Part 1; porter’s five forces framework on easy jet company.in this section of the report this will carry out and analysis on the following new entrants, suppliers, the power of buyers, substitution and rivalry.
New entrants- not everyone can afford to be apart of this industry as start up costs are very high. Buying a plane requires a lot of money. Not including the running of the plane, equipment linked with this sector is also so expensive therefore there are limited new entrants which is good for easyjet as this means less rivalry. Regulations are strict and airport taxes currently are very high which makes it even harder for new entrants.
A big threat would be if traditional airlines wanting to enter the low budget market as they would have the equipment and the knowledge on how to run a successful airline which would urge easyjet to be more competitive.The power of suppliers- airplane supplier, oil supplier. The oil supplier is very important a plane needs petrol without it airlines would be put out of business as they wouldn’t be able to fly their planes. Petrol suppliers have upped their prices since the last war in Iraq as there is a high demand for it they know that airlines will pay for it regardless of the price.
Airplane supplier- airbus and Boeing are the only two airplane suppliers, the bargaining power for easy jet is low. Its difficult for them to change prices. The bargaining power could be a lot higher for easyJet can be if they decide to buy more than 7 planes at a time they would lower prices this way.Airport- with the airport taxes costing the plane even to park, parking is expensive for any plane company but for easyJet it usually is cheaper because planes land in secondary airports such as Heathrow.The power of buyers is high – The competition is intense as easyJet is not the only low-cost company there’s also Ryanair, Thompson, Thomas cook, Wizz air and it is easy for customers to select a different airline to travel with as they look for the best deals also you will choose the best airline for you and your needs.Threat of substitution is low – The threat of substitute is low. Trains are a main substitute e.g.
the eurostar. They are known to be cheaper than planes for short journeys usually they are based in the city e.g.
London. Airports are usually located outside of the city, so you will need to allow more time to travel to and from the airport. You must plan before you leave your house as you will need to know what time to leave to get there with plenty of time so that you don’t miss your flight. Parking prices have risen throughout the uk not just for airports you will need to park the car first and then travel to your gate. Except for the location, trains do not have so many advantages, because easyJet have prices that are approximately the same and sometimes cheaper than train prices which is a big advantage for easyJet.Competitive rivalry- EasyJet has been neck to neck with Norwegian airlines for two years now and just missed achieving the top title for budget airlines.
easyJet’s competitors can be either direct or indirect. The direct competitors; are the ones who offer the same services as easyJet for competitive prices the main direct competitors are Ryanair and Flybe, Norwegian airlines. Ryanair only focuses on the leisure segment and easyJet tries to incorporate all of the services, easyJet does use some of the main airports, such as Paris Charles De Gaulles airport or Madrid airport, whereas Ryanair uses especially minor airports.
The indirect competitors; Air France or British Airways. They are indirect competitors because they target people who are less interested in buying a cheap flight, they will be less interested in buying flight in traditional companies. Substitutes are also indirect competitors as well, as previously mentioned above trains or vehicles do present disadvantages. To conclude this part of the analysis the rivalry is higher of direct competitors as they propose more of a threat to easyJet.PART 2: SWOT Analysis of easyJet Company I a tool for the strategic analysis of easyJet it is a great way to understand the strengths weaknesses opportunities and threats that are proposed to easyJet and their future.
To propose a strategy for easyJet to adhere to the need for the external and internal situation of Easy Jet is necessary to analyse and propose a new plan. This is to establish how the whole company behaves and how people and processes work together.The mission statement shows that they are wanting a good value for money service with safety are the forefront of what they do. ensuring that they are providing the best possible services for their customers, they understand that a happy customer is a repeated customer. Strengths With quick turnarounds at airports, easyJet is able to get multiple flights on same routes in one day which is good for their business as it allows them to be efficient at the same time not jeopardize the safety of passengers.
As easyJet provide a good value for money product/service , customers are unlikely to place complaints when they have to carry out online bookings for themselves.This eliminates the cost of a sales representative selling tickets which they don’t offer at a travel agents but they do offer this service over the telephone, this means customers don’t have to go through the hassle of having the tickets printed and then having them delivered to the customer’s home address. This ensures that tickets are not lost causing a panic before customer fly this is why they have a ticketless app that customers can use, easyJet is saving itself money by not printing out tickets and passing it onto the customer this also takes the limelight away from easyjet as they this can be known as Lean process.definition of lean process- understanding customer value this focuses on the key processes to continuously increase customer value. The goal is to provide an excellent value to the customer through a perfect value creation process that has zero waste system.Customers will always be happy when they get the treatment that they deserve and that will happen with a sufficient team of staff within the company as stated previously in the mission statement they work as 1 team. stated on their web page they say the have the lowest fares in the world so no matter what changes occur or what strategy is being used, the company always sees itself with the same outcome this is their current strategy process .
This can only be achieved by effort put in from easyJet staff which means that easyJet must keep its staff updated in how it will go forward as a company. EasyJet succeeds in tight scheduling and that is down to well trained staff that can function together very well “1 team attitude”.Low costs and low fares: easyJet keeps costs low by eliminating the unnecessary costs which allow customers ticket prices to be low. EasyJet has a good reputation they have a house colour scheme of orange and white which is recognisable to their customers as their brand.
EasyJet has a strong brand image due to the high number of customers they have they are one of the leading uk airlines in the uk who have plans to expand. EasyJet has an attractive website which is easy to navigate with clear filters to use to filter your ideal holiday, this is a great way of effective advertising as customer wont get frustrated with the site because they don’t know how to use it . Easyjet recognises its loyal customers and emails them to alert them of any sales, offers, in hope that they will return to the airline this is a good way of retaining customers.
Easyjet’s market share in previous years they had around 54.5 million customers (Corporate.easyjet.com, 2018) using their facilities that was dated back to 2011. This was an improvement from 2010 statistics they had a rise of ticket sales 11.8% in 2011 compare to the previous year (Easyjet ,2011).
EasyJet is trying to go green as a company: Sustainability EasyJet actively embraces environmental responsibilities they know that they have increased their carbon percentage from 2016-17 they are very conscious of this and have come up with a solution to fix this issue whilst developing their future strategies (Business Teacher: 2011). The solution of this issue is that this year easyJet started to operate the new generation Airbus A320neo aircraft mentioned in the porter five forces section. “There will be 100 of these aircraft in the fleet by the end of 2022”. These aircraft, equipped with engines that purify and are cleaner for the environment making the aircrafts 15% more fuel efficient than current generation aircraft they hope that the aircrafts will have done this by 2022.
(Corporate.easyjet.com, 2018) EasyJet are one of the airlines that does not offer agency bookings; passengers can only book via telephone at an extra cost or the Internet: It is the e-booking system. Its website represents a big flexibility for customers: they can modify a flight already booked.Weaknesses The low-cost airline industry is extremely competitive with numerous brands fighting for the same customer base. it’s important that they have a good customer strategy. Competition is now increasing a lot of airlines have who have altered their business models and begin offering lower prices with frills for the same routes as EasyJet.
They do not offer a free food service on longer flights of more than two hours, which many customers find difficult.The service format does not cater to a wide demographic as many older travellers do not like the party atmosphere on EasyJet planes that are most often taken by young, rowdy travellers going away for school holidays or weekend party trips. This format alienates many demographics that EasyJet could be serving. who they cater to “Firstly EasyJet customers were classified based on their date of birth to create a population pyramid (fig. 1). The results highlighted that 50 % of all female customer where aged between 21and 38, with the average age of the female customer being 40 and 43 for the male customers, resulting in the average age being 42.
The results also identified that there was a slightly higher number of men than woman using the airline with 55% of customers being male. This could be due to the male association of business trips.”Cost base is not as low as Ryanair, however easyJet has a unit cost advantage against most competitors which is great apart from ryanair hopefully in the near future they will overtake Ryanair. Its cost per seat is around 50% higher than Ryanair’s this is an opportunity for change this can be resolved in years to come with easyjet’s innovative thinking . Ryanair is easy irish rival although norwegian airlines has been taken over 1st place.Seasonality of earnings this is common throughout the industry, in the school holiday times is when the flight prices sky rocket with its profits increasingly relying on a strong summer half year they have to take advantages to earn their money they (April to September is where the money comes from) in the winter months when the children have gone back to school is when the prices drop this limits people to go on holidays due to having to be at home and looking after the children so what easyjet do is promote their services and to the places that are lacking in sales they do the most discount on those places (October to March). Mainly all the issues happen during the summer due to unexpected problems in the summer where it’s very busy for the whole industry.