Comparative Analysis

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.