Analysis of External Environment and Industry Competition in Paris
Strategic management refers to the process of implementation of policies of the company and formulation of new regulation within the company with an aim to achieve organizational objective effectively. This study provides and helps the management in innovation of its activities and drive the company towards the fulfillment of goals and objective. Corporate strategy is a part of strategic management of the company; it refers to the process of carrying the business in such a way so as to improve the business performance (Hesterly, & Barney 2010).
The varied three principals were given by Michael E Porter under this theory that are:
- Creating a position for the company in the market which is unique and identified
- Aligning strategies of what to do and what not to
- Formulating policies which are fit for the company as per their organizational behavior.
Such strategy is defined by the company with an aim to enhance and the conditions of the company grow rapidly. Also strategic management helps the company in identifying the prospective risks in advance and takes corrective actions against them. The decisions of strategic management are taken by the top level management of the company for the purpose of making the company more competent and gain competitive advantage in the external environment (Eden, & Ackermann 2013).
In the given case of EasyJet airlines, the company is efficiently working as a LCC (low cost carrier) company and providing services to its customers. But due to the EU referendum and Brexit the company can be barred by EU from working its activities in EU as EasyJet has it’s headquarter in UK (Uphill 2016).
For the company decides to shift it’s headquarter within the geographical boundaries of EU so they that can easily carry out its business activities with members of EU without any hindrance. Thus the company decided to inaugurate it’s headquarter in EU (EasyJet 2017). Further details of the company are discussed below:
The company decided to shift its headquarters from UK to Paris resulting in change in various external factors which may lead to change in internal activities of the company. Such factors are discussed below with the Porter five forces model:
The company holds two types of customers in their profile that is one who travel for personal reasons and other who travels for business activities. As it is known that the country France (Paris) is known for its beauty and many people come to travel in this country. Due to which the country receive an optimum return from tourism sector. Also the company EasyJet works under the LCC model which cost more cheaply to the people due to which this airline is mainly recommended to the people. Also, as this airline is economical due to which they are taken as priority than others.
Use of Resources by EasyJet to Gain Competitive Advantage
Due to entrance of many intermediaries and travel agencies, there is a very few difference in the cost of services of other companies. Therefore switching power of the customer is also less, resulting in threat for the buyers (EasyJet 2017).
Aircraft manufactures are the suppliers of the airlines services in the country France. Also it is known that Airbus and Boeing are the top most manufacturers of EasyJet in the world, thus resulting in standardizing the process of service providing facilities. In airlines industry all the factors are almost similar, the only difference in different company can be the way they provide services to its customers.
The airlines companies get the advantage to easily switch between the companies that manufacture aircrafts. As it is known that the manufacture companies require a huge investment cost in making the airplanes due to which they initiates long term contract and invests huge amount, also take credits for carrying their activities. Due to which it becomes difficult for the company any of their contract get cancelled and the airlines companies are only source due to which the manufactures carry its business. This results in low bargaining power of the supplier (EasyJet 2017).
The airlines industry works with the quality of work they provide to their customers. And the EasyJet Company has already an image in the market. The company has its name renowned worldwide as the second best company in airlines sector competing Ryanair. Also it can be said that the company has low threat of entrants. Mainly due to the brand image already set the market and another because this requires huge amount of investment and low switching cost as well. The customer only relies to the company on which they trust because they want to have a safe and happy journey. So they feel safe only if they travel with the company whom they trust. And EasyJet has its name renowned in the country France resulting competitive advantage.
But the company can perceive risk due to the Brexit referendum, as the people of EU might boycott the company and look for other alternatives to vel. But for that also the company is providing various attractive packages to retain its customers. Another threat which the company might foresee is of the companies already holding its actions in France (Paris), due to which it might get difficult for the company to earn expected return within time (EasyJet 2017).
Evaluation of EasyJet’s Vision and Mission for the New EU Member State
Medium range of threat can be expected by the company as the people opting for air transportation will not switch it to travel with car, train or bus. But the threat occurs when the short duration travelling London to Paris (round tour) are carried the train transportation that is Euro Star etc. thus it can be said that the company will always get revenue from long tour but for the short traveling, the company can occur threats. Also Paris is the hub for tourism in Europe thus if the company will open its headquarters the then might also the advantage for that and lose the short tour revenue.
There is cut throat competition in the airlines industry and all the company are strongly willing to reach at the first place and earn highest revenue. Also at this time after Brexit referendum the company might attract greater risk as compared to other because the company would be new in that environment due to which they would take time to understanding the market responses. Resulting in, delay in the actions of the company which were taken with a view to gain the competitive advantage (EasyJet 2017). Also the company is known for its low cost and there might be a possibility in Paris that people would not prefer to travel with LCC Company.
Also the industry requires huge maintenance as well as fixed cost due to which it might get difficult for the company to shift all its working from Luton to Paris resulting in financial instability. Other companies present in the external environment might gain an advantage with this. Thus there is high risk of competition and rivalry in the industry.
For any human resources is an important resource which helps the company in gaining competitive advantage. But for that human to become efficient for the company and for the company to make full utilization of human resource the company has to introduce other efficient resources so that the man power can use that resources and initiate effectiveness in the organization. The resources used by the company to gain competitive advantage are as follows:
Physical resources: the company is having around 20 jet bases around the whole EU division (France, Poland etc.). Along with that it has 107 Airbuses A319, 137 airplanes with having 156 seats and 30 Boeing 737 and 149 seats. So it can be said that the company is having sufficient resources for its business and invested in the adequate amount to the adequate resource so as to get competitive advantage (EasyJet 2017).
SWOT Analysis and Recommendations for Changes in EasyJet’s Business-Level Strategy
Infrastructure: the company holds an adequate infrastructure which aids the customers also. The company believes in maintain adequate infrastructure due to which the customers do not face any problem in bagging and other activities also. Good infrastructure creates a reputation about the company in the mind of the customer due to which trust of the customer gained by the company.
Financial resource: the company adequate finance to make investments in other field to diversify and expand their business. Also the company hold many airplanes which shows that company has reserves to respond the opportunity of growth for the company. As the company is having adequate liquid cash due to which the company has an advantage to meet the unseen liability as well. Also the company keeps a sufficient reserve of oil so that they don’t meet any problem when they are on air.
Human Resource: The Company is having resource of around 1000 working on the current headquarters that is Luton. The professional are properly skilled and qualified to manage the activities onboard and off board. Without the qualified management including Andrew, Sir Colin and Carr, the company wouldn’t have achieved the place where it is standing right now.
Technology: it is the most important factor in the airlines industry as more efficient technology, lesser the expense which will increase the effectiveness of the company. Also the major sale (98%) of the tickets is being done online. Due to which can be easily assumed that higher the qualified technology, higher the sales. Also as the name of the brand suggests EasyJet which means that the website of shall be easy and accessible to all (EasyJet 2017).
Communication: most of the activities of the company are carried with the aid of intermediaries and suppliers. Because of having a good communication process them the company easily carries on its activities and spread information general public. As the company is having good relationship with them therefore the company has goodwill in the market.
- The company efficiently carries out its operational activities and manages the sales force.
- The company believe in the performance management system thus initiate use of hi-tech technology in its working for the customers as well as for internal environment
- Due to having efficient infrastructure, EasyJet gets the opportunity to expand its business activities (Hill, Jones, & Schilling 2014)
- With the aid of internet, the company has reduced its cost of advertisement and also by doing sales online, it has gained competency and reduced the labor cost and invested in various other activities from which the company can earn revenue.
- From the year 2007 to 2011 to company used its physical as well as intangible resources in such a way that the company its toughest competitor that is Ryanair behind.
The mission of the company is to provide its customer good experience during the flight and provide them point to point services and gain their trust with the company’s activities. As the company uses LCC model therefore the company wishes to provide economical fares and maintain a long lasting relationship with its customers (EasyJet 2017).
Also the mission of EasyJet is to provide these six values to the company and its employees:
- Safety: Compromise on anything other than safety
- Pioneering: finds way to travel economically without problems
- Simplicity: cut the complex work and focus on simplicity
- Integrity: stand on the words which are conveyed by the company
- One team: always work with a team
- Passion: passion to fly and work with customers.
For the purpose of strategic change in the management the company needs not to change its values but with the change in the headquarters of EasyJet the company would aim be receive these following benefits to attain stability:
- Gain competitive advantage from industry rivalry
- Satisfy both customers and employee’s needs.
- Work with prudence and friendliness (McCall 2017)
- Aim to achieve higher share in the market
- As the company handle its activities online also thus resulting in low price of their services. This is the key component of the LCC services hence the company has low cost overhead and turnaround charges as well (Peppard, & Ward 2016).
- EasyJet hold a dignified brand name thus resulting in trust and support of the customers of the company
- Through its efficient working and quality service providing the company has gained competitive advantage
- The travellers’ wants to have a safe and god experience therefore they come to EasyJet as they provide safety along with punctuality and no frills at all.
- The airlines industry has to invest huge cost I order to maintain its business in action and one single mistake can turnaround al the tables against them. Thus the company EasyJet is highly sensitive and if they incur any additional cost apart from their regular charge, the company is then prone to danger.
- Also it is seen that the company has a strong financial report but the company uses such assets in further investment purposes. Also EasyJet make under-utilization of the resources provided to them (Rothaermel 2015).
- There are 2 models defined in the aircraft due to which the whole dependency of the company lies on them.
- With inclusion of new headquarters in Paris more sales can be predicted due to higher rate of tourism in the country.
- Also the company has a long lasting relationship with its employees and customers resulting in growth of the company and introduction of new customers from different countries as well (Slack 2015).
- EasyJet has a wide scope of expansion with the shift in its headquarters.
- One of the major opportunity which will affect the growth of the company is that the prices of aircraft is likely to reduce resulting in profit for the company
- Political threat can be major to the company in Paris. As due to EU referendum the company has already faced barriers in its growth.
- Also EasyJet would get trouble with the currency change as UK’ currency is pound sterling whereas Paris has its currency in euros
- Also the country has major threat of terrorism and wars and bombing airports is the most common case (Thompson, & Martin 2010).
Also it shall be noted that to company shall retain its rules and regulations which they used to flow in Luton. As those instructions were fit for the organization and due to them only the company is holding this position in the market. Therefore, in order to again establish in a new market the company shall retain its old techniques and gain market capitalization.
Conclusion
From the above analysis it can be said that company has earned major respect with time and has also became one of the best cost effective company providing its services to customers at allow rates with high quality. With adequate reserves EasyJet can easily conquer the market by investing in its core activities ad gaining competitive advantage. The company has efficient employees who provide best services to the customers resulting in gaining distinctive capabilities for the company.
Reference
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