TABLE OF CONTENTS
RATIONALE FOR GOING INTERNATIONAL.. 3
STRATEGY FOR INTERNATIONALISATION.. 7
INTRODUCTION
International business refers to the business that operates across the boundaries of a country. The objective of internalising the business is to expand its visibility worldwide by using strategic partnerships and institutional strengths to mobilise the leverage of the internal resources of the business. This report will take EasyJet while considering the business expansion due to the present airline condition in Japan, the disrupted market and competition within struggling domestic businesses have enabled the business to be profitable. The ability to enter the market with a wide range of experience and resources will allow EasyJet to operate successfully in Japan.
This report will discuss internalisation in the context of EasyJet in Japan with a rationale for the business to go international. Several analyses will be taken into consideration to understand the market space in Japan, with the use of internalisation strategies like Human resource management, marketing, and operations management will be taken into consideration to make the business operate successfully in the market of Japan. Lastly, strategies for internalisation will be presented to help EasyJet use the perfect strategy to get into the market with minimal loss and unlimited chances of success.
OVERVIEW
EasyJet is a low-cost European point-to-point airline with a cost advantage, operational efficiency, and seamlessly connecting Europe with the rest of the world by welcoming them in the sky. EasyJet was established in 1995 and was founded by Sir Stelios Haji-loannou to offer low-cost flights in Europe, but over the period, the business of EasyJet expanded all across Europe. As of the current date, EasyJet is considered to be the largest airline in the world with 310 aircraft, 927 operating routes across various countries and 155 airports. Several offers availed by EasyJet try to give away the offers to the customer to the best of their interest, with the leisure to spend more with us rather than searching for accommodations elsewhere. Operating in over 1,100 routes in many countries, the number of people involved in terms of job roles is nearly 12,000, including 3,300 pilots and 8000 plus cabin crew members.
RATIONALE FOR GOING INTERNATIONAL
Company consideration for business expansion internalisation should be the major preference for it, to enter the fresh market with fresh ideas for business development and growth. In terms of EasyJet, getting into a new market will allow them to enter a market other than the European market. EasyJet is well known for the services they provide in the European market Europe, ability to book tickets at affordable rates without compromising on quality makes consumers prefer them over the competitors. The airline business in Japan is filled with complexity, with failing business organisations. Effective use of strategies will allow EasyJet to capture major shares in the market (Nambisan, Zahra and Luo, 2019).
- Increasing the turnover: Expanding the business internationally is an opportunity for EasyJet to reduce the risk and increase the profitability of the business. Expanding the reach of the airline services will give the company access to the international market with a whole different set of customer lines. As per the current condition of the airline market in Europe, the local market is saturated with a limited share left to capture. For instance, using the investments and resources to expand the business reach in other areas or countries will introduce new customers to the company with a new share of the market and profit. In recent years, tourism in Japan has increased significantly, according to the report, but many airline organisations have been forced to shut down their business due to a lack of fulfilling customer needs and requirements. EasyJet, with the experience and enough capital, would allow them to operate in Japan at less operating cost, targeting major shares of profit in the country (Paul et al.,2021).
- Expand customer portfolio: The main objective of internalisation is to gain a new set of customers due to limited or fewer numbers of customers remaining in the market. The European market is filled with airline competitors, which often distribute the interest of the customer in the business. An organisation with better deals and a price range that grabs the customer's attention, and the one continuously compromising with the price may end up in a loss-making situation. Operating in Japan will give EasyJet a larger and more diversified customer base the EasyJet, and new expectations and behaviour towards the services will lead companies to adapt or offer more innovative service that differentiates themselves from the competitors in the new market. Taking into consideration the new customer expectation often results in reinforcing and enriching the value proposition of the company, and impact on companies’ revenue. Dealing with dynamic situations in the market allows the business to stand out by improving the capacity to adapt and innovate in the market (Buckley and Casson, 2019).
- Improve the brand image: The wider the business is expanded, with more names it can build. As per the theories, a well-established organisation in different countries often gains the interest of the customer to attract the customer with their brand value and marketing strategies rather than continually making changes in the way they operate. A well-established business in the market automatically attracts the interest of the customer by spreading its brand value among the customers. Reaching out internationally brings credibility to the business and improves the confidence and beliefs of the customer in the business. The selling point of the organisation becomes much easier for the targeted audience because the customer is well aware of the business and has the belief to get their needs and requirements fulfilled in the long term. The expansion in the networking and reach of the organisation grabs the interest and attention of the customer by providing reassurance and confidence within the organisation itself to operate with the full potential to make use of the opportunities in the market (Eden and Nielsen, 2020).
- Better access to local talent: Going to the local market makes the organisation diverse its profile from a different culture that promotes and enriches the organisation to improve international performance. Adapting to the market in Japan will give EasyJet an idea and access to the local market of Asia, which can be further beneficial while expanding its business in Asia. The business expansion provides an opportunity to understand the local market of Japan and, based on that, make the business well-structured in nature to improve the brand efficiency and productivity in the market (Contractor, 2021).
- Competitive advantage: The current market condition in the airline industry is a tough situation, with continuous entrance and involvement of the bigger airline giants and increased level of competition and threat to the business. Targeting to wider set of audience gives the organisation the right to expand its reach and look away from sharing a single set of customers with a common interest. Targeting countries like Japan, which has a wide set of opportunities and has not been exploited by similar businesses and getting the chance to be the first mover in terms of using strategies and becoming the trendsetter in the new market of Japan. The marketing of the company will increase customer-wise and will also provide the knowledge to improve the brand image and human resource function with access to the local market of Japan. Internalisation for the business firstly represents cost consumption and risks, with effective use of strategy allowing the business to formulate the export strategy in foreign countries (Narula, R., Asmussen, Chi and Kundu, 2019).
COUNTRY ANALYSIS
PESTLE Analysis
- Political factor: Japan is a country with monarchical rules and regulations, and according to that, certain problems may also arise in the way of EasyJet while expanding its business in Japan. EasyJet usually operates in the market space where political stability is dependent on the democratic system. A monarchical system in the economy may increase the level of corruption in the economy. The political relationships with other countries like Russia, South Korea, China and Taiwan allow Japan to import oil at an effective price range. This would lead to benefits for EasyJet in low-cost operations (Chi et al., 2019).
- Economic factor: The Japanese economy is considered to be one of the strongest economies. Over the period, the employability rate of the country is rising, with well-educated employees present. EasyJet could utilise the resources and effectiveness of the economy to expand its business effectively. Able to adapt the employees with the best quality will initiate the business to work innovatively with an understanding of the target country itself. A developed economy plays a major role in the success of the business organisation; a stable economy in the country promotes business and provides them with the opportunity to be profitable in business (Hayakawa and Mukunoki, 2021).
- Social factor: The social culture followed in Japan by women is based on the factor of age. Japanese women are expected to quit their jobs after the age of 30, where they are required to marry and look after their families. This is a negative aspect affecting business because the chances of hiring women to the best of their abilities get reduced, and they are required to select employees with limited options. Retirement at an early age would not be for employees in the long term for the company, and will force them to job hunt for new members at regular intervals of time.
- Technological factor: The technology system is the most advanced system in the world, which gives EasyJet exposure to adopt new business strategies for the business, which will allow them to work on new innovative strategies continuously to stay ahead of the competitors. The ability to use technology to its full potential allows the business to implement many cost-cutting strategies. Operating in Japan with the use of effective technology will make the operation easy and will allow the business to reach out to customers and fulfil their needs and requirements in an effective manner (Abdelrhim and Elsayed, 2020).
- Legal factor: The laws and regulations in the country of Japan are influenced by the European Union, which gives the business a familiar experience while operating far from home. Being able to operate in a new market with the same rules and regulations in the same country allows the business to be familiar with the market and to operate while considering the rules and regulations. A familiar legal structure works in favour of EasyJet because the services provided in the Japanese market will be identical in nature and will not have to make major changes to deal with legal bodies in the country.
- Environmental factor: The airline industry is one of the businesses which have reportedly polluted the environment as compared to other business organisations, but being able to solve the problem of distance travelling makes it necessary in the system. EasyJet will be forced with multiple implications and forces to reduce the level of carbon footprint and regularly come up with campaigns to save the environment. The presence of a large population in Tokyo and Japan makes the areas inhabitable and reduces the chances of the country's development in the economy (Xiao, Meng, Ye and Li, 2020).
STRATEGY FOR INTERNATIONALISATION
Internalising the business enhances the level of opportunity and gives them the leverage to use a precise strategy to operate effectively in the new market. Strategy is required by the business to crack the challenges and limitations and to come up with better ideas and strategies to operate with full potential in the market. Several internalisation strategies make the process simpler for the organisation, by reducing the level of risk and the challenges, entrance will be much easier for the organisation in the international market (Colovic, 2022).
- Adopting the licensing strategy: Licensing is generally an international agreement where two or more parties get involved in the subject to payment of royalties by using the licensor's proprietary. Mainly, these contracts of licensing are for a limited period, which allows the parties involved in it to take advantage of the contributions and, based on that, collect the royalties. EasyJet can implement this strategy in the Japanese market by acquiring the failing business in the market and allowing it to operate under the name of EasyJet. The brand reputation of EasyJet will simply be the marketing in the market, and based on that, will allow the business to expand to be more profitable (Rankila, 2019).
Licensing in internationalisation can be the best method where EasyJet can test its abilities to operate in real market conditions. Licensing allows entrepreneurs to operate outside the country and take advantage of the image established by the business over the period. The license agreement is usually present for a limited period to expand the business internationally (Arregle, Hitt and Mari, 2019).
- Building a joint venture: A Joint venture is the association between two or more companies working together for a limited period for a common objective. In this process, partners share capital, resources and skills to expand the business's ability to work the market. The strategy is used to pull the resources and reduce the level of risk present in the Japanese market of Japan. In the current market the majority of airline businesses are failing due finding difficulties in the price-cutting strategy and fulfilling the needs and requirements of the individual. Pulling resources from those organisations will allow the business to operate with lower operating costs.
The companies like Air Central, Air Hokkaido and Air Next are the major companies seen drawbacks in recent times due to the pandemic and several other reasons. Establishing joint venture deals with these organisations will allow EasyJet to deal with the airline business in Japan. This will allow both companies to share their risks and resources, allowing EasyJet to get access to knowledge and expertise by understanding the problems posed by them and will also get the opportunity to get the specialised staff to reduce the differences in the cultural barriers (Aguilera et al., 2020).
ENTRY METHOD
MARKETING
The marketing strategy used by EasyJet would be more related to the customer approach, by solving their problems. The expectation of the customer from the airline business is to be welcomed with wholehearted services, at an affordable price range. But the distance covered by the planes in Japan does not make it worth providing the services at a cheap price range. Marketing can be used as the major element for EasyJet to establish its brand in Japan, as in the European Union. The marketing strategies used by the organisation must be related to solving the problem of the customer and coming up with an innovative solution for customer development (Trevor, 2019).
Several marketing strategies can be used by the organisation to communicate with the new customer line in Japan. The objective of marketing is to offer affordable rates for flight tickets with the best quality services in the world. Offering discount offers to the consumer over regular intervals of time or on an occasional basis will keep the customer engaged in the business of EasyJet, and they will be more aware of the announcement taking place in EasyJet because of their brand loyalty. Marketing gives the ability to understand the customer and grab their interest while entering a new market to speak out about the aims and objectives of the company.
MANAGING OPERATIONS
The expectation of the customer from the airline business is to be welcomed with wholehearted services, at an affordable price range. But the distance covered by the planes in Japan does not make it worth providing the services at a cheap price range. The contracts of the countries with several countries like Russia, China and South Korea allow the company to import the oil in a limited price range. This gives the transportation companies leverage to work with full potential with a limited amount required for the cost of oil and cost of production (Vissak, Francioni and Freeman, 2020).
EasyJet can customise the aeroplanes they have to increase the number of seats within them. This was the method used by several airline businesses in Europe to reduce the number of rides and consumption within each ride. EasyJet can use the same strategy in their operation by making their services more effective for the customer and covering a bigger space in the aeroplanes to get more people imported or exported from one place to another. Inheriting more customers with a limited amount of price range will decrease the number of flight rides planes need to take and would increase the number of customers and profitability of the company without compromising with service quality provided by the organisation.
MANAGING HUMAN RESOURCE
Human resources is a strategic approach in the organisation used to nurture and support the staff to ensure the work environment remains positive. Human resource is one of the important aspects for EasyJet while operating in Japan, ability to use employees who are familiar with the culture and has the potential to satisfy the needs and expectation of the customer often allows the business to be successful in the customer service sector (Fletcher, Harris and Richey Jr, 2021).
Effective management obeys the command of the management to fulfil the needs and expectations of the consumer. Providing job opportunities in the economy to promote the economic rate of the country. Human resources-wise wise understanding the necessary skills required as per the company objective, leading and organising the team to be punctual and using a customer-oriented approach will keep management effective for the longer term.
CONCLUSION
In conclusion, business internalisation is the process of expanding the business across the nation's boundaries. This report has taken EasyJet for business expansion in Japan. Further, several analyses have been taken into consideration to understand the suitability of the business in the Japanese market. Lastly, internalisation strategy and entry method theories have been discussed in the organisational context to operate successfully in the market.
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