Assignment on Business Strategy (sample-4)

 

Strategic planning process:‌

Strategic planning is a part of formal planning. For achieving organization’s goal it helps a lot. It has constructive impact on performance of a company. This process is done by formulating the strategy by fixing objectives, analyzing internal and external environment; executing the strategy; assessing the strategy and then at last changing the strategy (quickmba, 2013).

An airline company of UK named EasyJet first flew in 1995 which is founded by Cypriot business Stelios Haji Ioannou. The business-level-strategy which is applied in easyJet is cost leadership strategy. To sustain in airline business easyJet try to maintain it’s every effort to reduce the cost in their cost structure. In easyJet’s Cost leadership strategy, following factors are followed.

• to sell ticket using of internet
• With highest utilization using Boeing Aircrafts
• The cost of issuing, distribution of tickets is reduced by online ticket booking
• No frill approach- means decrease of unnecessary expense - of the founder
• No free lunch and free catering in the airline
• Airports are being used Efficiently by easyJet
• To lessen the cost introduction of paperless office

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  Terminologies used in easyJet‌

  No frill
  
  
  Removal of costly optional feature is known as No frill. This approach is preferable to the companies which follow cost leadership model. Huge uses of things like luxurious and decorative additions known as frill. These things lead to lower the price of the ticket. In easyJet, the airline charges on customers for those additional things. (McGrath, Ginny, 2007).
  For retaining no-frill approach of the management easyJet remove non-essential items like free lunch, free catering services.
  Maximizing the utilization of substantial asset:
  
  
  It means most effective and efficient use of the Boeing Aircraft. It is bought at least price.
  
  
  Ticketless travel:
  
  
  This means the use of email instead of ticket that which will decrease costs associated to issuing the hardcopy of ticket.
  
  
  Simple service model:
  It is a simple model because in it hard-to-manage items and expensive service provision are avoided.
  
  
  Paperless office:
  
  
  In this model paper doesn’t use in the office. Documents and papers are converted in didital form which saves the cost of paper and it is environment friendly (Howstuffworks, 2014).
  Turnaround times:
  
  
  Unloading and reloading of passengers after reaching an airports is relating to this concept that. With the reduction of time, an airline become better and more efficient (Barrett, S. D., 2004).

  Steps in strategic planning process in easyJet:‌

  
  
  
  Mission and objectives:
  
  
  EasyJet is in airline industry. Providing simple and reasonable airline service to passengers is its mission. Leading the industry with higher profit is its vision and providing airline service at lower cost is its objective.
  Environmental scanning:
  
  
  To reach goal what easyJet has internally and externally perform is resemble with this. Like, it internally performs operating performance in the firm for strong position. At the same time, from the external environmental viewpoint, a popularity of low cost travel in the coming days will work as opportunity.
  Strategy formulation:
  
  
  For strategy formulation understanding the strength, weakness, opportunity, threats is important. For easyJet airlines, the understanding of all these points suggests to pursue cost leadership.
  Strategy implementation:
  
  
  In easyJet strategy can be implemented by engaging resources, program and budget. To implement the strategy motivating the staffs also work.
  Evaluation and control:
  
  
  To determine whether cost leadership model will work or not as expected needs, it need to be evaluated and if it doesn’t properly as expected then to make proper control it will be adjusted.

  Planning techniques in easyJet‌

  Following planning techniques have been used by easyJet.
  
  
  SWOT analysis:‌
  SWOT analysis means, analysis of strength, weakness, opportunity, threat. External and internal environment of an organization is analyzed by it. SWOT of easyJet is discussed below.
  Strength:
  Use of lower cost model and lower cost airline is strength of easyJet. Financial performance of easyJet is nice and its business is growing in the present time.
  Weakness:
  Most of the airline industry use premium but easyJet avoids it. EasyJet is also avoiding few basic services like food service.
  Opportunity:
  EasyJet will capture more of the passengers and will reach to great number of people as a result of online ticket selling. Expansion of the market in other countries will bring great advantage in future which will be easily gained by the brand.
  
  
  Threat:
  There is a possibility improper functionality of the business model. The competitors may replicate the model better and can go in straight contest with easyJet. The funding cost may go up. To the firm no added value may be added by expansion.
  
  
  To construct internal and external environment SWOT helped easyJet and inspired it to be cost leader in their business level strategy.
  
  
  Simulation analysis:‌
  The planning, values and strategies change with the changes in the business environment. With the help of simulation analysis we can find out what will be given to the desired variable for the changes in other variables that have impact on the preferred variable ( Investopedia, 2014). EasyJet could utilize the strategies through it. The impact on the cost leadership model by the changes in the variables like- government regulation, competitors’ emergence, preference of premium services can be identified by it. EasyJet also followed this planning process.
  
  
  Industry analysis:‌
  For the competitive nature easyjet is in the position of enormous challenge. The supplier power and passenger power is high in the form of changing to other airlines. Threat of alternate is modest as video conference may come out seriously. Threat of participant is moderate.
  To overcome the challenge and achieve a good position in the industry, this model of planning helps easyJet to design its strategy (Porter, M. E. 1979).
  
  

  Task 2: Formulating a new strategy‌

  For formulating new strategies it is important to carry out an environmental audit for easyJet and assess the importance of stakeholder analysis.
  
  
  Organizational audit in easyJet‌
  To make an organization effective and efficient in operation organizational audit is done by recognizing the strength and weakness of the organization and designing the corrective measures accordingly (Ukessays,2014). It is consisted by some basic blocks. In below they are discussed.
  
  
  Customers:
  They are the airline travelers of easyJet and their important is great. Services are designed accordingly the need of the passenger, so it is very vital to understand the need of the passengers. EasyJet’s main passengers are economy class passenger, after listening the
  passengers, easyJets provides low cost airline services to them. EasyJet retains its passenger by minimizing cost of fare, using airports and aircrafts in efficient way, maximizing the productivity. Passengers fell happy with lower cost as result of Using cost leadership strategy.
  
  
  Competitors:
  Competitors may limit the profitability of the firm. It is important to audit to identify the competitors and their point of view of strategy. EasyJet should observe low cost service offering of the competitors in the air industry. This form of audit is beneficial for easyJet because it will keep the firm updated and help to form strategy. EasyJet is firmly following a cost leadership strategy to make it unlike from others. It depends on the model of cost reduction. Use of internet, no frill approach, paperless office all these lead to take market share from competitors and form the position of the company strong.
  
  
  Environmental audit in easyJet‌
  Today airlines fell pressure from the people about emission of huge CO2 because they are aware of environment. The environment is a crucial issue for easyJet to follow. The assessment or examination of the level of compliance of the practices that decrease the exposure to the hard to the environment means Environmental audit (Environmentalauditors, 2014)
  As it is a critical issue easyJet is following an environmental audit. In below the issues that are related to the environment and what easyJet strictly follows are discussed.
• In the Europe this airline uses the newest fleet. Generally newer fleets emit fewer amounts of carbon-dioxide and other harmful materials than older ones.
• Its load factor is high which mean the lift to weight ratio is higher.
• It reduces the harm to the environment because it minimizes frequencies of take-offs by using the point to point traffic in its routes.
• In airports it stays for short time because it uses rapid turnaround which is truly environment friendly.
• To stay environment friendly it does not apply electricity as rail uses.
• EasyJet is saving trees by using paperless office. Because paper come from trees. It uses digital forms of paper documents which is environment friendly.
• To reduce the use of paper it also offers Ticketless travel in the airline. It uses email instead hardcopy of ticket. It is utter environment friendly process.
  So, environmental audit clearly shows that environmental regulations are properly complied by easyJet.
  Significance of stakeholder analysis in easyJet‌
• Classifying the essential stakeholders
• Recognizing their interest
• Realizing the claim they may put in the firm.
• Distinguishing the most vital stakeholders from organizational viewpoint
• Formulating strategies that are significant for the principal stakeholders (Hill, C. W., & Jones, G. R., 2008)

Most significant stakeholders of a business are customers, shareholders and employees which has been proved by this analysis

Interest of the passengers, employees, shareholders should be focused by the strategies of easyJet. Considering the passengers’ interests they charge a lower price to reduce the cost of the fare. To ensure highest return on the investment the firms depends on the shareholders. It is the main reason of employing cost leadership strategies by easyJet to reach most passengers of economy class which helps to attain higher return.

3 Strategy evaluation and selection‌

(a) Possible alternative strategies easyJet may adopt‌

EasyJet may use different strategies like Ansoff matrix, product/market matrix. Regarding the product and market Ansoff matrix offers four strategies.

Figure 1 Ansoff Matrix (tutor2u, 2014)

Market penetration:‌

It means in the existing market with the help of selling goods and service the promotion of market share (business dictionary, 2013).

By selling the present products to the existing markets it can happen. The market share of the present products and services can be increased with the help of promotional sales and discounting. Though this strategy, market share of the easyJet will increase. However, low cost air traveling is already provided by easyJet. So, the chance of applying this strategy to lead to grow of the firm is very little.

Product development:‌

EasyJet can introduce new route in different cities in the existing countries where it runs its business, where premium service airlines don’t have reach yet. It is known as service or product development. To survive in the market the company may consider of launching new products of diverse type.

Market development:‌

The company should try to go other market beyond Europe with its present services. It can launch its service in USA, Asia, Canada etc. EasyJet can attain lot of leverages by it. High level of revenue increment can be lead by it. But it requires higher level of investment in the new areas, which a cost leader may not follow. Market development is normally perused by the premium service provider companies. For easyJet, condition of premium airlines service in the USA will be a model of market development.

Diversification:‌

For airline diversification means increase revenue volume from both new service and new market in the airline. In the new market like the USA market EasyJet can introduce premium services to accomplish this strategy. For a company like easyJet this is a uncertain game.

3 (b) Best alternative strategy for easyJet‌

In current position the firm is not capable to propose more cut rate, which makes market penetration for the company insensible. More reduction of price of airline tickets is required for the market penetration which will surely reduce the profitability of the easyJet. For easyJet this strategy will not work well.

There is no way to follow market development by the company. With the existing services a new market is not so simple to gain. Cost leaders do their business all over the world. So, leading the market as a marked developer by going beyond the current market is quite hard.

Diversification is generally perused by big companies. A company needs to deal with selling new products and services in new markets in this strategy. This is truly hard to run concurrently. Easyjet is a cost leader. Huge investment, research and development, market analysis is required to reach new market needs but it may result low return or no return. New products are unknown to the customers, so it may not be profitable anyway.

We can reach the decision that product development has the highest edge for easyJet after considering all the strategies of growth with the services of the company. The company has launched new products and services and they will launch more. Their products which we have seen are as follows.

• EasyInternet
• easyMoney,
• easyCar,
• easyCruise

To reach the customer well the acquisition of GO will help these products. To maintain firm’s business level strategy which is cost leadership, this strategy will help the firm. These products are cost effective because they are technologically developed. To remain cost leader the firm need to getting listed in the UK Stock Exchange which will let the firm to provide the fund at lower cost. For more product development the firm need to research & development and knowledge of the customers demand which will offer products and services for the first time are expected to happen in the firm.

Task 4: Strategic implementation‌

The people who implement the strategy are minor to the people who formulate the strategy. If the strategy includes the judgments of the people who will actualize those, then it will result in a better implementation. It is important for implementation to be done as a result of participative decision making process by the internal members of the organization.

To implement the strategy setting the objectives is essential for the units or functional departments. For helping to achieve the organizational goal, roles and responsibilities should be provided to each functional department to attain their own individual objects and for this a proper communication is really important.

Roles and responsibilities of Marketing Department:‌

To find out the market demand of the services provided by easyJet this department will perform analysis in easyJet. In addition, as the firm will do product development strategy, then information of the customers’ demand needs to be known to marketing managers. As the firm is getting bigger its brand to some other sectors; the role Marketing Department also expanding to make the products well-known to market and sell well in the market to enhance the secured turnover of the business.

It is important to locate the best place to deliver goods and services. Marketing plan should be updated time to time and need to be adjusted with the complete planning of the firm (UK

Essays, 2014). As a result of marketing strategy easyJet sells its goods and service beyond the national boundary like Morocco, Egypt.

The sales revenue will exceed £582 million, if the role and responsibilities are carried out properly.

And hence the strategy implementation will take place in the company.

Role and responsibilities of Finance Department:‌

Out of the business segments that the company will be engaged in, cash flow management. The payment of salary, wages, and accruals should be carefully managed. When a firm want to expand its business area it needs to have source funds for investing, in addition to these finance department will suggest the investment plan. To yield higher return from the investment finance department should to source the low cost fund. This department reports the performance of business units in the firm to management. Finance department control and maintain the cost and other related expense.

Via easyJet’s new product or service development strategy marketing and finance department estimate the emerging cash flows in easyJet. Particularly special marketing support needs in new business areas#.

Resource requirement:‌

Enormous investment in the innovation and ingenuity needs for product development. For product development strategy the research and development incurs huge cost. To check the demand state of the services of the company market survey needs to be performed. Huge investment will be needed for the new areas like easyInternet, easyMoney, easyCar, easyCruise. In this regard the finance is key input. For these the company can manage either equity or debt financing. In the UK stock exchange easyJet is listed, so it can handle the resource, the cash by issuing equities for the new businesses.

Smart human resources are required for better selling of the goods and services of new units. The cooperation and good performance of the human resources are also needed for the strategy implementation. The management of them is essential. Motivation is also needed for them.

To keep business with tangible things Material is another important input. Material like parts of engines will be needed for the easyCar. The definition of availability of the material is whether the easyCar will be capable to supply the cars to the customers.

Management can ignore the time investment which is a resource that. The possibility of implementation of the strategy increases with increase of act of the management puts in time investment.

Time scales for easyJet to implement the strategy:‌

Companies need targets and time management for new products and services. EasyJet wish to manufacture new products and promote them in the markets. For this reason marketing department has enormous responsibility to play for selling the goods. Say, easyJet will introduce new service ‘easyInternet’ to its service line. Target and time scales are very vital factors to implement and examine whether the sales are being made or not. In below the way time scale and target make sense are discussed.

Time and Targets

• to sale easyInternet to internet user contacting with sales people.

• to sale easyInternet to internet user contacting with sales people.

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• makeing them clear about what they will going to sell and the measurng process of their performance.

• makeing them clear about what they will going to sell and the measurng process of their performance.

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• to sell internet service sell people should be assinged with full details of their service along with the conditions.

• to sell internet service sell people should be assinged with full details of their service along with the conditions.

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• Using different media sales people will start to sell the service specially by using internet

• Using different media sales people will start to sell the service specially by using internet

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• calculation of generated revenenue within 14 days period by easyInternet.

• calculation of generated revenenue within 14 days period by easyInternet.

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• Awarding sales people according to their sales performance

• Awarding sales people according to their sales performance

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Figure 2 Timescales and Target

Implementation of the strategy and the work accomplishment are ensured by this system. By monitoring it is checked whether targets are being fulfilled in the given time or not. By this way it is ensured that strategy is working in accordance with the set objectives of the management to sell easyInternet which is a new service of easyJet.

Reference:

Barrett, S. D. (2004). How do the demands for airport services differ between full-service carriers and low-cost carriers?. Journal of Air Transport Management, 10(1), 33-39.

Businessdictionary, 2013. market penetration. [Online] Available at: < http://www.businessdictionary.com/definition/market-penetration.html > [Accessed on 18th May, 2014]

Environmentalauditors, 2014. What is an environmental audit?. [Online] Available at: < http://www.environmentalauditors.com.au/what-is-an-environmental-audit.html > [Accessed on 18th May, 2014]

Hill, Charles WL, and Gareth R. Jones. Strategic Management: An Integrated Approach: An Integrated Approach. Cengage Learning, 2008.

Howstuffworks, 2014. How Paperless Offices Work. [Online] Available at: < http://money.howstuffworks.com/how-paperless-offices-work.htm > [Accessed on 18th May, 2014]

Investopedia, 2014. Planning Your Retirement Using The Monte Carlo Simulation. [Online] Available at: < http://www.investopedia.com/financial-edge/0113/planning-your-retirement- using-the-monte-carlo-simulation.aspx > [Accessed on 18th May, 2014]

Marshaclarkecolbournecollege, 2014. Market penetration. [online] Available at:

<http://marshaclarkecolbournecollege.weebly.com/business-strategy-lecture-notes.html> [Accessed on 18th May, 2014]

McGrath, Ginny (2007-08-04). "EasyJet scraps free baggage allowance". London: The Times. Retrieved 2008-08-30.

Porter, Michael E. How competitive forces shape strategy. Harvard Business Review, 1979.

Quickmba, 2013. The Strategic Planning Process. [Online] Available at: < http://www.quickmba.com/strategy/strategic-planning/ > [Accessed on 18th May, 2014]

Tutor2u, 2014. Ansoff Matrix. [Online] Available at: < http://www.tutor2u.net/business/strategy/ansoff_matrix.htm > [Accessed on 18th May, 2014]

UK Essays, 2014. The Roles And Responsibilities For Strategic Implementation. [Online] Available at: < http://www.ukessays.com/essays/commerce/the-roles-and-responsibilities-for- strategic-implementation-commerce-essay.php > [Accessed on 18th May, 2014]

Ukessays, 2014. Organisational Audit And Environmental Audit Marketing Essay. [Online] Available at: < http://www.ukessays.com/essays/marketing/organisational-audit-and- environmental-audit-marketing-essay.php > [Accessed on 18th May, 2014]