External environment and industry competition in the new EU member state
This report is focused on the concept of strategic management in the famous airline EasyJet. The airline is operating its business having the low cost carrier model based on the London Luton Airport. In the past few years, the airlines have done many major changes in its management style. The airline has such strategy by which it is getting success in its industry. The company is now providing the services of domestic and international carriers to the passengers at very low cost (Pate & Beaumont, 2006). In current time, the company has flights for over 820 routes in more than 39 countries. To expand the business of the company, the country Denmark is selected in this report. Further, by the environmental analysis the report has analyzed the competitive advantage of the company in the EU member state (Schilling, 2010).
External environment and industry competition in the new EU member state
For the company EasyJet, the country Denmark is selected. The company is planning to expand its business in Denmark. But before expanding the business, it is important to do the proper research about the environment of the country. It is not easy for any company to expand in the new market as there are various factors affecting the business of the company (Ghuman, 2010). For understanding the environment of the country Denmark, PESTEL analysis will be very helpful.
Political Factors:
The political environment includes the political power or ability to impact the events, government agencies, laws, and the lobbying groups in the society. Denmark is the part of European Union so; the country has the advantage to the tourism. People from the other countries can easily travel to the Denmark because of the fact that they do not need any visa. They can travel with their ID card. So, this is the biggest advantage for the EasyJet to make tourism and diplomatic relationship with the various countries.
Based on various sources, Denmark is known as the excellent place for doing the business. Along with this, Denmark has ranked as the best place in the world in terms of conducting the business. As compared to other European countries, the customs procedures in Denmark are very efficient for operating the business. There is the government agency named ‘Invest in Denmark’ situated in the ministry of foreign affairs and provides the details to potential investors.
Economical Factors:
The economy of Denmark is expected to reach $353.1 billion in the year 2017 having the CAGR of 1.9% over the next five years. The competiveness of the company is under pressure because the wages cost in the country has increased as compared to the other countries. To improve the productivity and growth, the government of the Denmark has planned of reform process by 2020 and it is expected that the productivity and the labor supply will increase in future. So, by the economical analysis of the country, it can be said that Denmark is the suitable country for EasyJet to expand its business. The corporate taxes in the country is reduced which is very beneficial for the company in terms of improving the business in the overseas market. Further, the GDP growth is expected to grow in future thus, the expansion in the Denmark will be beneficial for the EasyJet (Pakarinen, 2012).
PESTEL analysis of Denmark
Socio-cultural Factors:
The social environment of the country Denmark has the long tradition of active labor market policies and the well-developed learning system. There is the ongoing reform of compulsory education and training system that raise the skills of the people in the labor market. EsayJet will get the opportunity to train the employees in the training system of the country. There is the flexibility in the labor market of the country which is helpful in achieving the effective allocation of the skills within the economy. There is the higher living standard in the society which will give advantage to the EasyJet in terms of targeting the customers.
Technological Factors:
In the aviation market, technology is increasing in the speed and this technology is different from the other countries. The level of technology and the infrastructure in Denmark is highly developed. There is high quality research and development which have made the country known in the world. Further, the country provides opportunity for creating new technologies with other companies and research and development institutions. So, it can be said that it will be beneficial for the EasyJet in creating new technologies for the business
Environmental Factors:
Environmental factors are the most important factor in the success of EasyJet. Due to the increased global warming, the environmental awareness is increasing in the country. The lifestyle of Denmark is modern and green. The consumers in the country are more focused on the environmental friendly products and services. So, EasyJet needs to implement CSR practices to attract more and more customers in the Denmark (Manna, 2016).
Legal Factors:
Denmark is the democratic country. Most of the power is exercised by the cabinet government in the country. The legal system of the country is based on the civil law and constitutional act of Denmark. There is the business freedom, freedom from corruption and property rights. Due to being the member of EU, Denmark is the leading opponent of trade barriers. Because of this, doing business in the Denmark is most efficient fo r the companies.
EasyJet’s resources and competencies
Before analyzing key resources and capabilities of the EasyJet, it is important to identify the key success factors of the company. To gain the business objectives, there is the need to carry out the research about the needs of the customers (demand analysis), and the analysis of competition in the market. On the basis of research, the resources and the capabilities of the EasyJet are as follows:
Resources
For the EasyJet, there are both tangible and intangible resources which are analyzed. In tangible resources, EasyJet has two types of resources i.e. financial, and physical resources. On the other hand, in intangible resources EasyJet has human and technological resources. The analysis of these resources is as follows:
Tangible resources
Financial:
According to the annual financial report of EasyJet, the company had ample amount of financial reverse by which it is able to catch the opportunities speedily such as the recent bid of EasyJet for the Great British Airlines.
Political factors and its impact on EasyJet’s operations
Physical:
EasyJet has around 137 aircrafts including the fuel efficient and the most modern fleet of the Europe. The company builds the stiff barrier for the new entrants in the airlines industry and gives the tough competition to them having the competitive advantage. Along with this, EasyJet has the quality of committed airport slot at the main airports which is the another form of competitive advantage of EasyJet. Further, the company has market strategy of keeping the stock of the fuel in advance. By this, the financial power of the company can be seen. Having the stock of the fuel, EasyJet is away from the short term oil price variations in the market (Peñaloza, Toulouse & Visconti, 2013).
Intangible resources
Technological:
In terms of sales, EasyJet makes its 98% of sales if the flights by the internet. So, it is clear that the website of the company is technologically developed and is updated on the daily basis to offer the easy access of booking to the customers. Further, the company is enjoying its brand recognition among the customers. The ‘easy’ brand is used since 1998 for the different ventures such as easyvalue, easy music, easycar, easybus etc. further, in case of the culture of the company, the organizational culture of the EasyJet is flexible. EasyJet gives the importance to team work and co-operation to gain the desired results (Gilligan & Hird, 2012).
Human:
From starting, EasyJet has the strong management team i.e. strategic manager, general manager who have complete responsibilities of the airlines. Those can be considered as the main source of the company. The board of management is responsible for achieving the objective of the company. Further, in most of its operations, EasyJet uses the subcontractors. There is the strong and effective communication strategy as it is important to achieve the operational targets. Performance rating system, workshops and innovative programs are being initiated by the EasyJet. These programs contribute in establishing the effective work relationships with the suppliers and subcontractors (Taleghani et al, 2011).
Capabilities
EasyJet has the long term contracts with the suppliers which ensure the exact amount of delivery, time and location of the aircraft. There are various operational activities which are carried out by many numbers of people. The company has introduced online reservation system which enables the company to cut out the travel agents and save on the commission. In the EasyJet has, marketing and the sales is responsible for creating the consciousness among the target customers of the company about the services. The key responsibilities of the EasyJet airlines are as follows:
- The operational efficiency of the company,
- The marketing and sales force of the company,
- The excellence and efficiency in the financial management, and
- Technological advancement of the company i.e. selling large amount of tickets via internet (Fifield, 2012).
Based on the above discussions, SWOT analysis for the EasyJet is as follows:
Strengths-
The EasyJet airlines have the good and supportive culture which is the key strengths of the company. EasyJet is the airline which provides low cost air travel services for the leading city destinations in the UK and all over the Europe i.e. Barcelona, Amsterdam, Berlin and Prague. Further, airlines provide high quality services with the competitive prices and offer many services such as internet bookings, and ticketless travel. EasyJet is famous as the leading brand name in the UK airlines industry. The company has fast and effective services and maintains the obstacles free services for the passengers (Hospodka & Fedorco, 2013).
Economical factors and its suitability for EasyJet’s expansion
Weakness-
The airline industry is the highly competitive industry. Main competitors of the EasyJet are BMI Baby, Ryan Air Plus and Jet2. These are the external competitive forces which can affect the pricing policy and customer base of the EasyJet in the industry. Along with this, EasyJet does not provide the free food services to its passengers on the longer flights. This can also affect its customer base.
Opportunities-
There is the opportunity for the EasyJet of the openings of the alternative routes in the big cities of Europe. Along with this, the company can take the opportunity of offering free food to the passengers in the flights during the travel of two and a half hours. This would be helpful for the company to provide good experience to the travelers with the EasyJet with the comfort and enjoy. Further, company can use the updated version of the fly on the documentaries which would be helpful in maintaining the brand image of the EasyJet having more coverage and publicity.
Threats-
There are some complications in the expansion process which has been met since the new routes are introduced by the EasyJet Airlines. There is the strong competition which will be taking consideration in the market and there is also unavailability of the options. Strong competition in the market will lead to high level of complications in terms of demands. In the period of economic downturn there is the limitation of business travels by the companies. In the time of new-security measures, there will be the need of travel alternatives such as video conferencing in the airlines (Baker, 2003).
Vision and mission statement
For expanding any kind of business, it is important for the company to have proper vison and mission. In case of EasyJet Airlines, it is crucial to have proper strategic mission and vision while expanding in Denmark.
Mission: The Company has the mission to achieve certain goals and objectives. EasyJet has the mission to provide the safe journey, point to point air services and good values to its customers. To achieve this mission, the company will train and develop people and establish long term relationship with the suppliers.
Vision: In case of vision statement, the company wants to be the most innovative and admired brands among the customers in the aviation industry.
The current vision and mission of the EasyJet Airlines is in the favor of the customers. The fares of the company are low with the many business routes. To establish the long term relationship and strong bond with the suppliers, the current mission and vision is appropriate for the company. The above mentioned statements are customers oriented which leads success for the company. So, it is recommended that the existing mission and vision statement is very beneficial for the EasyJet Airlines while entering in new country (Peck, Christopher, Clark & Payne, 2013).
Conclusion
By the above discussion, it is observed that the strategic management is the important part of the business which is needed to implement by the companies. In case of EasyJet Airlines, it can be said that Denmark will be the suitable country for the expansion due to its good image in all over the world. Form the above evaluation, it is concluded that the current vision and mission is appropriate for the EasyJet Airlines to achieve the set targets in the business.
References
Fifield, P., (2012), Marketing strategy (2nd edition), Berlin: Reed educational & publishing Pvt Ltd
Ghuman, K., (2010), Management: Concepts, Practice & Cases, USA: Tata McGraw-Hill Education
Gilligan, C., & Hird, M. (2012), International Marketing Strategy and Management, (Vol. 17)
Hospodka, J. & Fedorco, L., (2013), AIRLINE PRICING STRATEGIES IN EUROPEAN AIRLINE MARKET, 8(2)
Manna, D., (2016), PESTLE ANALYSIS OF DENMARK, accessed on 7th July 2017 from https://www.sachdevajk.in/2016/12/18/pestle-analysis-of-denmark/
Pakarinen, T., (2012), INTERNATIONALIZATION AND EXPORTING OPPORTUNITIES TO DENMARK: CASE URJALAN KEINUKALUSTE KY, accessed on 7th July 2017 from https://publications.theseus.fi/bitstream/handle/10024/46569/Pakarinen_Tea.pdf?sequence=1
Pate, J. & Beaumont, P. (2006), The European low-cost airline industry: the interplay of business strategy and human resources: European Management Journal, 24(5),322-329
Peck, H., Christopher, M., Clark, M., & Payne, A., (2013), Relationship Marketing, Burlington: Linacre house, Jordon hill
Peñaloza, L., Toulouse, N., & Visconti, L. M., (2013), Marketing management: A cultural perspective, USA: Routledge
Schilling, M. A., (2010), Strategic Management of Technological Innovation, New York: McGraw-Hill Irwin
Taleghani, M., Biabani, S., Gilaninia, S., Rahbarinia, S. A., & Mousavian, S. J.,(2011), Arabian Journal of Business and Management Review :The Relationship between Customer Satisfaction and Relationship Marketing Benefits, 1(3), 78-86.
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