* Our billing system allows us to use yield management techniques to maximize utilization and revenue from our assets.
* Our points of presence ("POPs") will be co-located within the premises of other businesses ("Hosts") to minimize our exposure to non-core "shopkeeping" activities.
* We will develop a strong people culture and align the interests of our staff with those of our shareholders in order to create a profitable business and long-term value.
Success of Easy Internet cafes
Yes we can say that in future it will be successful because of its low cost strategy. Due to its superior operating abilities and automation its cost is reducing. Moreover tying up with the premises of other businesses like restaurants, departmental stores its risk is also reducing. Its success will also depend on how much it can leverage the fixed costs and the level of capacity utilization. It is also using its core competencies as discussed effectively in this business. Now as per the website it has also launched the mobile service which is synergistic to its business. It can utilize the synergies effectively in the all areas of business to convert the cafes as the retail stores of Easy group where customer can buy any thing and everything online. Moreover recently it has taken the franchisee route for expansion will help in reducing the cost and risk for the easy.
b. What do you think of the easyCar concept? Will it make money for easyGroup?
In April 2000 the company set-up the car rental company, easy Rent a car (now easyCar). This service is in synergy with the principles and strategy of easy group. Now it has 2,000 rental locations in more than 50 countries. Some things easy Car does differently (According to the corporate website) . Thus we see that it is using the medium of ecommerce effectively to increase its reach and to reduce the cost. Its capital investment is less as it operates as a car rental as a broker. It negotiates the bulk rates with the car rental companies earns the extra margin. It offers free unlimited mileage to satisfy the customers. It is also not giving refunds for cancellations. Moreover It matches well with its airlines and is a part of travel business. Thus By its cost leadership strategy it will be successful.
3. What is the core competence van easy Group?
Various management consultants and thinkers have defined the process of strategy in various ways. Porter’s model focused on defining a firm’s strategy in terms of it’s product/ market positioning. Building on Porter’s notion of competitive advantage, the resource based view of strategy argues that the resources and capabilities of an organization can be a source of competitive advantage if they processes certain characteristics of being rare, durable and difficult to imitate, flexible and durable.
Easy group’s core competency is effective execution of cost leadership strategy and leveraging the power of ecommerce significantly. Jet has successfully reached to the cost advantage and thus it is contributing positively to the firm’s margin.
Its success lies in developing competencies on construction of efficient-scale facilities, tight cost and overhead control, minimization of operating expenses, reduction of input costs, tight control of labor costs, and lower distribution costs.
Thus it is gaining competitive advantage by getting its costs of production or distribution lower than the costs of the other firms in its relevant market. Thus this performance advantage is achieved by:
- Marshalling resources that support the business strategy and implementing the chosen strategy, efficiently and effectively.
- Utilizing the full potential of the human resources to the firm’s advantage.
- Leveraging other resources such as physical assets and capital to complement and augment the human resources based advantage.
4. Should easy Group enter the UK cinema business?
I will recommend that it should not enter the UK cinema business. The reasons are discussed below:
a. How well do cinemas fit the “easy” formula?
Cinemas do not fit well with their formula. First the success of it depends on success of the movie which is considered to be very low. Thus it is high risky business and lot of volatility is there. Secondly this product is considered to be giving entertainment to the consumer. Thus low frill may not gell with the nature o f the
Product. Moreover the Cinema industry is not that attractive as we see below.
b. In order to answer this question makes an analysis of the cinema business in the UK using the 5 Forces Model! Describe easy Cinema as a potential entrant?
Today's business environment is extremely competitive and in economics parlance where perfect competition exists, the profits of the firms operating in that industry will become zero.
However, this is not possible because, firstly no company is a price taker (i.e. no company will operate where profits are zero).
Secondly, they strive to create a competitive advantage to thrive in the competitive scenario. Michael Porter, considered to be one of the foremost gurus' of management, developed the famous five-force model, which influences an industry.
Industry competition
In UK Cinema as an industry is competitive. It has got six main operators and the Odeon is the leading operators. However, creating brand awareness and providing high quality entertainment amongst movie goers is the key for long-term survival.
Bargaining power of buyers
The consumer has got choice and the success of the operator also depends on the success of the movie. Thus the bargaining power of consumer is very high.
Bargaining power of suppliers
The distribution of the movie is controlled by the big movie houses of Hollywood. Thus do have certain influence over the UK industry. They may not accept the yield management model of the Easy group.
Entry barriers
It requires high capital investment of approximately 15 mn pound to set up the 16 screen cinema. Moreover it requires high brand loyalty in the mind of the consumer.
Substitutes
There are substitutes in form of video rentals, video sales and last but not least DVD rentals which is increasing. It can be online broadcast also.
This model gives a fair idea about the industry in which a company operates and the various external forces that influence it.
However, it must be noted that any industry is not static in nature. It's dynamic and over a period of time the model, which have used to analyze the cinema industry may itself evolve.
Going forward, we foresee increasing competition in the industry but the form of competition will be different. It will be between large players (with economies of scale) and it may be possible that some kind of oligopoly or cartels come into play. This is owing to the fact that the industry will move towards consolidation. The barriers to entry will increase going forward. Thus according to my opinion Industry is unattractive.
c. If you think the UK is attractive, what are the entry barriers? how would you enter this business?
As discussed above the entry barriers are high capital investment, high brand loyalty, high competition, risky nature of business. They can enter by acquiring an existing cinema operator. This will help in gaining markets share in timely manner. Moreover here the strategy can be concentrating on online DVD sales and broadcasting instead of Cinema. Infact in May 2006 they have closed down the cinema operations and are concentrating on the DVD sales.
5. What are your recommendations for the easy Group diversification strategy?
"In the emerging economy, a firm's only advantage is its ability to leverage and utilize its knowledge."
...Larry Prusak, Executive Director - The Institute for Knowledge Management
We are living in an economy of kaleidoscopic change where the only element, which is constant, is change. To maintain a competitive advantage, all businesses should concentrate on the 5 strategic pillars for a high-performance company:
- Leadership
- Innovation
- Information Technology
- Organizational excellence and agility
- Knowledge
A successful organization constantly redefines their methods of creativity and problem solving.
For any high performance organization, knowledge management is the central pillar in its strategic plans. An organization’s strategy must be appropriate for its resources, circumstances, and objectives. The process involves matching the companies' strategic advantages to the business environment the organization faces. One objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently. A good corporate strategy should integrate an organization’s goals, policies, and action sequences (tactics) into a cohesive whole.
Thus easy group’s strategy of diversification should address the entire strategic scope of the enterprise. As it is a multi-business firms, the resource allocation process—how cash, staffing, equipment and other resources are distributed—is typically established at the corporatet level
. In addition, because market definition is the domain of corporate-level strategists, the responsibility for diversification, or the addition of new products or services to the existing product/service line-up, also falls within the realm of corporate-level strategy.
Similarly, whether to compete directly with other firms or to selectively establish cooperative relationships—strategic alliances—falls within the purview corporate-level strategy, while requiring ongoing input from
Critical questions answered by corporate-level strategists thus include:
1. What should be the scope of operations; i.e.; what businesses should the firm be in?
2. How should the firm allocate its resources among existing businesses?
3. What level of diversification should the firm pursue; i.e., which businesses represent the company's future? Are there additional businesses the firm should enter or are there businesses that should be targeted for termination or divestment?
4. How diversified should the corporation's business be? Should we pursue related diversification; i.e., similar products and service markets, or is unrelated diversification; i.e., dissimilar product and service markets, a more suitable approach given current and projected industry conditions? If we pursue related diversification, how will the firm leverage potential cross-business synergies? In other words, how will adding new product or service businesses benefit the existing product/service line-up?
Thus it has to pursue and select the new businesses carefully.
Creating new value added services
With the advent of ecommerce, Easygroup become bridge between the virtual and physical world. It is of critical importance in retaining customer participation. Product innovation serves as a key tool to attract new customers. They are catering to all kind of B2B and B2C companies with its robust information technology infrastructure. Through creative deployment of its core competencies, Easy group should take on greater pieces of the value web in B2B e-commerce.
The Evolving Value Propositions to the target customers
The ultimate aim is to provide a complete end to end consumer experience---right from the promise to satisfy his need to its delivery. But the physical world offers only "Point Solutions" which is basically a solution of his needs in terms of functional benefits. A credit card, for instance, allows consumers to satisfy the immediate necessity of settling a transaction. But today’s consumers are also looking for process and relationship benefits----book referrals at no extra cost or e-mail reminders. The physical world is not able to deliver these benefits because of gaps in time, space and memory. The web, on the other hand provides all of these and more ("reverse marketing, for example, where consumers seek out vendors rather than the other way around") by giving the Easy the ownership and control over all interactions with the consumer.
The above strategy of Easy will help in:
Integration – It is integrating all its products, practices, market news, product specifications, performance metrics, and policy and procedures for the information they need to make confident business decisions and act quickly on revenue opportunities, with no geographical restrictions.
Personalization -Each user can tailor his or her portal experience to his or her role by choosing from a menu of options. To assemble a complete view of the business, the customers can select options including e-mail, real-time news feeds, chatting, and personal mentoring on various products.
Community – It is encouraging the community building thereby increasing the customer loyalty and getting genuine feedback.
- MARKETING MANAGEMENT BY PHILIP KOTLER
- F.F.Reichheld and P.Schefter, "E-Loyalty :Your Secret weapon on the Web," Harvard Business Review July-August 2000 ,pp. 105-113
- A.J. Slywotzky ," The Age of the Choiceboard," Harvard Business Review, January-February 2000 ,pp.40-41
- N.Venkatraman ,"Five steps to a Dot-Com Strategy: How to find your footing on the Web," Sloan Management Review Spring 2000 , pp. 15-26
- Rashi Glazer, "Winning in Smart Markets," Sloan Management Review ,Summer 1999 ,pp.59-69
- Shikhar Ghosh, "Making Business Sense of the Internet," Harvard Business Review, March-April 1998, pp.129-135
- Douglas F. Aldrich ,Mastering the Digital Marketplace (John Wiley & Sons, Inc.,1999)
- Patricia B. Seybold ,Customers.com (Random House , 1998 )
