SMA Analysis Of

EasyJet Plc.
Assignment
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Table of Contents
Introduction ................................................................................................................................................ 2
A) Easy Jet Current Business strategy ..................................................................................................... 3
B) External Environment Analysis ........................................................................................................... 5
1. SWOT Analysis .................................................................................................................................... 6
Strengths: .................................................................................................................................................. 6
Weaknesses: .............................................................................................................................................. 6
Opportunities and Threats: ..................................................................................................................... 6
2. PESTEL Analysis ................................................................................................................................... 6
Political: ..................................................................................................................................................... 7
Economic: .................................................................................................................................................. 7
Social:......................................................................................................................................................... 8
Technology: ............................................................................................................................................... 8
Environmental: ......................................................................................................................................... 9
Legal: ......................................................................................................................................................... 9
C) Recommendations for Future Strategy ............................................................................................ 10
D) Balanced Scorecard Approach .......................................................................................................... 10
References ................................................................................................................................................ 14

Introduction
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The global economy development issues in recent years have changed the traditional approaches

of companies. The changing trends in consumer demands, economic pressures, technological

developments, and open global trading systems have changed the environment if airline industry

globally. The competition increased in last decade with more inclusion of low fare economical

airlines in Europe; therefore, customers have more choices available in the market now. Airline

businesses in Europe have become more customers centric rather than following their traditional

conservative ways of operating airlines. Therefore, It is important to evaluate the strategies of

airlines to understand their business modes in rapidly changing external environment.

In this report, Europe’s leading airline EasyJet current business strategies evaluation is performed.

The external business environment is analysed with the help of SWOT analysis and PESTEL

analysis. In view of these analyses, suitable strategies are recommended to the Easy jet

management.

Easy Jet Current Business strategy

The company selected for this analysis is EasyJet, the leading airline of Europe and a major

competitor of Ryanair, Lufthansa, and Virgin Atlantic. The company was launched in November

1995 with it’s headquarter in Luton (Airwise 2002). The base of company is still in Luton and has

spread to major international flights routes after starting from basic routes of Edinburgh and

Glasgow. The brand image of EasyJet is a simple, low cost, with no frills airline like Ryanair but

this company is not based its strategy on secondary airports. The target market of EasyJet

includes both business and leisure travellers with high brand loyalty to the brand. The brand

corporate colour is Orange that shows Orange Culture for the staff with its vibrant and lively

appeal. The corporate slogans involved a sense of passion and sharpness, the delivered values of

EasyJet.
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In past, company was not operating flights for business passengers, have no agents on airports or

in offices, no ticket offerings to save passengers time delays, and no congested airports for its

regular flights. These non traditional activities and presence of company on internet with

complete physical operations have boosted the sales of company in limited time. The other

important strategies followed in past are reduction of turnaround and increased utilization of

available resources (Branwel 2002).

Current strategy of EasyJet characterized as a low price with low value addition flight operations

from major airports of the world. The company is not focused o the main hubs like Heathrow and

Dallas but limited operations from Luton and Liverpool. The company is facing less direct

competition from other airlines due to this strategy which is expanding the capacity of the

company to operate a low cost airline with complete operations. The company is more focused on

expanding the aircrafts base to support cost effectiveness and economies of scale with large

flights and limited value addition. The recent changes in current strategy have made some

astounding developments (DanMilmo 2012).

EasyJet adopted the strategy of different route development than Ryanair, though not abiding the

national laws completely, but rely less on the subsidies provided buy secondary hotels. In

contrast, the company is expanding network on central and large airports of Europe to facilitate t

passengers on main routes of high density traffic. Also, encouraging business travels through

more daily and weekly flights to important business centers of Europe. Furthermore, company is

not only targeting the business travelers only as in recent social media campaigns, the promotion

network has been expanded to the families and individual leisure travelers. Also, the removal of

Sir Stelios has made profound changes in the strategy of EasyJet. It is addressing the media in a

less controversial ways than Ryanair. Rather than attracting the att9ention of national media
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through catchy statements, company is heavily promoting is services on consumers’ social

networks and publishes heavy budget campaigns (Annual Report 2012).

Another important change is recently observed as company has been officially launched a holiday

brand in association with a travel company Low cost travel group. This holiday plan is comprised

on the full package holiday traveling offers on planned dates and venues on EasyJet flight

network. These travel packages are managing the needs of excursion trips and holiday visits of

families and individuals. Recently, EasyJet has announced the joining of Nectar rewards scheme

just like Sainsbury. This UK based loyalty program help customer to earn points on EasyJet

flights purchases to get rebate on future flights. The company has shared to cost of full- fledged

loyalty program with other partners in this scheme (easyjet website 2013).

A steady rate of growth is being experienced by EasyJet while the rest of the industry is not

staying still and competitors such as Flybe and Ryanair, amongst others, are striving aggressively

with strategies in order to become largest low cost airline in Europe. Fly Be had landed itself with

an extended partnership agreement with Air France, which has added its AF code to numerous

routes between UK domestically, 17 to be exact and also between UK and France which are 45

(EasyJet Plc. 2011). According to EasyJet Plc. (2011), all other major competitors have suffered

a blow in the industry of low cost airlines and are re considering their operational strategies.

A) External Environment Analysis

In order to analyse the external environment of EasyJet, SWOT analysis and PESTLE analysis are

performed as presented below:

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1. SWOT Analysis
Strengths:

Reaching twenty nine countries through 500 routes, EasyJet has proved itself to be a strong intra-

Europe network. Its operations are present on the major 45 routes of Europe and around the

continent it has twenty bases. Aggression, Focus and Innovation are the key characteristics of its

Management. A business model that is effective is present at EasyJet has which consistently

delivers lower fares and making use of regional and secondary airports gives it the possibility to

gain faster turnovers with cost cuts (Cassani 2003).

Weaknesses:

Internal weaknesses are also faced by EasyJet which includes demotivation of potential customers

due to use of regional and secondary airports as they are distant from major cities (Harnischfeger

2003). The organization is restricted by regulations of airport and passenger compensations. The

brand identity is critically linked to low-cost air travel and hence maintaining that can prove to be

difficult.

Opportunities and Threats:

Availability of opportunities is a result of changes in external environment and also threats and

hence a method for detailed analysis of external environment that’s used is PESTE.

2. PESTEL Analysis
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External forces which impact future of EasyJet’s business strategy and analyzed in the following

paragraphs:

Political:

Almost all organizations’ business policies and strategies are affected by the national policies

enforced by a particular country’s government or the broad ranged policies introduced by EU

parliament. New opportunities have been provided due to European Politics which have made it

easier for EasyJet to grow its number of destinations countries as visa free travel has been allowed

with few limitations and controls amongst EU member countries under the Schenegen Treaty.

Travel in almost all the countries of Europe has been made much easier due to these treaties

(Ghose, & Reid, 2004). If new countries which are prospective of membership such as Romania

and Cyprus, to name a few, come under this agreement then customer turnover for EasyJet would

further increase. Mean while, stricter security measures in airports recently prove as a threat to

low cost airlines as time is wasted and such regulations effect the ‘no time wasting’ policy of

EasyJet.

Economic:

Economic situations in the current time have a broad ranging impact in the World, in general, and

Europe, in particular. Reductions in purchasing power have been experiences and European

customers are shifting towards means of travel which offer lower cost. This provides an

opportunity for low cost carriers like EasyJet. However, the rising fuel prices pose as a threat as it

becomes to keep cost low while providing same standard of customer quality. Moreover, the

economic crunch has resulted in difficulties in obtaining easy loans for companies, which can
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affect strategies which might be relevant in the growth period but become futile in recession.

Political forces directly or indirectly effect economic forces as both have an inter relation

(Sweney 2010).

Social:

Tastes and demands of the customers that include factors such as disposable income, fashion etc

are included under the banner of Socio-cultural environment. An upward or downward shift can

be experienced in the demand for air travel which is greatly influenced by the situation regionally

as summers often bring greater opportunities for low cost carriers as tourism is greater in

summers while opposite is true for winters. Regional social and cultural incidents and events also

effect demand for travel. Customers of a higher age group prefer traveling in carriers which

provide utmost comfort and better standards of assistant and help are present which can pose as a

threat to low cost airlines in the likes of EasyJet..

Technology:

Innovations in technology can be both a threat and opportunity for EasyJet. Customers of current

time want easy access to information which leads to popularity of mobile technology. EasyJet is

already making use of Internet as a part of its sales strategy but the business can be affected on a

large scale with coming developments in advanced information technology. Moreover,

technology is making environmentally friendly and fuel efficient jet engines more commons and

is allowing for business support on air with facilities such as teleconferencing.

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Environmental:

The start of the Twenty First Century saw the popularity of the term Global Warming on

international forums, and Europe as well. Individuals and Governments are now more concerned

regarding environmental issues such as weather changes which has led to passing to new

legislation all across Europe amongst other countries for greater environmental protection.

Environmental Legislation in Europe made it compulsory that airlines reduce their carbon

footprints and implement noise reduction of engines which have increased cost of maintenance

for airline companies like EasyJet. An important area of legislation is also regarding waste

management according to which waste needs to be recycled properly. If all these laws are

complied with then this will prove as good practice for EasyJet and it will also provide

opportunity for the company to build a green image which can increase its popularity (Neal, &

Kassens-Noor (2011).

Legal:

Laws and Regulations which may prove as a restriction for business activities or may facilitate

them come under the Legal banner. Laws regarding competition disallow use of unfair means by

airlines to gain advantages over companies while providing opportunities for growth at the same

time. Real threats to airlines are Health and safety laws as inability to follow them effectively can

lead to closure of a business(Clark 2002). EasyJet’s public reputation can be effected by claims

made by employees or customers which might lead to reduction in demand. Laws involving

Employees may also affect the company in a bad way as employees may go on a strike on issues

such as pay which disrupts operational ability of a business.

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B) Recommendations for Future Strategy

After making use of extensive evaluation tools such as SWOT and PESTEL analyses to assess the

current markets, existing products and development of new products and markets. The Analysis

shows that with its existing operation of low cost airlines and provision of related services,

EasyJet is implementing a successful strategy. Strategies that can be worked on is entering new

markets in countries of East Europe and providing bus service facility to Luton Airport form

London for greater customer facility. For instance, the market for Lithuania can be entered by

EasyJet through starting an air service from but airport of Luton to Kaunas International Airport

which is one of Lithuania’s largest city and only approximately 60 miles from its capital city,

Vilnius. Through this strategy, eastern European market may be entered by EasyJet and cost of

maintaining bases at other airports can be balanced by lower costs of bases in Easter Europe. If

these strategies are worked upon, they can help EasyJet achieve its objective of becoming largest

low cost airline in Europe. Asia and Africa will be new destinations for the company operations

as due to its low price strategy, will attract the lower income economies of these continents.

C) Balanced Scorecard Approach

The balanced scorecard is a system for management and strategic planning which is used by

organization to align business activities with the future vision and organization strategy of the

business. The people behind its design are Dr. David Norton and Dr. Robert Kaplan who made it

as a measurement system for quality performance so that managers and executives had access to a

view of performance that was balanced (Johnson et al 2008). Full strategic planning has evolved

due to it and also the strategic plan of the organization is being transformed in to daily basis
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orders for the organization. The weaknesses of some of the management approaches used

previously have been recognized by the balanced scorecard approach and a clear prescription is

provided about what needs to be evaluated as to achieve a balanced financial perspective. A

weakness of traditional systems of financial reporting is that they only provide evidence of how

the organization has performed, but have little information to offer about how it many perform in

the near future. To overcome this problem, David Norton and Robert Kaplan made the Business

Scorecard process which not only considers financial measures but also includes measures related

to customer, learning and business process.

i) Balanced Scorecard perspectives

The Financial Perspective

For EasyJet, it is a source to obtain accurate financial data such as profit, return on capital,

operating income, value added, but the point is that the this constant focus on just the finance

related data is causing a situation that is unbalanced. A need exists perhaps to add some further

data such as cost-benefit and risk assessment further in this category.

The Customer Perspective

In recent performance observed in EasyJet, there has been given priority to customer satisfaction

and customer focus. These measures are fast becoming important indicators of performance

management. If performance is poor from the perspective of the consumer then there is likelihood

of future decline. Analysis of customer satisfaction should be done in terms of kinds and variety

of customers and the processes for which these customer groups are being provided services or

products.

The Learning & Growth Perspective

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Both individual as well as corporate self improvement is included in this perspective. It includes

strategy EasyJet related to corporate cultures and employee training. Employees and organizations

need to continuously be in a learning mode to survive in this era of rapid technological change.

This could be measured through factors such as staff satisfaction, technology and innovation and

training funds.

The Internal/Business Process Perspective

The managers at EasyJet are allowed by these perspective to have knowledge about how good

their business operation is and whether the customer requirements or the mission match with the

services and products on offer. Metrics such as order fulfillment, productivity and cost can be

used for measurement.

The tentative balance scorecard for EasyJet is as follows:

Financial Perspective Customer Perspective

- New sales growth target
- Increase in market share
- Capital Investment
- Fast turnaround to market
_________________________
- Efficient Service
- Timely delivery
- Quality travel accessories
- Heavy social media marketing
_________________________

Internal Business Perspective Learning & Growth Perspective

- Improve employee satisfaction
- Retain key employees
- Capacity building and Training
- Improved management of
resources
- Leverage core competencies
- Leverage technologies
- Implement best practices
- Protect critical assets
- Easy access to information
_________________________

Source: Adapted by the Author

It could be seen from the above tentative scorecard for EasyJet that four major dimensions are

included in each perspective of the balanced scorecard. These are: initiatives, objectives,

measures of those objectives, and target values of those measures.

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DeWit & Meyer (2004) asserted that these four perspectives are interpreted in to the

organization’s strategy with the balanced scorecard creating a balance between non-financial and

financial areas, past results and future results drivers, external and internal measures, and also a

balance between objectives of customers, employees and shareholders. The four perspectives are

logically connected and not just a simple collection of independent ones. Financially performance

is finally improved as growth and learning guide the organization towards better business

processes as well as increase customer value.

All members of EasyJet are made to align towards commons strategies and goals by the use of a

comprehensive management system namely balance score card. Prioritizations are made easier for

the managers as this management system also links the benefits for the manager to the manager.

Finlay (2009) suggested that through this approach feedback is provided to the manager on issues

which are important and key areas where the feedback can have a positive impact and can also

become a vital tool for decision making. Motivation can be enhanced by linking those goals and

budgets to compensation, incentives and reward programs. Financial and operation balance is

achieved by balance score card which many concern many elements of importance to

organization development.

A limitation of this approach could lack of ability in measurement of areas such as social

environments and other important stakeholder that may directly or indirectly effect performance

of a business. Quality induction may be provided due the measurement design being subjective.

Staff motivation may also face a setback individual effort may be neglected.
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References

Airwise, (2002)., EasyJet Buys BA's German Subsidiary,

http://news.airwise.com/stories/2002/05/1020850340.html,

Annual Report (2012), EasyJet Plc. Accessed from

http://2012annualreport.easyjet.com/performance-risk/financial-review.aspx

Branwel J, (2002)., EasyJet in £ 22m review as it prepares to axe Go, Marketing Week, 10/3/2002,

Vol. 25 Issue 40, p12

Cassani B, (2003), Go: an airline adventure, The Times. 28 October 2003. p27.

Clark A, (2002), Air turns from blue to orange: Two former foes become Britain’s top lo-cost

airline as a resul;t of Easyjet-GO merger, Guardian, 17 May 2002. p22.

Conno A, (2002)., EasyJet expands European network with GO, European Venture Capital

Journal, June 2002.

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DanMilmoo (2012), EasyJet to launch allocated seats on all flights, Guardian, 05 September

2012.

DeWit, B. & Meyer, R. (2004), Strategy: Process, Content, Context,3rd Edition, Thomson

International Business Press.

Finlay, P. (2009), Strategic Management: An introduction to business and corporate strategy,

Prentice Hall.

easyJet plc. (2011). easyJet plc. Retrieved April 13, 2011, from Our long-term strategy:

http://2011annualreport.easyjet.com/strategy/our-long-term-strategy.aspx

Easyjet website., (2013), http://www.easyjet.com/EN/about/index.html

Ghose, P & Reid, R. (2004), Judgement day: Should you buy shares in easyJet. The Sunday

Times, 8th February 2004,pp.8.

Harnischfeger U, (2003)., Turbulent times for air charters, The Financial Times, 21 October 2003,

p33

Johnson, G. et al (2008), Exploring Corporat Strategy: Text and Cases, 7th Edition, Prentice Hall.

Kotler P. and Keller K.L. (2006), Marketing Management, 12th Edition, Prentice Hall.

Neal, Z. P., & Kassens-Noor, E. (2011). The business passenger niche: Comparing legacy carriers

and southwest. Journal of Air Transport Management(17), pp. 231-232.

Sweney, M. (2010). EasyJet flies into trouble with ASA over claims about Ryanair. Retrieved

April 29, 2012, from guardian.co.uk:

http://www.guardian.co.uk/media/2010/mar/03/easyjet-ryanair-asa
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