This is solution of City of London College Business Strategy Assignment, provides solution for the EasyJet Airlines.
a) Strategic context and terminology – missions, visions, objectives, goals, core competencies
|Terminologies||In context with EasyJet|
|Mission: The mission statement of the company contains the aspirations of the company in long term. The mission statement answer the three questions i.e. what do we do? Whom do we serve? What are the benefits and values which are product and services provide to the customers||EasyJet is a service based company whose main mission is to provide on time and punctual service and affordable prices to all the people who wish to travel from one place to another using airline facilities.|
|Vision: Vision is an idea which may be hypothetical, unattainable and close to impossible dream which gives and emotional thrust to the company and forms the basis of motivation in the company||The main vision for EasyJet is to become the number one low fare airline company in the world with 100% safety and minimum environmental issues related to carbon emission due to burning of fuel.|
|Objectives: Objectives are goals which are set by the company in the next few years probably in the next 5 to 10 years in terms of profit making as well as non-profitable terms.||The main objective of EasyJet is to become 100% punctual in terms of providing service, reduce the carbon emission by 2.5% till 2017 and by 5% till the year 2022.|
|Goals: The goals of the company are short term physical objective which are used to judge and evaluate the performance of the company||The OTP measured by the company on monthly basis and its comparison with previous years to know the improvement and performance of the company. The company will set up new targets in the beginning of the cycle and will try to accomplish it in that cycle.|
|Core competencies: Core competencies are values which differentiates the company from its competitors specially those organization which are doing same kind of business||Some of the prime core competencies followed at EasyJet are: · Punctuality · Customer Service · Concern for Environment · Safety of its customers|
b) Issues involved in strategic planning
Strategic planning means making plans on how to allocate and managing resource to implement current business strategy. Any business strategy consists of the goals which the company wants to achieve in a span of time, the various methods the company will like to adopt in order to accomplish those goals and the utilization of various resources to achieve the goals. The company however, needs to plan on how much target to set, how to allocate resource and what methodology to adopt. All these are part of strategic planning process. However, strategic planning is not easy and involves lot of issues. The issues in reference to EasyJet are discussed below:
- Business strategies of any airlines along with EasyJet heavily rely on the prices of fuel. The continuous fluctuation in the price of fuel is one of the biggest issues while making any business strategy as it becomes more and more difficult to define the targets as profit margins cannot be forecasted with the ever changing prices (Arnold, 2006).
- Economic fluctuation: Any company plans to utilize its resource based on the existing resources and the existing availability of funds. However, economic fluctuations make it very difficult to judge the value of money and define the target accordingly (Rae, 2001). For example, EasyJet decides to buy 10 new aircraft in order to grow their business in the next year. However, because of economic fluctuations, the cost of aircraft goes up and the company is left with funds only sufficient to purchase 8 aircrafts. Thus, planning becomes difficult, while economy keeps increasing and decreasing.
- Employee relations: Another important aspect related to strategic planning it retention of employee and maintaining employee relationship. Any planning is done based on the current human resource available . However, if there are too many exits pertaining to lack of management of human resource or because of external factors can lead to insufficient resources to accomplish the goals. Hence planning becomes tough.
- Competition from rivals: Another issue with strategic planning is that the company is not aware of what changes their competitors will make to their strategy. For example, EasyJet‘s main rival is Ryanair. Any strategic planning is done keeping in mind existing internal resources and assuming other parameters to remain constant. However, any strategic change by rival company can result in unexpected outputs and hence planning becomes difficult.
c) Planning techniques
Some of the planning techniques adopted by EasyJet are BCG matrix analysis and Bowman’s Strategy Clock. The two planning techniques are described below:
- BCG matrix: According to the BCG matrix, there are two parameters based on which the growth or performance of the company can be judged. This technique is highly essential to understand where the company lies and what type of business strategy is required to grow. The two parameters are: market share value and growth of the company. The market share tells how much cash will flow into the company, while growth rate tells that the company is demanding more or less of investment. The four cases based on the two parameters are:
- Cow cash: These companies shows high market shares but are slow in growth. Normally, bigger and mature companies with limited scope of growth come under this category.
- Dogs: Companies with low market share and slow growth rate are termed as Dog. It means that the company is earning just enough to sustain itself.
- Question mark: Question mark companies are features by high growth rate but low market share. These companies are normally start-ups.
- Stars: Companies which are high in growth rate and have high market share are termed as Stars.
It can be seen from the above diagram that EasyJet is low budget company who is currently placed in Dogs category as the company is neither growing nor the company possess high market shares. The company needs to expand its volume in order to increase its growth rate otherwise survival will become tougher (Meyer, 2004). Hence, the company will look to grow its size and expand its business world-wide so as to succeed in the long run.
- Bowman’s Strategy Clock:
According to this strategy, a company can be divided into eight segments based on the price charged by the company on its service and the added value provided by the company. Out of the eight segments, EasyJet comes under the category of less price/less Value Company. Not many companies like to end up in this situation. However, EasyJet is able to attract big number of customers based on its prices. The company has not added in value to its service which still remains the same, however the prices have gone down considerably, which has resulted in the success story of the company so far. However, the company should aim to become the Hybrid which provides more value at low prices. This strategy helps EasyJet to analyse the business strategy of its competitors and resolving one of the key issues to strategic planning which Porter’s three basic strategies failed to understand (Alexandre, 2011).
a) Organizational audit for EasyJet
The organizational audit helps in understanding the policies, programs, operations and educational practices implemented by the company. The main operations followed by EasyJet are:
- Safety: EasyJet focuses highly on customer’s safety which is one of its prime concern and all the operations are carried out keeping in mind customer’s safety.
- Building Europe’s No. 1Airline: The main vision of EasyJet is to become no. 1 low budget airline across Europe and all its operations are carried out keeping in mind the vision of the company which motivates the people of the company to achieve the vision.
- Punctuality: One of the main motives of EasyJet is to provide punctual service to its clients. The company tries its best to make sure that each aircraft reaches its destination 15 minutes before the scheduled time.
- Minimize cost and maximize profits: The prime aim of any company is to maximize profits; however it becomes difficult to generate more profit by a company like EasyJet which operates on low budget. However, some important steps taken by the company to ensure low operational cost are: fuel conservation, avoid food and snacks service on board, and avoid participation with other competitors by offering connecting flights (Shrager, 2007).
b) Environmental audit for EasyJet
One of the best features of EasyJet which makes it different from other companies is the core competency of the company. The company values safety and environmental concern as one of the biggest issues and works continuously to ensure safety to customer and ensure that environmental concerns are eliminated. The company’s business strategy involves various CSR activities and active participation of the company to ensure that all its operation are carried out without harming the environment. Some of the main steps taken by the company to minimize environmental concerns:
- Efficient use of technology: The Company makes sure that the best fuel efficient model based on the latest technology is used. The Company has bought 100 new aircraft which are the most fuel efficient aircraft till date based on the new technology. Hence ensuring maximum contribution to minimize pollution.
- High Load: The company makes sure that more and more passengers can be transported in one go and thus promotes high load flights. The company offers last moment attracting prices to make sure that the flight carries maximum number of passengers.
- Point to point operation: EasyJet focuses on operating on point to point traffic which minimizes the number of take offs and landings and ensure that emission of gases like carbon di oxide is minimized.
c) Significance of stakeholder analysis
Stakeholders are those people who may or may not be associated by the organization and the operations carried out by the organization but are affected by the performance of the company. Some of the stakeholder’s of EasyJet are owner, employees, suppliers, investors, customers, airports, social communities (Sunmade, 2008). In this section, we will be analysing each stakeholder of EasyJet:
- Owner: The owner of the company is the one which make sure that profit margins are high and hence long term durability is maintained. However, the owner has to work under lot of pressure as the main motive of the owner is to succeed.
- Supplier: It is always better to have your own equipment so that aircrafts can be manufactured within the organization. Suppliers may charge more or may fail to fulfil the demand of the company which can affect the business. Moreover, aircraft manufacturer being few in the market supplies the same product to the rival company of EasyJet which does not differentiate the two companies on quality of aircraft used.
- Employee: One of the main stakeholders of any company is the employees of the company. The company like EasyJet has to make sure that more and more employees are retained and less number of employees is hired because lot of time, money and effort is lost in hiring new employees and giving them training to make them based on company’s values in a competitive environment.
- Customers: EasyJet has to make sure that cheap and efficient service is provided to the customer with safety so that it attracts more and more people.
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The importance of stakeholder analysis is:
- Ensure that the entire stakeholder’s interests are taken care while implementing a business strategy.
- All the stakeholders are aware of new business strategy and its effect and transparency is maintained.
- Helps in defining the roles and responsibilities of various stakeholders.
- Potential risks involved with new business strategy are identified through stakeholder analysis.
Analysis of possible alternative strategies relating to substantive growth, limited growth or retrenchment
The best way to analyse market strategy related to substantive growth, limited growth or retrenchment is to do Ansoff matrix analysis.Four strategies related to Ansoff matrix
There are four different strategies related to Ansoff matrix. These are:
- Market penetration: EasyJet makes sure the brand service for which it is best known in European market is maintained and improvements should be made so that the existing customers remain intact with the company.
- Market development: As mentioned in the BCG matrix, the company needs to expand so as to have better growth rate. Therefore, EasyJet needs to identify new potential customers and new geographical markets and supply same service for which it is known for to new customers.
- Diversification: This step involves providing new services to the new market. For example EasyJet can add new values to its service when it enters into new markets; however, this strategy involves huge risk as the company is not aware of customer’s behaviour in the new market. A new company like EasyJet should not follow this strategy as it involves lot of market expertise and experience before going for Diversification (Elmers, 2009)
b) Appropriate future strategy for EasyJet
It is important to do a SWOT analysis in order to understand what are the best opportunities, major threats, strengths and weaknesses of EasyJet so as to formulate a better future strategy (Fett, 2009).
|Strength · Best low budget airlines in European market · High quality service at very low price. · Price strategy which involves attracting price for last minute booking which involves cashless booking at times. · High quality fleet which work on latest technology and are fuel efficient.||Opportunities · Free food and snacks services which will attract more number of customers, which makes journey more comfortable. · Start its service at new and important routes in other European countries as well as to start some its service to some US countries. For example starting a flight service from UK to Brazil.|
|Weaknesses: · Extreme competition from rival companies restricting the company to demand more prices and hence profit margins are less. · The company do not offer facility of food or snacks for long running flights specially whose flight time is more than 2 hours.||Threats · Fluctuation in prices of oil is one of the major threats to all low budgeted price flights. · One of the threat faced by all the European companies is the pressure of employee union · Economic fluctuation · Tough competition from various competitors.|
Thus, some of the future strategies which EasyJet should look to follow are:
- Including new services related to providing food and refreshment to passengers during flight time.
- Improving their performance related to punctuality so that the competition can be challenged.
- Opening of new routes in other European and some American countries. A new service from UK to Brazil during the FIFA world cup of 2014 can be one of the best opportunities for the company in near future to generate more revenue.
a) Comparison of the roles and responsibilities for strategy implementation
Suppose EasyJet is implementing a new business strategy to start up new flight service from UK to Brazil in view of the FIFA world cup 2014 in near future. Some of the roles and responsibilities that the company requires to manage from its various stakeholders are:
- Investors: The Company needs the investors of the company to take the risk of investing so that new aircrafts can be purchased in order to implement new strategy.
- Suppliers: Suppliers need to understand the requirement of EasyJet and should be able to supply new aircraft during this short notice so that the company has enough aircraft at its disposal before the start of the tournament.
- Employees: Employees should understand their responsibility related to increase in business and should make sure that quality service is provided to all the customers. The company should ensure that more experience employee should be used to provide service on flights travelling on new routes.
- Management: The management of the company should ensures hiring of new employees and arranging new training programs to fulfil the void created in service in relation to expansion of business.
b) Evaluation of resource requirements to implement a new strategy for EasyJet
To make sure that the new business strategy of expansion of business so as to start new flight service from UK to Brazil requires some new resources. These are:
- New aircrafts: The Company needs to buy new planes which can run from UK to Brazil without cutting down on the existing supply of planes in other routes.
- More fuel: Increase in number of flights will result in demand of more fuel which needs to be fulfilled by the company in order to implement this new business strategy.
- New employees: Since the business has grown and the company is providing service to new locations, the company needs to increase its human resource as well which involve recruitment process, training programs, etc.
- Finance: The Company will require more loans in order to buy new flights, to organize events like recruitment process, etc. Thus, either the company should make use of its own revenue or look for investors and banks to give loan.
The company has to pull up its socks and should work hard under lot of pressure to implement this new business strategy because of little time and lot of work that needed to be done.
Read More : Unit 6 Research Project Assignment
c) Targets and timescales for achievement in EasyJet to monitor a given strategy
The company has nearly 2 months to make sure new service from UK to Brazil is started. This involves lot of hard work from all its stakeholders and closer and strict deadlines. These are:
- Buying of new flights: The Company should receive new planes in a month time so that new flights are arranged which are tested thoroughly to ensure safety of passengers before the flight can be used to flight from UK to Brazil.
- Promotions: The Company should promote its new service so that more and more people are aware of it and can make use of it. It involves posting ads through various means of media and communication.
- Legal formalities: The Company should also start with finishing all the legal formalities that are required to be done. The company should start off right now and make sure that all the things are settled before the start of the tournament.
- Hiring process: the company should complete with the hiring process in the next fifteen days and should provide at least one and one and half month of training to new employees so that the employees are ready to take the roles and responsibilities of other employees who are channelized to provide service to new routes.
- Analysis and research: Since, the company has very less time, all the things have to be implemented parallel and thus lot of analysis and forecasting is required.
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Thus, it can be seen that though EasyJet is one of the best in business when it comes to offering low budget flights, the company still needs to focus in overcoming its weaknesses and make full use of the opportunities. The company has a golden opportunity to check whether growing its business to provide service in countries other than Europe will be a success or not by starting a special short term service from UK to Brazil during FIFA tournament.
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