Keywords: easygroup ansoff matrix, ansoff easyjet
The easyGroup are the owners of the simple brand and licenses it to all of the easy top quality businesses, including easyJet plc, the flight Stelios were only available in 1995 and in which he remains the greatest one shareholder. Easy Group brands include easy Car, easy Cinema, easy Hotel, easy Internet café, easy Pizza, and easy Value. Airline easyJet is now publicly exchanged, but easyGroup holds a stake in the business.
The easy formulation requires consumer-oriented businesses that screen significant price elasticity, need a high fixed-cost basic and low marginal-cost to service additional customers. Establishments with strong but complacent incumbents are particularly well-suited for the easyGroup methodology. Easy Group is contemplating its entrance into the theatre exhibition business in the united kingdom through the start of a no-frills movie theater.
The company is convinced so it can redeploy the capabilities, such as yield management, that led to the success of easyJet, its low cost flight business, into this new project. The situation examines the market for cinema in the united kingdom, as well as the advancement of Easy Group's profile of companies, with a view to evaluating the elegance of the business's planned introduction of easy Theatre.
How do you characterise the easyGroup business model?
A business design describes the rationale of how a business creates, delivers, and catches value and it catches economic and social factors. The process of business model design is part of business strategy. Theoretically and practice the term business model is used for a broad range of informal and formal information to signify core aspects of a company, including goal, offerings, strategies, infrastructure, organizational constructions, trading tactics, and operational procedures and guidelines. (A. Osterwalder, Yves Pigneur, Alan Smith, 2010)
The easy business model has an integral feature: clear value proposition - the "easy" idea is to bring cheap and successful services to many customers. As a remedy a Web-based arranging and supervision system was built on Microsoft Windows Server 2003 that may be quickly modified for numerous online projects. This benefited the business with fast time to advertise of new business endeavors, low-cost of possession, easily replicated for many new ventures and highly secure and reliable.
Easy Group is becoming an important incubator for new businesses which, while showing the 'easy' brand, will each be stand-alone companies. Rather than building a conglomerate, Stelios is turning easyGroup into a network of organisations associated by brand and image alternatively than strategic intention or goal. The creation of easyGroup in 1998 was a signal that Stelio's intended to try out this notion. The name 'easy' itself talks about a lot of easyGroup's approach to new ventures, which executive describes as 'taking a complicated business and so that it is simple'.
Technology alternatives play a significant role in this, but central to the 'easy' philosophy is yield management. The group searches for businesses where there is high price elasticity, high set cost bases and low marginal costs and, especially, where incumbent firms have grown complacent and aren't prepared for the entrance of energetic new entrants. By launching and growing new businesses quickly, easyGroup aims to earn market show from these incumbents through a combination of low cost and easy-to-access services.
The Easy model provides to the customer useful services at the lowest possible price, based on the "real value" of the basics of the provided service, steering clear of any superfluous frills. THE SIMPLE group breaks up a typical service, only will keep items that are absolutely required by the consumer and offer it to him at the cheapest price considering the time they buy it. The time is one of the most present valuable item in nowadays services.
As Stelios Hajiloannou, Easy group CEO, said "Easy" is an operating brand. In any industry where individuals are being ripped off, if Stelios can find a way to provide them with real value, he states he will get it done. On Easy group part, the model creates a huge turnover as it seduces a great deal of consumers, because of the specificity of the model and the advertising of the brand. Immediate margin are low as the model provides low prices but this is paid out by the marketing of the working fixed costs give thanks to to the Yield management lever.
The model is made up of modifications of turnover by proposing attractive prices on opportunities where rivals use to be underperforming. As Stelios H. targets highly leveraged market sectors, the excess turnover produced on those abnormal slots is almost a net advantage that compensates the lower margins on other sales. Our business model, predicated on low-cost and convenience, has shown its versatility.
EasyGroup's brand means low-cost products, no frills services, cost- and time-sensitive set ups that provide value in exchange for some hassle. That's the irony. The easyGroup brand is definitely not an easy someone to deal with. In a nutshell, the brand simply offers to make day-to-day things less expensive by varying the business models-not glamorous or progressive, but honest.
Easy Group model clearly reduces the functional difficulty and maintenance cost, that allows these to undercut their competition. All the easy group companies offer the same school of services using standardized components, whether it's one kind of plane or one type of car model. Due to the advanced technology used that helped the easyGroup to lead to invention, it helped advance the business models and the tactics which had a real impact on the people's life.
In my judgment without the web solution, the simple model wouldn't be as successful as it is, and would completely lose its essential basis of functioning. Internet makes this business model a vibrant one, with a young and accessible image. The simple model is a based on a self-serving system, which is almost totally provided by the net solution. The net system allows fix costs to be prevented by managing the scheduling, pricing, booking, repayment and various other aspects of the business enterprise and outsourcing to the customer.
It is the only way the company can apply its concept "for more folks". Internet makes the offer open to almost everyone everywhere, in any second. True to its low-cost, no-frills business design, easyCinema does not sell snacks and refreshments to movie-goers. For individuals who wish to treat themselves in such pleasures, they need to bring their own food along. Trailers and ads are scale back to lower the costs of functioning the cinema.
How would you characterise easyGroup's growth strategies in conditions of the Ansoff matrix?
According to the Ansoff's Matrix there are four development strategies a company could increase. These growth strategies are Market penetration, Product development, market development and Diversification. Considering easyGroup case it shows that the business was following a diversification strategy but which it uses the other growth strategies as well which will be mentioned further below.
ANSOFF MATRIX
Existing Products
New Products
Existing Markets
Market penetration
Product Development
New Markets
Market Development
Diversification
(Johnson et al webpage 258)
The Ansoff Matrix can be used to give attention to the easyGroup present status, products and markets (customers).
Market Penetration: Easy group remains to achieve growth using its existing products i. e providing services at very cheap prices. By third, business strategy the marketplace share continues to grow. Market Development: Easy group is seeking progress by concentrating on its existing products to new market sections. (Mintzberg H, Quinn J. B, Ghoshal S, 1998)
For example Easyjet is concentrating on business travellers with its low cost airfares and recurrent plane tickets to popular destinations. The best way to accomplish that is by attaining challengers' customers. Other ways include bringing in non-users of your product or convincing current clients to utilize more of your product/service, with advertising or other marketing promotions. Market penetration is the least risky way for a company to grow.
Product Development: Easy group, especially Easyjet has grown by launching new journey routes in so doing further expanding its product range. Diversification: Easy group is taking forward home based business ideas because of its existing market segment such as easy Internetcafe, and the latest project easy money. The Ansoff Product-Market Expansion Matrix is a marketing tool created by Igor Ansoff and first shared in his article "Approaches for Diversification" in the Harvard Business Review (1957).
The matrix allows marketers to consider ways to grow the business via existing and/or new products, in existing and/or new market segments - there are four possible product/market combos. This matrix helps companies make a decision what plan of action should be studied given current performance. The matrix illustrates, in particular, that the element of risk increases the further the strategy goes away from known quantities - the existing product and the prevailing market.
The Easy Group began with the center activity of providing low-cost flights to Europe. That is therefore its central business, and with over 18 million travellers a year traveling easyJet, the Easy Group had a need to establish ways for the business enterprise to expand and expand. The Easy Group had prolonged to penetrate the existing air travel market at low-costs flights; it also developed the marketplace potential to add a greater availability of easyJet flights by increasing the amount of airports managing the people.
While the plane tickets are the key business in Easy Group, a complementary diversification program was entered for a 'travel solution' program is made on the market to meet the entire range of customers needs and anticipations of both frequent and holiday travellers. This is targeted at both the commercial and the customer sectors available. By taking the key talents and opportunities available to the Easy Group has generated a further progress strategy which include market penetration, market development and diversification into new suitable regions of business.
Market penetration their strategy of offering lower costs to the clients enable these to get access to most of the market show. Market development included the growth strategy to improve the quantity of handing international airports by branching out into new markets and a wider customer basic. Last but not least with diversification Easy Groupings strategy of hiring cars, the internet cafe and hotels is a means for the Easy Group to find ways and various markets that may be developed to provide the best charges for the customers. (Karen Beamish, Ruth Ashford, 2008)
Therefore product development and market expansion typically involve a greater risk than market penetration (existing product and existing market); and diversification (new product and new market). Ansoff stressed that the diversification strategy stood in addition to the other three. As the latter are usually implemented with the same technical, financial, and merchandising resources which are used for the original product line, diversification usually requires new skills, new techniques, and new facilities. Because of this it almost invariably leads to physical and organizational changes in the composition of the business enterprise which represent a definite break with previous business experience. (Karen Beamish et al 2008)
Most of the simple Groups growth strategies involve three of the Ansoff matrix namely market penetration, diversification and market development. Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technological, financial, and merchandising resources used for the initial product line, therefore diversification usually takes a company to obtain new skills, new techniques and new facilities, just like Easy Group does. The idea of diversification will depend on the subjective interpretation of "new" market and "new" product, that ought to reflect the perceptions of customers somewhat than managers.
To what amount is easyGroup a conglomerate?
A conglomerate is a mixture of two or more corporations involved in completely different businesses together into one corporate structure, usually relating a parent or guardian company and several (or many) subsidiaries. (Dearbail Jordan and Robin Pagnamenta, Sept 25, 2007) Often, a conglomerate is a multi-industry company. Conglomerates are often large and multinational. (Dearbail Jordan et al, 2007) Regarding the easyGroup they are really conglomerate and the magnitude of it will be discussed below.
Fortune comes with an article on Stelios Haji-Ioannou and his various "Easy" companies that form the EasyGroup conglomerate. Stelio has started out a number of companies that range from rental cars, airlines, to internet cafes, predicated on the thought of removing middlemen using technology. Evidently, his companies are doing very well, including EasyJet which is a general public company that produced $765M in earnings last year. (Wendy Walker, 2003)
I noticed that EasyGroup has a similar business model to companies like Fresh Direct and Dell. Many of these companies are employing technology to get rid of the middleman to provide lower cost and higher value to customers. These companies are not internet companies as a result, however they are examples of how internet technology and general information technology may become a competitive benefits, if applied effectively to aid a rational business design.
All of the companies provide same course of service, but with self-motivated prices, using standardized components, be it one kind of planes or one type of car model. This model naturally reduces operational difficulty and maintenance costs, that allows those to undercut their competition. In addition, it reminded me of Dell in some ways because Dell is enthusiastic about maximizing their margins by minimizing their cost of inventory with just-in-time set up of PC's. These are all smart business key points and practices that more companies should certainly adopt to stay competitive.
The interesting thought for me is the fact that companies such as EasyGroup, FreshDirect, Dell, and even EBay could not exist and thrive to the same level if there was no such thing as the Internet. However, the true focus must not be on the advancement in technology that enables such companies to are present and thrive. It certainly should be how developments in technology business lead to innovation running a business models and routines that contain real impact in people's lives. The business stands tall as it pertains to obtaining higher standards of quality. (Wendy Walker, 2003)
Over the years brands have been synonymous with quality & technology in their respected domains. Easy Categories passion to stand out has made us develop faster than the majority of our competitors. Easy Group strongly believes that success is a continuing occurrence by benchmarking ourselves with the best Business practice used globally; we anticipate a excellent future, taken to life by growing alternatives. The easyGroup is graded among the most effective growing business conglomerates of India.
The easy group has been a front-runner in delivering innovative and personalized solutions. By offering contemporary products, superior quality and confident availability. The group has gained an exceptional stronghold with an array of receiving brands to its credit. Easy Solar Business is constantly innovating to offer more value your money can buy. His high quality products are supported by excellent nationwide sales and service support.
Easy Group remains grow in terms of products benefits, market talk about and customer retention. Today Easy Group is Conglomerate consisting of diverse products such as Solar Thermal, Solar Photovoltaic & Electric power Products. Our products accomplished market reputation in very brief period of time. Most of Easy Groupings customers are mainly authorities and semi government organizations continuously backed us in period of previous six years only because in our regular attempts in retaining quality and implementing latest research and development.
Many of the firms follow the "easy" format of removing the frills in something to make it cheaper overall, plus using the produce management system of resource and demand. Within the last few years the business has began to franchise the firms to broaden, and decrease costs. Some EasyGroup subsidiaries have been more lucrative than others, the most successful section being EasyJet.
The scope of Easy group been conglomerate is large because they are operating with a number of different large businesses that are categorized as the primary Easy Group organization. You will find up to fourteen businesses namely EasyJet, Easy Internet café, EasyCar. com, Easy Money, Easy Movie theater, Easy Cinema Disc Lease, Easy Bus, Easy4Men, Easy Pizza, Easy Music, Easy Sail, Easy Mobile/Shimmer Bright, Easy Hotel, Other businesses. (Wendy Walker, 2003)
Should easyGroup entre the cinema industry?
According to the truth, three factors made easyCinema an attractive growth area. First, the yield management capabilities that were used for the flight business and do well operating could be applied to easyCinema. For instance, easyJet prices are associated with demand and improve purchase. Likewise, they would demand more for peak-time movie seat tickets.
Stelio's always wondered why cinemas charged so much money when they are so empty. Then realised that by maximizing both capacity and the level to which it was applied, easyGroup could develop the cinema admissions well above current rates. Second, easyGroup may use the technology to automate the procedure of offering customers, thereby reducing labour costs. All bookings would be made through the Internet or kiosks in the foyer of the cinema. (Jackson Mahr, 2003)
Third, the no-frills concept will be applied and this could be an advantage. The theatre would now show any advertising or support promotional promotions associated with videos (activities that want significant time and group). (Jackson Mahr, 2003)They would allow the audience to generate their own food and drink, eliminating the traditional allowance stand. Therefore the customers will be considering going to view a movie knowing they do not have to invest more income on the food and drink than the actual movie they would like to see.
EasyCinema is just one of many new ideas in the easyGroup pipeline. (Jackson Mahr, 2003)The criteria for a new business can be summed up in a single word, simple. The easy formula requires consumer-oriented businesses that display significant price elasticity, require a high fixed-cost platform and low marginal-cost to service additional customers. Also, business with strong but complacent incumbents are particularly well-suited for the easyGroup way.
Although all these aspects are positive I would recommend that it will not enter the UK cinema business, the reasons are talked about below. The main question is how well do cinemas participate in the "easy" formula? I would think that Cinemas do unfit well using their formula. Firstly the success of the genuine cinema will depend on success of the movie which is considered to be suprisingly low. Therefore by going through with the theatre idea it is known as to be high risk business and there is a lot of instability in the movie theater industry.
Secondly the product is known as to be presenting entertainment to the consumer. Therefore having a low frill may well not be enough to guarantee the cinema's success. Moreover the Theatre industry isn't that attractive according to the case. The business environment is incredibly competitive. Other things to consider will be the bargaining vitality of potential buyers. Here the consumers have the choice of movie however the success of the operator will depend on the success of the movie. Which means bargaining electric power of consumer is very high.
With the Bargaining vitality of suppliers circulation of the movie is handled by the top movie properties of Hollywood. Therefore they actually have certain influence over the UK industry. They might not accept the yield management model of the Easy group. Based on the entry barriers, it needs high capital investment. Another problem that might influence the success of the theatre is substitutes. (Jackson Mahr, 2003)A couple of substitutes in form of training video rentals, video tutorial sales and Movie leases which is increasing day-to-day and could affect the success of easyCinema.
This case study gives a reasonable idea about the industry when a company manages in and the various external causes that impact it. However, it any industry is not static in aspect. Going forward, we foresee increasing competition on the market and these competition will large players and it can be possible that some type of oligopoly come into play. If oligopoly had to be the result it could cause the industry moving towards loan consolidation. The obstacles to entry will increase in the years ahead; therefore matching to my thoughts and opinions the industry is unattractive.
As reviewed above the entrance barriers are high capital investment, high brand loyalty, high competition, dangerous dynamics of business. They are able to enter by acquiring an existing movie theater operator. This will help in gaining market segments share in timely manner. In addition here the strategy can be focusing on online DVD sales and broadcasting rather than Cinema.
CONCLUSION:
The easyGroup profits by either selling shares in the businesses or by licensing or franchising the brand to reputable lovers. The easy brand currently functions in more than a dozen market sectors mainly in travel, leisure, serviced office accommodation and other consumer facing areas. Presently, only EasyJet plc, out of the easy band of companies is detailed in the Stock exchange.
EasyJet shows substantial organic growth since the day it happened in 1995. Although easy group's businesses are based on the low price model, they still face competition from set up players, who focus on quality. Throughout the years, the simple Group strategy held a definite readability built around some corner-stones principles: a low-cost methodology, an identifiable and recognizable simple communication strategy mainly centered on price and entertainment, frequent development, development of new tactical business units in close to the customers market, with a center focus on vacationers.
In terms of management, the easy Group also adopted a steady and durable stance in reducing its operating administrative fees and in trying to get the newly created Strategic Business Units the management platform that helped bring success to the recently settled business. All in all, the strategic uniformity is usually to be found in a managerial wish to expand as far as possible the no-frills concept to every profitable market.
Harvard Referencing:
A. Osterwalder, Yves Pigneur, Alan Smith, Business Model Generation, , self released, 2010
Alan Clarke, Wei Chen, International hospitality management: principles and cases, 2003, site 232
Jackson Mahr, easyGroup June 13, 2005
Jardine, Cassandra (2006-11-29). "They'd have a good laugh easily called myself Sir". The Telegraph (London). Retrieved 2007-09-07.
Karen Beamish, Ruth Ashford, Marketing Planning 2007-2008, webpage 44-45
Mike W. Peng, Global Strategy 2009, page 279
Mintzberg H, Quinn J. B, Ghoshal S, (1998) The strategy Process. Modified European release. PrenticeHall
Yves Doz and Mikko Kosonen, Harvard Business Review, Vol. 85, Issue 6, pp 98-104, June 2007.
Wendy Walker, Easy Jet Press Pack, Feb 21, 2003
