Business

Case Study Questions
1-What sort of business environment and competitive analysis would Stelios Haji-Ioannou have done in 19981999 to decide on launching easyCar.com

Answer
Stelios was already operating the airline company which followed low cost model so he was pretty much aware of the macro environmental factors which were then faced by the industry the basic analysis that he must have done should be regarding PEST forces. He was operating an airline company, having said that the effect of PEST forces differs from industry to industry. For example, there are certain government policies and regulations which have positive impact on one industry but at the same time these policies turn out to be harmful for the other segments of the economy, one example in this regard could be the restrictions which certain governments impose on foreign imports looking from the perspective of the local producers one can assay that these policies will do good for him because the demand will rise and as a result of this he could charge the extra premium. But this is only side of the picture, spare a thought for the people associated with import business, these restrictions and policies will surely prove out to be detrimental for their trade activities, this is just one example while there are many such cases where similar policies and other macro environmental factors tend to shadow entirely different and sometimes dissimilar effects. Thus he must have first understood the effect of these macro environmental forces and their effect on his targeted industry. In addition to this, making the external audit of the industry is also an essential step because this is what makes the firms understand the profitability and the structure of the industry in which they intend to venture. The best method to conduct this external audit is to evaluate the Porters five forces which act on the industry. As known, that strategy is one thing which tries to find out ways for a company to be unique and different from others, becoming the best is not important in fact what matters is the uniqueness of a firm. This analysis makes it easier for the firm to find out paths to success by making even the deadliest of the circumstances to work in its favor. Thus Stelios must have done this analysis too, in order to understand the structure of the industry in an apt manner.

2- What experiences did he have which would have allowed him to do this

Answer
The major factor which allowed Stelios to venture in this industry was that he understood the price sensitivity of the consumers he wanted to target. The reason behind the failure or average performance of most of the firms is that they jump into the same game which is being played and that certainly is not the way to go about it. Success lies in being unique and different and that is exactly what Stelios did he did not play the same old game which was being played then by all the companies, in fact he broke the clutter by catering to an unidentified and unsatisfied needs of the customers, and the thing which made him understand this need was his experience with his airline company. He identified the importance of price to most of the customers and pursueing with the same vision he went on establishing this rental car company. At that time, the major competitors were competing with each other on all the basic grounds but price but easyCar found its competitive advantage in differentiating the prices offered.

3-What are the advantages and disadvantages of the easyCar concept versus traditional hire car companies such as Hertz, Avis or Budget

Answer
As far as the advantages are concerned, the first and the foremost advantage of easyCar was that it started providing people the facility of renting out a car at a price which was much lower than the big players of the market. This could be rated as the unique selling proposition of easyCar and this is what really pulled the customers in. Price differences reduced the switching costs of the customers and they started preferring easyCar over its other competitors. As per the basics of strategic management, there are two ways to gain competitive advantage first being product differentiation and second being low cost in this case easyCar primarily differentiated it on the basis of price which proved out to be good for the firm. Convenience was another advantage which easyCar brought to the customers, instead of going to the agents and seeking cars, the customers could simply log on the website of the firm and get the contract this saved the time of the customers because they could get all the details on the website. This medium was so popular that 90 of the sales were generated through this medium and the rest from direct sales. EasyCar did not operate from agents this was another advantage because sometimes bad behavior of agents makes the firms lose customers this remained an intelligent move of easyCar. Each of the easyCar outlet deals with one car depending on its location, this also made the firm reduce the cost, and customers too did find comfort in this because they could directly go to the outlets where their preferred cars were available, this provided the customers ease. On disadvantage in my opinion is that the number of outlets at the airports is not at all sufficient, so this is one thing which makes it hard for the customers to get to the easyCar outlets, thus the sales of the firm get hurt. Another minor flaw which I found was that almost all the cars which are offered by easyCar belong to an expensive class there are tourists who want to drive cheap cars for lesser rates than what easyCar is offering so they go to the local rental company which obviously is not good for the firm. So in order to make these people come to easyCar, the management must begin to induct cheap or may be second hand cars in its fleet if not at all of them then such cars could be placed at some of the facilities so that this segment is not left uncovered. There are some companies which do not charge all the money in advance so the customer for obvious reasons likes to go to them to get the cars the advance payment policies must be revised by the management so as to increase the customer base.

4-Was easyCar.com a step change in strategy or a logical product line extension Do you think the overall easyCar strategy has changed since the business was launched

Answer
In my opinion, this was logical product line extension the reason behind this is that Easy Jets strategy was also of low cost and same was what easyCar followed later Easy Jets successful strategy was what motivated the owner to go an venture in the car rental segment. If we examine the policies and strategies of both the firms it can be concluded easily that there is no difference in both of them. Both companies are catering to the price sensitive segments of their respective industries. The overall strategy has not at all changed because easyCar still focuses on its core identity and that is to provide people convenience and value at a cheap cost this is the reason that the firm is  shaping its policies in such a manner that the price sensitive people get more and are more attracted. All the operations of easyCar are working while giving this idea the center place for example if we analyze the promotion strategies we get to understand that most of the publicity and advertising is done by using posters and newspapers and the reason behind this is that the firm does not want its expenses to rise because if they do then it will become hard to provide low cost services to the customers. Another example in this regard is of the cleaning policies this has been introduced so that customers do not have to pay  16 more for cleaning expenses, which eventually reduces the burden of the customers.

5-Do you think the overall mission statement for the easyCar business is effective in describing the business Support your analysis

Answer
A successful mission statement generally has nine basic components which are to be addressed if all of them are kept under consideration while writing the mission statement then it can be said that the mission statement is a well chalked out one. These nine components include customers, product or services, markets, technology, survival and profitability, philosophy, self-concept, concern for public image and concern for employees. If we just talk about describing business then it can be stated that all the unique aspects of the business are being communicated in this mission statement. But if this mission statement is evaluated on the basis of the nine key factors which are described above then it looks just about an average mission statement some important points are missing in this mission statement, for instance, there is no point whatsoever which describes the organizations concern for its employees which obviously is not a good thing because not mentioning the importance of employees in the mission statement sends a negative signal to the customers they perceive this as if the employees are not respected deeply by the management. Similarly, there is no comprehensive statement about the markets which the firm wishes to target concern for public image is also one factor which is left untouched in the mission statement of easyCar.

6-What market segments are easyCar targeting, e.g. tourists andor business travelers

Answer
EasyCar is targeting mostly the segments that are price sensitive and want value for their products. Basically, there are two distinct segments which make up the market for easyCar first being the leisure or tourist segments while the other is the business segment. The needs and wants of both these segments are different from each other tourists want lower rates because their basic aim is to travel so this is one segment which is highly price sensitive, these people are mostly switchers and usually they opt for those companies which provide low cost services this segment makes up around 45-65 of the whole market, thus in order to acquire the market share this segment has to be emphasized. Business segment is one which is less price sensitive in comparison with the last segment, these people go for convenience and quality this segment makes up around 35-55 percent of the entire market. In order to achieve long-term success and lasting market share such policies are needed to be made which focus simultaneously on both these areas because easyCar cannot afford to leave out or hurt any of these segments while pleasing the other one. If we evaluate the policies and practices of easyCar, it can be easily found that the firm is trying hard to please both segments at the same time one example in this regard could be of starting the advertising campaign on television the firm was advertising before just through posters and newspaper ads but these are less effective when it comes to target the business segment so the firm has planned to market its services via television campaigns. As mentioned before, that business segment is one which demands more quality of the product and that is the reason that easyCar went on establishing more facilities near the airports (this move proved good to both the segments) and it also includes more cars in the fleet because business segment is far more choosy than the other one .EasyCar has always been finding out ways to lower down the charges this shows that it does not want to leave the tourist segment alone cleaning car policies indicates towards this fact that the firm is determined to reduce the prices further so that it could acquire more market share.

7-How would you position the overall strategy of the Easy network of companies versus competition

Answer
Discussed before as well, that there are two ways to achieve competitive advantage, first being product differentiation and second being low cost. Easy network of companies have been focusing on the second one from the first day and this has been the reason of their success without changing or altering the products too much they have been able to earn profits because they emphasized on catering to the price sensitive market. This has been the secret of their success, no matter which business they ventured in they did not change their core strategy and kept on playing their very own game in all the industries and so far their tactics have proved out to be profitable for them. EasyJet focused on offering low prices to its customers and made huge impact, then came in easyCar with the same strategy and influenced the market this epitomizes that low cost is still what some sectors are hungry for and if they get this in some good proportion of quality then they get attracted and as a result sales get generated.

8-The Easy Internet Caf Business was also a new development, but much less successful than easyCar. What is the reason for this difference

Answer
The first and the foremost reason behind the unsuccessful internet business was that, internet is one thing which is already been provided to the customers at a cheap rate and the USP of easy network of companies is low cost but this feature was already presented to the customers by the competitors so the expedition did not turn out to be lucrative one. Another reason for the failure of this service was that the level of service was not that good as the customers were expecting it to be.

9-What are the strategic differences between easyCar and easyInternet versus the core easyJet business

Answer
There are not many strategic differences though because they all are trying to provide value to the customers at low prices in my opinion, the strategy and core concept is the same it is just that the product categories are different.

10-What do you think is the next step for the Easy network of companies in terms of new developments and do you think they are well placed to deal with the present financial crisis

Answer
Easy network of companies overall have been doing quite well, and in my opinion, it should continue to serve the price sensitive market because these are the people who mostly are left unattended in certain product categories. Because easy network of companies has already been serving to the people who are price sensitive, thus lowering the prices a bit more will be a good ploy in the current circumstances. As per yet the firm is quite well placed and it has the strength to see through this wave of recession.

PEST Analysis
PEST analysis makes it easier to comprehend the present standing of a firm, PEST analysis also lets the managers the outside forces which can and do effect the trade of business organization and hence it helps them in calking out such strategies and policies which are in accordance with the overall environment of the market.. The PEST analysis of easyCar has been conducted after examining carefully all the varying forces of the market in which they are conducting the business (Grant, 2005).

EasyCar is one such firm which has a good market reputation thus it has to fight with more organizations so there are more exterior forces which are acting on it and to tackle them the firm has to make a comprehensive strategy. Any multinational is exposed to more external variables in contrast with any such organization which has its trade operations only in a single state. EasyCar is rated amongst the best car rental firms in Europe and it has grown in popularity in this region at an exponential rate. The customer base of easyCar is mounting due its apt policies and in order to guarantee future growth of business it is essential to recognize the rising pressure of the outside factors. The basic strategy of the firm is to offer low prices to the customers so that they could afford car rental facility without any hesitation and reluctance. PEST analysis is regarded as a tool to comprehend the control and magnitude of these external variables.      

Political
As it is known that easyCar deals within the European market, hence there is no such state interference in the dealings of the business as long as all the laws are practiced in the right manner by the operating firms. Legislated rules and regulations, for example tax policies, labor laws, environmental policies trade restrictions, tariffs etc. have to be followed in the right context. These are some of the major regulations which are to be followed by the management of easyCar and if this is done in the apt manner then there is nothing much to worry about this external force because almost all the European countries provide businesses with an environment in which they can excel without any interference and restriction. The tax which is levied on the income in the European countries is also quite realistic and provides expansion opportunities to the companies working on the continent. One oblique drawback of fine administrative policies is that it tends to intensify the rivalry which surely is not cherished by the existing business organizations. Having said that, one has to admit that the policies of the European block are well chalked out in addition to this, they really do welcome and encourage business activities. As it is known that easyCar is an international car rental firm so it is also trading with customers which are located outside the home country. The operations of the company are far spread across the continent of Europe so rules and regulations of the states in which the firm is operating must be kept in consideration. Particular laws like privacy and Disability Discrimination Act (DDA) have been imposed by the governments, especially for regulating the websites within their domain these must too be practiced so as to avoid any sort of lawsuits.

These are not the only issues, in fact, there are many other compulsions which such firms are expected to fulfill so the management of easyCar has to be practical in comprehending them so that no problems come up, because if any such things happen then this really hurts the market standing of the company and eventually dents the profit loss account. Till the day the management of easyCar has been operating pretty well in this regard but this all has to be continued in order to grow further. The changes occurring in the global political scenario also hurt the operations of the company so all this has to be considered closely too. For example, at times the political scenario changes so vigorously that there is a probability of war in some regions, so the operations in such regions are needed to be restrained in order to avoid any failures (Grant, 2005). All these variables are needed to be examined adeptly in addition to this, it has also been observed recently that security concerns in almost all the European states have mounted, so novel laws have been introduced in order to prevent any terrorist attacks the management of easyCar should abide these regulations. This will increase the market reputation of the firm because the people will perceive the firm to be a socially responsible one.

Economic    
Keeping in view the recent financial crisis, which has affected almost all countries in the world, companies must work exceptionally hard to gain and sustain a level of growth as well as to provide value additions to their products and services so as to allure their consumers and accordingly a lot of effort is needed to be put if the company wishes to retain their consumers. This should be the prime focus of easyCar as in the times of recession, imposed by such financial crises, people do not travel for entertainment and leisure purposes as then the top priority of people is towards meeting basic facilities. EasyCar must formulate its policies accordingly as in the present world scenario the profits of many firms are decreasing fast. It is not advisable for the easyCar to reduce prices and wages, and neither they should do it and compromise on quality and value addition to their product and service, instead a long term and strategically crafted guidelines are required from the management of easyCar (Grant, 2005). It is quite interesting to see that in todays global crunch, where many firms are on the verge of their destruction and are suffering from severe losses several companies are at their record high growth levels. This phenomenon is due to the fact that such companies have made it compulsory for them to monitor the changes and satisfy their customers with perfect products, nothing more and nothing less. The changes in economic conditions have caused many problems for the managers especially the change in the prices of resources and raw materials used for production andor operations. This scenario has made it extremely troublesome for the manager to hedge the risk and left the companies with floating costs whilst making them to stick to lower their prices so as to attract the customers.  One advantage which the firm enjoys while operating in Europe, is that European countries have been making policies together since European block is a pretty strong one this is one reason that European countries were the first to emerge out from this turbulent situations.

Social    
This is one of those factors which matter the most for the entire company. It is so, because when making marketing strategies this has to be considered closely and a little underestimation to this factor would result in irrevocable loss for the firm. The need to understand the ever changing social trends is more for easyCar as its employees directly deals with the customers so it is vital for the management of the company to keep a close eye on the altering trends in order to make the strategies in line with it. This variable is of the utmost importance and the company must, at all points, have to monitor the changing trends in consumer psychology and behavior if it wishes to stay successful. It is a proven fact of that consumers form a strong relationship with companies through constant interactions with a firm, and they prefer such companies, over many others, which know their tastes and preferences.

More consumers only wish to satisfy their needs and wants, completely disregarding the related companys limitation, thus the managers have to be extra careful and wary regarding these changing trends. This practice would also enable the company to take advantage of every profitable trend and to protect itself when the trends are threatening for the company. If these symptoms are not paid attention to, then these may cause the company to lose the game for their survival. For example, Orkut was on one occasion, the most accepted website amongst the general public but ever since Facebook was launched, people have abandoned using Orkut. The example proves how fast the trends change in the market place. The indicating factors of this change could be shown by a portion of the targeted audience in the market or by other minute factors this effect is not limited only to a group of people from a certain country or region. Hence all these factors are needed to be put into consideration by the managers of easyCar and counter measures, as well as precautionary steps, should be taken accordingly.    

Technological      
This is one key macro environmental factor when it comes to easyCar. Keeping in mind that this is just company which is offering only rental services to its customers, the focus of technological advancement should be aimed to add value to their operations. The management of easyCar should search for the procedures and techniques which would better satisfy its customers needs and demands. As majority of transactions, which include placement of order from the customer along with settlement of bill, are conducting via the internet, easyCar should firstly try to improve and update its website. Furthermore, in practice, when a customer comes to easyCar with prior arrangements for renting a car, it takes roughly one hour for the companys employees to work out the red ribbon procedures and hand the car over to the waiting client. The company should also focus to shorten this time span significantly. Also, the company should use the recent technological advancements in its billing systems to ensure fast, easy and secure transactions. All these measures will result in benefiting the entire organization because customers will be able to get better service in shorter time and on the other hand the employees will find it easier to handle the customers even at the peak hours and this is one thing which will increase the customer base of the firm.

Five Forces Analysis Company
Five forces analysis is the study of operations of the industry and the development of business tactics and strategies. The analysis reveals to us the level of attraction in a business and the intensity of competition. This analysis includes the detailed study of five factors, namely threat of new entrants, threat of substitute products or services, bargaining power of suppliers, bargaining power of buyers and the intensity of rivalry. This gained much popularity in todays corporate environment especially amongst marketing and research people as it enables them to easily analyze and predict the future of a firm or a business by measuring the five factors. All these factors, if analyzed, fall in the micro environment of a company and hence the performance and the profits are affected by changes. These are the factors that marketers need to monitor closely as any change in them forces the company to review its marketing and other business strategies. Furthermore, this five forces analysis is also much needed equipment for evaluating the current held position of a company or business in its respective industry. With the help of this tool, competition is thoroughly evaluated to develop and enhance a companys core competences. Financial policies of firm are too dependent on this analysis as the allocation of funds is very closely linked with the outcomes of this analysis, because most times, due to these factors, vital financial decisions are needed to be made. In this project, the effort is made towards analyzing the affect of these five forces on the easyCar what has been done and what is there to be done more from easyCars part.

Threat of New Entrants
The threat of new entrants in the same market is a major danger that lurks for the sales and revenues of a firm. For obvious reasons, attention of the investors is more inclined towards profitable emerging businesses. This will cause reduction in the profit margins of the company, as the market will move towards prefect competition and due to the competition between the new entrants and the stable companies the price of the products will start to decrease. In order to stop this from happening, companies who are catering to any segment or any region for any specific product feels the need to create entry barriers. It is known that most profitable and prosperous businesses are those where the capital investment needed to start the business is high (this is known as the high entry barrier) and the exit barrier is low this is true because most of the investors are not willing and able to take high initial risks as this can be dangerous for their overall operations so this high entry barrier reduces the attractiveness in that particular business, and the benefit of low exit barrier is that it ensures that one can wind up his business or cash out from the business easily, in the case of easyCar it can be seen that many companies are already catering to the same segment, so setting up such entry barriers is the need of the time, and can be done by making huge investments to develop the assets of the company so that any new entrant will get demoralized, as far as exit barrier is concerned at this point of time.
Moreover, the companies which are currently working in the industry can take such strategic measures that the chances for the amount of sunk costs for the new firms grows high, this can be done by easyCar if they can enforce a wipe out of any small regional company by attacking it all out adopting the strategy of a loss leader for some time could prove to be a useful option, this will send a strong message to the potential new entrants and some of them might abandon their plans for entering into the arena due to such high opportunity of cost risk. Another effective way to stabilize this force is to place yourself so strongly in terms of market share and brand equity that no new entrant can hope to fight against you, this advantage already lies with easyCar as they have a growing market share and brand equity rate. This takes out all the magnetism from the business as the new entrants will get to know that the margin of success for them is very low. In addition to this, the supply chain for the product in the market must be such that no area is left for the potential entrants to make the regional frontal attack so you have to cater to the complete market and leave no weakness which can be exploited to gain a competitive advantage on the company by any of the potential entrants. This is the area where easyCar needs to focus because in this industry, especially as the market is of global nature when competitors from all around the world are already lined up in the same track, it must be of prime focus to develop a strong distribution chain outside Europe (Porter, 1998). If easyCar focuses on these recommendations it is possible to minimize the threats of the new entrants.

Threat of Substitute Products
The beginning of substitute products can be very lethal in any business because it has the capability to nearly force a firm out of the market if the substitute product has the cost and technological advantage, because this is something that gives the competition a whole new dimension and it really captures the market share in no time if the target market is massively attracted towards it.

EasyCar must focus on positioning its products in such a style that the apparent level of product differentiation increases this can be done by continuously adding value to the products. In addition, easyCar must encourage this in the minds of his customers that the relative price performance of its products (rental cars) is more than any other available alternates in the market, this will aid the customers in strengthening their buying behavior.

The Intensity of Rivalry
The intensity of competition is already too high in this industry as there are too much firms from all around the world who are catering to the same needs using the same resources. Some of the rivals of easyCar are namely Hertz, EuropCar, Avis Europe etc. hence this depicts the true intensity of the continental competition that easyCar is currently facing (Porter, 1998). To fight with this intense competition easyCar first of all needs to position it successfully in the minds of the customers so that they can distinguish the difference between easyCar and other competitors. Secondly, efficient management is the key to success research and development department must be strengthened so that nothing left is left for the competitors to attack. The focus of easyCar at this point must be to deposition the competitors points of difference and to create as much points of difference for itself as possible. This can be done by adopting as well as innovating. Consumer behavior in concentrated rival situations can be altered with affective advertising and promotional campaigns.

Bargaining Power of Suppliers
If the bargaining power of the suppliers amplifies, this results in rising costs of production and operation, high prices of the final product, ill-timed availability of the raw material, losing the low cost benefit and lastly in turn down of market share and brand equity. In this industry of intense competition, easyCar cannot even think of affording deficiency of supplies. To cater to this threat long term contracts must be signed with the suppliers so that no difference on prices arise, this is something that easyCar has been doing already. Secondly, the supplies must not come from one way because this is one major reason of growing bargaining power of the suppliers therefore easyCar must concentrate on diversifying its supply chain so that no standstill can be created in the near future.

Bargaining Power of the Customers
In order to counter this threat, easyCar must make its products and services keeping the consumers preference. This is most effective way of reducing the bargaining power of the buyers. Constant value totaling is something that creates brand loyalty and the psychological switching cost of the buyers augment and the brand becomes product for them. Buyers price sensitivity must be taken into account by easyCar so that if needed it can change its pricing strategy (Porter, 1998).