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on 5 October 2012

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Transcript of esaygroup

Strategic management Case Study:
Extending the "easy" Business Model Zooming-in on easyGroup's stategy Anais Baudenet - Bertille Villiot - Mickael Onillon - Fady Boutamé - Amélie Chianalino - Sandy Teng - Vincent Le Carour - Alexandre Rollet Very intense competition (UCI, Odeon Cinevan, UGC…)
Multiplex VS independent theaters: where to stand?
Distributors strong bargaining power (Warner Bros, Sony pictures…) THREATS The market for Cinema: in 2001, admissions at the highest level and expected to grow
Different target audience (mainstream, niche segments and families) OPPORTUNITIES EXTERNAL ENVIRONMENT No customer experience (no trailers, no food no drinks, no box-office and ushers) WEAKNESSES Pricing strategy: low budget, no-frills, low fares down to 20%  pioneer
Great use of technology that fits customers’ patterns (printing tickets with bar codes, mobile phone) STRENGTHS INTERNAL ENVIRONMENT RECOMMENDATIONS PESTEL PORTER’S GENERIC STRATEGIC MATRIX "Our mission is to manage and extend Europe’s leading value brand to more products and services, whilst creating real wealth for all stakeholders." Mission statement "The only conglomerate i know that works on the stock market is GE. easyGroup is not about unrelated ventures, but about a formula for success that can be replicated across seemingly disparate businesses."
- Stelios Haji-Ioannou Their Core Business Case introduction

Presentation of the founder and CEO

easyGroup and success of easyJet

SWOT / PESTEL analysis / 5 Porter’s forces

Resources and core competencies

Recommendations Agenda Founded in 1998
Owner and CEO : Stelios Haji-Loannou
Headquarter : London
Products :
Car Hire
Financial services
Strategy based on controlling cost and undercutting rivals Presentation of What is British "Serial entrepreneur"
He created « Stelmar Tanker» at the age of 25 with £30M and sold it 13 years later for £1.3 billion.
He started easyJet at the age of 28.
Improve the brand « easy » across new business while keeping the core business model. Stelios Haji-Ioannou Experience in the low cost strategy (easyJet)
Yield management
Basic services
New distribution method (Internet)

Do theses resources offer a competitive advantage to easyCinema ?
But easy to imitate

 Only a temporary competitive advantage for easyGroup on the UK cinema market easyGroup’s core competencies

easyGroup has a clear lack of control of it value chain and a huge dependence from the movie makers
Disadvantage compare to the main national operators like Odeon or Warner
Barrier from movie maker who compete into the UK market
A clear competitive disadvantage and a major weakness to success the entry easyGroup's value chain The Cinema Industry Life Cycle • EasyJet
• Fastjet
• EasyInternetcafé
• EasyCar.com
• EasyMoney
• EasyCinema
• easyCinema Online DVD Rental
• EasyBus
• Easy4Men
• EasyPizza • EasyMusic
• EasyCruise
• EasyMobile
• EasyHotel
• EasyGym
• EasyValue
• Easy.com
• EasyJobs
• EasyWatch
• EasyTelecom
• EasyVan
• EasyOffice The easyBrands easyFigures
1995 : Creation of the first European low-cost airline company.
Stelios Haji-Ioannou wanted to transform the European airline market considering the US market.
The scope of EasyJet is to offer cheap flight tickets in Europe and so to make people able to fly easily. EasyJet
EasyJet considers that it will succeed in being the first European low cost airline company thanks to :

Operational effectiveness that make the travel habits to change.
Low price and high volume that will increase the profits.

EasyJet’s competitive advantage :

A price policy that maximize profits :
Yield management policy
Fares based on supply and demand
No travel agents
A high rentability of planes :
Short-haul destinations (Europe only)
Rapid turnaround times to increase aircraft
utilization : 11.5h perday vs 6h.
But no compromises on passenger safety :
brand new planes, experienced pilots… EasyJet
EasyJet has built a new commercial flights style :
No business class
No inflight meal
Use of minor airports (Luton in London)

EasyJet increased its visibility on the market thanks to a particular way of advertising :
No agency
Commercial Campains
Use of planes as an advertising space
Consumers like the position of EasyJet on the
market .
- First mover

In 1999, EasyJet’s recognition is positive. EasyJet easyJet Revenues easyCinema Today Questions? Thank for listening easyJet is a seperate company
easyCar suffered financial losses and had a reputation of poor service
dispute over unpaid rent with the landlord, Odeon, which resulted in eviction, the EasyCinema closed in May 2006
In late July 2012 easyCinema announced that as of 1st August 2012 the easyCinema website and branding will cease and instead will be operated by LOVEFiLM.
easy4men As of 2011, it is no longer in operation. HIGH
Low switching costs
Customers sensitive to the cinema’s experience
Availability of substitute products
But little differences in the offer of major operators Buyers’ bargaining power LOW
High barriers to entry
Strong brand equity
Difficult access to distributors
Pressure on profitability Threat of new entrants MEDIUM

Moderate buyers’switching cost

Threat of derivate products

Perceived level of service differentiation

Moderate web threat Threat of substitutes EXTREMELY HIGH

No substitute imputs and few powerful suppliers
Exclusive distribution channels
Distributors power Suppliers’ bargaining power HIGH

Few big players dominating the market

Intense competition

Mature industry

Difficult to differentiate Competition rivalry Improve customer experience

Work on customer retention through differenciation

Be in line with local demand

Manage good relationships with distributors

Achieve vertical integration with suppliers or be part of a buyer conglomerate

Achieve a critical size Key success factors Who is the man behind easyGroup?

Presentation of easyGroup

Which other ventures are based on this model?

How easyGroup tried to apply its business model to the cinema market ?

Could we apply a same business model to different markets? easyInternet Cafe easyCar Founded in 1999 in London, it was one of the first easyGroup Ventures
Applied on the same no-frills, low cost and yield management principal that had worked for easyJet.
Price fixed according to store location and seasonality => High occupancy rate
The model has evolved to smaller stores and limited staff but high quality of software
easyGroup wanted to expand internationally this brand as a franchise but this brand was a loss-making business Tangible assets:

Revenues & Profits

Market value

Listed in the London Stock Exchange

Intangible assets:

Stelios Haji-Ioannou; CEO, serial entrepreneur



“easy”brand recognition Resources Resources Experience of the yield management

Ability to attract a media coverage (skilled PR operator)

Strong and stable management team, led by Ray Webster Closed after 3 years of operations. Why?

High rent: After a change of ownership of UCI charges went up
The new owner of UCI is the same company that ownes Odeon
=> The landlord and the competitor are the same

Problems with distributors eadyCinema then became a website that allows to see movie listings and to rent DVD
The websites attracted more than 500K hits a month

The website is now operated by LOVEFiLMS, a company owned by Amazon Analysis of easyModel Launched in 2000 base on the "easyModel"
Price was fixed according to seasonality
It proposed a single Mercedes Class A model and had an important fleet
The model has later evolved to have a smaller staff and less important fleet
The company has suffered financial losses and is now is an international car rental broker via the Internet
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