EasyJet Company

Introduction The purpose of this report is to define key problems and critical issues of easyJet, discuss McKinsey’s 7S framework, analyse driving forces, external environment and the position of the company comparing with competitors.Advertising We will write a custom essay sample on EasyJet Company specifically for you for only $16.05 $11/page Learn More Key Problems and Critical Issues This company has to consider both internal and external problems, for instance, the management of this company faced challenges to control internal management system and implement a strategic plan like motivate the employees, changed the status from private to public, use subcontractors, maintain a relationship with directors and customers. However, a reporter Sunday Times investigated availability of its low fares and stated that easyJet theoretically asked low price, but practically the customers have to pay more while the price of the services depends on many factors including time factors (earlier flight was much more expensive), taxation policy, unrealistic decision of the management and so on. SWOT Analysis Strengths Weaknesses Strong brand image in the airline industry; It has enough financial capability to expand business in a new route; Outstanding customer service; Online service and e-commerce facilities; Easyjet is able to offset high fuel costs; Loyal customer base Decrease profit for the global recession high remuneration to their employees and directors; Unusual crisis, for example, IT security and fraud risk, Opportunities Threats It has the opportunity to become a market leader in the low-cost aviation industry; Increase the number of routes Long-term objectives to build a strong position in short-haul route while the low-cost market could grow by as much as 300% by 2004; Extreme competition from other low-cost carriers and Europe’s major carriers; Internal challenges for entry of potent new co mpetitors; Legal barriers and environmental problem; Table 1: SWOT analysis of easyJet Source: Self-generated McKinsey Seven 7S Framework for easyJet Strategy: The core organizational strategy of the company is to offer highly competitive fares and sustain in the market by competing with existing and new carriers; Systems: the management system has considered both manual and technological factors; however, easyJet is fully equipped with IT facilities; Shared Values: It consists of three essential elements culture, believes and values; easyJet has organized several programs like workshops, and simulations to explain its objectives and develop a good relationship with employees and other shareholders; Skills: To develop the employee’s performance, it arranged training while it has many young and relatively inexperienced employees; Style: Stelios was a charismatic leader who struggled to shape the business though he followed the autocratic leadership style to implement maj or decision; Staffs: Retention of the employees is the problem while competitors recruit the employees of easyJet providing a higher salary, for instance, British Airways hired away its lawyer providing  £500,000 per year; Structure: easyJet follows a comparatively complicated organizational structure where CEO controlled managers of all departments along with subcontractors, outside vendors. Driving Forces It is notable that although there are certain deficiencies among the workforce of easyJet, its internal-forces are still quite impressive because of expertise and proficiency of the top management and the CEO (although the CEO is somewhat authoritarian and does not bother much about directors’ advises); so, the forthcoming position of easyJet could be optimistic; however, the external forces are analysed below: Bargaining Power of Suppliers: the key suppliers like Boeing and Airbus have moderate to high bargaining powers Bargaining Power of Customers: the customers in this industry respond greatly to raising fares as their switching costs are relatively low New Entrants: the barriers to enter the market are vast amounts of capital investments and strict laws, which makes it tough for new entrants to start-up and sustain Threat of Substitutes: there are high threats of substitutes Competitive Rivalry: there are strong rivalry from other low-cost carriers Analysis of Statute Vs Competition:Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More To protect the flag carriers and national businesses, most countries enacted laws to prevent competition; nevertheless, in 1992, the EU passed legislation to deregulate the industry, which meant that all businesses faced extreme rivalry. Enactment of such statute became a huge problem for luxurious and expensive flag carriers like British Airways, because people now had a choice to travel by low-cost carriers like easyJet , go, or Ryanair; consequently the competition in the industry became very intense; conversely, low-cost carriers from different European nations started competing by offering economical prices to attract customers. Environmental Scanning Political Factors Governmental policies like unfriendly taxation or enactment of unfair autocratic laws may pose problems for the players; however, the EU ensures that such actions are prevented and the member states are compliant with the EU-laws. Economic Factors The industry is recovering after the global financial crisis and new opportunities are generated for low-cost carriers like easyJet and Ryanair Socio-Cultural Factors The market players of the industry have incorporated their own corporate social responsibility guidelines in order to make sure that they are conducting ethical businesses and contributing to communities. Technological Factor The aviation industry is heavily reliant on the uses of technology and so the market players need t o keep up with technological advancements in operations and new aircraft models. Environmental Factor The European aviation industry needs to strictly comply with all the environmental laws and make sure that the emission of CFCs is lower; moreover, companies like easyJet need to use fuel-efficient engines.Advertising We will write a custom essay sample on EasyJet Company specifically for you for only $16.05 $11/page Learn More Legal Factors Legislation plays a major role in the industry; in the 1990s, the European airline industry was greatly regulated, and individual nations wanted to protect their flag carriers; however, in 1992, the EU passed law to deregulate the industry, which meant that all airline businesses were open to competition; as a result, easyJet now experiences free market competition. Where Is Easy Jet Today Whilst 60 out of 80 carriers (which were established in the same decade) are already bankrupted, easyJet is still in a leading p osition in the industry; moreover, today, deregulation provided easyJet access to new routes, strengthening its position financially, for example, it has about 100 scheduled flights each day using a fleet of 20 Boeing 737s and serving 26 destination. Evaluation of Range of Alternative Courses of Action Alternative Solutions Evaluation Criteria for Strategic Alternatives Adopt a situational approach of leadership This report recommends easyJet to consider situational leadership style instead of autocratic approach as it does not follow any specific style of leadership rather leader takes a decision considering present position of the company Stelio had taken the majority of the decision as per his knowledge and ethics; therefore, he not intended to refund the customer and said his finance directors that you were pulling my hair out, which reduced the perception of the customers and demoralize the management team; It would be possible to increase market share in the European sh ort-haul routes; This policy complied with the vision of easyJet Restructuring Pricing Strategy including refund policy It would help the company to create a strong customer base in certain markets; so, by offering further low fares, easyJet could capture more market share Revenues may decrease anytime due to adverse economic condition; therefore, the restructuring pricing strategy would provide a backup, so that the customers remain loyal even after diminishing purchasing powers Operating at economies of scale could be one of easyJet’s core competencies, so, capacity utilization development by reducing production cost would assist the company to offer low price The growth of the industry could be reduced due to the Eurozone crisis; so, reforming pricing strategy is the only solution to sustain as a market leader Adopting this strategy has minimal financial risk; however, the European Commission could impose fines for breaking competition law in the EU zone Improve motivation and focus on staff retention Advisors team feared Stelio’s entrepreneurial management style and they believed that CEO should change his approach to motivate the employees; thus, strategy complied with the vision of the company; To retain employees, they need to provide competitive remuneration along with facilities; Implementation of this strategy may create any serious financial problem; The CEO and top-management should appreciate a good idea of other members; Table 2: Strategic Alternatives Source: Self-generated Recommendation and Conclusion After evaluating the alternative courses of action, it could be said that the best recommendation for the company would be to implement the alternative of adopting a situational approach of leadership so that the business can better perform in certain areas, as suggested in the above evaluations. However, easyJet should remain cautious in undertaking strategies and in decision-making to make sure that there is an ac tive revenue generation even during the Eurozone crisis. Works Cited Branson, Richard. The Web’s Favourite Airline. 2000, International Institute for Management, Switzerland This essay on EasyJet Company was written and submitted by user Emiliano Gould to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.