But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. Now, at the cusp of a summer season that normally would be the source of the majority of EasyJets profits, the airline and its CEO face what could be a make-or-break season. This eliminates the need to any commissions to external sales agency. Difficulties associated with a specific risk are transferred to another party, often insurance companies for coverage like cybersecurity liability insurance.Examples of risk transfer include: buying business interruption insurance to handle unplanned expenses in the aftermath of a cyber attack; reducing the likelihood of project Overall the analysis will highlight the inherent threats and weaknesses suffered throughout the industry, and also the importance of innovation to maintain low cost advantage, alliances and size to success. Risk 2: Geopolitical instability. The globalization is also another factor influencing which build up the air traffic as lifelong. Web1) Economic Risks. It takes up to last extend in the time. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. Ryanair had even tried to capitalize on this connection between vaccinations and travel in its marketing, rolling out at jab and go advertising slogan in January, which it had to withdraw after objections from Britains Advertising Standards Authority that it was not promoting responsible behavior. Consumers are optimistic and the travel and tourism industry are now booming again. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. The UKs second-largest union has slammed easyJet flight cancellations in a scathing email obtained by Euronews. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. This level of disruption and deterioration of the operation cannot continue," the email reads. The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. The54-year-old Greek-Cypriot entrepreneur hasnt had a formal management role in the airline since he stepped down as chairman in 2002, but he remained a major shareholder, owning more than a third of the company before the pandemic hit. WebThere are two types of strategies taken in account in the Easy jet such as differentiation strategy which is the strategy in which the industry has the particular rules and And he was not a happy shareholder: For a decade, he had sparred with a succession of EasyJet CEOs and boardsfaulting them for overly ambitious and costly expansion plans and for ordering too many new aircraft from manufacturing giant Airbus. Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. The customers of EasyJet have been using the Internet for making bookings. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. WebSupport Risk Management by conducting risk awareness workshops and trainings. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. The linkages with the value chains of channels and customers which are the essence of EasyJets capability and which can protect its market leadership and maintain cost leadership competitive advantage from competitors. Offers may be subject to change without notice. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. EasyJet is known for its low-cost competitive pricing. EasyJet may be prepared and has to a large extend engaged in price war with competitors via its lower cost structure (economies of scales due to its larger operations) and also has the financial resource capability to fund short to medium-term losses with the aim of driving out competitors in the longer terms. Normally there would have been close to 100. Transfer the risk. These large airline groups are so big and so important for so many economies that the national governments will do whatever they can to keep them alive, saysDirk-Maarten Molenaar, atravel and tourismindustry consultant at Boston Consulting Group. In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. The website features a map of the world that displays a small airplane icon for every flight in the air, based on radar and transponder data. WebeasyJet is aiming to become the worlds most data-driven airline. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. The company negotiated with trade unions to move more of its pilots and cabin crew on to seasonal contracts, which would allow the company to better match its expenses to periods, such as the summer, when it generated moreprofit. Strategies are largely determined by the extent to which they deliver best value to both customers in terms of being competitiveness in the marketplace (leading low cost airline) and also to provide value to shareholders. They have focused on expanding into new markets in Eastern Europe. Founded in 1995, low-cost carrier EasyJet established itself among the largest airline based in the United Kingdom by passenger numbers. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. EasyJet through its use of an overall cost leadership strategy can use internet-based technologies to reduce value chain costs in a variety of ways: On-line bidding and order processing to eliminate the need for sales calls and decrease sales force expense. An Internal and corporate analysis in terms of strength, weaknesses, opportunities and threats (SWOT) will assist in gaining an understanding of where EasyJet is currently in terms of strengths and where improvement is required within the business and what outside environmental threats it may face as well as what new opportunities are available to the company in the short and medium term. WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. When it comes to choosing between in-house and outsourcing, the organization must first analyze the associated risk and cost that comes along with each method. Having fought off Haji-Ioannou, Lundgren and EasyJets C-suite faced other foes they couldnt control. Strategic risk management is the process of identifying, quantifying, and mitigating any risk that affects or is inherent in a companys business strategy, strategic objectives, and strategy execution. The first is to reduce the bottom line costs of operation (low cost strategy) and the second is to increase the value of the organisation and its reputation to customers, so that they will demand more or pay more for what they receive (differentiation strategy) (ACCA Paper 3.5 (2001)). In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. Legal and regulatory change. Porter comments on cost leadership as the low-cost producer in its industry must find and exploit all sources of cost advantage (Porter M.E (1980)). The minute consumers start to make a choice based on this, and I think they will, an emphasis on sustainability will pay off, says BCG consultant Molenaar, and EasyJet has been out front in preparing for this.. Enabling risk management through a Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). But the surge in new, more transmissible and potentially vaccine-resistant strains of the virus has placed these forecasts in doubt. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. Terms & Conditions. But what are the internal weaknesses suffered by EasyJet? Many full-service airlines are locked into hub-and-spoke flight networks that limit their scheduling flexibility, BCGs Molenaar says. WebSome compliance risks are specific to an industry or organizationfor example, worker safety regulations for manufacturers or rules governing the behavior of sales representatives in the pharmaceutical industry. Investments in assets are also key consideration in value creation in that consideration of the extent to which assets and working capital are being utilised. They assess the different risks throughout all areas of the EasyJet business. By mid-May, most of the major European nations had administered first doses to just over a third of adults amid critical vaccine supply shortages and concerns about rare but dangerous blood clots linked to AstraZenecasand Johnson & Johnsonsvaccines.Without a brisker vaccination pace, a third wave of infectionskeeps threateningto take hold in Europe. Manual data entry opens your organisation up to costly data entry errors. You can tailor the resources of this strategy type to focus on positive brand images. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. This text provides general information. It can restore the reputation of a brand. Yet Lundgren says his strategy is still valid, telling trade publication Travel Weekly that holidays are going to lead the recovery. Liberum analyst Khoo says the move into packaged holidays made strategic sense. The type of childcare had little impact on infection risks. Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. Healthcare workers were exposed to this highly infectious virus during the pandemic and suffered several social and psychological consequences, such as anxiety, psychological distress, and burnout. Haji-Ioannou founded EasyJet in 1995, eventually using it as a springboard to create of an Easy-branded empire that extended from car rentals and pizza delivery to a hemp business. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. The greatest dangers, however, may be the market leaders need to manage its evolving This is done in order to maximise the yield from a flight, as many of the costs associated with running a flight are fixed relative to the number of passenger on board. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. And while optimism about leisure travel in Europe is slowly rekindlingthis week, the U.K. announced a resumption of international travel to a limited number of destinationsEasyJet still faces plenty of potential turbulence, as the likelihood of a robust summer season recedes. easyJet holidays is on track to meet the medium-term target of 100m+ PBT. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Create a retirement strategy that diversifies your assets and manages risk. This is critical for EasyJet having analysed the competitive rivalry position in the industry. Finally the threats from the suppliers bargaining power, this is very strong in the airline industry for two reasons, one is highly skilled labour can command a very favourable terms and second is the price of oil. As a budget airline focused exclusively on short-haul flights within Europe, it had more flexibility than long-haul carriers to adjust its flight schedule, canceling flights without worrying about losing connections or violating alliance agreements. Yield management is a form of risk management and therefore, adds value. In the May showdown vote, the disgruntled founders effort was roundly defeated, with 99% of the shares not held by the entrepreneur and his family casting ballots against removingthe directors. Budget airlines that rely on the leisure market make most of their money from April to August. Given EasyJets cash burn, it needed to raise more moneyand quickly. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. *You can also browse our support articles here >. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. Before a new business starts making profits, it needs to be kept afloat with money. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. Potential negative outcomes include bad publicity and a Threats are also in terms of legislative environmental laws regarding pollution and use of more environmentally friendly fuel, which are at premium prices. Decisions must be made on the trade-offs inherent in development of a strategy. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. The pandemic, of course, wiped out business and leisure travel alike. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. But nothing has been normal for EasyJet since March 23, 2020. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Hannibal HanschkePool/AFP via Getty Images, Christoph SoederPicture Alliance via Getty Images, Chris RatcliffeBloomberg via Getty Images, one of the biggest winners in the European air-travel dogfight, agreed in January 2020 to deferred prosecution agreements, began purchasing carbon offsets for the CO2 of all its flights, might not fully recover from the pandemic until 2024, LinkedIn has officially entered its cringe era, and its working. However, by year 2000 it has not only managed to survive but also increased its market shares and assets of aircrafts to 74 and servicing 105 routes and carrying over 20 million passengers a year. Take it up as a as a proactive exercise embedding it into the organizations strategy instead of merely keeping it a reactive one Periodically monitor, review and update the digital risk framework. EasyJets competitive advantages via low prices are sustained in a number of ways. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. Step 1: Identify and document risks. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. The global, interconnected nature of the aviation industry means that airlines, lessors, MROs and suppliers are highly vulnerable to external factors out of their control. Remote working and hot-desking have been characteristics of easyJet since the beginning. The airline had become Europes equivalent of Southwest in the U.S. The same figure for Ryanair was 2.25 pennies, while it was about 5 for British Airways and 5.37 for Air France and KLM. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. This will identify its strength, weaknesses, opportunities and threats. Ties are banned except for pilots! And the government has said the second of these has to be a more accurate PCR test, which can cost as much as 219 ($302) per passenger. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. A strong and visible brand to create a high level of awareness with consumers. Get in touch with us. However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. Paperless operation, the management and administration of the company are undertaken on IT systems, which are accessed through secure servers; provide flexibility in the running of the airline. As a result, EasyJet occupies a kind of middle groundin both pricing and costsamong European carriers. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. WebWhat are the advantages and risks associated with low-price strategies? Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. Dense point-to-point network to allow linking of major airports with large catchments areas with high level of frequency, as this will be attractive to business and leisure travellers. This results in high levels of asset utilisation and reduced unit costs. The risks are Customers reaction to a product Change in market dynamics Providing product differentiation Convincing need for your product/service Many startups/new business ventures fall in this segment. This will help the companies decision makers understand where the organisation is now. This involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. A PESTEL analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well. The company carries out In essence, Lundgren told the BBC, thismeansonly the rich can go on holidays: The expense of these tests would be way over and above what the cost is of an average EasyJet fare, he said. Many of EasyJets competitors in Europe are national flag carriers: Air France, KLM, Lufthansa, SAS, Iberia, TAP Air Portugal, Swiss Air, and British Airways. He keeps his mood and rises up again, Lundgren told the newspaper will help the decision... 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