The business has also enjoyed an increase turnover and trading profits resulting in continuous substantial growth in underlying profitability over the last 7 years (see table 1). The global, interconnected nature of the aviation industry means that airlines, lessors, MROs and suppliers are highly vulnerable to external factors out of their control. The globalization is also another factor influencing which build up the air traffic as lifelong. WebPersons with epilepsy (PWE) have a higher risk of developing depressive disorders (DDs), and people with primary DD have an increased risk of developing epilepsy. Enabling risk management through a Being low cost, driving efficiency and investing only where it matters most to our customers and our people. Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. Kotze compared Lundgren to his rival CEO, Michael OLeary, who runs Ryanair and has a reputation for being merciless at containing expenses and being generally combative. Still, the connection was critical for airlines. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. Product Development. 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. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. Haji-Ioannou founded EasyJet in 1995, eventually using it as a springboard to create of an Easy-branded empire that extended from car rentals and pizza delivery to a hemp business. A prime example of this was the subsequent takeover of Go by EasyJet. This involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. As hard as it has tried to inoculate itself against the pressures of the pandemic and to convince passengers it will be safe to fly, its fate remains up in the air, subject to unexpected and unwelcome turbulence. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. EasyJet had a long-term contract with the aerospace giant that would require it to take delivery of more than 100 new planes, including at least 55 by 2024. This will provide an evaluation of the external business environment in which the company operates. Terms & Conditions. Healthcare workers were exposed to this highly infectious virus during the pandemic and suffered several social and psychological consequences, such as anxiety, psychological distress, and burnout. The company carries out TECHNICAL Changes in retailing methods as such ticket sales via the Internet is now a common place in air travel, passengers receive an email containing their travel details and booking reference when they book online. The Essay Writing ExpertsUS Essay Experts. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. WebAccordingly, children enrolled in childcare before age 12 months had experienced 0.5-0.7 more infections at age 6 years (in total 4.5-5.1 infections) than peers enrolled at age 3 years, differences that persisted throughout adolescence. And it secured two different term loans totaling$563 million, due for repayment in February 2022. In mid-May 2020, the company revealed it had been hacked. EasyJets no frills strategy does not only mean a cut in Cabin crew and denial of food, but also allows for a faster pre-flight preparation, thereby reducing the time grounded as well maintaining fare. Taken together, those restrictions mean that summer 2021 is looking increasingly in doubt. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. Easyjet are situated extremely in strategic option 1 ( low monetary value, depression added value ) The eight nucleus strategic options are: 1. Statista assumes no EasyJet is forever trying to attain a cost level that is low relative to its competitors. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. 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. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. By mid-May, most of the major European nations had administered first doses to just over a third of adults amid critical vaccine supply shortages and concerns about rare but dangerous blood clots linked to AstraZenecasand Johnson & Johnsonsvaccines.Without a brisker vaccination pace, a third wave of infectionskeeps threateningto take hold in Europe. When the risks are specific to a certain activity the risks will be managed, and maintained Its not clear what role Haji-Ioannous pressure played in this decision. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. (The others are rival budget airlines Ryanair and Wizz Air, as well as Southwest Airlines in the U.S., on which EasyJet originally based its business model. Furthermore, a lifetime history of D Risk 2: Geopolitical instability. Given that they were doing almost nothing before, there is a big opportunity to move from zero to something, he says of the holiday tours. The linkages with the value chains of channels and customers which are the essence of EasyJets capability and which can protect its market leadership and maintain cost leadership competitive advantage from competitors. Continuing to deliver strong productivity, easyJet Airline Company Limited Registered in England with Registered number 3034606; subsidiary of easyJet plc Registered in England with registered number 3959649 Registered Office: Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF, Additional ESG information - Financial Year 2021, Directors' interests and substantial interests. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Under pressure from airlines, it later lifted this policy for some European destinations, only to reimpose it as infection rates soared again in Spain and France. The first step in the risk analysis process is identifying risks you think could affect your project. The development of the next generation aircraft will also lead to technological opportunities in term of fuel efficiencies. 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. When EasyJets board did not accede to his demands, Haji-Ioannou carried through on his threatrequesting a special meeting to vote on the removal of board member Andreas Bierwirth, a former Austrian Airlines and Lufthansaexecutivewho Haji-Ioannou termed a friend of Airbus. When the board tossed out this request on a technicality, Haji-Ioannou resubmitted his call and asked for the removal of the chief financial officer, Andrew Findlay, too. Competitive pressure. The UKs second-largest union has slammed easyJet flight cancellations in a scathing email obtained by Euronews. We will start by looking at strengths: EasyJet serves diverse ranges of European routes with principle activities in both Leisure and business markets, offering 60 key European routes. Over time, a brand may experience enough negative interactions that its reputation is placed into a vulnerable position. Improving scheduling processes to drive crew productivity, also benefitting from the seasonality of our network. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. 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. 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. Our academic experts are ready and waiting to assist with any writing project you may have. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. 3. After rejecting the bid, easyJet plans to raise 1.2 billion pounds ($1.7 billion) to stay in the race by funding growth at airports. 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. 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. Increasing automation driving self-service capabilities for customers. A focus strategy can be implemented to resolve these issues as well. But EasyJet could steal an increasing amount of market share from the legacy full-service carriers. The findings in this The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Market Development. Also, only one type of aircraft is used, in order to minimise maintenance costs. 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. The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. Table below provides an analysis of EasyJets sales revenue and profitability ratio since 1998. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. In an interview with LondonsEvening Standard newspaper in January, Lundgren sounded down, admitting he missed frequent trips to the Spanish island of Majorca, where he owns a house and where he and a friend also own a recording studio. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. Given EasyJets cash burn, it needed to raise more moneyand quickly. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. EasyJet is known for its low-cost competitive pricing. Lundgren says he likes the site because it keeps airlines honest: When customers can see that their inbound aircraft hasnt even taken off from its previous destination yet, theres no point in feeding them the bad news with an eyedropper, as airlines traditionally had done, gradually announcing slightly longer delays. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Barton, EasyJets chairman, tried to put the episode behind the company, saying publicly that he hoped EasyJet could reengage constructively with its founder, but that the negative headlines and publicity has placed unnecessary pressure on a dedicated management team and negatively impacted the reputation of this great British and European brand. Indeed,though Lundgrens management team had won the showdown, there were signs of damage. Background Coronavirus disease-19 emerged in December 2019. They fly into second- and even third-tier airports, where they control a dominant share of the gates and can drive tough bargains on any airport fees and charges for ground crews and baggage handlers. Improving CSAT across the whole customer journey. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. And, finally threats of any takeover bids from national airlines. In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. Investments in assets are also key consideration in value creation in that consideration of the extent to which assets and working capital are being utilised. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. But with new, more infectious variants of COVID-19 spreading rapidly in Europe, in October renewed lockdowns were imposed across many parts of the U.K. and from Helsinki to Tel Aviv. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. Budget airlines that rely on the leisure market make most of their money from April to August. 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. Strategic risk management is the process of identifying, quantifying, and mitigating any risk that affects or is inherent in a companys business strategy, strategic objectives, and strategy execution. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. 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 Our mission to make business better is fueled by readers like you. Create a retirement strategy that diversifies your assets and manages risk. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. We are seeing significant benefits already from operational resilience processes and predictive maintenance. But these savings barely stanched the arterial bleed of cash gushing from the companys coffers:In 2019, the airlines operations had generated more than $1 billion in cash. Most of Europe was in the yellow category, requiring 10 days of self-isolation when coming back, and with the U.K. government still advising against leisure travel. Organizations continue to develop new applications in or migrate existing applications to cloud-based services. Finally, EasyJet has sustained its price-based advantage by focusing on market segments where low fares are critical and valued by customers. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. All work is written to order. Bills will pile up, suppliers will need payments, and your employees will be expecting their salaries. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. But EasyJets contract required it to pay the aircraft maker at least $6 billion through 2023a sum considerably greater than the airlines entire current market WebThere are two types of strategies taken in account in the Easy jet such as differentiation strategy which is the strategy in which the industry has the particular rules and The threats are in terms of fines and rise in cost of raw materials. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. It helps to remember that while you cant control what happens to you, you can always control your response. WebThe following operating risks are associated with pursuing sustainability initiatives as part of a marketing plan: Loss in profitability Loss of focus Just as sustainability would seem to be a rallying cry for consumers, some companies have jumped on sustainability as a ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. Advantages of Choosing In-House. Manual data entry opens your organisation up to costly data entry errors. WebeasyJet is aiming to become the worlds most data-driven airline. Web1) Economic Risks. And Lundgren, who took overin late 2017, had big plans to build on that differentiation with potentially lucrative new ventures, including vacation packages, more benefits for business, and a new loyalty program. Please do not hesitate to contact me. Adjust your investments to The U.K. requireseven those returning from green countriestake COVID-19 tests before boarding a plane to return to the U.K. as well as within two days of returning. But at the same time, Haji-Ioannou and his family sold off a portion of their shares, bringing their total holdings to less than 27% of the company by May 2020. Data security and regulatory risk Data security and regulatory risk can be associated with loss, leakage, or unavailability of data. The way the report has classified the risk is whether the risk is a generic risk that will affect the whole industry of whether the risk is specific to the company. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. Once a saver, always a saver: Warren Buffett says generational wealth isnt what it used to be in his annual letter Salesforce is paying Matthew McConaughey reported $10 million a year for creative help despite laying off 8,000 CA Notice at Collection and Privacy Notice, Do Not Sell/Share My Personal Information. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. Potential negative outcomes include bad publicity and a Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. Finally the threats from the suppliers bargaining power, this is very strong in the airline industry for two reasons, one is highly skilled labour can command a very favourable terms and second is the price of oil. 8. 1 or No. That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. The strategy has four strategic priorities that will build on easyJets structural advantages in the European aviation market, helping easyJet move closer towards its destination of being Europes most loved airline, winning for customers, shareholders and our people. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. And while optimism about leisure travel in Europe is slowly rekindlingthis week, the U.K. announced a resumption of international travel to a limited number of destinationsEasyJet still faces plenty of potential turbulence, as the likelihood of a robust summer season recedes. 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. Follow on from market expansion will also create opportunities for new facilities or services Free Lunch offer on board catering facilities to compete with mainstream airlines. A lack of real-time reporting makes it easy to miss the signs of an approaching catastrophe. The first is to reduce the bottom line costs of operation (low cost strategy) and the second is to increase the value of the organisation and its reputation to customers, so that they will demand more or pay more for what they receive (differentiation strategy) (ACCA Paper 3.5 (2001)). Haji-Ioannou insinuated that this was evidence of the corruption hed long alleged. Objectives To assess the psychological distress, anxiety, depression, coping strategies, The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. Are you interested in testing our business solutions? To what extent does EasyJets concentration on EasyJet cost efficiency is achieved in a variety of way as shown in the following diagram: The success of low-fare (cost) strategy is primarily dependent on the maintenance of a low cost base. What happens to EasyJet, which had been one of the strongest players in the airline industry before COVID-19, could presage the entire sectors fate: If EasyJet cant come back strong, what airline can? To enjoy unlimited access to our journalism, subscribe today. EasyJets decision to use its aircraft as collateral for loans it needed to get through the pandemic means that its cost base will be higher going forward, once debt service is included in the calculations, says Savanthi Syth, an airline analyst for brokerage Raymond James & Associates: Theyve traded liquidity for today in exchange for their aircraft ownership costs going up in the future.. Previously it used telesales and now sales are through e-commerce web site. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). Whats more, it included maintenance and avionics support for EasyJets existing fleet. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. The management of the element of working capital. Findlay said only that after almost six years with EasyJet, it will be the right time to pass the financial reins to someone who will help take EasyJet into its next chapter, and Lundgren said he was sorry to see [Findlay] leave.. Many of EasyJets competitors in Europe are national flag carriers: Air France, KLM, Lufthansa, SAS, Iberia, TAP Air Portugal, Swiss Air, and British Airways. Therefore, capability is strongly related to the way that resources are used and controlled. Another major industry wide threat is the volatility in price of fuel Oil price record high of $53 a barrel. this was the headline in the business pages of all the newspapers last November. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs 2 airline by market share for each airport it serves. But nothing has been normal for EasyJet since March 23, 2020. But the training center is the only part of EasyJets operation at Gatwick still humming. data than referenced in the text. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. Finally, opportunities may also exist in the area of innovation and alliances, how about a joint venture scheme with Ryanair to maintain and enforce the low cost competitive advantage. easyJet is building a network of key cities, broadening their presence across Europe. 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. Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. It was enough to make any airline CEO play the blues. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. Worse, the company had discovered the hack back in January but hadnt notified people whose credit card details had been accessed until April, and was only now letting other customers know. Focus on seasonality improvements such as season contracts and bases. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. 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. liability for the information given being complete or correct. Focusing on improving the control and decision making across operations. He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. A PESTEL analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well. That move also diluted Haji-Ioannous stake in the companys stock from more than 34% at the beginning of 2019to just under 30%, making it easier for EasyJets board to ignore the demands of its querulous founder. Yield management is a form of risk management and therefore, adds value. Making it easy, enjoyable and affordable to travel again and again for business and holidays. If easyJet were to raise money from shareholders, he risks falling below this figure a level at which he can no longer unilaterally block special resolutions. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. Having considered the possible future opportunities what are the potential threats that EasyJet needs to bear in mind? Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. Lundgrencomplainsthat the British governments travel rules remain too onerous. POLITICAL Following the European deregulation of commercial aviation, a fleet of low cost carriers are reshaping the local airline landscape. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. In 2020, it transported a Low price/low added Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. At the same time that it was offloading planes to raise cash and placing others into long-term storage in boneyards, the company still took delivery of 14 brand newAirbus A320 and A321 Neos. Balance your retirement plan with your other financial goals. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. Before a new business starts making profits, it needs to be kept afloat with money. Therefore, the low cost strategy is the ideal strategic fit to its environment. The primary weakness is the perception of low quality low cost can also be seen as low quality service than that offered by the established national airline i.e.