Easy Jet Analysis (Essay Sample)

EASY JET SWOT AND PORTER ANALYSIS
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Abstract
This paper intends to analyse the strategy of Easy Jet using SWOT and PORTER’s five force tools. Easy Jet is a low-cost airline company based in London. Low cost airline industry is one of the fastest growing businesses globally. Even though the airline industry has witnessed decline in growth in the recent past, the low cost airlines have successfully managed to increase in the number of customers, profit, and general annual turnover (Binggeli & Pompeo, 2002).
Recent tragedies such as SARS, increased global terrorism attacks and the September 11th attack in the USA have affected the performance of the airline industry globally. Low cost carriers have been the least affected by these tragedies and the general changes in the business environment in the industry. The success of the low cost carries in the airline industry has resulted to the increase in the number of players in the business that tends to copy and apply strategies that have helped the major players attain the sustained growth. As much as the low cost players develop a new class of customers, the rates at which the numbers of low cost players are increasing poses a challenge to future survival of the industry.
Analysis of the corporate strategies applied in the industry as well as risk management proves to be essential in getting an insight into the current and future performance of Easy Jet. This is an interesting area of study since it covers an area that has not been fully studied to understand the status and future performance expectations. Analysis and detailed evaluation of Easy Jet proves to be more informing providing information that can be beneficial to both the airline itself or the low cost airline industry as a whole. With numerous information available on risk management and corporate strategy, this paper details information on corporate strategy and risk management in low cost airline industry with specific reference to a case study of a major player in the industry.
Table of Contents
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Introduction  PAGEREF _Toc364376305 \h
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SWOT ANALYSIS  PAGEREF _Toc364376306 \h
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Strengths  PAGEREF _Toc364376307 \h
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Weaknesses  PAGEREF _Toc364376308 \h
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Opportunities  PAGEREF _Toc364376309 \h
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Threats  PAGEREF _Toc364376310 \h
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Porter’s Five Forces  PAGEREF _Toc364376311 \h
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Threat of new entrants  PAGEREF _Toc364376312 \h
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Bargaining Power of Suppliers  PAGEREF _Toc364376313 \h
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Bargaining Power of the Buyers  PAGEREF _Toc364376314 \h
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Threat of Substitutes  PAGEREF _Toc364376315 \h
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Competitive Rivalry  PAGEREF _Toc364376316 \h
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Conclusion  PAGEREF _Toc364376317 \h
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Appendices  PAGEREF _Toc364376318 \h
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Appendix 1  PAGEREF _Toc364376319 \h
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Appendix 2  PAGEREF _Toc364376320 \h
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Introduction
The company was founded in 1995 and by 2012, the business expanded its fleet to 191 aircrafts that fly to over 130 destinations in thirty countries. The business earned £3.85 billion revenue in 2012 with the total number of almost 8,500 employees (Easy Jet Annual Report, 2012). The corporate strategy of the company aimed at providing low cost airline services has been rather successful and made Easy Jet a leader in the UK in terms of the number of passengers served each year. The main business strategy that the company used to expand in the international markets is to use mergers and acquisitions. The first large acquisition took place in 1998, three years after the establishment of Easy Jet. The company acquired TEA Basle, an airline company based in Switzerland. The deal cost 3 million Swiss franc at that point. Then in 2007, another large acquisition allowed Easy Jet to expand in the market. The company acquired GB Airways for over £100,000,000 (Easy Jet, 2012). The main rival competitor of Easy Jet in the airline industry is Ryan Air. The latter company is currently the largest low cost carrier in the European Union.
SWOT ANALYSIS
Swot analysis is one of the leading analytical tools. It is important to use this tool to analyse Easy Jet’s strategy since it operates in a very dynamic and competitive environment. Swot provides the management with insight into organizational aspect as well as decision making process
Strengths
Easy Jet has had the ability to provide quality service to its customers. This fact has enabled it retain its customers as well as attract more customers. The business has expanded its fleet to 191 aircrafts that fly to over 130 destinations in thirty countries. The business earned £3.85 billion revenue in 2012 with the total number of almost 8,500 employees (Easy Jet Annual Report, 2012).
The corporate strategy of the company is aimed at providing low cost airline services, which has been rather successful and has made Easy Jet a leader in the UK in terms of the number of passengers served each year. The company has continually used merger and acquisition strategy to expand in the international markets. In 1998, three years after the establishment of Easy Jet, the company acquired TEA Basle, an airline company based in Switzerland. The deal cost 3 million Swiss franc at that point. Then in 2007, another large acquisition allowed Easy Jet to expand in the market. The company acquired GB Airways for over £100,000,000 (Easy Jet, 2012).
Weaknesses
Although Easy Jet has low unit cost as compared to most of its competitors, it is not lower than Ryanair. Its cost per seat is almost 50% higher than that of Ryanair. This poses a threat of direct competition from its main rival.
Opportunities
The recent set Easy Jet academy is a good idea and an opportunity for ancillary income. In addition, the leverage on hotels and Easy Jet holidays will create brand awareness and in the process attract more clients.
Threats
Easy Jet is present in some of the high cost airports. These airports increase their prices regularly. There exists also threat of terrorism and currency fluctuations. This scenario is likely to hinder Easy Jet’s strategy of providing cheaper prices to its customers.
Easy Jet is also likely to suffer from labour unrest not only from its staff members, but also from its suppliers like ATC, security and ground transport. As it expands, the diversity and unionisation is likely to fuel internal labour disputes.
Easy Jet also suffers the threat of new players entering the field. This will increase competition for customers.
Porter’s Five Forces
The analysis of Easy Jet using Porter’s five forces is vital and relevant in order to understand the strategies it has adopted in order to thrive in this competitive field.
Threat of new entrants
This threat is generally low because a new entrant into the industry will require a strong financial base to make impact. In order for a new entrant to survive, it requires efficient and quality services as well as strong relations with all the players in the industry.
Bargaining Power of Suppliers
There are a lot of restrictions imposed by the government to suppliers of the airline industry. This has resulted to a limited number of suppliers. As a result, the airline companies have very limited choices when it comes to suppliers. Therefore, the bargaining power of suppliers i...