International Business Strategy – Case Study Example

International Business strategy Table of Contents Table of Contents Pressure from the substitute product 3 Bargaining power of buyers 3 Airline Industry in late 90s 4 Competitive advantages of EasyJet 4 Cost advantages 4 Target Market 4 Exploiting Change 5 Recommendation 5 References 5 Pressure from the substitute product The major threats of easyJet are the ferry services and Euro rail while easyJet has to face a little challenge from the other low cost airlines in maximum routes. In terms of substitutes, easyJet takes less time and fare than the substitute modes of transportation. Bargaining power of buyers Buyers have important power in the airline industry. The global competitive airline market is price sensitive. There are so many low-cost airlines for the same route in which easyJet operates. The customers Bargaining power of suppliers The most important issues are the airport charges and availability of roots, which can affect on the operation of easyJet. These factors may significantly impact on the ability of easyJet to trade. Government as a force in industry competition The UK government has employed a competition policy in low-cost airline industry. The government has limited the entry barrier for the low-cost airline. Therefore competitors like Ryanair, British Airways have got the permit to operate in the same route and poses a great threat to easyJet with supreme customer service in low price. Here the inadequate service created the problem for easyJet. The government regulation is one of the major issues for easyJet’s operation (Champ, Herod and Rainnie, 2010, p.42). Airline Industry in late 90s The airline industry became profitable after late 90s due to the highly competitive ticket fare. The external factors like fuel price, high disposable income of people influenced the airlines to fix competitive fares (Hitt, Ireland and Hoskisson, 2008, p.23). Moreover UK government has given the permission for various low-cost airlines and people were motivated to fly by low-cost aircrafts. It made the airline industry highly attractive and competitive. Competitive advantages of EasyJet Easy jet has achieved its competitive advantages by its superior competitive strategies. They achieved cost advantages through low pricing strategy; they have done the market segmentation according to the pricing strategy. Moreover they have introduced few ideas in order to reduce the operational cost. These are listed below: Cost advantages Being a low cost airline easyJet has created goodwill among the target customers. They are able to handle the cost control pressure with better efficiency. It makes easy for the company to enter in new market as they have to face low entry barrier (O’Connell and Williams, 2011, p.123). Although easyJet is a low cost airline the services like fast turnaround time and compensate the customer for cancelled flights has created a great brand image in customer’s mind. Target Market Target audiences of easyJet are people who are self-organized and independent. Moreover the customers who have desire to fly in low price and limited transportation services. The company has targeted the flexible customers and the customers who have low expectations. Exploiting Change EasyJet is the first airline in the world that has based the ticket sales through the web. This strategy cut down the cost of travel agents, because if customer books their ticket then it will reduce the unnecessary operational cost (Yeoman and Beattie, 2004, p.13). Moreover the company has started giving discounts to the customers who book their ticket directly through the company website. This strategy benefited both the customers and the company. Recommendation Now-a-days easyJet is the environment friendly airline who reduces the pollution level in air traffic. The company cannot rely on one element that is low-cost strategy. They have to implement broader marketing strategy in order to target all the segments. Moreover easyJet should differentiate their product and services in the saturated competitive airline industry from the competitors. References Yeoman, I., Beattie, U., 2004. Revenue Management and Pricing: Case Studies and Applications. Stamford: Cengage Learning. O’Connell, J., Williams, G., 2011. Air Transport in the 21st century: Key Strategic Developments. Burlington: Ashgate Publishing. Hitt, M., Ireland, R., Hoskisson, R., 2008. Strategic Management: Competitiveness and Globalization: Concepts. Stamford: Cengage Learning. Champ, S., Herod, A., Rainnie, A., 2010. Handbook of Employment and Society: Working Space. Northampton: Edward Elgar Publishing.