Business Essays

Business Essays: Easy Group Study

• Introduction
• Organisational Strategy and Resource Requirements
• Targets and Timescales for Achievement

Introduction

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.

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.

1. www.easyjet.co.uk
2. From www.easyjet.co.uk
3. www.easyInternetCafe.co.uk, press releases.
4. Mintzberg H, Quinn J.B, Ghoshal S, (1998) The strategy Process. Revised European
   edition.PrenticeHall
5. www.easyinternetcafe.co.uk
6. www.ryanair.com
7. www.ryanair.com
8. 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

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