Task 1
The globalization and liberalization has brought about many changes in the World today. There is growth and development in the field of business and trade. It has made upliftment in all the sectors throughout the World. Initially the business used to depend only on traditional techniques for improvement and growth and profitability of the business, but with time, the executives plan strategies and formulate decisions, which amount to sustainability and growth in the competitive World.
The assignment deals in the aviation industry Easy Jet based in United Kingdom. The share of this company is listed in the Stock Exchange. It is a low cost aircraft model, carrying around sixty-five passenger, which has made the company, rank second in Europe. The company used to provide the passengers with low cost flight which them to capture the market. It made the flight tickets cheaper. After United Kingdom decided to leave European Union, the low cost airlines decided to shift their head office from UK to EU.The chosen country is Germany (Basedow 2017).
Political Factors
Political factors reflect the political stability of the region of Germany where Easy jet is operating.
- The company is able to produce many aircrafts at a price below the cost therefore; they are able to produce huge aircrafts, after the innovation customer base. After the invention of the new airport at Heathrow which will help in the growth and the more increase in the customer due to increase in the airport hub (Tielmann and Schiereck 2017).
- The cost of fuel and oil has been low which enables the airline industry especially the low cost carriers to have a considerable increase in the market consideration. This has promoted the company to have a considerable growth in the industry (Tarasanski 2017).
- The brexit will potent huge loss if Germany do not allow trade for the countries in Britain, there it will have troubles for the airline company Easy Jet
- With the innovation in Information Technology and the digital market, it will have troubles and they will create problems for the airline industry existing in Britain.
- The problems of the environment that is the natural calamity. It will impose problems to run the flights throughout the Europe especially in Germany. This makes the cancellation of flight and delay in travelling (Theodore,Theodore and Syrrakos 2017).
Bargaining power of Buyers
The airline consists of two types of buyers one is buyers and another is single flyers. People purchase two type of ticket that is either the economic or the business class. This buyer group works as an intermediate between the airlines and the travelers. They work with several airline companies in order to give consumers the best flight possible. Between these two groups, there is a large amount of buyers compared to the number of companies.
Bargaining Power of Suppliers
The main suppliers are the aircraft manufacturers. Two famous manufacturers are Boeing & Airbus. In this industry, the inputs are significantly standardized. Airline firms only seem to differentiate with amenities.
Threat of New Entrants
Threat of new entrants is vital concept of Porter forces. It is a very low threat in this industry. The main threat to airline industry is the cost of switching is very low and there is no proprietary cost.
Threat of Substitutes
This threat is medium since there are several substitutes in this industry. Potential traveler chooses cars; trains and boats for reaching to the destination, there will be a cost to switch. Sometimes, forms of transportation can happen to be more costly than a plane ticket. The major cost is time.
Rivalry among Existing Players
There is huge rivalry in the airline industry. This is a sluggish industry and is in the mature stage. The competitors are same in the long .The fixed costs are particularly high in this industry. Leaving the industry is difficult due to the long-term loan agreements that make companies stay in business.
The airline industry depends on the transportation market to be good. If Easy jet wants their flight to fly in Germany, they will have to sell their shares. The company in order sustain in the United Kingdom will have to be listed in the London Stock exchange (Bouoiyour and Selmi 2016). The companies have to relocate to Europe after this bexit.If Easy jet wants to continue flying in the new EU countries and to continue their operations they should keep the asset utilization high. The options that are evaluated after changes are:
- Enter into agreement with the European Common Area: this covers thirty-six States and it is open for all members of the aviation company. Since after brexit they have to leave EU, this will safeguard the members and continue flying (Brudadr 2016).
- Negotiate into bilateral agreement: The UK will be negotiating with the members of Europe to extend the facilities to continue their flying business
- Negotiate all the agreement with all the individual Countries: If the agreement to be entered with Europe is costly then they can negotiate with the other Countries which will benefit the flying of inbound
- Acquire a license to fly from the EU members: Easy jet can obtain the license from the EU states; this will help the UK members to fly to European Countries. Therefore, if the airline will take the entire license from them then they will be able to fly throughout (Dey 2015).
Pestle Analysis
Figure 1: Investment and Utilization of Strength
(Source: Düsseldorf 2016)
The strategy followed by Easy Jet to have a good position in Germany so that their carrier is used by most of the people to travel between the airports. Easy Jet plan is to serve the customers with a low cost flight, which becomes affordable for the customers to buy it. Their strategy of cost cutting is done by:
- To increase the number of seats in the carriers so as to accommodate many passengers at a time
- They utilize their space and have the ability to load high in their carriers
- Reduce the maintenance and ownership cost (El-Shimy 2017).
This strategy will help the low cost carrier East Jet to have a efficient market base thereby create a huge market which will enable them to have a competitive advantage and create a strong market which will help them to have a long term sustainability and thereby increase the wealth of the company.
Easy Jet strategy is t enable the passengers so that they can support the customers to purchase the flight tickets which are much economical to them thereby it help in creating he customer base which is required to improve on their growth and sustainability (Fichtner et al 2015). They were trying to have their position by operating the entire airport so that they invest in large scale thereby having a huge position in the markets of UK and Switzerland and all across the UK countries so that they can target the market opportunities in the countries all over.
Easy Jet has focused on the market, the cultural and structural advantage so that they have a leading advantage in the UK market and they can attract the customer with a reasonable and affordable price. Their most important strategy is to form a customer base who will seek their flights within the whole UK since they are giving the facility of lower cost airplane (Joerges, 2016). Their saving from the oil, fuel and the rest expenses has led them to improve their ground maintenance and. Improvement cost. They offer value to the customers by listening to them and improving constantly on by the innovation done to their products. The carrier focuses on the customer and their satisfaction which makes them different from the rest, they try their best so that they can contribute significantly in the market so the customers enjoys the flight experience thereby increasing their loyalty toward the company. Their business structure will enable to draw a huge business structure, which will help the company being a good position and the comparative advantage in the market (Hill, Korczak, and Korczak 2016).
After the brexit the company Easy Jet thought that the existing headquarter which is presently situated in Luton and now after brexit it will be shifted after Britain left European Union. Luton is thinking of measures such as contingency measures, such as they are planning o get a new certificate from the European countries so that they are able to fly in the European countries even after Britain leaves EU (Tatham 2016). They meet several times to pull down the threats, which were posed by the news that Britain was leaving United Kingdom.
External and Industry Competition in Germany for Aircraft Industry
The airline Easy Jet is focused mainly on the customers mainly on the customers and therefore the customer satisfaction their main criteria; they try their best to improve on their growth and reputation.
The vision and mission of the Easy Jet is that they do their best their way and they do not copy from the rest thereby making a unique presence in the market. The company encourages one team that there are no layers in the management, which will help in the interaction of the company with the people and thereby with the passengers (Hood 2017). This strategy will help in the fulfilling their strategy and thereby helping in attaining the customer’s base, which they want to achieve. They do not have any offices and they operate on a uniform platform, which encourages them to have a open culture so that they can work together and thereby supporting each other which enable them to have a informal culture within the company. The culture in the company support the informal and casual environment therefore they focus on the simplicity of the company. This will enable the company to get their goal (Hunt and Wheeler 2016).
The carrier by Easy Jet that is the low cost vehicle business structure which have been growing in the past years and these airlines have been successful airline in their business in the recent years, which include the Ryan air in the Countries of Europe. This model of the business structure decrease the cost .The airlines focus is on the secondary market, which mainly focuses on the airplane utilization, and they depend on low cost to depend on direct sales. This way they can keep their targets and improve the growths (Koehl 2016). This strategy implemented by the carrier companies will also reduce the cost and will decrease the cost much lower.
This model as become very famous, thereby increase in the growth of travel industry and help in air travel industry. With the increase in market expectation or changes in preferences of the customers, the airline industry has to adapt to the changes prevalent in the market. In the market scenario the airplanes are offering in all the airports which will increase in the operating efficiency and help in the gaining efficiency in the market of Europe. Their improvements in using the global system and thereby offering the more frill to all the passengers who will fly n the areas across the countries. The growth in all the countries and the developments that have been taken place will help in the changing market scenario helps to continue to grow of the LCC market all over the world (Katie 2012).
The marketing strategy of Easy jet is product differentiation, mergers, acquisition, and the ways by which easy Jet gains a competitive advantage in the low cost airline industry.
The entry for Easy jet is independent strategic entry and customers have with regard to the product or service offered to them and the prices charged.EasyJet’s flights offer the consumer value for money as the benefits gained from the transaction relative to price appear favorable in comparison. Within the airline segment there will be consumers who are price sensitive and thus demand the ‘low-cost’ alternative. Hence, easyJet are following the customer matrix price strategy in order to attain sustainable competitive advantage (maintaining benefit whilst reducing price)
Task 2
Conclusion:
The European Union is related to many emotional relations. It is seen that business is not at all related to the emotion that the country have, with the increasing terrorism the country is at threat. The Country will open up for many opportunities, which will open the options for the investors; thereby it will bring growth in the Country. It seen that the revenue of the business such as aircraft companies, as the Easy Jet and Ryan air will increase. The news that Britain will exit from Europe, which has definitely posed much fear to all the industry in the resent years. However, Easy Jet will sail through the bad times since there is political instability but with time, Easy Jet will have a good hold due to the strong position and is much stronger as compared to other airlines flying in United Kingdom. The political instability is causing the problems and turmoil to airline industry. There is potent risk since due to the increase in price of the tickets the passengers will not opt for the tickets and will travel less than usual. This will decrease the business for the time, but Easy Jet has grown and has customer satisfaction from the people from a long time therefore the company will not be affected in the end.
References:
Basedow, J., 2017. BREXIT and business law. China-EU Law Journal, 5(3-4), pp.101-118.
Bouoiyour, J. and Selmi, R., 2016. a. Are UK industries resilient in dealing with uncertainty? Brudadr.,2016 The case of Brexit. Working paper, CATT, University of Pau.
Dey, K., 2015. SWOT Analysis of the EasyJet Airline Company.
Düsseldorf, I., 2016. Ryanair. SWOT Analysis of the Leading Low Fare Airline.
El-Shimy, N., 2017. The Impact of British Exit (Brexit) from the European Union on Egyptian-British Relations. Review of Economics and Political Science, 2(1), pp.72-101.
Fichtner, F., Große Steffen, C., Hachula, M. and Schlaak, T., 2016. Brexit decision is likely to reduce growth in the short term. DIW Economic Bulletin, 6(26/27), pp.301-307.
Hill, P., Korczak, A. and Korczak, P., 2016. Political Uncertainty Exposure of Individual Companies: The Case of the Brexit Referendum.
Hood, E., 2017. The Evolving Nature of UK Museums in the Era of Brexit.
Hunt, A. and Wheeler, B., 2016. Brexit: All you need to know about the UK leaving the EU. BBC News, 24.
Joerges, C., 2016. Brexit and Academic Citizenship. Browser Download This Paper.
Katie, J., 2012. How should EasyJet manage the declining markets?.
Koehl, A., 2016. Brexit and Short-Selling Disclosures. Browser Download This Paper.
Milas, C., Worrall, T. and Zymek, R., 2016. Watch Out for Winners and Losers: Odd-?Implied Brexit Sentiment and FTSE Returns. Financial Times.
Noor, M.T., Alam, K.J. and Islam, M.S., 2016. Brexit and the Impact on Economy of Bangladesh. Imperial Journal of Interdisciplinary Research, 2(12).
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Tarasanski, P., 2017. Brexit: Changing Dynamics of Corporate Financial Risks, Return, and Performance: Case Companies: BP, Royal Bank of Scotland, Marks & Spencer, GlaxoSmithKline, EasyJet.
Tatham, A.F., 2016. The Legitimacy of Discriminatory Disenfranchisement? The Impact of the Rules on the Right to Vote in the Bremain/Brexit Referendum. Perspectives on Federalism, 8(1), pp.I-XI.
Theodore, J., Theodore, J. and Syrrakos, D., 2017. Brexit and the Referendum Vote. In The European Union and the Eurozone under Stress(pp. 87-131). Springer International Publishing.
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