Easy cruise case

..............................................................7 1.3.1. Technical support ............................................................................7 1.3.2. Personnel...............................................................................................7 1.3.2. Customer as a co-producer.......................................................10 1.3.3. Physical support .............................................................................10 1.4. Operations management .............................................................................11 1.4.1. Safety.................................................................................................11 1.4.2. Operational Integrity....................................................................11 1.4.3. Cost Control.....................................................................................12 1.4.4. Internet.............................................................................................13 1.4.5. Yield Management.........................................................................14 1.5. Marketing...........................................................................................................16 1.5.1. The Market for Low-cost, No frills...........................................16 1.5.2. Brand Strength and loyalty.......................................................17 2. Application of easyBusinessModel to easyHotel................................18 2.1. Offering Structure ..........................................................................................18 2.2. Delivery Process..............................................................................................18 2.2.1. Personnel ..........................................................................................18 2.2.2. Customer as a co-producer.......................................................19 2.2.3. Technical Support ..........................................................................19 2.2.4. Physical Support ............................................................................19 2.3. Operations management .............................................................................20 2.4. The London Hotel Market............................................................................21 2.5. Brand & Loyalty...............................................................................................22 3. Traditional Cruise Industry .............................................................................22 3.1. The market........................................................................................................22 3.1.1. The Global Cruise Market...........................................................22 3.1.2. Valuable Customers......................................................................23 3.2. The actors..........................................................................................................24 3.2.1. Mission statement .........................................................................24 3.2.2. Range.................................................................................................25 3.2.3. Ranked list .......................................................................................26 3.3. Environmental analysis ................................................................................27 3.4. Offering Structure ..........................................................................................28 3.5. Service Delivery Process .............................................................................31 3.5.1. Personnel ..........................................................................................31 3.5.2. Customer as a co-producer.......................................................32 3.5.3. Technical Support..........................................................................32 3.5.4. Physical Support ............................................................................33 3.6. Cost structure ..................................................................................................34

© CCMP 2006 - Easy Cruise Case – Sylvie Cellard, Synthiea Kaldi, Eric Vogler – EM Lyon Page 2

Licence d'utilisation accordée à : Groupe ESC Troyes

1. easyGroup’s low-cost, model

no

frills

business

In the process of founding easyJet, a very successful low cost, no frills European airline based on the Southwest Airline model, Stelios Haji-Ioannou decided that his true desire was to be a “serial entrepreneur” founding companies based on a lowcost no-frill business model and then appointing others to run those companies. easyGroup’s focus is on growing price elastic markets and competing with existing players by lowering the cost base. The group lowers the cost base of an industry through the use of Internet and technology, by maximizing utilization, and by increasing efficiency through simplifying the industry. easyGroup eliminates the frills of a business to concentrate fully on the core competencies necessary to deliver the core service. The group’s mission statement is, “…to extend the easy brand to more sectors ("paint the world orange") whilst creating real wealth for all stakeholders. We will build on our core brand values of being lowcost, innovative, and fun and always an "underdog" fighting for the little guy. We will protect our brand from internal and external threats and manage appropriately the business and other risks inherent in venturing. We will develop our people and ensure their reward is aligned to realize shareholder returns. “We will create wealth by: v selling shares in incubated businesses which have become substantial and profitable enough to IPO (Initial Public Offering). v charging royalty fees for licensing our IP (Intellectual Property) to reputable established entities or new ventures we control and franchise.” (www.easy.com) Maintaining a very flat, innovative culture, easyGroup grows the companies it creates with the goal of having them publicly listed. As new services are developed, an easyGroup executive takes the lead. With project development and launch the group participates less actively in the day to day operation of the new brand, hiring experts in that particular field to run the show. Transparency is another important trait of easyGroup’s corporate culture. This came about from Boeing contacting Stelios about their aircraft in June 1994 a day after a Greek newspaper ran a story about him thinking of starting an airline. Stelios recalls “That taught me that expressing your thoughts, going public with your intentions, is never a bad thing….” (Calder, 2003, “No frills; the truth behind the low cost revolution in the shies”, Great Britain: Virgin

© CCMP 2006 - Easy Cruise Case – Sylvie Cellard, Synthiea Kaldi, Eric Vogler – EM Lyon Page 3

Licence d'utilisation accordée à : Groupe ESC Troyes

book ltd, p 120). This transparency of intentions can be seen on www.easy.com where the company lists their existing projects as well as those under consideration. easyJet’s agreement to be the featured airline in the UK docu-soap ‘Airline’ is also an indication of the company’s transparency. This series attracts about 10 million viewers every episode, and every time it airs, bookings rise. easyGroup looks for contestable markets in which they can sustain the best price offer. General traits of contestable markets include: v Low barriers to entry (and exit) v No collusion in the market so firms truly compete with each other v Firms are short run profit maximizers, producing where Marginal Costs = Marginal Revenues (a necessary condition for profit maximization) v There is perfect customer knowledge about available offers on the market easyGroup targets those markets which are more open to new entry due to higher profit levels from the ability of the group to lower cost bases, as well as the existence of low barriers to entry and exit. easyGroup believes they can create and sustain a lower cost base than currently exists in the market and therefore offer a better value to the customer. While easyGroup may not always offer the lowest price available, the easyBrand reputation for being the best value on the market contributes to the perception of the offer also being the best price.

Another relevant variable for easyGroup to enter a new market is scalability. A market which expands due to competition among suppliers is scalable. easyJet proved that the European air travel market was scalable. Or, “if new, low fares become available, the number of passengers increases by more than the extra capacity on the route. passengers.” In other words, every airline finds it is flying more The market for easyJet grew among people A fall-off in passenger numbers led railroads to (Calder 2003, 132)

previously traveling by trains.

respond by offering lower prices for train travel.

1.1.

Offering structure

As previously presented, easyGroup’s focus is on delivering only the core service, or the primary service for which the customer approaches the provider. easyJet offers just one core service, safe, timely, point to point air travel within Europe. easyHotel will provide a safe, clean room in which to sleep,