Home » global a589112irline industry background the global airline industry continues to

global a589112irline industry background the global airline industry continues to

Background The global airline industry continues to grow rapidly, but consistent and robust profitability is elusive. Measured by revenue, the industry has doubled over the past decade, from 284 billion in 2004 to an estimated 575 billion in 2014, according to the International Air Transport Association (IATA). Much of that growth has been driven by low-cost carriers (LCCs), which now control some 25 percent of the worldwide market and which have been expanding rapidly in emerging markets; growth also came from continued gains by carriers in developed markets, the IATA reported. Yet profit margins are razor thin, less than 3 percent overall. LCCs such as Ryanair and EasyJet capitalised on the creation of a single EU aviation market in the 1990s that allows airlines to operate services on any route within the bloc. However, Britains exit from the EU has cast doubt over whether UK- based carriers will remain part of this arrangement, and throws up complications for overseas airlines that fly into British airports. Underlining investor concerns, stocks in the sector took a hammering after the referendum result. EU chiefs have warned airlines including EasyJet and Ryanair that they will need to relocate their headquarters or sell off shares to European nationals if they want to continue flying routes within continental Europe after Brexit. Executives at major carriers have been reminded during recent private meetings with officials that to continue to operate on routes across the continent for instance, from Milan to Paris they must have a significant base on EU territory and that a majority of their capital shares must be EU-owned. Assignment Questions Scenario In a statement to the London Stock Exchange in the aftermath of the Brexit vote, EasyJet said the company had been preparing for this eventuality in the lead up to the referendum vote and has been working on a number of options that will allow it to continue flying in all of its markets. As such the company has opened talks with EU member states’ aviation regulators about relocating its headquarters from the UK. This prospect of moving its legal HQ reinforces the fact that leaving the EU will have an impact on its corporate structure. EasyJet employs roughly 1,000 people at its Luton base, in functions such as finance, IT and marketing – separate to the staffs who work on its operations at the Bedfordshire airport. The airline is now expected to review all 27 of the remaining member states before holding further discussions with a number of them about the possible terms of an Air Operator Certificates (AOC) with a view to making a decision later this year. You have been hired by EasyJet as a consultant to develop a business level strategic plan for relocating its headquarters from the UK into an EU member state (Choose a country and city). You are expected to write a report to summarise your research findings on the given tasks below: Tasks (100%) 1. Critically analyse the external environment and industry competition in the new EU member state you are recommending. This should include competition within the new EU member state as well as competition resulting from relocating to the new EU member state. (35 marks) 2. Using relevant frameworks, critically discuss EasyJets resources and competencies as well as how they can be utilised in gaining competitive advantage upon relocation to the new EU member state. (20 marks) 3. Critically evaluate whether EasyJet can continue with its current vision and mission statements in the new EU member state. Reframe the vision statement and the mission statement of EasyJet for the new strategic change if required. (10 marks) 4. In light of the analysis conducted in Task 1, 2 and 3, construct a SWOT analysis of EasyJet and recommend changes (providing justifications) to its current business-level strategy if required. If changes are not required, provide justifications for retaining the current strategy. (20 marks) 5. Referencing (Harvard) (10 marks) End of Assignment Brief Learning outcomes assessed: Critically examine the relationship and the need for compatibility between corporate strategic and functional management policies. Analyse the internal and external influences on corporate objectives and strategy. Demonstrate the need for flexibility in strategic management and the practical limits of quantifying corporate strategy.

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