MA in Management – Tactical Analysis Component
G. SAA Answers
SAA 1 – Evaluating the Suitability of EasyJet's approach
EasyJet's existing strategy can be characterised since price/low useful (route one particular on the technique clock) focusing on Luton and Liverpool hubs (not the key UK airports) and aimed towards routes with little direct competition from the other airlines (which builds up aspects of access and variety structured positioning).
EasyJet exploited difficulties environmental modify that resulted from the primary liberalisation in the EU air travel market. The attractiveness of this " low cost” ideal group in the market has brought in new competitors (like BA's GO) so the industry structure is definitely changing. EasyJet's decision to get new aircraft and open up new tracks can be seen since an attempt to pre-emptively protect and build issues current position. The relates to Geneva air-port and TEA also allow them exploit a great EU " open skies” agreement with Switzerland in the event that finalised making use of the same strategic approach.
The strategy is largely expanding after existing functions in operating a low cost airline. Expanding the fleet of plane potentially provides cost performance advantages with regards to economies of scale and scope across a bigger range of routes. Standardising on fresh Boeing 737-300s and 737-700s should also support minimise operational costs as well as the purchase financial systems from the package (discounts). Other parts of the value chain are consistent with this low cost approach – head office at Luton airport rather than a more expensive location (although not stated in the model the HQ is seto down to a baseline to reduce expenditure. Aircraft repair is also developed out). Since EasyJet is privately owned or operated then the significant increase in gearing implied by the financing of recent aircraft is probably less unsightly to traders than could be the case if the company was public.
Ideally, it would be helpful...