An assignment on case analysis

Submitted To
Sadia Afroze Associate professor Dept of Accounting & Information Systems University of Dhaka

Submitted By Name
Md. Faruk Hossain Md. Aslam Hossain Ripon Biswas Md. Azizul Hoque Ummey Honey Dil Nur Jahan

Id
13061 13010 13070 13048 13113 13142

Date of submission: 30th July, 2012

Easyjet- The EASY Way to Succeed

Question#1: With the acquisition of Go, Easyjet became the biggest low-cost airline in Europe. What is the mission of Easyjet? Analyze the growth of Easyjet as a successful low-cost airline and its business model. Also discuss the nature of the competition faced by Easyjet and the competitive advantages of the airline over rivals.

Answer: Mission of Easyjet

Easyjet became the biggest low cost airline in Europe after it acquire Go. Easyjet has the following missions Providing safe, good value and point to point air services to the customers. Offering a consistent and reliable product and fares that are attractive to the leisure and

business markets on the European routes.

Growth of Easyjet as a successful low-cost airline

Year March: Easyjet was incorporated as a European airline operator. 1995 Growths

October: The first flight bookings were opened at the Easyjet telephone booking center in easy land. November: Two inaugurated flights flew from London to Glasgow and Edinburgh

1996 1997 1998

Delivery of first wholly owned Boeing Aircraft taken First international flight between London and Amsterdam started. The company launched its first official website (www.easyjet.com) The first booking accepted The company bought 40% of Swiss charter operation and renamed it as Easyjet Switzerland. The company formed Easygroup

1999

Stelios started EasyEverything. April: A car venture named Easy Rental started

2000

November: The company listed in London stock exchange and 25% of the stock was sold to the public.

2002 2003 Next

Stelios retired from the post of chairman of Easyjet to peruse his other interest. Easycinema was started Other ventures i.e. Easypizza, Easycruise, Easybus etc, were in pipeline.

Business Model of Easyjet

The business model used by Easy jet is known as low-cost hero. Easyjet have adapted this model for the European market through further cost-cutting measures. High aircraft utilization, quick turnaround times, charging for extras and keeping operating costs low are the key point of this business model.

Nature of competition and competitive advantage of Easyjet

The company is operating in low cost industry and the services provided by the competitors are almost same. For this reason, the rivalry among the competitors is intense in the industry. So, the company has to face intense competition in the industry. The competitive advantage of a company can be termed as the ability of the company perform any thing well than that of its competitions. Easyjet has several competitive advantages like low cost ticket booking facility over the internet, new fleet, opportunity of information sharing, unique brand positioning of the company in the market etc.

Question#2: Easyjet was able to offer low fares because of the operational advantages it enjoyed. Discuss Easyjets operational model with special emphasis on the efficacy of a no-frills approach. To what extent were the two strategic imperatives of Stelios achieved and how did they contribute to the operational advantages of the company.

Answer:

Operational Model of Easyjet

To enable the company to charge lowest possible fare for the services, the operational model of Easyjet provides guidelines for keeping the cost to a minimum. The company has the following operational policies to adopt low cost strategy:

No Food on Flight:
From the customer feedback, Easyjet identified that food served to the passenger on the flight leads to the major portion of expenditure per passenger. From the response of the passenger, it is identified that passenger dont want to have food in short haul flights rather they want to buy food on the basis of their choice on the flight. This helped the airline cut necessary expenditure on food.

Ticketing:
Selling of all tickets were done on internet or on telephone. this reduced the impact of middlemen and this ultimately leads to the reduction of cost related to the middlemen.

Pricing Policy:

Demand and supply of seats on a particular route determine the prices of the tickets. The price of the ticket was revised if the rate of ticket sales for a particular flight was higher than normal.

The Fleet:
Boeing 737s are used by Easyjet so that the company can keep the costs of the airlines low and offer low fares to the customers. Flying a single model fleet had a advantage of simplifying the maintenance of the plane that leads to the reduction of the costs.

Extent of two strategic imperatives of Stelios achieved

Two strategic impertatives of Stelios achieved are the following. First The planes were operating at full capacity. The price of tickets is reduced as all the unnecessary costs were cut. Second Based on the demand and supply position of the flight, sophisticated yield management system could set an infinite number of fare for a given flight.

Contribution to the operational advantages of the company

Operational efficiency of Easyjet was achieved through quick turnaround. It ensures the best use of aircraft. As no seat number was assigned by the airlines, it reduced the time for ticketing and administration. Cheap service, inexpensive location were focused by it that contributed to cut down overhead costs and a unique brand position was created through this.
All the above mentioned advantages and benefits assisted the company to be the most low cost airline in Europe.

Question#3: Easyjet became a successful airline but analysts wondered how long the success would last. Discuss the differentiating strategies adopted by Easyjet. How far do you think they are sustainable in the long run in the context of its immediate rival and the dynamic external environment?

Answer:

Differentiating strategy adopted by Easyjet

Easyjet has adopted the following strategies:

a) Ticket booking facilities over the internet and telephone rather than middlemen.d b) Innovative way of marketing so that feedback from the customer was obtained. c) Pricing policy based on demand and supply d) Strong branding of the products

e) Proactive measure of marketing.

Sustainability in the long run

Within a short period of time, Easyjet has become successful. With the merger of the Go, the company became strong enough to overtake long time low cost leader.

The earning of the company is susceptible to price swing. The Easy jets break even low factors 71% compared ot competitors Ryannaires 53%. That
means Easy jet needs more passenger than Ryanair to break even. It is very much difficult to say how far Easy jet will be sustainable in the long run in the context of its immediately rival and the dynamic external environment.