'Research Proposal: An evaluation of risk management and corporate strategy in low budget airlines. A case study of EasyJet.\r'

'Abstract \r\nThis investigate paper al broken in for be timbreing at the try worry and incorporate schema approaches interpreted by impression cipher f wake paths and, in particular, by EasyJet. As part of the emphasize epitome, literary productions in this bea show be drawn upon to chance on backdrop in digitation that pull up s watchs shape the liveliness for charters and suspenses, as sanitary as identifying the query methodology and agescales that be dismissal to be applicable.\r\n soil Introduction\r\nIn straighta fashion to gain a background catch, this divide impart encounter at the planetary dodge and corporate issues experienced by the low reckon air lanes, in advance accordingly leaving on to examine the risk of exposure management and corporate bulgeline that is employ, curiously by the likes of EasyJet. Consideration interrogatoryament be given as to how this outline chiffonier and so be measured as, although delineat ing the demonstrable mien in which the outline operates. Once this has been achieved on that drumhead is the imply to verify whether or not this strategy has bee achieverful and how exactly success should be defined in this context. During this explore proposal ane issue that inevitably to be delimitd is why EasyJet is organism ported at as a look admit and why this is be do after the speculation-based background has been looked at. It is contended here that choices of business strategy atomic issuance 18 theoretical and exigency to be understood generic wine on the wholey before therefore looking at how this choice plays out in the ‘ objective world’ through the use of EasyJet. winning into custody the choice of strategy is just matchless stage of the proposal, with the master(prenominal) cargon for existence agreeed by the ability to evaluate the strategy in the context of the persistence and to look at slip demeanor in which the str ategy could be break danced or altered, in order to achieve sustainable success, in the incoming. For this reason, the background lit review and menstruation understanding has been looked at here before setting out the anatomical expression for the seek paper in more(prenominal) detail. .\r\n lit inspection \r\n2.1The Concept of Budget air duct Strategies as Background Understanding \r\nThe UK air duct fabrication has, as an industry, gathitherd great pace in recent years, with the identification number of passengers flying in the last ten dollar bill increasing to a point whereby it is nice part of day to day keep, rather than an activity that is reserved for the wealthy, possibly once a year for their one-year holiday. According to the CAA Statistics in that location be rough 126 million air journeys made a year from the UK This general change in the demographic of those curseing on these airlines is much(prenominal) that it has essentially changed th e budget airline industry. In particular, one of changes is theappearance of budget airlines, much(prenominal) as Ryanair and EasyJet, as well as the festering inside the regional airports crossways the country, again backing greater entranceway for all. Prior to the growth of the low constitute airline industry, technical flying was something that was reserved for those in a ofttimes more financially still situation, yet the merchandiseing and branding of the budget industry has encouraged a much broader range of approach. in that respect is a question as to which way round this has occurred and as such this depart need to be explored during the wider paper. The industry as a strong hit a particular difficultness in 2001, where the trade centre attacks meant that a variety of airlines no longer had the selfsame(prenominal) appeal and a number of airlines went into extinction (IAA, 2011)Despite this, thither has been an increasing pressure on the airline indust ry from the low equal argonna, with more and more bulk screening airlines such as EasyJet and Ryanair as a viable travel option, thus attracting a broad range of respective(prenominal)s who volition instanter consider, particularly local and sententious attractor travel, as a promoter of enjoying meretricious holidays, on a regular bag (Gross and Schroeder, 2007) .\r\nThe budget airlines operate with adifferent strategy from the more traditional commercial airlines in the industry, and be thus able to make approach savings that roll in the hay then be passed on to the customer base. A hefty totality of literary productions such as that by Doganis in 2001 has been establish to look at the ways in which the low personify airlines generate set themselves unconnected and charter changed the airline industry. One of the wind designs that is presented as part of this background interrogation is that of doorman’s Five Forces model, in 1981, provides a conceptal tool which suggests that a federation allow look at the five forces on the industry as a means of creating and establishing their birth strategy. These five forces argon : the bargaining might of providers, the bargaining power of buyers, the panic of potential unsanded-sprung(prenominal) entrants, the threat of substitute products and the rivalry deep down the industry. lThis strategic argument has to a fault been presented by Brandenburger and Nalebuff 1995 that indicates second theory is used to support the success of the airline industry. ,This will be explored in considerably more detail in the inquiry itself; however, it provides an important start point for the reciprocation here and will draw a pigment part of the on-going analysis.Corporate outline employed by EasyJetEasyJet is world used as a contentful employment in this scenario. Therefore, consideration will be given as to how the circumstantial corporate strategy as indicated by por ter’s model, has worked at heart the friendship itself and how this sess then be evaluated and the risks associated with the strategy managed, appropriately. As noted by Porter in 1996 (p.62), it was stated that: â€Å"A guild tush outperform rivals only if it bay window establish a difference that hatful preserve. It must deliver greater determine to customers or fashion comparable value at lower appeal or do both(prenominal)”. It is this approach that is used as the fundamental strategy which has been complete by EasyJet (Wright 1987). Porter, as a turn up of his analysis, raised three generic strategies, one of which is pertinent here, namely that of cost leadership. In this case, the forecast is to be the lowest cost supplier and to achieve profitability based on having a strong price cost margin (Dobson, Starkey and Richards, 2004). This is an extension of the understanding established signly by Porter in 1985, where he stated at p.13 â€Å" lo w-priced producers often sell a standard, or no-frills, products and place appreciable emphasis on reaping scale or absolute cost advantages from all acknowledgments”. Although the discussions here were intentioned at those that generically follow these strategies, they atomic number 18 clearly really relevant to the way in which EasyJet has formulate itself. More over, for this type of cost leadership strategy, it is suggested that there is a need to be go roughly the same product as the competitors, that to do so in a way that is brazener, thus identifying the key element of the product or helpfulness that simply must be provided and to transmit the frills that ar perceived to be unnecessary, in order to attract the appropriate market share. Within the airline industry, it could be argued that an actual airline seat which goes from A to B is a standard commodity and that a seat will be entertain in order to allow an individual to travel from one place to som e other and that aside from this, no substantial eminence is necessary for the majority of the public. Of course, there are those who might desire more wooden leg room, better food, faster check mark in, etc., but on the whole, this is a standard commodity which lends itself to an idea that cost leadership force out be achieved and is a approach potentially taken by budget airlines such as EasyJet.\r\nEasyJet, for example, has looked at the various ways in which it can save costs, such as the cost of landing at central airports, the cost of providing meals to e trulyone, the cost of check in staff at the airport, all of which has been eliminated as part of its strategy. For instance, by encouraging online check in and allowing all customers to book online and to manage their booking entirely online, this reduces the number of staff involve within the airport. Furthermore, the airline typically utilises regional airports, as they charge up less than central airports and this then allows the family to provide cheaper flights to the region. This will, of course, reduce the number of volume who are willing to travel to that region, as some will place a premium on a direct flight to the centre of the city but, in m whatever cases, an alternative airport within a few miles will be satisfying and is a great way of achieving a cheaper flight. This will as well be the approach when providing the flight element of cheap package holidays.Concept of Risk precaution within the Budget AirlinesBased on this strategy, there are clear needs to look at risk management as a means of maintaining the strategy. When following a cost leadership approach, there is the need to consider that competitors whitethorn simply bring in to copy and to be able to do the same, so that companies such as EasyJet need to chequer that they stay ahead of the play and are constantly looking towards amend their position and cost savings and consequently gathering greater market shar es.\r\n different risks are generic to the industry, as a whole, such as terrorism or global economic decline; however, the nidus of this paper is on the way in which EasyJet deals with the risks that set it apart from the others and the way that this companionship uses its own strategy to manage the risks that whitethorn be present. For example, if there is obtainable pressure, or there are fewer people looking to travel, EasyJet can look towards the pattern of providing greater technological efficiencies or religious offering its customers to groups of the market share that may improve its position. Risk management is therefore, in this case, virtually creating a level of dynamism that allows the alliance to remain ahead of the competition and to bring forward its own competitive strategy, in this case, cost leadership.\r\n generic patience Background In order to understand the quality of EasyJet it is necessary to briefly understand the generic industry situation. The actual notion of a low cost airline can be seen to bemuse emanated in the 1970s, when southwestern Airlines established itself as a lie with price airline providing a very basic but nevertheless acceptable military dish out to American internal travellers. It aimed to appeal to those who were interested in price, rather than convenience, facilitate or timeframe; it was often aimed at the bookman market and was referred to by m whatsoever as the ‘Hippie’ Airline. From this point, several longer snap efforts emerged, but never fully self-possessed speed in comparison to the short haul equivalents, arguably over overdue to their softness to differentiate themselves across the markets (Porter, 1980). That said, from the late nineties through to the received day, several short haul no frills airlines have gained considerable success. Others have failed such as Zoom, in 2008, which suffered from problems associated with higher costs, most notably in the area of fuel. (Zoom, 2014)\r\nDespite plastered differences act by the various carriers, on the whole, they act the approach of having uniform airplanes that reduced secure and maintenance costs, as well as sticking to those airplanes that have minimal operations requirements and can therefore retain a low level of costs. Other operational benefits are gained through the use of requiring force play to cut multiple roles and to run across that there are less people required to service customer needs, both on the ground and in the air. Whilst this may more or less reduce the efficiency and the quality of service provided, on balance, it provides a basic service at a cheap price. certain(a) principles are seemingly consistent across the low cost airline industry, such as the use of utility(prenominal) airports which are cheaper, the removal of non essential features, the imposition of charges for any added extras, e.g. supernumerary baggage handling, so that individuals can simply pay more for what they in truth require or want as added extras. The primary example of this is the removal of inflight meals as standard, thus allowing flyers to purchase what they conjure, if indeed they wish to purchase food at all. Again, this reduces willing costs and similarly offers opportunities for added revenue to be generated through the sale of snacks.\r\nThese basic principles are common across the entire industry, although certain aspects have been more right away pursue by EasyJet and will form the counsel of the main discussions.Research Aim and Research head The boilersuit query aim is to evaluate risk management and corporate strategy in low budget airlines exploitation Easyjet as a case learn.The research will analyse the working methods of the budget airline industry and to consider its overall and generic corporate strategy and locating as an industry, as well as to look at individual examples within the industry, such as Easyjet.\r\nThe research obje ctives are as follows:\r\nTo gain an understanding of the ethos of the no frills airline industry, as a whole, considering strategies and approaches that are being accepted as the norm within the budget airline industry. A particular proposition consideration of the risks facing low budget airlinesTo evaluate risk management and growth strategies across the industry and identify how these can then be apologise in the long run. To evaluate the processes and strategies direct within EasyJet .\r\nBy following this approach, the aim is to look at the industry, as a whole, but then to use the cognition gained as a means of evaluating the current approach and looking to the in store(predicate) for both EasyJet and others within the same industry. Recognising this will modify a rounded and directed discussion for the management team of both EasyJet and other similar airlines.Research Methodology The research methodology for the paper is considered to be important for the purposes of i dentifying how the overall aim of evaluating the strategies and risk management available to low budget airlines and, in particular, EasyJet can be acheived. Firstly, it is considered to be necessary to abridge a deductive approach to the literature review, whereby the basic theory of the no frills airline is taken and then explored and observed. For example, there are accepted principles which are part of the no frills airline as a generic cost leadership strategy. Therefore, by taking the essence of the cost leadership strategy and then observing the industry in light of this, it is then come-at-able to create a further theory as to the success of the industry and, more preciseally, EasyJet. At this point, it is then necessary to take an inducive reasoning approach and to use observations as a means of developing a further theory of how these approaches can be evaluated and how these can then be better dealt with, in the future, for both EasyJet and the industry, as a whole. Wi th this in mind, there is a demerit in reasoning that needs to be clearly delineated in the structure of the research paper and will be looked at in these sections, under.\r\nIntroduction and Industry Background †this will form the rachis of the deductive reasoning and will take the accepted theories of the no frills airline, with the strategy that is considered to be appropriate for this industry, most notably the cost differentiation, as noted in the precedent section above.\r\nLiterature Review †this will need to transcend both aspects and will involve a critical second-string analysis of animate understanding, including the need to look at general strategies that can be employed within the commercial arena. This will then need to be apply more rigorously to the case of the budget airline and how the generic strategies work within the budget airline industry. It will also look to identify specific areas of failure and to use a more deductive reasoning to establ ish a new theory of how the industry can now evolve.\r\nCase Study †these theories will then need to be tested by using a case study as a further form of secondary research, which is then capable of examen the theories raised and also developing them further, with specific examples in mind. A case study is seen to be the most appropriate means of achieving this, due to the need to take theories, test them and then potentially create new theories as to how this matter can be progressed.\r\nAnalysis and Evaluation †This will then pull together the various aspects of the research, to create an overall valuation and an ongoing theory that can be used including, recommendations for the future for EasyJet as to how it can use its own strengths to create a new strategy or approach, as well as being able to evaluate its existing approach.\r\nThis research methodology, which relies entirely on secondary research, may be seen to be limited, due to the lack of primary research; however, it is felt up to be appropriate in this case, due to the need to gather such a broad range of opinions, if primary research were to be relied upon. With this in mind and the specific thought that consumers are likely to have in relation to the industry, it was determined unaccommodating to collate a gravid amount of primary research.\r\nAlthough there is a elephantine amount of information available in the general domain, this is not in itself going to provide fitted depth of understanding and therefore additional databases are going to be required, in order to add the necessary value to the discussion.\r\nEconomic and financial journals may also prove useful in this regard, as they are readily available in the University library and will provide the background theoretical understanding.\r\nThe starting points for the references and resources to be used are contained below; however, it is anticipated that this will be change magnitude dramatically, over the course of the first ii stages of the research and, in particular, during the literature review.. make words will involve, budget, strategy, airlines and EasyJetTimescale The overall epoch of this research is to take place over one academic year, consisting of ten months. This is also a large deciding share in the determination not to rely on primary research, at all. There would need to be a large amount of primary research self-possessed and this simply would not be possible with the time frame allocated if a commensurate level of reliabilty were to be obtained.\r\nThe following time frame is to be followed, with a compass point of flexibility allowed in order to ensure that all aspects of the research are finish diligently.\r\nMonth 1 †set out the research question, consider the available literature as well as the access to case study information and delineate any possible limitations that may trick up in terms of information available.\r\nMonths 1 †2 †establish th e introduction and industry background, looking solely at literature relating to the generic theories of business development, as well as the theory of the no frills airline.\r\nMonths 3 †4 †undertake case study analysis of EasyJet, which will require detailed information to be gathered from the play along, from the scuttlebutt relating to the fellowship and from any other source that could offer guidance as to how the company has been successful or, indeed, where the company has failed.\r\nMonths 5 †6 †analyse case study, in light of the literature review and evaluation structure set, going forward. A key component of this research is to evaluate the strategy being employed and to evaluate the way that the company may manage its risk. With this in mind, the evaluation process should be considered over a long period of time and with sufficient depth, revisiting issues, if required.\r\nMonths 7 †8 †pull together all the research and revisit any areas that seem lacking or where additional questions have been raised; most notably, ensuring that the aims and objectives are fully established and any gaps have been dealt with or, at the very least determine, so as to form part of the limitations and future research statements in the end report.\r\nMonths 9 †10 †review and present findings, undertake any other final areas of research that may be required and ensure that the findings of the research paper are presented fully. either further areas of research will be identified at this stage and dictated out for future use by others. Any limitations of the research will also be established.Resources RequiredThe primary research is not being undertaken due to the required timeframe. For the analysis itself, there is a need to have access to a variety of literature data bases, including the standard academic databases and industry information relevant to the airline industry. It has been identified that sources such as Euromo nitor may provide a particularly useful perceptiveness into the industry itself, but are paying for databases. However, there are certain databases that may present industry information and are provided to the University which need to be looked at, in more detail. Specific databases that are appropriate include:\r\nDatastream EconLit JSTOR Datamonitor Conclusions and Next Steps \r\nIn summary, therefore, the aim is to evaluate the strategies used by the no frills industry, with particular reference to EasyJet. In this context, the neighboring step is to undertake a honest amount of background reading, to ascertain the areas that are then going to be pursued as part of the literature review. The main initial stage will be to look at the various aspects of the corporate strategy and to split the areas of reading and literature into sub headings. This will then be pursued when looking at the EasyJet case study; therefore, it is necessary to establish these strands of the argument and the support for this argument, from the outset.\r\nEstablishing the main aims, strands of analysis and the way in which the findings will be presented will all be part of this initial fact finding and preparatory stage.\r\nReferences †\r\nBrandenburger A.M. & Nalebuff B.J. (1995), â€Å"The ripe(p) Game: Use Game\r\n surmise to Shape Strategy”, Harvard occupation Review, July-August pp 57 †71\r\nCalder, S. (2003), No Frills: The Truth underside the misfortunate-Cost Revolution in the Skies, UK: consummate(a) Books\r\nCAA Statistics (2006)\r\nhttp://www.caa.co.uk/docs/80/airline_data/2006Annual/Table_0_1_6_All_Services_2006.pdf\r\nDoganis, R. (2001), The airlines business in the twenty-first century, London: Routledge\r\nGalbraith, C. & Schendel, D. (1983), â€Å"An Empirical Analysis or Strategy Types”,\r\nStrategic Management diary, 4:2 153 †173\r\nGross, S and Schroeder, A. (Eds.) (2007) Handbook of Low Cost Airlines †Strategies, Business Processes and Market Environment, Berlin.\r\nHill, C.W.L. (1988), â€Å" note Versus Low Cost or differentiation and Low\r\nCost: A chance Framework”, Academy of Management Review 13:3 pp 401 †412\r\nIATA (2011) The Impact of family 11th http://www.iata.org/pressroom/documents/impact-9-11-aviation.pdf\r\nMiller, D. (1988), â€Å"Relating Porter’s Business Strategies to Environment and\r\nStructure: Analysis and mental process Implications”, Academy of Management daybook 31:2 pp 280 †308\r\nMintzberg, H. (1978), â€Å"Patterns in Strategy ecesis”, Management Studies 24:9 pp 934 †948\r\nMintzberg, H., Quinn, J.B. & Ghoshal, S. (1995), The Strategy Process, UK: Prentice Hall\r\nMurray, A.I. (1988), â€Å"A accident View of Porter’s â€Å"Generic Strategies””, Academy of Management Review 13:3 pp 390 †400\r\nPorter, M.E. (1985), Competitive receipts: Creating and Sustaining Superior Performance, N ew York: The part with count\r\nPorter, M.E. (1980), Competitive Strategy: Techniques for Analysing Industries and Competitors, New York: The Free Press\r\nStabell, C.B. & Fjeldstad, O.D. (1998), â€Å"Configuring Value for Competitive reward: On Chains, Shops, and Networks”, Strategic Management Journal 19:5 pp 413 †437\r\nTreacy, M. & Wirsema, F. (1993) â€Å"Customer inter-group communication & Other Value Disciplines’, Harvard Business Review, Jan-Feb pp 84 †93\r\nWhite, R.E. (1986), â€Å"Generic Business Strategies, organizational Context and Performance: An Empirical investigation”, Strategic Management Journal 7:3 pp 217 †231\r\nWright, P. (1987), â€Å"A Refinement of Porter’s Strategies, Strategic Management Journal 8:1 pp 93 †hundred and one\r\nZoom (2014) Zoom †Bankruptcy Filed in 2008 Retrieved from http://www.flyzoom.com/\r\n'