the very embodiment of the Easyjet low-cost ethos.
Objectives
To identify and analyse the competitive strategy that Easyjet have utilised to be able to build up their current position. To critically evaluate the competitive strategy that Easyjet have utilised in the development of their current completive position. Also make appropriate tips regarding Easyjet.
Competitive advantage
Competitive benefit is the means by which a business can outperform its opponents and more revenue. (Lomax & Raman, 2006)
The ability to create more financial value than competition (Barney, 2010)
Competitive edge is more generally predicated on the stableness and continuity in romantic relationships between different parts of the organisation (Lynch, 2008)
Design is a form of competitive gain Good design allows things to operate more efficiently, smoothly, and easily for the consumer Customers appreciate good design. While they can't necessarily explain what specifically makes it good, they know it feels better. There's a visceral interconnection. They are willing to shell out the dough, if you give them a great experience. (Hackett, 2009)
Porter's Common Strategies
This set of strategies consists of three: segmentation strategy, differentiation strategy and cost leadership
Cost authority strategy concerns mass production of standardized products to lower the cost. Developing the product in high quantities or by volume would lower the costs of the product because fixed costs are maximized.
Differentiation strategy means creating products that are being packed as unique. Customers think that the top features of the merchandise are matchless and superior compared to others hence the reason behind its uniqueness.
Segmentation strategy means products are centered on few, chosen market or the professional markets. The company creates the product to match the preferences or requirements of a particular market.
(Porter, 1998)
Main Findings
Analyse Easy Jet's competitive strategy
Easy plane which is the UK's leading low priced airline, currently operating in over 400 routes with over 175 airplane in 27 countries is a no frill air travel, the concept started in the beginning of the 1970's in america and then this idea was accompanied by Airlines in Europe, and all of those other world.
Easy jet is recognized as No-frills airlines, where airlines which may have offer low fares but eliminate all unneeded services Easy Plane offers a no frills service at low fares. EasyJet's generic strategy is an average cost leadership strategy. The business enterprise philosophy of easyJet is that money can be produced on any route in which a carrier can journey three times each day to a low-cost airport, based on a minimum market size. The foundation of commercial success for such strategy is keeping a 30-40% cost advantage over founded airlines.
Easyjets low prices strategy can be defined as "A minimal price strategy seeks to achieve a lower price than rivals whilst trying to keep up a similar recognized service or product advantages to those made available from competitors" (Johnson, 2005) They believe that to achieve competitive benefits through this plan, the business need two basic alternatives, one is to discover a portion where main competitors are not thinking about. The other the first is find this portion attracts price reasonable consumers. (Johnson, 2005)
They use this by doing the next;
Easyjet is a Solution less airline which mean All you need to journey is your passport (or suitable photographic ID on domestic flights) and there verification number, predicated on their time of check in at the airport, this decides the order where they plank the aeroplanes (Easyjet. com).
Efficient use of airport. Easyjet flies to main destination airports throughout Europe, but benefits efficiencies through quick turnaround times, and progressive landing charges agreements with the airports
By lowering turnarounds to 30 minutes and below, Easyjet can achieve extra rotations on the high frequency routes, by increasing usage rates of its aeroplanes.
There's no such thing as a free lunch Easyjet does not offer free food from company, travellers are given the choice as to whether they desire to buy themselves drinks or snacks from the in airline flight. (McCosker, 2003)
The absence of business category means gaining seats and maximizes capacity. Though EasyJet does not provide the same kind of versatility as business category in traditional airlines, it is possible to change flights for reduced of 10, plus the difference in price. Punctuality is a priority
Direct marketing and Internet sales - Stelios recognized the prospect of sales on the web before it had become accessible. Initially a call middle allowed customers to reserve over the phone, a far more familiar communication route available to all. By offering discounts for Internet bookings, Stelios shaped his customer's purchasing behavior with the result that 80% of reservations were made on the web in 1998. It reduces circulation charges from travel agent commissions and computer booking system costs.
Easyjets strategy was modelled on Southwest air, but Stelios claimed he previously been influenced by Richard Branson and Virgin Atlantic. His approach to customers and folks mirrors that of Branson. He flies on his own planes some 3 or 4 times a week and week talk to the passengers. He's regularly present at Luton (his head office) and happy to revolve passenger problems. (Thompson, Strategic Management fourth editon, 2001)
Easyjet favours an informal company culture with a very flat management composition, which eliminates unnecessary and wasteful tiers of management. All office-based employees are encouraged to dress casually. Ties are forbidden - except for pilots! Remote working and 'hot-desking' have been characteristics of easyJet since the beginning.
One of the strategies which easyJet is persuading is a cost authority. In persuading cost benefit, the purpose of the company is to be the cost innovator in its industry or industry segment (Give, 2002)
The Easyjet product is, the truth is, a package of service, many subcontracted in. Easy jet supplies the planes and their crews, and markets and the offers the flights. Being a company, it is focused. Check-in and information services, snacks (for passengers to by before they mother board the aeroplane), baggage handling and fleet maintenance are bought in from specialists. (Thompson, Strategic Management, 2001)
Competition for customers in this sector of the market is intense, Virgin point out and Take a flight Thomas make are simply a few from many have low-price, no frills subsidiaries, neither which is reputed to be profitable. The largest of the competitors is Ryanair, over 25 years old and located in Dublin, hauling over 75 million people yearly.
When Stelios founded the positioning of the Easyjet as you of leading low cost airline in European countries by "adopting an efficiency driven operational model, creating brand consciousness and maintaining a high levels of client satisfaction" (where we are now) he needed a step further in his perused of the strategy "to provide low cost air travel to masses' (where you want to be) which is based on key talents (how we going get there) (Easyjet: The Web`s Most liked Airline, 2002)
Another of the strategies persuaded by creator of Easyjet can be seen, as "strategy is perspective, that is, eyesight and route. " (Mintzberg, 1994)
Evaluate Easyjet competitive strategy
Competitive advantage increases out of value a company can create for its potential buyers the exceeds the firm's cost of creating it (porter, 1985)A corporation relative position in a no frill Air travel industry is distributed by its competitive gain which is cost control and differentiation, from other frills airline companies and using its choice of competitive scope. Presenting new solutions new or shifting buyer needs the emergence of a new industry section and availability changes in administration polices are competitive advantages. Where Differentiation is the firm's product, associated services, and other activities affect its buyer's activities. All of the activities in the value chain contribute to buyer value, and the cumulative costs in the chain will determine the difference between your buyer value and producer cost. (Porter, 1985) Easy aircraft gains competitive benefits by performing strategically important activities more cheaply or better than its competitors. (Easyjet. com) Competitive gain can come not only from great products or services, but from anywhere along the worthiness chain. To understand how a firm fits into the overall value system includes the worthiness chains of its suppliers, channels, and buyers. Common strategies are of help because they characterize strategic positions at the simplest and broadest level. Porter keeps that company reaching competitive advantage requires and makes a selection about the sort and opportunity of its competitive advantage. (Porter, 1985)
Concerning competitive edge, Easyjet concentrates on costs therefore achieves overall cost command. It inhabits an inexpensive Market position.
"The reduced cost airlines developed sufficient lead times and competitive edge to limit any new entrants to niche positions - and we still do not assume that the full service airlines have the culture to effectively develop sustainable in house low fares subsidiaries" (Binggeli, 2002)
However, there are problems associated with the idea of sustainable cost management as this includes that Easyjet gets the lowest cost weighed against competitors over time. This is improbable to be achieved simply by reducing costs however their opponents i. e. Ryanair can do this too.
The search of the cost-leadership strategy will demand Easyjet to have a strong focus on cost management, range economies, and also have experience curve cost advantages through the maintainer of quantities. In reality, it could be questioned whether cost control is a separate strategy. (Pointed 1991) explained, 'having a cost advantage is merely a facilitator to differentiate, usually on price', adding that low-cost form seeks to eliminate bases for differentiation, to be able to offer a general service to the complete market, therefore lowering differences between segments.
Another kind of strategy persuaded by Stelios Haji Ioannou is express by phrase (Casell, 2002)
It could be argued that cost leadership can be considered a precarious strategy, which may increase the move towards a item market in which; ultimately, no person benefits (Partridge, 1994)
Strategy Clock
The 'Strategy Clock' is based upon the work of Cliff Bowman. It's another Ideal way to investigate a company's competitive position compared to the offerings of competitors. As with Porter's General Strategies, Bowman considers competitive advantage with regards to cost benefit or differentiation edge. Easyjet are situated highly in tactical option 1 (low price, low added value)
The eight key proper options are:
1. Low price/low added value - Likely to be segment specific.
2. Good deal - Threat of price battle and low margins/need to be always a 'cost innovator'.
3. Cross - Low cost bottom and reinvestment in low price and differentiation.
4. Differentiation - (A) With out a price top quality: recognized added value by consumer, yielding market talk about benefits.
(B) With a price high quality: Perceived added value sufficient to carry price premium.
5. Centered differentiation - Perceived added value to a 'particular segment' warranting reduced price.
6. Increased price/standard - Higher margins if opponents do not value follow/risk of sacrificing market show.
7. Increased price/low prices - only feasible in a monopoly situation.
8. Low value/standard price - Loss of market talk about.
The strategy clock diagram
http://htmlimg3. scribdassets. com/9l9911lw1u1cczk/images/2-2c81643482/000. jpg (Scribd. com)
Easyjet SWOT analysis
Strength:
Easyjet has a solid brand name in the low cost airline industry; the business also owns the general acceptance among customers, business or leisure, because of its low fares and high efficiency
Most seats are sold through Internet. Ticketless air travel makes Easyjet not the same as rivals.
Flattened framework and casual culture give efficiency in management and procedure. Easyjet is generally able to take advantage of the most advanced technology and working practices.
Efficient use of airports and plane is another critical durability of Easyjet. The sensible network helps the business to cut costs.
Paperless procedure has simplified and given the huge overall flexibility in the management working techniques.
Easyjet standardise on a single aircraft type and purchase new airplane in bulk, in that way reducing maintenance costs.
The merger of Go accelerates the business growth
Weakness:
Easyjet is limited currently to regional procedures, which does not allow it to develop a more balanced collection of services.
Although EasyJet's advantages from the offer with airbus in many ways, it also causes a problem - the business will are powered by a mixed Boeing/Airbus fleet. Personnel training and coordination in future are necessary to the move
For the elder people or the people who do not use the internet, it isn't convenience to book online. They really should have significantly more ways to book
There is not any business course in airplane of EasyJet, which makes it lose some business travellers
Opportunities:
From a political perspective, the deepening and widening of EU provides new opportunities industry large. New routes can be created to those countries that will join EU in forseeable future. Furthermore, Airlines are now able to operate basics out of any Western Country, gives many more opportunities for enlargement.
Comparing to US market, the European market continues to be an immature market, which provides opportunities to all players.
General slump pushes most companies and individual keep in a tight budget, therefore low cost airlines now have more chance to battle their expensive rivals.
Threats:
The low-cost carriers are facing growing costs, specifically in the regions of fuel, air-port charges and incomes.
Unpredictable incidents (e. g. Iraqi battle, SARS) give uncertainties in gas resource, customers' sentiment, etc.
Competition from rivals is another danger, including new businesses copying 'low price no frills' strategy
Recommendations
This report shows that Easyjet has done perfectly since it begun in 1995, it is dong almost everything correctly utilizing their competitive strategies to achieve success and stay ahead of their rivals. Although huge profitable company so it has become, it is important that they do not become over comfortable, and be aware of what their competition are doing, they should have sufficient capital to those to make radical changes if needed to. There are a variety of ways that Easyjet could improve to adopt the organisation onward and make the business more profitable and enhancing performance.
Firstly Easyjet could cooperate with other easy business, such as Easycar which could do discounts on carry and parking at international airports, Easyfinance could offer a special rate for lending options used on flights. Easyhotel could give savings on hotels across the airports. This could not only help easyjet and so that it is better for customers but can also increase other easy businesses.
It could be very beneficial for Easyjet to develop alliances with transatlantic procedures. This might build a much better romance with the transatlantic functions meaning it could create more routs. Easyjet have over 400 routes which means they have a lot more routes which they could add. This might mean getting more customers that couldn't reach spots before where other airlines been to.
As fast as the internet is continuing to grow over the last couple of years, not everybody has it or learn how to use, more often its elder people, whom could add a bigger market if Easyjet could find out a way to reach them and make a much better way of buying flights on their behalf. Although Easyjet do have a telephone number to book flights it's been stated "Telephone bookings are more expensive and aren't inspired" (Lowfareflights) which is very off adding. Possibly free phone calls or some sort of broacher delivered through the post could allow people without internet learn about Easyjet and become able to acquire with no hassle.
As the amount of low cost providers is growing another opportunity could be created some kind of loyalty program such as devotion card or member cards. The client would then collect points every time they travel with Jeasyjet, which would add up so when they have sufficient items, they could obtain some kind of reward such as a discount on plane tickets, free flights etc. This would gain Eeasyjet as well as the clients because the client would want to travel with Easyjet instead of another company because they know they can save items and be rewarded with Easyjet. Major companies in the UK such as Tesco using clubcard who released it in 1994 to gain customers devotion, it became very successful, making customers from other stores move to Tesco as they recognized they would b rewarded with this scheme. David Sainsbury, then chairman of J Sainsbury plc, turned down the idea of introducing a similar scheme. However, the result that Clubcard possessed on Sainsbury's sales resulted in the reversal of this decision, with the launch of the Sainsbury's Pay back Card in June 1996. (Randall, 1996-06-23) This will likely therefore stop customers turning to Easyjets rivals.
From this statement, Easyjet can be seen as you of the key airlines in its market, and although it offers some hard competition Easyjet is becoming more powerful. Its competitive strategies are ahead of the competition and are being very successful. No enterprise is ideal and always need improvements therefore Easyjet could become a lot more successful and dominate the marketplace despite of the stiff competition.
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