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Evaluate The Attractiveness Of The Budget Airline Sector By Considering The Business And Competitive Sectors

4295 words - 18 pages

B820 TMA 01December 2003To: Paull RobathanSubmitted by: Kerry SheehanCONTENTS PAGE1EXECUTIVE SUMMARY 4PART A 6ENVIRONMENTAL ANALYSIS 6STEP ANALYSIS - 1995 6THE BUSINESS ENVIRONMENT 8STRATEGIC SPACE 8THE ATTRACTIVENESS OF THE BUDGET AIRLINE SECTOR 10COMPARING MEASURES OF ATTRACTIVENESS IN THE BUDGET SECTOR 12Analysis of Demand and Competition 12Financial Analysis 12Industry Specific Modelling 13SUMMARY 13PART B 15EASYJET'S STRATEGY 15DELIBERATE V. EMERGENT STRATEGY 16COMPETITIVE ADVANTAGE: 16Industry Participation 17MEASURING SUCCESS 17DEVELOPING SUCCESSFUL STAKEHOLDER RELATIONSHIPS 18Operating successfully in the competitive environment 19Maximise Revenue: 20Maximise Load: 21Minimise Costs: ...view middle of the document...

INTRODUCTIONThis report is divided into two sections addressing the two distinct parts of the question. The target recipient is a potential entrant into the Budget Airline Sector.In part A we endeavour to:Evaluate the attractiveness of the budget airline sector by considering the business and competitive sectors.This will be achieved by the use of STEP analysis, Strategic space and Porters Five Force analysis. We will then derive from the above the attractiveness to potential new entrants.In part B we build upon our findings in A and:Identify the strategies pursued by Stelios Haji-Ioannou (Stelios) over the periodAnalyse the extent to which thy allowed Easyjet to compete successfullyAllowed them to respond to the external challenges facing them in 1999.This will be achieved by accessing deliberate/emergent strategies, stakeholder frameworks and benchmarking.PART AENVIRONMENTAL ANALYSISTo understand the European Airline Industry and its operating environment, we initially used STEP analysis. STEP enables us to systematically categorise information on the key influences which impact the Macro-environment.STEP ANALYSIS - 1995ENVIRONMENTALINFLUENCES INDUSTRYISSUES OPPORTUNITIES&THREATS IMPACT ON ATTRACTIVENESS OF BUDGET SECTORSocial UK frequent fliers Influenced choice of location Maximise demand + For UK baseRecession - less disposable income Reduced demand for non-essential leisure travel Price increasingly important + Budget format popular, reduced importance of additional service levels e.g. mealsYoung service-based workforce, e.g. telesales. Airlines labour-intensive, wages major cost Increased efficiency & responsiveness + For new entrants, existing workforces protectedIncreased travel across Europe Growing demand Short-haul routes popular + Potential for future profitabilityTechnological Aircraft advancements: fuel consumption, noise levels, safety Major cost implication of fleet strategy Differentiation through fleet + Exceed expectations if high quality fleetImproved 'call-centre' technologies Feasibility of in-house distribution Low-cost processing of volume sales + Greater control over distribution & cost efficienciesEconomical Global mergers widespread Restricted by regulations Opportunities post-deregulation + Smaller carriers & new entrants to achieve economies of scale, protection against monopoliesAviation fuel prices affected by political/economic events, exchange rate Massive fluctuations are significant uncontrollable costFinancial instability - Significant negative impact, new entrants vulnerable as insufficient reservesPolitical + Budget sector now viable strategy, success from deregulated US marketTable 1 STEP analysis 1995STEP ANALYSIS - 1999KEY INFLUENCES INDUSTRY ISSUES OPPORTUNITIES& THREATS IMPACT ON ATTRACTIVENESS OF BUDGET SECTORSocial Media interest Impact of public opinion on brand image Coverage supported or undermined brand + Positive about, e.g. easyJet & Virgin, negative coverage of...

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