EasyJet Company’s Comprehensive Manner

Executive Summary

This is a strategic analysis that assesses several attributes of the EasyJet Company and its activities in a comprehensive manner. The vision and mission statement indicating the targets of the company in serving its clients through establishing a strong and affordable transport network are availed and discussed. In a bid to attain these visions, the company has established various objectives such as improving safety, reducing the cost of operation, boosting the performance and tasks developing personnel and instilling proper strategies to ensure success achievement of each objective. The prevailing technologic marketing strategies, including the use of websites, social sites to advertise the flight services with modern aircrafts have been evaluated in this analysis.

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It evaluated various features such as the external prospects and threats of the customers as well as the internal potencies and weaknesses of the company. These include the PESTEL analysis, porters five, value chain, competitive profile matrix and the external factor evaluation matrix from the external analysis. The interior analysis incorporated such factors as the value chain analysis, financial analysis and the internal factor evaluation matrix. Furthermore, the SWOT, SPACE, BCG, IE AND QSPM matrices are the other aspects analyzed in this investigation. The matrices compared several aspects of the airport and establishes the progress that the company can take facilitate effective functionality. In this regard, the matrices addressed various aspects of the company as strengths, weaknesses, opportunities, and threats subject to expectations and strategies of implementing different objectives of the company. The investments made to raise this airline and costs of maintenance related to good progress have been in line with the credible competitiveness and performance.

The study nulls down the particulate business strategies set by the airline to maintain a progressive competitiveness in the airline transport industry. Furthermore, the advantages and disadvantages of the instilled ways when compared to the other airlines such as Ryanair are addressed. This comes with regulatory policies that monitor the business ventures on strategic plans, regulation of promotion, proper management, and build-up of trust and loyalty. In fact, the competitive stature of the airline is expected use capital to become a leading airline service provider, reduce customer interests, and globalize its operations. This competition projection has outlined procedures of implementation and the postulated outcomes.

The study evaluated the current operations and availed recommendations on the expected procedures towards profit making. In this regard, the progress and intricate understanding of the company are highly evident. It has been availed by projected financial statement and income statement target best results associated to the prevailing issues seen from the airline and the financials trends. The study has also made several evaluations on its positive progresses as well as failures. These attributes have been related to various recommendations made in order to improve the performances of the company from the management structure to the business models. Prior to other recommendations, there is a time plan presented to show the specific timeline for the implementation. Finally, the methods applied to review the implemented strategies have been outlined since monitoring is a core technique in ensuring that all issues are in line. In the stand, EasyJet will continue to be effective and competitive in the air transport industry in Europe and throughout the globe. This will not only bring foreign income to the host country, but also act as a resource to facilitate investments and other nation progresses.

EasyJet Airline

EasyJet Airline is one of the leading airlines in the UK currently. This airline was started by Stelious Haji, in the year 1995, and it is a limited company under the management of Easy Group at the moment. This airline has grown over the years to reach a level where fifteen million passengers use its flights in a year. One of the biggest achievements of this airline that can prove its growth is taking over a rival airline. This happened in 2002 when EasyJet took over an airline called the London Stansted (Current ratios from EasyJet, n.d.). This company was not performing at its best at that moment though it was operating across many routes, especially in London. This proved that Easy Jet was on the right path of success, and that there existed good strategic plans underway that the company relied on for performance (Morning Star, 2014).

The major routes taken by EasyJet Airline are within Europe though it also flies to various destinations in different parts of the world. For this airline to grow to this level, there is a series of strategic plans that have been in place (Current strategic plan for EasyJet, n.d.). Businesses that have now multi-billion investments are all believed to have started as projects, which developed due to well organized strategic plans. Just like any other entrepreneurial company, EasyJet has these properly stated plans to direct the organization as it develops. The company has vision and mission that are directed towards achieving the set organization objectives and goals. This is also to be done in accordance to the strategies set by the firm. The following is a highlight of the vision, mission, objectives and strategies that EasyJet Airline has to use to achieve the best performance.

Vision, Mission, Objectives and Strategies

Vision

This airline’s vision is to increase its strength as the biggest affordable airline in Europe. In its vision, it is seen that this company already enjoys the position of being one of the largest airlines on the continent. It also shows that this company main base of operation is in Europe (EasyJet Portfolio, 2012).

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Mission

EasyJet Airline Company has a mission of providing the clients with secure, great worth, and end to end air services. This company’s mission is specific and direct making it a well directed one. It states clearly that the company’s aim is directed towards the aviation industry and also states what is expected in the long run.

Objectives

According to analysts, every businesses that are to be operated effectively for a reasonable time must have objectives that are driving it. They also argue that success of organizations is attributed to the objectives that they have to work towards. EasyJet Airline being one of the successful airlines in Europe has a set of objectives that are behind its operations. Best objectives for businesses revolve around trying to produce at low cost, to meet customer demands efficiently and to be flexible in the industry. The following paragraphs have the main strategic objectives of EasyJet Airline, and they are also geared towards the same (David, 2009).

To improve safety

This is one of the most crucial objectives of EasyJet. This organization seeks to ensure the passengers on the board are assured of their safety. The security is also on the baggage and parcels transported by the company. This is important in maintaining the trust their customers have to the airline.

To reduce operational costs

Many businesses have put a lot of emphases on this kind of objective without considering the quality of service offered to the esteemed customers. For EasyJet, this objective is guided with a series of activities that make sure the quality of service is maintained. For example, the company’s strategy of issuing ticket-less flights is accompanied by strict measures avoiding inconveniences at the airport. This strategy basically cuts down the cost of operation since the company would not incur the expense of printing the tickets.

To improve operations and performance

This has to be an objective of a business that wants to remain relevant and to perform in the industry. For EasyJet Airline, this is one of its main objectives since the company wants to move at the same pace with the technology that keeps on changing daily. For example, when the organization introduced modern aircrafts and also moved to online booking systems, it was aiming at improving its operations (Management Paradise.Com, 2010).

To focus on developing the personnel

This organization has an objective of developing the skills of personnel involved in its operations through things such as strong leadership and organized management. This is important since it will make sure that the people have the right skills required in the workplace leading to improved operations.

Strategies

A lot of strategies have always been put in place by the management of EasyJet Airline to drive this organization towards achieving its objectives. Some of these strategies were put in place a long time ago and are still in place. Other strategies that exist in this airline had been started in the recent years and are effective in improving the performance of the organization. The paragraphs subtitles have some of the strategies that are in this organization.

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Introducing the Head up guidance system

This is a strategy that is in place to ensure protection of EasyJet in terms of the customers’ security, effectiveness of the company, and its business positions. With this move, there is a better way for the pilots to state the situations when they are on the board. This assured the passengers of their safety and in turn the airline started to get more customers. This strategy is still in place as the organizational mission is to provide safe air services to its customers (Morning Star, 2014).

A website for the airline

The company published a formal advertisement website in the year 1997 and since then it has had several activities done online. One advantage of this strategy is that it makes the organization more accessible compared to its competitors who still do not use this Internet technology in many dealings. Bookings are now done online, and the company stated recently that more than 90% of its bookings are made online. This strategy brings in an economical way of distributing the airline’s tickets, and thus it works towards the vision of this organization of being cost effective. On the website, the customers are served efficiently with the information about flights and prices. This again meets the company’s mission of offering good value services to its customers (David, 2009).

Introducing ticket-less travels

In this idea, EasyJet brought to help cut down the cost of operation of the airline. There are some expenses that the company has to take when preparing the tickets and also when issuing them to customers. Since the vision of this organization is to increase its base as a big low-cost airline operating in the continent, it was important to initiate this strategy.

In this new case, the traveling details are sent through the email addresses to the customers after they have booked. On the date of traveling, they will just have to go to the airport with the booking reference and the details that were sent. This assists the airline to cut down on its expenses in a big way since printing, distribution, and issuance of the tickets are usually expensive processes. Even though the cost of production is reduced, the efficiency of the organization is boosted by giving the customers easier way of catching their flights since they will not have to queue for the tickets when there are tight schedules.

Priority for secondary airports

These airports are not usually crowded, and they also charge the airlines lower landing fees. EasyJet took this strategy so as its aircrafts can make more flights due to faster turnarounds in the secondary and smaller airports. This is a way of making more profits and at the same time maintaining efficiency since these airports are not crowded thus movements are quick.

With the same aim of making movements quick, EasyJet Airline introduced a strategy where the tickets do not have specified seats. When a passenger gets on-board, he/she seats where he/ she prefers. This idea is being used to avoid a lot of complications usually experienced when passengers board due to people trying to find their seats. The initiative makes the process quick and thus saves time for the company.

Operating Modern Aircrafts

This has been a strategy in place for EasyJet that seeks to make the airline the favorite among its customers. Even though it requires a lot of cash and resources to put the fleet of new aircrafts in operation, it eventually leads to more profits for the organization. When these modern planes are introduced in routes that are busy, the company is bound to expand as customers will prefer the modern and more comfortable flights. EasyJet Airline started with introducing a fleet of Boeing 737-700 aircrafts which has seen more flights taken by the airline ever since their operations. Recently, this company has released Airbus 319 planes, which have more modern facilities and many customers are booking with the airline. This strategy has served a great way in placing EasyJet ahead of her competitors.

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Analysis of the Vision and Mission Statement of EasyJet Airline

Vision Statement Analysis

Various objectives and strategies put in place by the management of this company illustrate the vision that the airline is working towards. One great move taken by EasyJet is that of acquiring a rival airline. For instance, the London Stansted acquired in the year 2002 was relatively bigger company, and this proved that EasyJet has a vision of becoming the largest airline in Europe. This airline has also ordered more than one hundred Airbus 319s showing its vision of widening the operational route it has in Europe and some other parts of the world.

One of the objectives of this company is to reduce its operational costs, and many strategies are initiated to make sure this objective is achieved. The introduction of a policy that one does not have to get a ticket to travel is one cost slashing strategy the company introduced. This illustrates that the vision of the organization is also about remaining as a low-cost airline. Establishing the idea of online booking supports this vision. The reason for that is that doing the process online is quite economical as few employees would be required to facilitate the booking, issuing and distribution of tickets. Putting all these together shows clearly that EasyJet Airline has a vision of being the largest economic airline in Europe that is stable (Morning Star, 2014).

Mission Statement Analysis

The mission of EasyJet Airline is stated as “to provide our customers with safe, valuable and point to point services.” This company has put some plans and objectives in place that are in line with this mission. For instance, this airline has an objective to improve the safety of its customers and the security of its commercial position. To ensure this is attained the Head-up Guidance System was introduced.

Goals that were set to maintain good value services include the objectives to develop the skills of personnel and to improve the operations. The company has been engaging in strategies that boost their quality. EasyJet Airline launched a website where customers are attended to more efficiently, and the airline is also introducing the modern aircrafts. This is an indication that the organization is working with its mission of offering valuable air services.

External Opportunities and Threats of EasyJet Airline

PESTEL Analysis

This is a tool of analyzing the position of organizing through checking the political, economic, social, technological, environmental, and legal situations in which the organization is conducting its business (Management Paradise.Com, 2010). These external environmental factors are discussed here in relation to EasyJet Airline Company.

Political factors

Terrorism

Terror attacks have been recorded in different parts of the world, and this has some impact on the traveling patterns of people. The attack in London during the year 2005 and that in the USA on the 11th of September 2001 were about airplanes. Some customers might have withdrawn from using planes for traveling due to the fear of recurrence of a similar crisis. The continued war in the Middle East is also a threat to the airline.

Taxation

The airlines are charged taxes at varying rates in different countries depending on their political stands. This is because the political governments have different tax policyies and regulations, and this might be a threat to airlines moving around the globe. EasyJet gets an opportunity over its competitors since most of its operations are within Europe where tax regulations are quite similar. Many projects are available for the government to support financially, and this requires a lot of inputs in terms of funds.

Political Instability

In most of the Arabian countries, issues of political wrangles have always been a major security threat. This has forced EasyJet to change its routes in those areas and even sometimes cancel flights for the sake of customers’ safety.

Economic Factors

Inflation

This is usually pushed by the fluctuating prices of fuel. Inflation rate is at 3.3 % currently, and this is not a good indicator to the airlines (David, 2009). This means that the cost of production has to go up and might lead to customers experiencing increased fare, which is contrary to the vision of EasyJet. Therefore, this stands as a big threat to this company.

Currency and the exchange rate

Introduction of a single currency in Europe has been a major boost to this airline that has most of its routes within Europe. Being a British company, EasyJet transacts using Pounds, which has more value than the US dollar. This is an opportunity for this airline to increase its profits since fuel prices, and many suppliers use the dollar.

Economic Growth

The United Kingdom has been experiencing high fuel prices and inflation causing a slow growth of the economy. This is a threat to the operations of EasyJet Airline since it also slows the business growth (Shark, 2014).

Socio-cultural factors

2014 World Cup and other Tournaments

This year the FIFA World Cup takes place in Brazil, and many football fans are getting ready to go and experience the event. This has led to the airlines having a lot of bookings done in advance to avoid last minute inconveniences. The UEFA Champions League has also been underway, and many soccer fans have been traveling across Europe creating more opportunities for EasyJet and other airlines operating in the continent.

Demography

The population in London and the UK has always been on the increase, which has the advantage to businesses operating in the area. EasyJet gets a chance to boost its earnings and operations out of this situation.

Technological Factors

Introducing Online Systems

This organization approached this idea by launching a website and introducing a series of activities to be done online. Generally, this improved the quality of services this company offered and also helped it cut down cost of operations since the number of employees was reduced.

Using Modern Aircrafts

The aircrafts manufacturers have introduced many modern airplanes which is creating an opportunity for EasyJet. Customers enjoy traveling in these modern planes, which is a reason why the airline has invested in them (Shark, 2014).

Environmental Factors

Use of Environment-Friendly Products

This has been one move taken by most members of the society in a bid to make sure the environment that people live in is healthy. EasyJet airline created an opportunity out of this by introducing environmental products that attracted most customers who are concerned about the ecosystem towards this company.

Environmental Regulations

The government has a mission to reduce the amount of carbon emission by the year 2020 and therefore, the airlines are obliged to take measures towards this direction. In regard to this, EasyJet has tried to eliminate commodities that are hard to recycle like through introducing tickets and fewer travels. This move gives it an image of an environment-friendly company.

Legal Factors

The aircrafts used by the airlines are usually obtained through international trade since different countries are involved in manufacturing of these materials. When new laws are introduced on this trade, it may end up affecting the operations of the airlines.

Porter’s Five Forces Analysis

This is analysis is done in the following five key areas:

Bargaining Power of Suppliers

The suppliers in this case include the people who provide labor, raw materials and even technical services. Suppliers can increase the market prices, which has the effect of increasing the cost of operation of the airlines. For example, the employee unions in the UK are a big threat to EasyJet since they check on the salaries of the company’s workers, and they may trigger strikes among the employees. The concentration of suppliers in the aviation market is so big, and this creates competition amongst them. This is an advantage of the airline company as the suppliers would try to cut down prices and offer more after-sales services to curb competition.

The Bargaining Power of Customers

This is determined by the type of service and quality of products offered by the company. EasyJet ensures quality services to its customers through things like maintaining punctuality and offering additional services like providing snacks on board. The number of customers that this airline has also done boosts the bargaining power. It has so many customers implying that the company is making profits out of in most cases.

Threat of New Entrants

An industry such as the aviation industry that is very profitable has a lot of entrepreneurs eyeing on investing in the area. This poses a big threat to existing firms depending on the strategies they have in place to tackle this scenario. For instance, EasyJet enjoys a big brand name that gives it a strong stand in the market. Product differentiation is also another tool used by EasyJet to handle the threat from new competitors. This company is different from any other competitor since it is known for low cost services.

Threat of Substitute Products

In the aviation market substitute product may include travel coaches, trains, and cruise ships. Customer may move from the airlines to the substitutes due to factors such as fear of terror attacks on the plane or increased flight charges. EasyJet maintains quality service to its customers to avoid losing them to substitute means of traveling.

Competitive Rivalry

This industry has been experiencing stiff competition with airlines coming up with new strategies to ensure they still have their customers and even get more. This competition has seen some bit of rivalry coming into the industry. To maintain operations with this competitive rivalry EasyJet Airline has put more pressure on maintaining its brand identity of providing low cost services.

Competitive Profile Matrix (CPM) Analysis

This is a tool of analysis that compares a business firm with a competitor in relation to the weaknesses and strengths they have in common (Strategic Management Insight, 2013). The factors used in this analysis are called the critical success factors (CSF).

AirAsia EasyJet
(CSF) Weight Rating Score Rating Score
Product quality 0.25 2 0.50 3 0.75
Customer loyalty 0.15 3 0.45 2 0.30
Safety and efficiency 0.15 3 0.45 3 0.45
Strong online services 0.10 2 0.20 3 0.30
Low cost structure 0.20 1 0.20 4 0.80
Global expansion 0.15 4 0.60 2 0.30
TOTAL 1.00 2.4 2.9

Table 1: This analysis shows that EasyJet Airline is relatively competitive than AirAsia if the stated critical success factors are put in consideration (Strategic Management Insight, 2013).

External Factor Evaluation (EFE) Matrix Analysis

The EFE is applied by organizations to set up their prevailing state in the market and also to analyze the opportunities and threats they are facing (Maxi-Pedia, 2014). Macro environment factors are the ones that are usually used in this tool of analysis. These factors are rated in terms of the company’s strategies between 1 and 4 with this scale; 1- poor response, 2- below average, 3- above average and 4 – superior response (Maxi-Pedia, 2014).

Opportunities Weight Ratings Weighted score
EasyJet uses Euro which is a common currency in Europe 0.05 4 0.20
The population of U.K recording a slight growth yearly 0.06 3 0.18
Increased web services 0.10 3 0.30
Environmental products such as use of utensils rather than plastic bags on board 0.05 2 0.10
New regulation to see the emission of carbon reduce by 2020 0.05 3 0.15
Many athletes and fans travelling across the continent during the UEFA and London marathon 0.06 4 0.24
Point to point travel advocated for by many countries 0.04 2 0.08
New government regulations on the airlines operating across the U.K 0.03 3 0.09
Europe and the middle East especially U.A.E being considered for business meetings 0.03 2 0.06
Consumer confidence in EasyJet since they keep to the goal of low cost services 0.05 4 0.20
Threats
Terror attack in London in 2005 and repeated attacks in the Middle East 0.11 1 0.11
New law to control carbon emission requires airlines to give 1.4 billion Euros yearly till 2020 0.05 2 0.10
Political instability in Russia and her neighbors 0.05 2 0.10
Inflation rate in U.K going up to 3.3% 0.06 3 0.18
Fuel prices going up; like in 2012 fuel costs went to nearly 350 million Euros 0.07 2 0.14
The economy of Europe being unstable as U.K experiences a slow economic growth 0.04 3 0.12
Bad weather such as snow falling causing cancellation of more than 1000 EasyJet flights 0.02 3 0.06
Union strikes like the continued strikes by airport workers in England 0.03 2 0.06
New laws on flying hours set by IAA 0.03 4 0.12
Competition from other modes of travel 0.02 3 0.06
TOTAL WEIGHTED SCORE 1.00 2.65
Opportunities weight Ratings Weighted score
Common currency (euro) 0.05 4 0.20
Growing population 0.06 3 0.18
Modern technology 0.10 3 0.30
Environmental products 0.05 2 0.10
Environmental regulations 0.05 3 0.15
International activities 0.06 4 0.24
Point to point travel 0.04 2 0.08
New government regulations 0.03 3 0.09
Government aids 0.03 2 0.06
Consumer confidence 0.05 4 0.20
Threats
Terrorism 0.11 1 0.11
Taxation 0.05 2 0.10
Political instability 0.05 2 0.10
Inflation 0.06 3 0.18
High fuel prices 0.07 2 0.14
Slow economic growth 0.04 3 0.12
International laws 0.02 3 0.06
Union strikes 0.03 2 0.06
Government oversights 0.03 4 0.12
Competition 0.02 3 0.06
TOTAL WEIGHTED SCORE 1.00 2.65

Table 2: An external factor evaluation matrix of EasyJet Airline (Maxi-Pedia, 2014).

Organization’s Internal Strengths and weaknesses

Value Chain Analysis

This is one way of determining the position of a business through studying a series of activities that take place at the micro level. This method breaks down the company into value adding actions taken by the firm (Value Chain of EasyJet Airline Company, (2012). For EasyJet, some of these activities include introducing a website to add value to the services offered to the customers.

Training of the employees to ensure they provide quality services is also part of the value chain this company engages in. These activities give the airline internal strength as customers stick to it due to quality products and services it delivers.

Value Chain Map

Value Chain Map

Financial Ratio Analysis

The net profit margin of EasyJet airline improved in the year 2013 compared to what was recorded in the previous year. From 6.62%, the profit margin moved up to 9.35% in 2013. This indicates that the company has been making profits, and this is showing the strength EasyJet has over its competitors.

The asset turnover of this company has also been on the rise averagely showing that more services are being offered by the firm. In 2012, the asset turnover stood at 0.88 and this inclined tremendously to 0.98 in the year 2013. This again proves the strength that the organization may be using to handle competition in the industry (Research Matic, 2013).

The following table has the financial ratio analysis of EasyJet Company.

Income Statement for EasyJet

(Currency in Millions of British Pounds) Sep30, 2011 Sep 30, 2012 Sep 30, 2013
Revenues 3389.0 3794.0 4194.0
Other revenues 63.0 60.0 64.0
Total Revenues 3452.0 3854.0 4258.0
Cost of goods sold 2820.0 3114.0 3322.0
Gross profit 632.0 740.0 936.0
Selling and administration expenses 102.0 104.0 101.0
Depreciation and amortization 90.0 105.0 112.0
Other operating expenses 171.0 199.0 226.0
Total Expenses 363.0 408.0 439.0
Operating Income 269.0 332.0 497.0
Interest expense -25.0 -25.0 -16.0
Interest and Investment Income 9.0 10.0 5.0
NET INTEREST EXPENSE -16.0 -15.0 -11.0
Currency Exchange Gains (Loss) 6.0 1.0 8.0
Other Non-Operating Income (Expenses) 1.0 _ _
EBT, EXCLUDING UNUSUAL ITEMS 248.0 318.0 478.0
Gain (Loss) on Sale of Assets _ -1.0 _
EBT, INCLUDING UNUSUAL ITEMS 248.0 317.0 478.0
Income Tax Expense 23.0 62.0 80.0
Earnings from Continuing Operations 225.0 225.0 398.0
NET INCOME 225.0 225.0 398.0

Table 3: Easyjet income statement (EasyJet Annual financial report, 2013).

Balance Sheet for EasyJet Airline

(Currency in Millions of British Pounds) 30 Sep,
2013
30 Sep
2012
30 Sep,
2011
Intangible Assets 467.0 456.0 451.0
Tangible Assets 2280.0 2395.0 2149.0
Cash at Bank and in Hand 1013.0 645.0 1100.0
Total Assets 4412.0 4295.0 4469.0
Creditors Amount Within 1 year 2385.0 2156.0 1938.0
Creditors Amount After 1 year 109.0 70.0 86.0
Total Liabilities 2395.0 2501.0 2764.0
Net Assets 2017.0 1794.0 1705.0
Called Up Share Capital 108.0 108.0 108.0
Share Premium Account 657.0 656.0 654.0
Other Reserves -54.0 43.0 15.0
Profit and Loss Account 1306.0 987.0 928.0
Shareholders’ Funds 2017.0 1794.0 1705.0

Table 4: The balance sheet of Easyjet airline (EasyJet Annual financial report, 2013).

Horizontal and Vertical Analysis

There are policies that companies put in place to avoid the threat of losing their brand name and financial position. Horizontal strategies are used by organizations to expand their operations through having many companies operating under its management but at the same level. For example, EasyJet took over London Stansted in a bid to increase its operations. This turned to be the strength of this organization as it has more customers and a big share in the market.

Vertical integration takes place when an organization acquires more companies in different levels of the industry. For instance, EasyJet operates both an airline and also has a tour operator launched recently called EasyJet Holidays. This introduced more customers to this airline due to the efficiency one gets when the same servers organize the entire traveling (EasyJet Portfolio, 2012).

Internal Factor Evaluation Matrix (IFE)

This analysis tool is used by organization to audit their strengths and weaknesses (Maxi-Pedia, 2014). The internal factors considered are usually rated in a scale of 1 t o 4; 1-major weakness, 2-minor weakness, 3-minor strengths and 4-major strengths. The calculation is done the same way as it is done in EFE. The following is an IFE matrix of EasyJet Airline:

Internal strengths Weight Rating Weighted Score
EasyJet is one of the largest airline in Europe 0.10 4 0.40
Good image of being an airline that is environmental friendly 0.07 3 0.21
Increased revenue from 3,854.0 million Pounds in 2012 to 4,258.0 million Pounds in 2013 0.12 4 0.48
The operating expenses reduced by 3.0 million Pounds in 2013 0.08 3 0.24
Shifting to online reservations 0.08 3 0.24
Leadership training done to equip personnel with skills 0.10 4 0.40
Low overheads as recorded in 2013 0.05 2 0.10
Profits of EasyJet increased from 6.62% to 9.35% in 2013 0.06 3 0.18
Internal Weaknesses
As taxes were increased the company faced had time trying to still produce at low cost. 0.12 1 0.12
Lack of separate class planes for business trips and leisure travels 0.09 2 0.18
Use of secondary airports that are far from the cities 0.05 1 0.05
Some customers are not conversant with the internet technology of booking 0.08 2 0.16
TOTAL WEIGHTED SCORE 1.00 2.76

Table 5: The total weighted average is more than 2.5, which indicates that EasyJet Airline has a strong internal position (Maxi-Pedia, 2014).

Matrix

SWOT Matrix

The following table lists various complements of the matrix system of information where the strengths are indicated alongside with the weaknesses. Essentially, the strengths are the factors that facilitate the building up of the EasyJet company and this makes it highly competitive against its rivals. Furthermore, the overall running of this company is established in relation to the adamant state of the company, especially in profit-related issues that determine the progress. On the other hand, the comparing weaknesses are the factors that pull the company down against its rivals while striving towards attaining a sustainable income. Primarily, they are the points that other competitors use to defeat the subject company. The weaknesses associated with EasyJet airline lays significantly on such competitors as Ryanair among other potential airline companies within the nation.

The opportunities of the company are associated with the market where broad spaces still exist. In this regard, the opportunities are involved in targeting the unexploited markets and creating a strong base for trust and loyalty from the customers. This does not only involve the common passenger without categorizations, but also the promising categories in raising the company’s progress such as the businessperson or VIP individuals. Finally, the opportunities come at hand when reducing the effects of the threats. Technically, the threats require adequate strategies to initiate the appropriate strategies to prevent the occurrences of such incidents. The company has initiated strategies to curb these probable outcomes since they can affect the efficiency of the company. It initiates such strategies as controlling the pricing strategies to prevent adverse losses attributed to lower prices from other service providers.

Strengths
  1. EasyJet is one of the largest airline in Europe
  2. Increased revenue from 3,854.0 million Pounds in 2012 to 4,258.0 million Pounds in 2013
  3. Has 49% market pairs in Europe
  4. The operating expenses reduced by 3.0 million Pounds in 2013
Weaknesses
  1. As taxes were increased the company faced had time trying to produce at low cost.
  2. Use of secondary airports that are far from the cities
  3. Some customers are not conversant with the internet technology of booking
  4. Lack of separate class planes for business trips and leisure travels
Opportunities
  1. Increased web services
  2. New regulation to see the emission of carbon reduce by 2020
  3. Many athletes and fans travelling across the continent during the UEFA and London marathon
  4. Target increasing business passengers
  5. Consumer confidence in EasyJet since they keep to the goal of low cost services
SO strategies
  • Act as the price maker in the market through funding the marketing strategies in internet (S1, O1)
  • Apply pricing strategies to outcompete competitors and gain more customers (S2, O5)
  • Increase market share by absorbing leisure and business passengers (S3, O3, O4).
WO Strategies
  • Target economies of scales by attaining large number of customer (W2, O2, O3)
  • Provide guidelines for using internet in applications (W1, O3)
  • Reduce costs and target new customers to cover the high base cost (W1, O2, O3, O5)
Threats
  1. Increment of terror attacks
  2. New law to control carbon emission requires airlines to give 1.4 billion Euros yearly till 2020
  3. The return of the competitors
  4. Constant economy
  5. Union strikes like the continued strikes by airport workers in England
ST Strategies
  • Regulate the funds variances due the economic state (S4, T4)
  • Take roles as the price determiner in the industry (S1, T3)
  • Increase the cost for market entrance (S4, T3)
WT Strategies
  1. Set a committee of 8 people to resolve issues about the airline (W2, W4, T2, T5)
  2. Recommend foreign currencies and make negotiations on taxes reduction with the government (W1, T1, T4)

Table 6: SWOT matrix (EasyJet Annual financial report, 2013).

SPACE Matrix

Internal External
  • Financial strengths (FS) 1-6
  • Sales appreciation 4
  • Liquidity 4
  • Profit among competitors 6
  • Working capital 1
  • Total 15
  • Industry strength (IS) 1-6
  • Government regulation 5
  • Entry barriers 5
  • Growth potential 3
  • Reliability 4
  • Total 17
  • Competitive advantage (CA) -1 to -6
  • Application of modern technology -4
  • Level in the major airline -1
  • Market share -1
  • Customer loyalty -4
  • Total -10
  • Environmental stability (ES)-1 to -6
  • Stability of prices -3
  • Cooperation with natural disasters -4
  • Pricing competitions -4
  • Inflation -2
  • Total -13

Table 7: SWOT matrix (EasyJet Annual financial report, 2013).

SPACE Matrix

GSM Matrix

GSM Matrix

BCG matrix
BCG matrix (Report about Easyjet, 2012).

QSPM Matrix

In the QSPM, ‘TAS’ is the total alternative strategies while ‘AS’ represents the alternative strategies.

QSPM Matrix

IE matrix

Growth and development
Segment Rev million pounds Rev % Profit million pound Profit % EFE scores IFE scores
1 2280 54 614 66 3 3.5
2 900 21 107 11 2 2
3 513 12 86 9 3.5 3
4 356 8 67 7 2 2
5 209 5 62 7 1 2
Total 4258 100 936 100 _ _

Table 7: IE matrix (EasyJet Annual financial report, 2013).

THE IFE TOTAL WEIGHTED SCORES

Specific strategies for EasyJet Airline

EasyJet Airline Company should set proper strategies that are consistent to their mission statements. The strategic plans should be set to maximize the profits and minimize costs in order to satisfy the customers’ needs. The following strategic plans are capable of boosting the company in the airline business:

  • Elevator pitch. EasyJet Airline Company should continuously describe their business in a marketable way since the customers will view the company’s website regularly. The company’s website should also be rebranded to attract the customers who prefer online bookings.
  • Mission statement. The Company should formulate proper mission statements to explain the expectations of their business to their stakeholders. The mission statement of the company should be specific enough to direct the employees on the business’ expectations.
  • Company’s goals. EasyJet Airline Company should set long-term goals in a systematic manner. There should be the formulation of an annual goal, and the targets of subsequent goals to provide a proper guideline and assessment of the business by the management.
  • Analysis of strength, weaknesses, opportunities and threats (SWOT). EasyJet Airline Company should continuously unveil their strengths and weaknesses to their customers. Available opportunities such as business expansion should be updated on the company’s website.
  • Proper tracking of the Key Performance Indicators (KPIs). In this, the company should track the performance of the business in terms of the customers obtained from online bookings to that of manual or office bookings. The management should also lay tracking procedure to assess their competitors’ performances strategies and if at all the competitors copy their strategies.

Target customers. EasyJet target customers should be open to any customer who may want to travel to their various destinations. The destinations should be expanded to include the need of ever expanding number of customers who prefer EasyJet Airline cheaper flights. Since the customers prefer online booking to manual bookings, the company should provide reliable internet services to include the increasing demand in online services. The customers should not be limited to the 30 countries under which EasyJet operates (EasyJet annual report, 2011)

  • Performance Analysis: Analysis of the market size, customer’s expectations, available opportunities and company’s threats should be carried out on a quarterly basis. Competitive analysis should be constantly evaluated to find out the company’s weaknesses that the competitors might take advantage to exploit.
  • Company’s marketing strategy: here, the strategies should include:
    • Target customers: A clear demographic profile of all customers should be kept in the company’s database. The interests of the customers should be taken care of in order to address their needs while on board. Suggestion points should be strategically placed to provide the customers with the opportunity to make suggestions that will increase their satisfactions. Low costs will, therefore, attract everyone; hence, the services provided should satisfy everyone.
    • Pricing strategy: being the most preferred business entails that EasyJet Airline should lower their prices slightly than their rivals. The prices should not be very low or too high depending on the season.
    • Promotion strategy: The Company should develop its services worldwide. Online promotions are preferred as they cover a wider range of factors. Online promotion strategies should include the optimization of the search engines, advertisements on social media, optimization of the keywords and the online booking guidelines. Fliers that market the company attached with the weekly updates of the world’s news should be produced and given to the customers who visit the offices or the ones on board. Trade shows and television advertisements are alternative strategies for marketing the operations of EasyJet Airline Company.
    • Special offers: Particular packages and price cut offers are subject to increment in the business. For example, the company may have a provision for free board for every fifth consecutive travel with the business.
    • Customer’s referral: there should be a database to store the information of new customers referred to EasyJet constant customers by constant customers. Special offers should be provided to the customers who refer new customers. This should be in the form of offering free flights to the destination of the customer’s choice for the most active customer in this case.
  • Marketing financial projections: the promotional expense that is efficient and cheap is online advertisements.
  • Strategic plan for EasyJet operations: Airside capacity should be increased. The travel destinations should be increased. Increase in the areas of operations necessitates increase in the expertise and the airplanes.

Advantages and disadvantages of the identified alternative strategies

For every strategy that has been outlined, there are merits and demerits associated with its implementation. By reducing the cost of travel, the company is bound to be faced with financial constraints to support its employees. However, as the customers continue preferring the business, the financial constraint will not be felt as enough profits will be obtained from the business. Globalizing the company’s operations will increase the range of target customers, market the company and boost the company’s performance among its competitors. This will provide the EasyJet with the best marketing strategy compared to its current operations in the 30 countries.

According to the company’s website, they have current 30%-40% cost advantage strategy. This approach will only be achieved when the company incorporates the promotional plans outlined in the promotional strategies. Targeting customers all over the world will improve the increase achieved in 2013 which was at 56% (EasyJet Annual financial report, 2013). This will increase the business image among its competitors.

The adoption of the alternative marketing strategy will ensure that the business addresses the challenges it realized from Air France-KLM, Lufthansa and even IAG; which gives the company stiff competition for customers. All attempts by the larger companies to reduce the loss they incur will not affect the operations and the income that EasyJet currently enjoys. Providing special packages and discounts will be an advantage to the company as that will ensure that in counteract the operations of the emerging low-cost carriers like Norwegian (EasyJet annual financial report, 2013).

There are some disadvantages that the proposed alternative strategies are bound to impact on EasyJet. Increasing the range of target customers implies that the seating allocations must be increased. The business will be faced with the challenge of accommodating all the customers who may prefer the services of EasyJet.

To increase the net profit achieved by the company in 2013, the alternative strategies offer more advantages to realize the company’s performance.

Hierarchy of aims together with recommendations of specific long-term goals and annual objectives

The company should aim at the following:

  • Maintaining cost benefit: EasyJet can do this through continuous analysis of its performances. The customers’ interests should be addressed to provide a competitive advantage over the emerging low-cost carriers. The robust operations in terms of adhering to strict arrival and departure times that the company aims at, should concurrently be effected by the alternative marketing strategies; though it will be a long term, but it will ensure the maintenance of cost advantage.
  • Globalization of the company’s operations. The company should have an annual target of establishing its business services in at least three countries outside Europe. The company should work to increase its business partners and the number of employees.
  • Be the number one company that provides the best airline services. This can be achieved through disciplined use of the business capital and annual SWOT analysis. The company should also increase the number of its aircrafts and seat allocation. This can be achieved continuously partnering with the modern aircraft manufacturers such as Airbus (New Aircraft Models by Airbus, n.d.)

List of policies facilitating strategy implementation

Alkhafaji and Aslin (2013) argue that proper policies are the key to success implementation of every strategic plan in the business. To facilitate the implementation of the procedures, the following policies should be considered:

  • Compensation system formulated to give bonus to those who work towards achieving the strategic goals.
  • Promotion and reorganization of the EasyJet team to motivate them and also ensure the proper implementation of procedures.
  • Sufficient budget allocation for each strategic plan.
  • Full engagement of the team towards implementation of the strategies.
  • Consistency in approach and implementation
  • Involve the management and the team.

The cost of recommendations

Recommendation 1: Addressing customer’s interests

This was recommended to ensure that low that cost advantage is maintained. To implement this recommendation, the company will incur the following costs:

Recommendation Plan Cost secured Cost of implementation (£ million)
Maintain punctuality Employ more crew Current cost saving per seat-7%
Estimated cost saving per seat (2014)-10%
2013-£454 million
2014-£480 million
2015-£510 million
2016-£520million

Table 8: Addressing customer interest (EasyJet Annual financial report, 2013).

The current expense incurred by EasyJet in crew is £454 million (EasyJet Annual Report, 2013). The projected costs require the stated costs in order to implement strategy. This will ensure that the company addresses their customers’ needs. This will in turn provide a cost saving strategy while minimizing on the input.

Be the number one company

For Easy jet to achieve this goal, we recommended a continuous partner with Airbus to provide more aircrafts, and increase seat allocation and the number of aircrafts. This can be achieved through:

Recommendation Plan Cost of implementation (£ million)
Sign a permanent deal with Airbus Deliver more aircrafts 2013 (current estimate)135 aircrafts (US $ 12.46 billion)
2014-185 aircrafts (US $ 17.08 billion)
2015-230 aircrafts (US $ 21.23billion)
2016- 245 aircrafts (US $ 22.61billion)

Table 9: Implementation cost (EasyJet Annual financial report, 2013).

The actual strategy of the company is that they acquire 135 aircrafts from Airbus (EasyJet Annual Report, 2013). The recommendation here is that the company acquires aircrafts as outlined in the above table. This will assist the company to be the number low-cost carrier, hence the difference between the two strategies.

Globalization of the company

To secure its space in the global market, the company should establish its operations annually in at least three countries outside Europe.

Recommendation Plan Cost of implementation (£ million)
Secure more space in the market Establish three new networks annually Operating cost as at 2013- £479(million)
Estimated cost 2014-482(million)
2015-£525 million
2016-£530 million

Table 10: Implementation cost (EasyJet Annual financial report, 2013).

The company strategized to expand their operations network to cover Europe (EasyJet annual Financial Report, 2013). It is recommended that EasyJet globalize their operations. This is the difference between the current strategy and the recommended strategies for the company.

The current strategies for Easy jet to maintain its cost advantage and to become the leading low-carrier airline are to acquire 135 more aircrafts, establish new routes and to expand its networks (EasyJet annual financial report, 2013). This is in contrast to the recommendations outlined above.

Implementation of the recommendations and the results to expect

It will be important to implement the proposed recommendations in a cost effective manner. To maintain the low cost advantage, the company can implement this through the following ways:

  • Conduct analysis of the performance of the company: the company will realize some of its weaknesses and finally adjust promptly so that its high returns do not decline.
  • Employ more staff: the company should reorganize its structure. Performing staffs should be promoted and new staff to be recruited to help meet the demands of the ever rising numbers of customers. EasyJet should expect smooth running of the company’s operations as the punctuality will be addressed by the increased staff.

However, the company can incur more expenses in paying the promoted and the staff to be recruited. The overall result can be an increase in profits and the maintenance of the cost advantage.

To globalize a company, the management has to formalize its business with the prevailing business environment (Homann, Koslowski & Luetge, 2007). Easy jet must formulate proper strategies to curb the threats from its competitors. To realize proper globalization strategy, EasyJet should increase its networks, acquire more aircrafts and establish its business in more countries. It should do this while taking into account the cost of implementation while maintaining the cost of its services. For the first phase of globalization, the company should expect a slight decline in net profits since funds are required to pay for all the implementation strategies. The company should also expect stiff competition from the large firms. If the company achieves this goal, there will be an increased net profit and stable operation networks. In this regard, the company might undergo adverse losses associated to competitiveness if the management does not implement the strategies that are appropriate in the market. If the recommendations are implemented, there will be services of high quality due to the employment of new staff members to provide services efficiently.

Preparation of the forecasted ratios and projected financial statements

Projected ratios for EasyJet Company

Liquidity Ratios EasyJet (2013) Projected
Current Ratio 1.1 1.0
Leverage Ratios
Debt to Total Assets 0.69 0.61
Debt to Equity 0.62 0.59
Long-term Debt to Equity 1.29 1.15
Efficiency Ratios
Total Assets Turn 1.0 1.2
Profitability Ratios
Operating Profit 11.67% 11.53%
Net Profit 10.30% 8.40%
ROA 9.14% 9.08%
ROE 20.89% 19.86%

Table 11: Projected financial statements (EasyJet Annual financial report, 2013).

Projected Income Statement

Projected April 30/04/2016 30/04/2015 30/04/2014
Operating Revenues (£ Millions) (£ Millions) (£ Millions)
Scheduled revenues 5,248.50 4,965.00 4,863.50
Ancillary revenues 875.50 720.50 652.50
Total operating revenues-continuing operations 6124.00 5685.50 5516.00
Operating expenses
Staff costs -620 -580 -465
Depreciation -288.5 -260 -240
Aircraft rentals -350.80 -342.8 -280.7
Route charges -584.5 -460.8 -350.80
Maintenance and repairs -925.50 -856.80 -758.50
Fuel and oil -350.80 -327.80 -315.60
Total operating expenses -3120.10 -2485.40 -2410.60
Operating profit-continuing operations 3003.90 3200.00 3105.40
Other income/(expense)
Financial income 48.5 42.30 40.50
Finance expenses -98.8 -92.50 89.20
Foreign exchange gain or loss 2.00 -1.00 -0.50
Total other income or expenses -48.30 -52.20 129.20
Profit or loss before tax 2955.60 3147.80 3234.60
Tax or benefit on profit -65.20 -85.50 -86.60
Profit or Loss for the year-all attributable to equity holders of parent 2890.40 3062.30 3148.00
Basic: 105.20 85.50 72.50
Diluted: 103.00 71.70 62.00

Table 12: Projected Income Statement (EasyJet Annual financial report, 2013).

Balance Sheet

Balance Sheet: 30/09/2016 30/09/2015 30/09/2014
(£Millions) (£Millions) (£Millions)
Non-Current Assets:
Property, Plant & Equipment: 2,980.00 2,480.00 2,290.00
Intangible Assets: 467.00 456.00 468.00
Investment Properties n/a n/a n/a
Investments n/a n/a n/a
Other Financial Assets 30.00 26.00 25.00
Other Non-Current Assets 121.00 84.00 82.00
3598.00 3046.00 2865.00
Current Assets:
Inventories: n/a n/a n/a
Trade and Other Receivables: 230.00 238.00 198.00
Cash at Bank & In Hand: 2855.00 590.00 1,250.00
Current Asset Investments: n/a n/a n/a
Other Current Assets: 341.00 480.00 320.00
3426.00 1308.00 1768.00
Other Assets: n/a n/a n/a
Total Assets: 7024.00 4354.00 4633.00
Liabilities:
Current liabilities:
Borrowings: 90.00 132.00 158.00
Other Current Liabilities: 1,491.00 1,210.00 1,115.00
1581.00 1342.00 1273.00
Non-current liabilities:
Borrowings: 653.00 421.00 1058.00
Provisions: 285.00 326.00 366.00
Other Non-Current Liabilities: 208.00 65.00 62.00
1146.00 812.00 1486.00
Other Liabilities: n/a n/a n/a
Total Liabilities: 2727.00 2154.00 2759.00
Net Assets: 4265.00 2200.00 1874.00
Capital and Reserves:
Share Capital: 106.00 106.00 106.00
Share Premium Account: 658.00 660.00 652.00
Other Reserves: 52.00 44.00 18.00
Retained Earnings: 1250.00 896.00 895.00
Shareholders’ Funds: 2136.00 1,997.00 1,625.00
Minority Interests / Other Equity: n/a n/a n/a
Total Equity: 4202.00 3703.00 3296.00

Table 13: Balance Sheet (EasyJet Annual financial report, 2013).

Timetable for action

The agenda for action by the EasyJet executive team include:

Strategic objectives Measure of Target Duration Core Responsibility
Customers
  1. Satisfaction
  2. Promotion, Special packages
  3. Discounts
  1. Random Survey on the customers satisfaction projected at the rate of 90%
  2. Feedback from customers
Annual Evaluation Peter Duffy
(Group commercial director: customer, product and marketing)
Marketing plan
  1. Promotional and advertisement strategies
  2. Business partners
annual increase by 3% of the funding Annual evaluation Mike Campbell
(Group Director in charge of Transformation)
Globalization of the company
  1. Increase in networks
  2. Increase in number of Aircrafts
1. the strength of the company
2. available opportunities
Annual evaluation Cath Lynn
(Group commercial Director in charge of markets, networks and pricing)
Funding the implementation of the strategies
Strategic implementation of all projects
Year 1 at 10%, Year Two at 15% and Year three at 20%. Annual evaluation Chris Kennedy (chief Financial Officer)

Table 14: Timetable for action (EasyJet Annual financial report, 2013).

Procedures for strategy reviews and evaluation

There are several events that can influence implementation of the strategies outlined above. The events can either arise from external factors or within the business. The external events usually originate from the opportunities and threats (SWOT analysis) of the EasyJet Company. They include:

  • Competition from the low-cost carrier companies. The low-cost airline companies would make use of EasyJet’s weaknesses to capitalize on the low cost advantage that they offer.
  • Globalization by other airline companies. In an attempt to globalize the business, the more stable international airline companies would offer stiff competition to EasyJet that would in turn hamper the implantation of the company’s globalization strategy.
  • Low value of currencies. Upon a decline in the value of the currencies of respective countries, the company is set to face financials strains as was projected in the costs of the strategies’ implementation plan.
  • Decline in a country’s Economy. In the event of a decline in the economic standards of countries where EasyJet has its networks, the strategic plan’s implementation might be affected due to decreased demand, as well as the rise in operational costs.

Internal factors that may derail the implementation of the formulated strategies may originate from the weakness of the EasyJet Company. The internal factors are:

  • There may be a lack of strategic management system by the EasyJet Company. The management team assigned to ensure successful implementation of the strategies may not deliver up to the expectations specified in the strategies plan to improve the company’s performance amongst its competitors.
  • The employees’ morale may derail the implementation of the procedures when the EasyJet crew is not dedicated fully to ensure that the procedures are implemented.

How the company will address the above mentioned events

  1. The company should evaluate itself continuously through carrying out quarterly SWOT analysis.
  2. There should be employee motivation in order to boost their morale and increase productivity.
  3. The decline in the countries’ economies can be addressed through formulation of policies and frameworks ensuring that the operations of EasyJet are within the economic standards of the respective countries.
  4. The company may reduce the number of flights to regulate the decrease in demand.
  5. The assigned management team should undergo frequent trainings to keep it updated on the prevailing operational and technological changes.

References

Alkhafaji, A. & Aslin, R. (2013). Strategic management: Formulation, Implementation and Control in a dynamic environment. New York: The Haworth Press.

EasyJet Annual financial report. (2013). Web.

Current ratios from EasyJet. (n.d.). Web.

Current strategic plan for EasyJet. (n.d.). Retrieved from www.easyjet.com.

David, F. (2009). Strategic Management Concepts: A Competitive Advantage Approach. London: Pearson.

EasyJet annual Report. (2011). Web.

EasyJet Portfolio. (2012). Web.

Homann, K., Koslowski, P., & Luetge, C. (2007). Globalization and business ethics. Aldershot, England: Ashgate.

Management Paradise.Com. (2010). Web.

Maxi-Pedia: IFE Matrix (Internal Factor Evaluation. (2014). Web.

Morning Star. (2014). Web.

New Aircraft Models by Airbus. (n.d.). Web.

Report about Easyjet: Analyses about Industry, Market, Competition and chosen strategy. (2012). Web.

Research Matic. (2013). Web.

Shark, T. (2014). AirAsia: “Now Everyone Can Fly”. Web.

Strategic Management Insight. (2013). Web.

Value Chain of EasyJet Airline Company. (2012). Web.

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