This results in a very strong competitive rivalry in the industry. Lundgren and the board were frustrated. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs As hard as it has tried to inoculate itself against the pressures of the pandemic and to convince passengers it will be safe to fly, its fate remains up in the air, subject to unexpected and unwelcome turbulence. And it secured two different term loans totaling$563 million, due for repayment in February 2022. But nothing has been normal for EasyJet since March 23, 2020. This will help the companies decision makers understand where the organisation is now. Finally, in February 2021, the company took advantage of a sudden uptick in investor confidence on the news that vaccinations in the U.K. might allow international travel to return by late summer. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. Having considered the possible future opportunities what are the potential threats that EasyJet needs to bear in mind? Transfer the risk. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. 2023 Fortune Media IP Limited. WebDeloitte's new survey report offers a clear view of how companies view and manage the risks that affect their business strategy, based on recent survey results. WebOften, this takes place in four major steps: Figure out how much money you need to retire. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. Focus on seasonality improvements such as season contracts and bases. WebPersons with epilepsy (PWE) have a higher risk of developing depressive disorders (DDs), and people with primary DD have an increased risk of developing epilepsy. The management of the element of working capital. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. Also, only one type of aircraft is used, in order to minimise maintenance costs. He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. Lundgren had been an industry leader in trying to position EasyJet for this new world. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. Due to varying update cycles, statistics can display more up-to-date EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Finally, opportunities may also exist in the area of innovation and alliances, how about a joint venture scheme with Ryanair to maintain and enforce the low cost competitive advantage. Bills will pile up, suppliers will need payments, and your employees will be expecting their salaries. easyJet's updated framework continues to build on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - positioning easyJet to deliver sustainable and disciplined growth and returns for shareholders. Improving CSAT across the whole customer journey. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. 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. If it failed to do so, he threatened to call a vote to remove one director from the board every seven weeks, until the board acquiesced. EasyJets competitive advantages via low prices are sustained in a number of ways. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. 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. 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. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. Ive always said the four core markets are where we want to put our focus on U.K., Germany, France and Italy, he told the World Travel Market conference in 2018, shortly after the Air Berlin deal concluded. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. So when the industry was slammed by COVID-19, government was responsive to pleas for help. That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. In a vast hangar on the outskirts of Gatwick Airport, one of EasyJets big hubs, sit a row of five space-age pods, painted in EasyJets trademark orange-and-white colors. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. Terms & Conditions. From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. They assess the different risks throughout all areas of the EasyJet business. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. The purchases rankled Haji-Ioannou, who had opposed EasyJets tie-up with Airbus ever since it had been signed in 2013. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. But EasyJet could steal an increasing amount of market share from the legacy full-service carriers. Not that he was going away. 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. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain easyJets strategy will seek to continue to lead the market in sustainability, working with our partners to achieve our Net Zero Roadmap and the decarbonisation of the aviation industry. When the pandemic struck, Haji-Ioannou decided to renew his pressure to convince the airline to abandon the purchaseultimately mounting a proxy campaign to remove directors from the 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. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. In an interview with LondonsEvening Standard newspaper in January, Lundgren sounded down, admitting he missed frequent trips to the Spanish island of Majorca, where he owns a house and where he and a friend also own a recording studio. Thats better, but still a big burden on, say, a family of four. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. Beneath the surface of EasyJets cosmetic cost savings of not offering free in-flight refreshments or different first, business and economy classes, was a philosophy of cost saving that permeated through the entire organisation. Therefore, demand led with proprietary yield management system. The fuel-efficient jets could help EasyJet reduce its carbon footprint at a time when consumers and governments seemed increasingly likely to hold airlines accountable for their climate impact. A typical approach for risk identification is to map out and assess the value chains of all major products. Many full-service airlines are locked into hub-and-spoke flight networks that limit their scheduling flexibility, BCGs Molenaar says. 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. easyJet holidays is on track to meet the medium-term target of 100m+ PBT. In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. Since March 2020,European governmentshave provided more than$32.2 billion in bailouts to the airline industry,through a mix of grants, loans, and debt-for-equity deals, according to a report from HSBC. He said he had discovered a secret meeting in Switzerland, arranged by Airbus, between top EasyJet executives and a lawyer who, according to documents revealed in the Panama Papers leak, may have helped clients evade international sanctions through offshore shell companies. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. The way the report has classified the risk is whether the risk is a generic risk that will affect the whole industry of whether the risk is specific to the company. Powered and implemented by Interactive Data Managed Solutions. Competitive pressure. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. 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. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. All airline companies within the industry will have similar value chain, which will include activities such as obtaining fuel, designing fare structures, airport facilities, developing co-operative agreements, and providing customer service. In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. EasyJet also has a strong cash flow position primarily from its policy to retain profits and reinvest it back to the business. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. And at least one key holiday localeTurkeywound up on the red list, meaning those traveling there would have to quarantine in a hotel for 10 days. Brand Awareness is another strength that is attributable to the company In November 1999, selected as a business super brand by the Super Brand Council, recognising EasyJet as an outstanding brand name. None would fly again until June 15. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. Findlay said only that after almost six years with EasyJet, it will be the right time to pass the financial reins to someone who will help take EasyJet into its next chapter, and Lundgren said he was sorry to see [Findlay] leave.. Increasing automation driving self-service capabilities for customers. 8. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. EasyJet is forever trying to attain a cost level that is low relative to its competitors. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. EasyJets decision to use its aircraft as collateral for loans it needed to get through the pandemic means that its cost base will be higher going forward, once debt service is included in the calculations, says Savanthi Syth, an airline analyst for brokerage Raymond James & Associates: Theyve traded liquidity for today in exchange for their aircraft ownership costs going up in the future.. We're here to answer any questions you have about our services. Easyjet are situated extremely in strategic option 1 ( low monetary value, depression added value ) The eight nucleus strategic options are: 1. Such lower costs benefit EasyJet initially as innovation is rewarded. Objectives To assess the psychological distress, anxiety, depression, coping strategies, On the other hand, risks which produce Step 1: Identify and document risks. As it turned out, it wouldnt need those flights. 100 per cent direct selling of fares; over 90 per cent of sales are online. The airline couldnt simply abandon it without jeopardizing any chance of a quick recovery when the crisis ended.Lundgren also thought the contract made long-term strategic sense. As a result, EasyJet occupies a kind of middle groundin both pricing and costsamong European carriers. EasyJet in its pursuing of low-price strategies may be prepared to accept the reduced margin either because it can sell more fares than competitors. 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. Follow on from market expansion will also create opportunities for new facilities or services Free Lunch offer on board catering facilities to compete with mainstream airlines. Barton, EasyJets chairman, tried to put the episode behind the company, saying publicly that he hoped EasyJet could reengage constructively with its founder, but that the negative headlines and publicity has placed unnecessary pressure on a dedicated management team and negatively impacted the reputation of this great British and European brand. Indeed,though Lundgrens management team had won the showdown, there were signs of damage. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. EasyJet is known for its low-cost competitive pricing. Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). EasyJet has other advantages over its full-service rivals too. The threats are in terms of fines and rise in cost of raw materials. 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)). 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