CRITICAL EVALUATION OF THE CURRENT CORPORATE STRATEGY
Corporate strategy is defined as the
scope and direction of a corporation focusing on the company’s mission and core
values. The corporate stagey under helps to facilitate in achieving the overall
goal of the company. It provides the clear direction to meet the expectations
of the stakeholders and enhancing shareholders value. In general, there are
three types of the corporate strategy they are: growth, stability, and renewal
strategies. Growth strategy is the strategy that enhances the market expansion
and product differentiation. The growth strategy is implemented either through
the current businesses or through the new businesses. The application of the
growth strategy helps to increase the revenue in the new marketplace or excel
in the current marketplace through the product expansion. A stability strategy
is strategy that does not bring any changes in the business current operations.
It does not bring any changes in the products that has been offered. It offers
the same product to the same customer. As the company doesn’t gain high profit
or loss but maintains the current financial position of the business. Such
types of business neither grows not fall. The renewal strategy is used in the
business when the business faces the trouble. Therefore, for resolving the
problem a renewal strategies are designed. Major two types of renewal
strategies are found: retrenchment and turnaround strategies. Corporate
strategies are important strategies for the business to secure profit and
sustainability issues. It helps to provide pertinent guidance for the company
to earn the valuable profit and ensuring high shareholders value.
Both of the companies Easy Jet and
Ryanair Ltd operate within the airline industry. But, they don’t hold the alike
corporate strategy as their mission and goals are different from each other.
The current corporate stagey of the company are different as they have their
distinct organizational culture, values, and norms. Both airlines have unique
attributes and they have different areas of expertise. The current corporate
strategy of the company varies from each other. The current corporate strategy
of the company are described below:
The Easy Jet PLC incorporates the cost
leadership strategy where services offered to the customers are highly lower
than their competitors. They hold notion to make the travel easy and affordable
to the customers. The main aim of the business is to provide market leading
returns to the shareholders through keeping a leading European network at
primary airports. The vision of the company is delivering amicable and
efficient services at a very low cost. The company mainly focused on the safety
measures, simplicity, integrity, passion, and pioneering. The company believes
on high degree of competitive advantages by providing the lowest cost services.
They are inclined to provide the low fares to enhance the operational
efficiencies. Major focus is placed upon the customer services to retain the
loyal customers. The goal of the business is to become the Europe’s most preferred
short-haul airline providing market leading returns. The company’s current
corporate strategy is to expand the business across the Europe. The current
corporate strategy of the airline is to capture the market shares and become
the number one short-haul airlines. The company has put all of its efforts to
increase number of routes to attract more customers across the Europe. The
company four main objectives are to build robust number one and two market
positions, to maintain the cost advantages, disciplined use of capital, drive
demand and airlines expansion across the Europe. The company implements the
marketing strategy for gaining the benefits from the competitive advantages as
well as the product differentiation across the Europe. The overall goal of the
company is supported by the company’s current corporate strategy. It tries to
achieve the corporate strategy through placing high importance on the cost
focus strategy and providing the best airline services as the cheapest cost.
Their current corporate strategy is based on low cost high services and to
expand its business across the Europe. Since, the airline is the UK’s largest
airlines but it tries to enter into
different marketplace of the Europe to expand business and operations.
The Ryan air Ltd holds the objective to
establish itself as the Europe’s foremost low-fare passenger airlines. It
intends to achieve the objective through the continuous improvement by offering
the best low-fares services to the customers worldwide. Although, the company
has the goal to offer services at the lowest price it tries to increase its
sales volume to excel in operating efficiencies. The company has the mission to
provide the best quality services at the lowest cost prices. The mission
statement states that the company aspires to become the most profitable airline
company of Europe and higher degree of customer retention as well. It focused
on the three major things: producing
high profits, low cost services, and become the leaders in the airline
industry. The company also put special attention in enhancing their sales
volume by increasing the number of new and loyal customer’s. The company
competes with other conventional and low-cost airlines but provides the unique
services. The current corporate strategy of the company is to offer the lowest
fares to the customer’s based on cost focus strategy. The company focus on the
low fares to increase the demand focusing on the fare- conscious and business
travelers. The sets fares are based on the demand for a particular flight and
sold on a one-way basis. Along with it, the company focuses on the customer
services to provide the best quality customers services. The overall strategy
of the company is to offer the lowest operating costs and focused on the
criteria for growth. The company undertakes the manageable growth plan
targeting the different specific markets. The corporate strategy of the company
is creating the superior value for their customers and delivering superior
value-adding activities in the most efficient manner.
Easy Jet and Ryanair Ltd both carried
the different corporate strategies to gain the objective they have set up. Easy
Jet is the biggest airlines and Ryanair Ltd is also a prominent airline
company. Easy Jet offers low priced airbfares but, Ryanair Ltd offers the
lowest air fares. Their current corporate strategy seem alike however, Easy Jet
Company is more focused on product differentiation strategy and Ryanair Ltd is
more focused on cost focus strategy. Therefore, the ultimate goal of both companies
is to expand their business across the Europe. But, to reach at the ultimate
goal they carry different corporate strategy. The product differentiation
strategy incorporated by the Easy Jet believes for wider customers approach and
the next believes that cost focus strategy helps to hold loyal customers
offering the lowest cost. Both companies have wider and divergent corporative
strategy that makes them highly unique in terms of service qualities and brand.
Hence, both companies current corporate strategy aligns with the overall
objective including their vision and mission as well. The companies are
expertise in their business operations providing the best quality airline
services at the most affordable costs.
EVALUATION
OF FUTURE PROSPECTS
Both companies’ financial performances
are robust. They are financially very viable and profitable as well. The Easy
Jet financial performance was measured through the calculation of the three
major ratio: net profit, current ratio, and EPS. The calculated net profit
margin of the company was 0.1 that shows that it remain financially viable in
the future days as the sales revenue is big. Similarly, the calculated current
ratio was 0.08 that shows that the company need to add more current assets in
the future days to pay all of the short term liabilities. The current
liabilities of the company was higher than its current assets. That suggests
that the company can face difficulties in paying the short term liabilities.
Likewise, the calculated EPS was positive. Therefore, the company can increase
the number of shareholders and generate huge capital from the shareholders
investments. The calculated ratios to determine the financial performance of
the Ryanair Ltd was found strong. The company’s operating income, net income,
total assets, and total equity all were higher than the Easy Jet. The net
profit and current ratio was determined as 0.15 and 1.55 respectively. The
results shows that the company holds strong financial performance and it is
financially viable. The company bigger sales revenue suggests that the company
can generate more net profit in the coming days. The company can easily meet
all of its short term liabilities because the current assets of the company is
huge than its current liabilities. The company has got positive EPS that
indicates the company is able to generate capital as the shareholders will be
attracted to invest into the company. Therefore, in the future days the
financial performance of the company will increase along with the growth in the
net income, current assets, and EPS .Hence, the company is able to remain
financially viable.
The corporate strategies undertaken by
the both companies are both need based approach. The corporate strategies
incorporated such as product differentiation strategy and cost focus strategy
are highly pertinent in the current context. Both undertaken corporate
strategies complement with their respective mission and vision. Therefore, the
strategy will be highly useful to enhance their sales volume and retention of
loyal customers. The current corporate strategy are designed considering the
current needs and demands. As a result, the company is able to remain
sustainable and profitable in the coming days. The corporate strategies
undertaken are helpful to operate its business operations smoothly and to
expand the market share of the company. The corporate strategies aid to achieve
the overall objective of the company efficiently and effectively. The corporate
strategies guides the company to achieve its ends results. Therefore, the
current corporate strategies aids in the further growth and development. The
strategies not only provides the company growth but, it helps to generate long
term benefits for all shareholders. The shareholder values also increases with
the effective execution of the corporate strategies.
