HOW CAN EASYJET DELIVER SUCH LOW PRICES?
TABLE OF CONTENTS
2. VALUE CHAIN ANALYSIS
4. LIST OF REFERENCES
In thisassignment our group is going to answer the question : “How can Easy-jet deliver such low prices??”.
For that we are going to take the value chain analysis as reference.
First of all we need to know what is exactly the value chain analysis.
Secondly we are going to explain how this analysis affect Easy-jet.
To sum up we´ll make a conclusion for answer the question.
Value chain analysis:
ValueChain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business.
It´s undertaken in order to understand the behavior of costs and the sources of differentiation.
In order to understand better the activities leading to a competitive advantage, one can begin with the generic value chain and then identify the relevantfirm specific activities.
Process flows can be mapped , and these flows used to isolate the individual value-creating activities.
Once the discrete activities are defined , linkages between activities should be identified. A linkage exists if the performance or cost of one activity affects that of another. Competitive advantage may be obtained by optimizing and coordinating linked activities.
Tosurvive in today's highly competitive business environment, any organization must achieve, at least temporarily, a competitive advantage. A low cost/price strategy focuses on providing goods or services at a lower cost than the competition, or superior goods or services at an equal cost.
The value chain analysis is also useful in outsourcing decisions.
To analyze the specific activities throughwhich firms can create a competitive advantage, it is useful to model the firm as a chain of value-creating activities.
These are the following creating activities of a company:
The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating aprofit margin.
Referring to airlines industry the principal objectives that they want to improve are: return to investors, public service and country strategic resource.
The creating activities of an airline are:
■ Technology: route selection, facilities planning, yield management system…
■ Manufacturing: ticket counter operations, aircraft operations..
■ Distribution:baggage system, flight connections…
■ Marketing: promotion, advertising, group sales…
■ Service: Lost baggage service, complaint follow-up.
The support activities assists creating activities in helping the organisation achieve its competitive advantage. They include:
❑ Procurement: This department must source raw materials for the organisation and obtain thebest price for doing so.
❑ Technology development: The use of technology to obtain a competitive advantage within the organisation. Technology can be used in production to reduce cost thus add value, or in research and development to develop new products.
❑ Human resource management: The organisation will have to recruit, train and develop the correct people for the organisation if theyare to succeed in their objectives.
❑ Firm infrastructure: Every organisations needs to ensure that their finances, legal structure and management structure works efficiently and helps drive the organisation forward.
The steps we are going to follow to explain each activity are:
■ Catalog activities
■ Analyze costs
■ Analyze WTP
■ Widen the wap
As we can see the...