Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. This is intensified as a result of little or no differentiation in the service offered. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. Therefore, the low cost strategy is the ideal strategic fit to its environment. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. After listing the risks and putting them in a risk matrix, the report will then aim to explain how the risk will affect easyJet and justify the position of it in the risk map. WebSome compliance risks are specific to an industry or organizationfor example, worker safety regulations for manufacturers or rules governing the behavior of sales representatives in the pharmaceutical industry. This will provide an evaluation of the external business environment in which the company operates. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Although mostly private now, many of these airlines were once state owned, and some still have not insignificant government stakeholdings. The federal government recently made cloud-adoption a central tenet of its IT modernization strategy.An organization that adopts cloud technologies and/or chooses cloud service providers (CSP)s and services or applications without A focus strategy can be implemented to resolve these issues as well. )The crisis has also posed complications for the 54-year-old Lundgren that his competitors dont face, including some particularly unwelcome excess baggage in the form of Stelios Haji-Ioannou. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. Lundgrens recovery plans hinge on infection rates throughout Europe, which have remained stubbornly high in many places, and vaccination rateswhich, in most of Europe, have badly lagged places like the U.S., U.K., and Israel. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. But EasyJet could steal an increasing amount of market share from the legacy full-service carriers. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. Deliver strong on-time performance, which is consistent with the focus on slot constrained, congested airports. Making it easy, enjoyable and affordable to travel again and again for business and holidays. EasyJet may be especially good at outbound logistics lined to its marketing and sales operations and supported by its technology development. The focused network strategy can be summarised as follows: easyJet recognises that the continued evolution of our product portfolio represents a significant opportunity to build on spend per customer, delivering enhanced sustainable returns. Protecting and building brand awareness and consideration. It was enough to make any airline CEO play the blues. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. Porter through the use of the value chain illustrates how resources should be utilised to enhance least-cost production or differentiation strategies (the generic strategies suggested by Porter). Highly utilised fleet of aircrafts that are large, modern, efficient and relatively environmentally friendly. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. It also offers passenger a few more extras, such as allowing them to check in at the airport without charge (Ryanair charges passengers who dont check in online) and a loyalty program that confers priority boarding privileges. With Ryanair maintaining high margins despite reducing yields through strict cost management. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. The customers of EasyJet have been using the Internet for making bookings. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Also, only one type of aircraft is used, in order to minimise maintenance costs. easyJets strategy will seek to continue to lead the market in sustainability, working with our partners to achieve our Net Zero Roadmap and the decarbonisation of the aviation industry. The attackers stole more than 9 million customers e-mail addresses and travel details and also accessed credit and debit card details of more than 2,200 customers. They have focused on expanding into new markets in Eastern Europe. However, by year 2000 it has not only managed to survive but also increased its market shares and assets of aircrafts to 74 and servicing 105 routes and carrying over 20 million passengers a year. Appendices 1. EasyJet came into the pandemic in better shape than many airlines: It was profitable and had a strong balance sheet, with relatively low levels of debt. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. Product Development. But the training center is the only part of EasyJets operation at Gatwick still humming. Procurement and firm infrastructure as a support activity does not add much extra value. Many full-service airlines are locked into hub-and-spoke flight networks that limit their scheduling flexibility, BCGs Molenaar says. Still, it wasnt spared from the industrys general carnage. Firstly, threats in terms of new & existing competition. 8. This results in a very strong competitive rivalry in the industry. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. EasyJet currently has two suppliers, Boeing and Airbus. 100 per cent direct selling of fares; over 90 per cent of sales are online. This will help the companies decision makers understand where the organisation is now. Porter explains that there are five forces inherent in a market, which will jointly determine the intensity of competition and profitability of EasyJet and the airline industry. The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. Ryanair uncompromisingly fought its way into the market with an aggressive pricing strategy. Strategies are largely determined by the extent to which they deliver best value to both customers in terms of being competitiveness in the marketplace (leading low cost airline) and also to provide value to shareholders. When rival European budget carrier Air Berlin went belly up in 2017, Lundgren spent$48 millionto buy its operations at several German airports and take on 25 of its airplanes. Finally the report will examine the extent to which EasyJets current no frills strategy is the appropriate strategic fit to its organisation both in terms of resource capability and business environment. EasyJet also enjoys internal strengths in its operations in terms of efficient use of airports by reducing turnarounds to 30 minutes and below, EasyJet can achieve extra rotations on the high frequency routes. Such lower costs benefit EasyJet initially as innovation is rewarded. In 2020, it hemorrhaged the same amount. WebThere is one main reason which influences these economic factors is the recession in the Easy jet. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. Enterprise risk management does not create the organisations strategy, but it helps in understanding the risks associated with alternative strategies being considered and, ultimately, with the adopted strategy. Next we will use Porters Five Forces analysis of the industry and the increasing threat of other low-cost carriers (Ryanair, bmi baby etc) and also threats from the flag carriers (British Airways, Air France, KLM, Lufthansa etc). For the battered airline, 2020 couldnt end soon enough. To enjoy unlimited access to our journalism, subscribe today. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. Given the fact that the company offers And at least one key holiday localeTurkeywound up on the red list, meaning those traveling there would have to quarantine in a hotel for 10 days. Adjust your investments to Those airlines are more dependent on business travel, which many analysts forecast might not fully recover from the pandemic until 2024if it ever recovers at all. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. Budget airlines that rely on the leisure market make most of their money from April to August. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Ties are banned except for pilots! Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. Ive always said the four core markets are where we want to put our focus on U.K., Germany, France and Italy, he told the World Travel Market conference in 2018, shortly after the Air Berlin deal concluded. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. Not that he was going away. It now owns just over half its fleet, down from 70% in 2019and six of every 10 planes it does own have been pledged as collateral against its loans. 2023 Fortune Media IP Limited. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. Since March 2020,European governmentshave provided more than$32.2 billion in bailouts to the airline industry,through a mix of grants, loans, and debt-for-equity deals, according to a report from HSBC. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. We will consider the value chain for EasyJet in more detail later in our discussion. 1 Based on share price of 6.62 at 30 September 2021 Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. The concept of the value chain is particularly useful in understanding an organisations strategic capability since its concentrates on value activities and the linkages between activities rather ran just resources. This level of disruption and deterioration of the operation cannot continue," the email reads. If it failed to do so, he threatened to call a vote to remove one director from the board every seven weeks, until the board acquiesced. When the pandemic struck, Haji-Ioannou decided to renew his pressure to convince the airline to abandon the purchaseultimately mounting a proxy campaign to remove directors from the board. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. The idea of remote working can also result in co-ordination and control weaknesses. Also, only one type of aircraft is used, in order to minimise maintenance costs. Webcomputing risks Let us look at five different types of risks and how they apply or vary by cloud deployment models. The54-year-old Greek-Cypriot entrepreneur hasnt had a formal management role in the airline since he stepped down as chairman in 2002, but he remained a major shareholder, owning more than a third of the company before the pandemic hit. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. Potential threats in terms of changing social trends like holidays outside Europe (many now want to experience the eastern cultures and travel to holiday destinations like China and Japan) and also travelling via the EuroStar to Paris etc. The globalization is also another factor influencing which build up the air traffic as lifelong. This time, he succeeded in scheduling a showdown vote for May 22, 2020. In mid-May 2020, the company revealed it had been hacked. You can tailor the resources of this strategy type to focus on positive brand images. An important part of easyJets strategy is to operate a modern fleet and based on the current business model, easyJet holidays is on track to meet the medium-term target of 100m+ PBT. The best of the best: the portal for top lists & rankings: Strategy and business building for the data-driven economy: Commercial airlines net profit in Europe 2013-2022, Commercial airlines change in passenger traffic in Europe 2013-2022, Number of passengers uplifted by United Kingdom airlines 2013-2021, British Airways - worldwide revenue 2010-2021, Leading airlines in Europe based on passenger numbers 2021, Net profit of commercial airlines in Europe from 2013 to 2022 (in billion U.S. dollars), Commercial airlines EBIT in Europe from 2013-2022, Earnings before interest and taxes (EBIT) margin of commercial airlines in Europe from 2013 to 2022, Year-on-year passenger traffic change of commercial airlines in Europe from 2013 to 2022*, Turnover of the air transport industry in the United Kingdom 2008-2018, Annual turnover of the air transport industry in the United Kingdom (UK) from 2008 to 2018 (in million euros), Total number of passengers uplifted by airlines based in the United Kingdom (UK) from 2013 to 2021 (in millions), Worldwide employment by registered airlines in the United Kingdom 2002-2020, Number of people employed worldwide by UK-based airlines between 2002 and 2020, Volume of turbine fuel consumed in aviation in the United Kingdom (UK) 2000-2020, Amount of aviation turbine fuel consumed annually in the operation of aircraft in the United Kingdom (UK) between 2000 and 2020 (in million metric tons), Annual revenue of easyJet plc from 2009 to 2021 (in million GBP), EasyJet plc: annual revenue by region 2018-2021, Annual revenue of easyJet plc from 2018 to 2021, by region (in million GBP), Annual operating expenses of easyJet plc from 2009 to 2021 (in million GBP)*, Annual earnings before interest, taxes, depreciation, amortization and rentals (EBITDAR) of easyJet plc from 2009 to 2021 (in million GBP), Annual operating profit of easyJet plc from 2009 to 2021 (in million GBP), Annual net profit of easyJet plc from 2009 to 2021 (in million GBP), Number of passengers carried by easyJet 2009-2021, Number of passengers traveling with easyJet from 2009 to 2021 (in millions), Passengers uplifted by EasyJet in UK 2008-2020, Number of passengers uplifted by EasyJet Airline Company Ltd in the UK from 2008 to 2020 (in millions)*, Number of seats flown on easyJet flights between 2011 and 2021 (in millions), Easyjet passenger transport volume 2013-2021, Passenger transport volume of Easyjet from 2013 to 2021 (in million revenue passenger-kilometers), EasyJet's passenger load factor 2009-2021, Passenger load factor of EasyJet between 2009 and 2021, Distance flown by EasyJet's passenger aircraft worldwide 2008-2020, EasyJet Airline Company Ltd's passenger aircraft kilometers flown worldwide from 2008 to 2020 (in million kilometers), Leading airlines in Europe in 2021, based on passenger traffic (in millions), Leading European airlines based on revenue 2021, Leading airline groups in Europe in 2021, based on revenue (in billion U.S. dollars)*, Liquidity balances of leading European airline groups 2019, European airlines with best liquidity as a share of 2019 revenue*, Liquidity equivalent days of revenue of the leading European airline groups 2020, Liquidity equivalent days of revenue of the leading European airline groups in 2020*, Number of passengers uplifted by United Kingdom airlines 2021, Leading airlines in the United Kingdom in 2021, by number of passengers uplifted (in millions), British Airways Plc's worldwide revenue from FY 2010 to FY 2021 (in million GBP), British Airways and subsidiaries: number of passengers carried 2011-2021, Number of passengers traveling with British Airways and its subsidiaries from 2011 to 2021 (in 1,000), Annual revenue of Ryanair from 2010 to 2022 (in million euros), Number of passengers carried by Ryanair 2011-2022, Number of passengers traveling with Ryanair from 2011 to 2022 (in millions). This has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution, processing and reconciling tickets. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. Balance your retirement plan with your other financial goals. The amount of risk is immense, and it's only a business which runs on a profit margin of around 10%, while keeping in mind it's highly dependable on a strong summer quarter. And they are relentlessly focused on keeping per-seat costs down. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. This involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. Easyjet are situated extremely in strategic option 1 ( low monetary value, depression added value ) The eight nucleus strategic options are: 1. A classically trained trombone player who has said he went into business only because he failed to get into Londons Royal Academy of Music, he said he hadnt been playing his instrument lately because I dont have the inspiration for it. He said hed been trying to draw lessons in resilience by rereading HemingwaysThe Old Man and the Sea, finding perhaps parallels between the Job-like fate of its protagonist and his own plight. As funding from operations are clearly a major contributor to value creation. A strong and visible brand to create a high level of awareness with consumers. Legal and regulatory change. Take it up as a as a proactive exercise embedding it into the organizations strategy instead of merely keeping it a reactive one Periodically monitor, review and update the digital risk framework. 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