In 1998, the founder of easyJet plc, Stelios Haji-Ioannou,
established the easy group of companies, with the objective
of exploiting the 'easy' brand for ventures other than easyJet.
Such ventures launched thus far include
easyInternetCafe, a chain of internet cafes, easycar, a budget
car rental business, easyValue, an internet price comparison
service, easyMoney, a personal finance service and easy.com,
an internet portal and e-mail service. The other latest ventures
include, easyCinemas, the cinemas offering low cost films
and easyBus, offering cheap transport.
The essay aims to analyse the external and internal environment
in which easy group operates and also considers issues relating
to its strategy.
ENVIRONMENTAL ANALYSIS
The environmental analysis comprises of Political, Economic,
Social, Technological and legal economical factors of the
operating environment.
Political
The political issues may include tax policy, employment laws
environmental regulations, trade restrictions and tariffs
as well as political stability.Any changes in these factors
have an impact on the operations of the business.For instance
in April 2000, easyJet, a part of easygroup, launched a campaign
to stop Barclays ripping-off easyJet customers by increasing
landing fees to easyJet by 300%. As part of the campaign, the
airline calls for John Prescott to regulate the Barclays-run
Luton Airport in the same way as other London airports.
Economic
A certain chain of events have had an impact on the
western ecomony. First of all the attack of September 11th,
created general unrest in the world and slowed down the ecomomy.
There was a significant decrease in the confidence of the
buyers in general, specifically the airline traveller. The
reduction in air travel may also have a connection with the
slowing down of the car rental business. The current Middle
East crisis caused an increase in oil prices and a change
in foreign exchange rates.
In general there has been unrest in the consumer's attitude.
Social
The social issues facing the easy group are safety issues,
making sure their businesses are safe, environmentally friendly.
Easy group's operations are paperless, i.e. they are entirely
dependant on the internet and therefore require no paper work
at all, which means less waste.
Career attitudes of people should also be considered in the
social aspect. For example, people pursuing professional careers
would like first class air travel, luxurious cars etc. Whereas,
easy group pursues a no frills strategy targeting mainly the
price conscious market segment.
Technological Factors
The entire easy group rely on new technology for its day to
day operations. The rate at which the technology is changing
has encouraged paperless operations thereby reducing costs.
IT technology is readily available, at competitive prices
and the company's system is designed for its employees to
access it from remote locations around the world.
Legal/economical factors
This involves the legal framework in which the firm operates.
Recently, easyInternetcafe, was sued by the British Phonographic
Industry that it had broken the Copyright Design and Patents
Act (1988) by allowing the downloading of musinc files onto
CD's in its Internet Cafes. easyInternetCafe and BPI decided
to settle the matter out of court, meaning easyInternetCafe
is to pay £80,000 in damages as a worldwide settlement
and £100,000 legal fees.
PORTER'S FIVE FORCES
According to Porter [4] it is vital for the strategic business
manager seeking an edge over rival firms can use this model
to better understand the industry context in which the firm
operates.
Rivalry
Often when a rival acts in a way that elicits a counter response
by other firms rivalry intensifies.
Easygroup can lower the prices of their products; give
incentives and discounts to gain competitive advantage.
Introducing, the differentiation of products e.g implementing
innovation.
Another possibility is the use of different channels of
distribution, apart from the internet and via call centres,
which the customers might find attractive. EasyInternetCafe's
new strategy is to open Points of Presence inside established
businesses that have several retail outlets and a minimum
of 30 square meters unused space in each. Such businesses
include McDonalds, Dunkin Donuts etc. [5]
Threat of Substitutes
This refers to the products in other industries which may
be substituted for easy group's products and services.
EasyJet: other modes of transport such as
train, ferry, bus etc.
EasyCinema: the growing DVD player and wide
screen TV industry would encourage people to purchase their
own personal home cinema systems and entertain themselves
in the privacy of their own homes.
EasyInternet: Nowadays fast broadband internet
connections are available for home use at competitive prices,
thus reducing the need to visit an internet café.
Buyer Power
According to Porter, buyers are powerful when they are concentrated,
meaning there are few buyers with significant market share.
They can threaten to buy or acquire a producing firm or rival.
E.g, EasyJet acquired British Airway's low cost airline Go
Fly last year.
Supplier Power
In case of easy group, its main activities are run on the
internet, so the internet technology supplier, in this case
may influence on the producing industry, such as selling internet
access or web services at a high price, in order to capture
some of the company's profits.
Barriers to entry
When industry profits increase, it encourages other firms
to take advantage of the high profit levels. E.g British Midland
offering low cost air travel within the UK and Europe. Governments
may also introduce barriers to entry by introduction of regulations
and creating monopolies.
CURRENT MARKET POSITION AND COMPETITOR ANALYSIS
Currently, only EasyJet plc, out of the easy group of companies
is listed in the Stock exchange. EasyJet has shown substantial
organic growth since the day it came into being in 1995. It
continues to face competition from Ireland based Ryanair especially
after the completion of its merger with KLM UK's low cost
airline called Buzz .[6]
Although easy group's businesses are based on the low price
model, they still face competition from established players,
who emphasise on quality. Easy rentacar and easyinternet café
also face competition from Hertz car rental (who is a partner
of Ryanair)[] and local internet café's respectively.
Easymoney is a relatively new service and offers an individually
tailored credit card [8], however like other internet banks;
it will take time to gain a customer database.
BCG GROWTH SHARE MATRIX
High
EASYRENTACAR
(Stars)
EASYINTERNETCAFE
(problem child)
Low
EASYJET
(Cash Cow)
EASYCINEMA
(dog)
High
Low
Relative Market share
STRATEGIC DIRECTION
The Ansoff Matrix is used to focus on the firm's present and
products and markets (customers).
ANSOFF MATRIX
Existing Products
New Products
Existing Markets
Market penetration
Product Development
New Markets
Market Development
Diversification
Market Penetration: Easy group continues
t achieve growth with its existing products i.e providing
services at rock bottom prices. By following this business
strategy the market share continues to grow.
Market Development: Easy group is seeking
growth by targeting its existing products to new market segments.
For example Easyjet is targeting business travellers with
its low cost airfares and frequent flights to popular destinations.
Product Development: Easy group, particularly
Easyjet has grown by introducing new flight routes thereby
further developing its product range.
Diversification: Easy group is bringing forward
new business ideas for its existing market segment such as
easyInternetcafe, and the latest venture easymoney.
www.easyjet.co.uk
From www.easyjet.co.uk
www.easyInternetCafe.co.uk, press releases.
Mintzberg H, Quinn J.B, Ghoshal S, (1998) The strategy
Process. Revised European
edition.PrenticeHall
www.easyinternetcafe.co.uk
www.ryanair.com
www.ryanair.com
www.easymoney.co.uk
REFERENCES
www.easyjet.co.uk
Mintzberg H, Quinn J.B, Ghoshal S, (1998) The strategy
Process. Revised European
edition.PrenticeHall
www.easyinternetcafe.co.uk
www.ryanair.com
www.easymoney.co.uk
additional sources: www.easygroup.co.uk
Please note: The above business essays and dissertations were written by students and then submitted to us to display and help others. Thanks to all the students who have submitted their work to us.
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