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External Environment Analysis

The purpose of the report is to do the development of a business level strategic plan to relocate the headquarters of EasyJet from the UK into an EU member state. In this context, the country that has been chosen is Germany and the city that has been selected is Munich. In this context, there is the requirement for analyzing the external environment as well as the industry competition in Munich, Germany that is being recommended. This needs to take into consideration the competition within Germany and the competition that results from the relocation to Munich. Germany. There is also the requirement for discussing the resources as well as competencies of EasyJet and in what ways they can be used to gain competitive advantage upon relocation to Munich, Germany. There is also the requirement for having a critical evaluation whether EasyJet will be able to continue with its present vision and mission statements in Munch, Germany.  

  • Political – For improving the connectivity of the surrounding areas with the central administration as well as other metro towns and cities and for reducing the pressure over the other airports that exists, the government has started a drive in Germany for boosting air connectivity in respect of quick transportation regarding passengers as well as cargos amongst the places. In Germany, the government did the launching of certain schemes to connect different regional airports that will be boosting the country’s air traffic and therefore, offering plenty of scopes to the airline companies (Stead 2013). When EasyJet will be starting its operations in Munich, Germany and relocate its headquarter from the UK to Munich, Germany then the organization is required to abide by the regulations of the government and  follow the schemes that the Government has launched, which will  provide various opportunities to EasyJet.
  • Economic – There is a reticent recovery of GDP in Germany and a trivial rise in the per capita income of the individuals has led to the growing preference of low-cost economy flights, which are preferred over the premium airlines. EasyJet can use the opportunity to set up their headquarter at Munich, Germany and being a low-cost airlines company it will be preferred choice for the customers and will start getting customers at a steadfast rate. A growth in GDP will also be indicating about the growth in the opportunities of business that will be boosting the air traffic due to the rise in the quantity of business travelling. Developing the opportunities relating to investment outside the domestic market of Munich, Germany will also be increasing international air traffic in respect of different purposes relation to business. The International Air Traffic Arrangements has seen the rise in international air traffic from 38% to 47% and in this context, Germany has experienced the greatest development (Hubbard 2014).
  • Social – There has been a rise in the preferences regarding air travel over other means of transport. Currently, individuals are interested in travelling through air than railways as well as roadways because of the attractive experiences associated with flying and significant drop in the travelling time within the different locations. This has offered the airline companies with the rising opportunities in business. The consumers are also preferring distant long-haul tourist destinations that can be seen in the rise in spending of holidays in foreign destinations (Jenkins 2016). The launch of low-cost as well as no-frills airlines has given rise to the change in perception regarding air travel as well as reduction in the status hurdles in respect of travelling through air between the middle-income section of the society. EasyJet can use this opportunity for catering to the middle-income segment within the society as they are offering low-cost flights.
  • Technological – To enhance the opportunity relating to the analysis of the consumers, it can be stated that the technological growth has assisted the airline companies in gauging the preferences of the customers, understanding the requirements as well as aspirations and deriving the analytical and expressive evaluation that is depending on the same. There is also the growth in the customer relationship management method as well as customer business interface method. In respect of improving the systems of reservation, technological advancement has assisted the customers as well as service providers with easier systems of communication as well as flawless booking facilities in respect of the customers. Developing the software applications, usability as well as functionality of websites, customer care call centres and systems of alert are considered being the top customer priorities (Jenkins 2016). These methods have assisted the airlines organizations in acquiring the customers easily as well as extending the customers with different services that can be accessed easily. When EasyJet will be opening its new headquarters at Munich, Germany it will be required imbibing the methods that will assist the company in better customer acquisition.
  • Legal – The imposing of regulations on air traffic by the different administrative authorities is stating that because of the different legal issues, there has occurred the exigency for diverting the resources as well as the re-orientation of business functions in respect of ensuring observance relating to the legal procedures. Certain legal factors that are lately concerned with the airline companies in Germany are the banning of the night flights in the airports, strict as well as greater regulations relating to consumer protection, increased taxation regarding air traffic, rise in noise legislation, regulating the climate in respect of emissions and rise in the requirements for air safety (Grant 2014). So, to commence its business in Munich, Germany the airlines company is required to abide by the different regulations that are imposed on air traffic by the various administrative authorities within the country.
  • Environmental – The green technologies as well as efforts for the reduction of environmental pollution is stating that the rising issues regarding the environmental influence towards different commercial operations is leading the airline companies towards devoting an earnest effort to reduce the environmental influence. The airline companies in Germany is pursuing environmental strategic programmes that will be including the alternate fuel sources, reduction in emissions, efforts for noise reduction and so on. So, when EasyJet will be opening its new headquarters in Munich, Germany it will be required to pursue different environmental strategic programmes, which will be concerning the welfare of the environment. The government as well as corporate houses are taking initiatives that are leading towards the rise in investment towards the development as well as harnessing of non-conventional energy sources (Frynas 2015).
  • Bargaining Power of Buyers – The airline industry comprises of two types of buyers. Firstly, there are individual buyers. They are purchasing the plane tickets due to various reasons that can be related with the individual as well as business aspects. This group of buyers is having extreme diversity, and the purchasing of tickets can be done in different ways. They can do this via the travel agencies as well as the online portals. There exists low switching cost within the organizations since many individuals are choosing the flight depending upon the place to where they will go and cost of flight at the time. This, however, is not sufficient in respect of the high switching costs. Every customer is requiring a lot of significant information. Buyers are required understanding the flight time as well as the safety issue related to flying (Chen 2015). The service that is provided is distinctive. Every airline company is having a niche. Certain airline companies are focusing on cost, and others are focusing on having the best facilities and so on. Being a low-cost airline, EasyJet is trying to focus on the cost factor and providing the customers with the opportunity of flying to different destinations at a lower air-fare. In general, the bargaining power of the buyers is having an extremely low threat within the industry.
  • Bargaining Power of Suppliers – The main suppliers are the manufacturers of airplane. Within this industry, extreme standardization of inputs are done. The airline companies cannot do the switching of the suppliers easily. Majority of the firms are having long-term contracts with their suppliers. It is not easy to make an entry into the plane manufacturing industry due to the huge capital that is required for making an entry. Because of this, there are very limited numbers of suppliers within the airlines industry. Therefore, while making an entry into the new market and set their headquarters in Munich, Germany, EasyJet is required keeping this aspect in mind. The airlines company is also required to make long-term contracts with the suppliers in Germany. Depending upon this fact, the bargaining power of suppliers is also having a low threat (Morden 2016).
  • Threat of New Entrants – This aspect is having a low threat regarding the airline industry. In this regard, there are two scenarios that will be raising the level of threat. Firstly, there exists switching costs that are extremely low and secondly, there is the involvement of no proprietary products or services. Although, there is the presence of these two scenarios, the airline industry is still having a very low threat. The current firms are having a large cost advantage. The airline industry is having the requirement of huge capital amount and with the absence of a strong base of customers, there will occur very less to no profit in the starting years. The current firms are having a significant cost advantage. The airline industry is requiring a significant amount of capital and in the absence of a strong base of customers there will occur very less to no profits in the first few years (Morschett 2015). The current firms will be using their high capital for retaliating against the newer firms with whatever means that is essential like reduction in prices as well as incurring losses. Another challenge in respect of the new firms that are interested in making an entry into the market is that they primarily have to become licensed which will be taking almost a year and after that they will be continuously be regulated  by the certain organizations like the Federal Aviation Administration as well as the Department of Transportation. When EasyJet will be planning to make an entry into the new market in Germany and set up its headquarters at Munich, they need to first acquire the license that will be taking approx. an year’s time and post that there regulation will be taking place by specific establishments.Therefore, these aspects will be preventing majority of new entrants from making an entry into the airline industry (David 2015).
  • Threat of Substitutes – The airline industry is having a medium substitute risk level. Consumers will be having the option of selecting different kind of transportation like cars, buses, trains or boats for reaching their destination. However, the main challenge is related with the time factor. However, airlines do the surpassing of all other types of transportation when cost, convenience as well as service is being considered. Customers at times, do the selection of other modes of transport due to different reasons like cost when they are not travelling very far. Therefore, while shifting their headquarters from the UK to Munich, Germany, EasyJet is required keeping this aspect in mind and since, they are a low-cost airlines company, the threat of substitution will not be affecting the airlines company much.
  • Rivalry amongst Existing Players – The rivalry among the existing players is very high. The rivalry in the airline industry is very severe due to various reasons. The airline industry is presently faced with stagnation. It is considered being in the maturity stage of the business cycle. The rivalry amongst existing players will be high and will be pushing out any organization that is not having sufficient capital (Goetsch 2014). While opening their new headquarters in Munich, Germany, EasyJet needs to keep this matter in mind and they need to have adequate capital for commencing business or else they won’t be able to thrive.

The Value Chain Framework will be adding competitive advantages over other competitors as well as reducing the risk of substitution. Their activities can be segmented into two categories, which are primary activities as well as support activities.

Primary Activities

The major goal of any organization is achieving operational efficiency. For doing this, all the primary activities will be the major concern in respect of EasyJet.

  • Inbound logistics – As per the framework depicted in the above figure, in respect of the routes, it can be stated that EasyJet is having their operations in more than 600 routes in 30 countries. In respect of passenger service, it can be stated that the airline company is providing services to more than 60 million passengers. Regarding pricing, it can be stated that the airlines company is offering the lowest price. Regarding fuel, it can be stated that the airlines company is spending more than 1,251 million euro on fuel.  (Gamble 2014).
  • Operations – As per the framework depicted in the above figure, in respect of flights and scheduling of crews, the company is doing the management of record number of 500 flights everyday and more than 4500 crews are functioning. In respect of ticket counters, the customers will be finding ticket counters in whichever destination, EasyJet is operating. In respect of safety services, the company is making sure that the crew’s safety as well as passenger’s safety will always be coming first (Bettis 2016).
  • Outbound Logistics – As per the framework depicted in the above figure, regarding the baggage systems, every customer can bring one cabin bag whereas the EasyJet plus or flexi fare card holders are given the opportunity for keeping another small bag below the seat. Regarding rental car and hotel reservation, the airlines company is providing rental services from the airport to the various places that the customers wish to go. The airlines company also assists in providing hotel reservation facilities.
  • Marketing and Sales – As per the framework depicted in the above figure, regarding promotion, EasyJet is undertaking aggressive processes such as offering discounts at regular intervals to the customers particularly in the peak time. Regarding advertising, they are undertaking aggressive advertisements. Their major advertisement platform is internet and every information is available on the company’s website.
  • Services – As per the framework depicted in the above figure, the approach of EasyJet is towards the satisfaction of the customers. EasyJet is targeting the travellers, entrepreneurs, managers of the small organizations (Rothaermel 2015)

Support Activities  

These activities will be assisting the primary activities for achieving the competitive advantage over the other organizations.

  • Firm Infrastructure – As per the framework depicted in the above figure, the airline company is having a strong brand awareness as well as reputation particularly in Europe. The company is also doing the expansion of its business into emerging markets such as Morocco as well as Egypt, which will assist in increasing the brand name reputation of the company. The organizational model will be depending upon the low cost model that is valuing cost effectiveness.
  • Human Resources – As per the framework depicted in the above figure, the airlines company is majorly recruiting young individuals. The job applications are accepted online. The company is encouraging variety as well as considering its workforce as a major success driver. As a result, the company is making a considerable investment in personal growth for increasing the involvement in jobs as well as commitment relating to team-work. The staffs are getting benefitted from the training programs, coaching as well as mentoring for having a constant improvement to their abilities (Daspit 2017).
  • Technology – As per the framework depicted in the above figure, the Company is using new advanced technologies, constantly improving the company’s IT business model for delivering better quality services as well as achieving better performances. The airlines company did the launching of its ‘Right Now Service’ for enhancing the online customer support. There has also been the launching of mobile apps for the customers in having easy accessibility. In addition, certain nano technologies are being used for reducing the weights of airbuses and making them more fuel-efficient (Slack 2015).
  • Procurement – As per the framework depicted in the above figure, the major suppliers of EasyJet are Airbus as well as Boeing. The airlines company is also dealing with the external organizations like Microsoft for ensuring the maintenance of the IT business model of the company. The airlines company also did the launching of different programs for enhancing the association with the suppliers.

Since, EasyJet will be relocating its headquarters from the UK to an EU member state (in this case, it is Munich, Germany), it is recommended that the airlines company will be continuing with its current vision as well as mission statement.

The current vision of the company is to become Europe’s favoured short-haul airline, delivering market-leading returns as well as to make the travel easy and affordable for everyone. This is the vision that the company is working towards day in day out. In this context, the company has already taken major steps for reaching where they are, but there is still work that needs to be carried out.

The current mission statement of EasyJet is providing the customers with safe, better value, point-to-point air services. Also, towards affecting as well as offering a continuous and dependable product as well as fares that will appeal to leisure as well as business markets on various European routes.

Strengths

Weaknesses

· The company did the establishment of a brand reputation in becoming the most economical European airline.

· The company is offering a consistent, on-time travel service having value added traits (Peppard 2016).

· There is very high competition in the low-cost airline industry where different brands are competing for the same base of customers. This has led to the slashing of prices by EasyJet that is a concern regarding the costs.

· The company is not offering a free food service on longer flights of more than two hours that many customers might be considering to be quite challenging (Eden 2013).

Opportunities

Threats

· The airlines company could be looking at means for making its entire operating structure to be more effective so that it could be offering certain perks for becoming increasingly competitive. The company recently made the announcement that it will be adding more frills. This is a major scope for the airline company in differentiating itself further.

· The airlines company could be looking for opportunities to have strategic partnerships with airports for assisting in the expansion of its route system as well as offering more options for travel regarding its customers (Hill 2014).

· The competitors are offering additional frills, flights as well as options for routes while maintaining a lower cost. This is threatening the market position for EasyJet.

· Threat is also occurring in terms of external forces of the market regarding cost pressures that are related with the rise in the oil cost, as well as recessions in the economy, which will be reducing the number of flights that the leisure travellers are taking (Wheelen 2017).

Industry Competition Analysis

Strengths

The reputation of the company for being the most economical European Airline will assist it in setting a new headquarters in Munich, Germany amidst the strong rivalry that is present within the country regarding the airline industry.

Weaknesses

The airline company might be required to slash its ticket prices due to the tough competition that is occurring within the different airlines company in Munich, Germany. Since, EasyJet is a low-cost airline, therefore further reduction in prices might prove to be detrimental for its business.

Opportunities

EasyJet could be looking for opportunities to have strategic partnerships with different airports in other cities of Germany for assisting in the expansion of its route system as well as towards offering more options for travel regarding its middle-income customers.

Threats

The competitors are offering additional frills, flights as well as options for different routes while maintaining a lower cost. This might occur as a threat regarding the market positioning of EasyJet in Munich, Germany where it will be opening its new headquarter after getting shifted from the UK.

In this regard, EasyJet will be following the cost leadership strategy, differentiation strategy as well as segmentation strategy. An organization can achieve the cost leadership strategy through the increase in profits by reducing the costs while charging industry-average prices and also increase the market share by charging lower prices. Since, EasyJet is already a low-cost airline therefore, setting its headquarters at Munich, Germany will increase in market share in the new country. For implementing a differentiation strategy, EasyJet is required having a better research, development as well as innovative strategies and also having the capability for delivering high-quality services. Through the segmentation strategy, EasyJet will be focusing on a selected or specialized market in Munich, Germany and will be creating the demand regarding a particular market in respect of low-cost airlines.

The marketing mix for EasyJet in Munich, Germany is as follows,

  • Product – In respect of maintaining as well as increasing the competitiveness of the organization as well as to attract increasing number of business travellers in the new location, EasyJet will be introducing a series of business marketing products that will include the Flexifare method as well as allocated seating. The Flexifare method will be comprising of the three special services that will include preferential boarding, free holding of luggage and ability for changing flight just two hours prior to the take-off regarding the flight.
  • Price – In the new location, there will be a simple structure of pricing regarding EasyJet. The airlines company will be employing two distinctive price strategies that will be stating that it will be not be offering last minute deals and will be offering only a single class and allow price to be the only influencer regarding demand.
  • Place – In the new location of Germany, EasyJet will be conducting majority of their sales through the online process and will therefore, be targeting this target market. This will occur through the identification and then actualizing the individual customer requirements. The airlines company will also be having only a single national call number, as this will assist in positioning EasyJet as a nationwide organization.
  • Promotion – In respect of entering the new market in Germany, EasyJet might cooperate with technology companies that will be offering platforms for global distribution systems. This will be enabling the business travel agencies in viewing as well as booking the flights of the airline company in a process with which they are familiar (Gamble 2014).

Since EasyJet will be starting their businesses in a new location, the focus of the airlines company will be to attain market condition relating to the economies of scale, which will assist it to attain cost effectiveness. However, the airline company will be facing certain challenges in this respect. It will be facing competition from the other domestic airline companies that are already functioning within Germany.

This aspect will be portraying a certain amount of risk that the airline company needs to undertake in the form of penetration pricing. This is a pricing strategy where the airline company is required to set lower prices from their already low-priced fares relating to the services for rapidly reaching a wide segment of the market (Grant 2014). EasyJet is required undertaking this risk on the expectation that the customers will be switching towards their services due to the reduced price range.

Resources and Competencies

Conclusion 

Regarding the ground operation, the airline company is ensuring that the crew is always in the appropriate place at the appropriate time. There occurs strict maintenance of daily operations such as checking of weather, as well as traffic and flight managements. Regarding the on-board services, the airlines company is not offering free food but they are having Buy-On Board services where customers will be buying foods that they prefer and they could also shop for merchandises. In addition, the company also did the designing of a pioneering method for measuring as well as evaluating the performance of the suppliers that will assist in increasing the quality of the products.

According to me, EasyJet could be looking at means for making its entire operating structure to be more effective so that it could be offering certain perks for becoming increasingly competitive. The airlines company recently made the announcement that it will be adding more frills. This is a major scope for the airline company in differentiating itself further. Moreover, EasyJet could be looking for opportunities to have strategic partnerships with airports for assisting in the expansion of its route system as well as offering more options for travel regarding its customers.

Bettis, R.A., Ethiraj, S., Gambardella, A., Helfat, C. and Mitchell, W., 2016. Creating repeatable cumulative knowledge in strategic management. Strategic Management Journal, 37(2), pp.257-261.

Chen, C.M., Delmas, M.A. and Lieberman, M.B., 2015. Production frontier methodologies and efficiency as a performance measure in strategic management research. Strategic Management Journal, 36(1), pp.19-36.

Daspit, J.J., Chrisman, J.J., Sharma, P., Pearson, A.W. and Long, R.G., 2017. A Strategic Management Perspective of the Family Firm: Past Trends, New Insights, and Future Directions. Journal of Managerial Issues, 29(1), pp.6-29.

David, F.R. and David, F.R., 2015. Strategic management: A competitive advantage approach, concepts and cases.

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.

Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.

Gamble, J.E. and Thompson Jr, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-Hill.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Grant, R., Butler, B., Orr, S. and Murray, P.A., 2014. Contemporary strategic management: An Australasian perspective. John Wiley & Sons Australia, Ltd..

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.

Jenkins, M., Ambrosini, V. and Collier, N. eds., 2016. Advanced strategic management: A multi-perspective approach. Macmillan Education.

Morden, T., 2016. Principles of strategic management. Routledge.

Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management. Springer.

Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

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Stead, J.G. and Stead, W.E., 2013. Sustainable strategic management. ME Sharpe.

Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic Management Journal, 38(1), pp.42-63.

Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson.

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