easyJet: Developing a Corporate StrategyIntroduction 2Main Body 2Suggested Strategies 7Conclusion 7Appendix 1: SWOT Analysis Strength 9Weakness 9Opportunities 10Threats 10Appendix 2: Ansoff Matrix for strategy development 11IntroductionThe case study for the following essay is development of the corporate strategy for easyJet. It is a European Airline with low budget and very low cost with affordable fares formed in 1995 by Sir Stelios Haji-Ioannou. Since then easyJet has grown rapidly to become fourth largest airline passengers carrier. Following are the basis on which the easyJet’s future strategies are based? These following strategies are: Overcoming hostile takeover bids and competition; formulating policies to grow and spread its operations without producing any negative impact on its operational margins; focusing on geographical markets and expanding its empire outside Europe and adopting the ways through which the sources of ancillary revenue can be increased.
Main BodyStrength of the company lies in the qualities and capabilities especially innovative and proactive style shown by its leader. The company’s brand name easyJet has capability to catch customers’ attentions at ease. It provides flights to main destination centers all over Europe, which are most conducive for business purposes, it is more efficient than others as regards to the turn around time with progressive landing charge agreements with airports and maximizing asset utilizing.
Its low fare has made its operations more efficient with passengers at the full capacity level. The average age of fleet is lowest with highest fuel efficiency. It is first among all the LCC’s to introduce 100 per cent E tailing and removing intermediaries and other costs. Besides, company has reduced other overhead costs due to the flat structured organization, adopted quality employee culture, ensures passengers safety with over wing exits and less quantity of CO2 emissions in their new flights and maintain low cost in supervisory and training.
(Air Scoop 2007: 9). But the company suffers from various weaknesses as regards the continued sustenance of cost leadership which is very difficult in dynamic market, the frequency of flights are more as a result nearby airports seems to be crossing their natural limits. The increase in fleet capacity is very difficult to fill due to the lean period and increase in competition.
There is high speculation that landing charges and access to the airport is conducted more by regulatory decisions and less by negotiations which could increase cost in future and with the low operational margins company could bear additional taxes and other charges and could not gain customers loyalty due to lack of scheme. Besides others, it does not have any long-term strategy for expanding business outside Europe and does not have any scheme to attract customers. It does not have any schemes to attract business travellers and more over its labour force is powerful because it has the support of the labour union striking bargaining techniques, which could have adverse affect on business.
(Air Scoop 2007: 9)It is expected that its pretex profit to fall between £110m and £120m, if we exclude one time cost of £12m related to the takeover of GB Airways. (McDonough 2008: Online). In this scenario, for the company, flexibility is very important and easyJet is in the process to analyze its schedule and make adjustments both to remove any unnecessary expenditure, reduce any flights which are not making profits and seizing any opportunity which company analysts are seeking in the industry.