In this report we would discuss the strategies adopted by EasyJet. In this HND business strategy planning assignment we would discuss about the various strategic planning , process and how it’s implementation helped to have an edge over its competitors. The report will further discuss about the evaluation of strategy and implementation of the most suitable one. Towards the end of the report we will discuss about strategic implementation.
Task 1: Strategic planning process
A. Explain the context of EasyJet’s business strategy as well as terminology used in their strategy formulation process.
As a result of the liberalization of airline markets; the strong growth of low-cost carriers; the high volatility in fuel prices; and the recent global financial crisis, the cost pressure that airlines face is very substantial. In order to survive in these very competitive environments, airlines had to come up with strategic planning like in the case of EasyJet. EasyJet came up with strategies such as using the internet to book the ticket and reduce distribution. Hence forth maximum tickets were booked online making EasyJet one of Europe’s biggest internet retailer.
Another business strategy which they came up with was Ticketless travel. Earlier it was a time taking process, due to this strategy it helped them reduce the cost significantly in issuing, distributing and processing millions of tickets. In fact now the passengers received the information on their email.
The company was therefore getting into Diversification in which they were increasing the range of products and services with relation to the existing business (Johnson, 2011). The company utilizes the airport of its maximum this helped in gaining turnaround times and therefore maximizing utilization rates of the aircraft. Also the company promotes paper less operation at the large level that reduces unnecessary wastage of time on the maintenance of papers and but also reduced the cost to significant level.
The company eliminated free-lunch that was earlier provided in the aircraft. It was a significant approach to show the company’s low-cost approach. In fact passengers could now purchase food. This helped the company to differentiate itself from other airlines.
B. Outline the stages involved in strategic planning and discuss planning techniques used by EasyJet’s.
Strategic planning is a long term direction of an organization; it provides scope of the organization gaining advantage over its competitors. It also has to take into consideration the value and expectation of the stakeholders. Strategic decision can be complex in nature and there could be uncertainty but it is mainly there due to changes in the business environment.
EasyJet is using linear programming planning technique, which includes those plans, approach and the procedure that will ensure the best utilization of available resources and reducing the unnecessary cost. People also call it as activity analysis as in this the planner analyse every activity and optimally use by allocating them in a perfect manner and it allow people to work in constraints also (Steiner, 2010).
EasyJet made every possible change to reduce the cost. It started focusing on customers who were looking for tickets at a cheaper price. One of the methods, which company used, is porter’s generic competitive strategies. Here the method price and product were the only differentiating factors on which a customer can compete with one another. It also started selling meals on the flight which also became one of the strategies which the competitors had not thought of.
Task 2: Formulating new strategies
A. Conduct an environmental audit for EasyJet.
The PESTEL provides a comprehensive list of influences on the possible success or failure on a particular strategy (Johnson, 2011). The PESTEL comprises of 6 factors which influence the environment, they are Political, Economic, Social, Technological, Environmental and Legal. By using the PESTEL analysis we would conduct the environmental audit for EasyJet.
- Political: the low-cost airlines are subjected to the same safety rules and regulations that any other scheduled flights have. Therefore they have to meet various European national and international conventions, agreements and protocols (Sunmade, 2008). Air transport is governed internally by the International conventions. There are factors that decide when the country intervene or interfere in the economy like taxing policies, environmental law, and foreign trade regulation. (Steiner, 2010)
- Economic: there are various the factors that affect the growth of any organization. These are based on economic growth, GDP of the nation, purchasing power of the people, inflation, and rise in oil prices and unemployment in the country. All these factor help in getting more opportunities for the organization as well manage good business environment there. That is why EasyJet have got all the opportunities to grow and right now the company is growing.
- Socio- cultural factor: it includes the population of the country, age distribution, income distribution of the population. The cultural aspect would include the life changes, change in culture and fashion. These factors decide the impacts it would have on the company. EasyJet has taken care of the socio- cultural factors which are favouring the people by making it low-cost airlines (Sunmade, 2008).
- Technological: Technological development in the airline industry of low-cost airlines is not a priority. In this it is the low- cost business model that has help in minimizing the cost and making the services efficient. For e.g. No services on board, travel in without tickets, online sale of tickets, short distance travel, a single class which would mean single rate for all. Services to secondary airport helped in saving money on air taxes (Sunmade, 2008).
- Legal: it would include employment laws; International laws the government set laws and standards that affect the business with regards to international law in the air space, agreements, International trade, and changes in the international trade can affect the company’s business.
- Environmental: EasyJet follows the rules for the environment regulation and they introduced a program Called Carbon offsetting. EasyJet does not give any food during the flights but they give an option to buy food in the airplane during the flights and the customer have the option to buy health food and the company also use recycling material as can, plastics fork and knifes, plastics glasses, etc.
It is important for EasyJet to take care of the above mentioned points and also prepare for strategies with the changing market scenario. Customer satisfaction is the key to success for EasyJet and the company should make changes to provide the best services in the low cost airlines.
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Evaluate the significance of stakeholder analysis in the formulation of new strategies.
Stakeholders are those individuals or group that depends on an organization to fulfil their own goals and on whom the company depends (Johnson, 2011). Their analysis is very crucial for any business. They have a number of core responsibilities which they have to adhere to. Every organization must spent time in understanding the stakeholder’s expectations because it will directly impact the business (Pinto, 2011). The stakeholders are driving force and sponsor for the project through all stages from development to training, implementation and support. Following are a key point, which states why stakeholder’s analysis is important for the organization: -
- The stakeholder must be able to clearly explain the necessity for their project to taken on before others and prove its strategic merit.
- It must provide the details required and a financial plan.
- The stakeholder needs to take ownership of the deliverables and make sure that they work against a number of key elements such as mirroring the requirements, process compatibility and performance.
- The stakeholders must identify and establish the necessary training and support required.
- It will also help in identifying the interest of the stakeholder in a particular move or the program (Davenport, 2013).
- The stakeholders have to identify and acknowledge any risk and changes that would be associated with their project at the initial stages.
In accordance with good project governance, the stakeholder must perform an analysis of the projects delivery against plan, budget and strategic objectives and sign off and accept the project.
Task 3: Strategy evaluation and selection
A. Identify and evaluate the possible alternative strategies EasyJet may adopt.
The main purpose of this company is to provide to the customers safe, good value and point to point air service. EasyJet is a market leader as far as cost leadership is concerned and the customer base at EasyJet are those who do not want to pay extra for luxury such as first class service or food on board. There are various strategies, which a company can adopt which are discussed in detail as follows: -
Easy jet provided facilities with the internet. Online ticket booking, ticketless travelling, no- frills concept, no free lunches, paper less operations helped the company to give tough competition to other airlines. It helped in price war among other airlines to be able to survive in the tough competition (Bryson, 2010). Therefore they created a niche market mainly based on their reduced price. EasyJet has a great value. It is a large company and is recognized in all Europe. Because of the high technology that EasyJet uses as online services, such as check in, booking flights, etc. and the accessible pieces, the customers have an image as a successful air company which they have an identity when they chose one company to fly.
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Instead the company must try to differentiate themselves by introducing a parallel line of flights for premium customers and they must work to provide extra value to the customer by providing extra features.
- The customers who are travelling first class should be given special treatment by introducing completely new airplanes for such customers with extra and premium services (Pinto, 2011).
- Apart from this, the company can also work to create a niche where a small group of customers will be targeted. It can be for certain services or a particular geographic area.
- EasyJet can also expand in various other part of the world. It should make a sub company to offer services to the first class.
- It is the time that the company can now focus on developing their services by either adding more features to it or by brining variation in the product. This product development strategy would help the company so better in the long run.
- It should make agreements with fuel suppliers and government so that the rise in price of fuel does not hamper its business.
B. Select the best alternative strategy for EasyJet using appropriate criteria.
EasyJet has become a pioneer in low-cost airlines and the strategies adopted by them have given the other airlines a tough competition. But it is time for the company to look for further ideas or option so that they can lead in the near future also (Luthans, 2012). For example it can come up with a sub- company offering and also including services for premium class and rich people. The company has to come up with new market strategies so that they can tap the niche customers. EasyJet can increase, as a result of the successful implementation of the strategy, the market chare, profits and become recognized around the world by the services offered.
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Task 4: Strategic implementation
Analyse how strategies are implemented using the case study. You are required to take into consideration the role and responsibilities, resource requirement, time scales as well as suitable action plan for successful implementation.
Strategy implementation is the translation of chosen strategy into the organization action so as to achieve strategic goals and objectives. It is manner in which an organization should develop, utilize and amalgamate the organization structure. These organization structures should be used to tasks and roles for the employees who can be correlated so as to maximize profit, quality and services. Managing Resources allocation is another important aspect, which should be taken into account from time to time (Chaffey, 2012). Following is the action plan for the successful implementation of a strategic plan:
- Align your initiatives: a new business strategy means new priorities and new activities across the organization. Initiatives should be analysed against their strategic value and the impact to the organization (Kaplan, 2013). Measuring initiatives against a scoreboard will help in prioritizing and ensuring the right initiatives are delivered.
- Align Budget and performance. Ideally the capital budgets are decentralized, so each division can both allocate and manage the budgets to deliver the division operations strategic initiatives. The projects budget can be re-allocated to short term requirement (Kaplan, 2013).
- Structures follow strategy: a transformational strategy may be required a transformation to structure. Organizations which try to fit new strategy in outdated structure will find it eventually reaching to a dead end.
- Engaging Staff: Strategy involves change. Change is difficult and human tendency is to resist change. A proper vision should be formulated which will work as a guide for the employees. It can a step by step process which is required to be addressed on right time either it can be a list of pointers which is required to be completed (Slater et al, 2010). Ensure every staff member understands the strategic vision, the strategic themes and what their role will be in delivering the strategic vision.
- Monitor and Adapt: Our strategies must be adaptable and flexible o that they can respond to both internal and external changes. Strategy meetings should be held throughout the year. Progress report will also let the management know that employees are not facing any problem and if in case they are facing any issue than it can be immediately addressed (Gershkov et al, 2013).
EasyJet can increase, as a result of the successful implementation of the strategy, the market share, profits and become recognized around the world by the services offered. Strategic planning, formulation and implementation have to be done for sustainability in the market and generate profit. Since aviation market is very costly but at the same time it is very profitable. The “easy” brand has been extended to other products which will help it strengthen its market position.