Individual (low-cost) companies, EasyJet have started by picking

      Individual Report – Strategic ThinkingBSS015-2     Marcus Filip Chis1622435  Table of Contents 1. Introduction.

3 1.1 The aim of this report 3 1.2 About EasyJet 3 1.3 Market Segmentation. 3 2. Porter’s Five Force Framework on EasyJet Company.

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4 2.1 The threat of new entrants is low..

4 2.2 The power of suppliers is high. 4 2.3 High Power of buyers. 5 2.

4 Threat of substitution is low.. 5 2.5 Competitive rivalry.

5 Reference: 6  1. Introduction 1.1 The aim of this report The aim of this report is: – to analyse the business environment andindustry in which the firm operates- consider the main competitors and their competitive positions- to conduct and analysis of internal of the firm – to identify the current strategy and bring evidence from external andinternal analysis 1.2 About EasyJet EasyJet is a British budget airline, is the 2nd largest low-costcarrier in Europe. The company has been founded by Sir Stelios Haji-Ioannou in1995 and it’s based at London Luton Airport.

The company operates domestic andinternational scheduled services on over 820 routes in more than 30 countries.EasyJet is known as largest airline carrier in the UK by passenger’s numbercarried. Just in 2016 they have carried more than 73 million passengers, makingthem the second biggest airline carrier by passenger in the Europe after Ryan Air(Annual Report 2016)  , EasyJet plc islisted on the London Stock Exchange and is a constituent of the FTSE 100 Index.

EasyJet have nearly 11.000 employees throughout Europe but mainly in the UK. Partof Easy Group are also: easy Hotel, easy Bus, easy Car. 1.3 Market Segmentation Like the other small (low-cost) companies, EasyJet have started bypicking up some customers from their competitors like BA (British Airways) orAir France. They also created a ‘new market’. EasyJet is operating in differentway to Ryan Air (its direct competitor in the market), which is targeting theleisure travellers for whom the ticket price is so important. EasyJet has thesame type of clientele for whom the ticket price was slightly less importantand also business customers whose companies seek to save on transportationcosts, but care about the travel’s conditions.

So, EasyJet is targetingdifferent kind of customers, business customers and leisure customers.    2. Porter’s Five Force Framework on EasyJet Company 1 The threat of new entrantsis low Airline industry is hard toenter. Not everyone can have access to it because the initial price to investin that industry is very high. Buying a plane requires a big amount of capital,and the equipment linked with airline industry are also so expensive. Also, theairport taxes, regulations and trainings for staff are so expensive. However, a big threat wouldbe if traditional airlines want to enter the low-cost market. They have alreadythe necessary equipment and knowledge.

  2 The power of suppliers ishigh The two main suppliers thatcan make up the majority of the production cost of air transport is: Airplanesupplier and oil supplier.              Airplane Supplier There are only two airplanesuppliers for the low-cost companies, Boeing and Airbus. So, bargaining powerof EasyJet is low. EasyJet are not in a position of power that means it is so difficultfor them to change prices. The bargaining power of EasyJet can be higher onlyif they decide to buy several planes at the same time, in this case thesuppliers can low the prices.               Oil Supplier Because the planes cannotfly without oil, the petrol suppliers have a higher power. Because of that, thepetrol suppliers are in the position of superiority.

The price is usually highand can be adjusted only by the oil suppliers. Price rise started since theIraq war.                         Airport The last supplier is theairport with its taxes. When the plane lands it need to be parked somewhere andthe parking is so expensive. But for EasyJet the cost is usually cheaper thanother companies. With the main offices and base to London Luton Airport, anairport which is cheaper than Gatwick and Heathrow.  3 High Power of buyers Because EasyJet is not the only low-cost company, the bargaining powerof buyers is high and it’s so easy for customers to compare the fares andchoose another company.

There are plenty of low-cost companies and customer canchoose the most suitable one and also, changing companies does not implement anycost of agent intervention.   4 Threat of substitution is low  The threat of substitution is low. The main substitute for planes aretrains, trains are cheaper than planes for short journeys. Moreover, trainstations are located within the city, while airport are often out of the citycentre, and therefore that means the people will need more time and money to goto the airport.

Also, the time to get to the airport is longer and the check-inprocedures requires more time. Besides the location, the trains do not have somany advantages, because the planes low-cost companies (in this case EasyJet)have ticket prices that are approximately the same to the train tickets orsometimes cheaper.  Vehicles, such as car or buses, can be another substitute, this isusually cheaper (especially when several people travel together) but the traveltime is much longer for long journeys and less convenient.   5 Competitive rivalry EasyJet is the fifth largest intra-European airline in terms ofpassengers, and the second most important low-cost company after RyanAir whichis its main competitor. EasyJet competitors can be direct or indirect.  Direct Competitors The low-costcompanies which are offering the same product with the same range of prices.

Twoof the main competitors for EasyJet are RyanAir and WizzAir. The competition betweenthese three is extremely intense and each of them attempts to gain dominanceover others. Besides, EasyJet can differentiate easily from the rest of theircompetitors, especially from RyanAir.

For instance, EasyJet focuses on twosegments of people, business travellers and people traveling for leisure, whileRyanAir only focuses on the leisure segment. Then, EasyJet does use some of themain airports, such as Paris CDCG or Madrid Airport, while RyanAir uses onlyminor airports. Their indirectcompetitors are the traditional old and big airlines, such as AirFrance andBirtishAirways. They are indirect competitors because they target differentmarket segments such as people interested in buying a cheap flight will be lessinterested to buy tickets with traditional companies.  Substitutes arealso an indirect competitor but at the smaller level, as specified above,trains and vehicles do present disadvantages. In a nutshell onecan say that rivalry is especially high for the direct competitors.   Reference: 1.

   FTSE100 Index:  http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/indices/summary/summary-indices-constituents.

html?index=UKX&page=2Accessed 03.01.20182.   Londonstock Exchange, EasyJet plc: http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B7KR2P84GBGBXSET1.html?lang=enAccessed 03.01.

20183.    EasyGroup:  Koenigsberg, O., Muller, E. and Vilcassim, N.J., 2004.

easyjet airlines:Small, lean, and with prices that increase over time. Londin Business School, London.4.    Pels, E. and Rietveld, P., 2004. Airline pricing behaviour in theLondon–Paris market.

 Journal of Air Transport Management, 10(4),pp.277-281.5.     

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