Question :what are the impact of responding to business

environmental factors and trends.

Case study

Study case: EasyJet PLC

EasyJet PLC (created in 1995) trading under the name EasyJet is a low-cost airline based in the UK, their head quarter is based in London Luton airport. As well as being a major UK airline (it is currently the 4^th biggest airline in Europe), EasyJet has a network of 29 bases across Europe (EasyJet flies domestically and internationally). EasyJet PLC has three affiliates: EasyJet UK, EasyJet Switzerland, and EasyJet Europe. It Employs over 1000 employees from 7 different country based within Europe.

Key points:

-EasyJet's heavy competition: Ryanair, Jet2.com, Norwegian, ...

-Potential of new entrants into the industry: extremely limited yet not impossible, national airlines are developing their own low cost to compete against current major low-cost companies.

-Power of suppliers: On that end EasyJet is doing great, the number of suppliers against the demand is no match, therefore EasyJet has great control over prices.

-Power of customers : This is very difficult for EasyJet, even though the demand is high within the travel industry especially in the UK, the competition is fierce, there is only so many customers that will travel to a certain destination at a certain date, yet many carriers willoffer that route, so the customer is in control and EasyJet has to be competitive pricewise.

-Threat of substitute products: They are extremely limited, if and when available they will tend to be a lot more expensive.

PESTEL report:

Political

EasyJet is extremely vulnerable to geopolitical conditions, due to the fact that EasyJet plc currently trade within most of the European countries, it has to deal with most of their local governments as well as the European government itself (brussels), EasyJet is currently dealing with heavy burdens, it is extremely vulnerable to the current situation caused not only by the Brexit but also the COVID-19 pandemic (Those two last factors have actually caused EasyJet to report the 1st annual loss in the last 25 years). For example, If we take the Brexit situation, it is of such uncertainty that it leave EasyJet to extreme volatility, airlines require months of preparations to operates, licenses, rights, banking, insurances, ... the only thing they can do at the moment is to prepare for different scenario

-The UK government will get a deal and the airlines EU trades will stay as they are.

-The UK Government ask for an extension which causes more instability and therefore EasyJet will have to deal with more uncertainty.

-The UK government does not get a deal and therefore will have to rethink the whole functioning all over again.

Here are some political factors that must be considered when conducting a Pestel analysis:

-Intellectual property protection

-Taxation - tax rates and incentives

-Industrial safety regulations in the Consumer Services sector.

-Legal framework for contract enforcement

-Political stability

Economical

EasyJet has gone through the most difficult year since its creation so far, the uncertainty caused by the Brexit within the United Kingdom has made the British people more cautious about their spending, traveling not being one of their priority anymore. Also, the Brexit has made it more difficult for EasyJet's suppliers to get the goods they need at a descent cost, therefore EasyJet has close to little bargaining power with their suppliers. EasyJet being the 4^th largest European airline is lucky enough to be able to save some cash in order to get through through the hard time coming. Yet it cannot afford to lose all of its staff but at the same time cannot afford to pay its staff and suppliers without customers using their services, those are fixed cost, the government has put in place some findings to help with this yet not all companies are eligible for it.

Here are some economic factors that must be considered when conducting a Pestel analysis:

-Labour costs and productivity in the economy

-Economic growth rate

-Inflation rates

-Interest rates

-Skill level of workforce in Travel & Leisure industry

Social

As previously said, 2020 has been the most difficult year so far for EasyJet PLC since there creation, most of the EU countries have imposed national lockdowns on their population, making it almost impossible for their citizen to travel and therefore use airlines. By the time the pandemic is over, people will not be traveling as much, it will not be their priority, airlines will have to work hard for a few years in order to convince people to use their services again. This is probably going to be the hardest burden for EasyJet, not only the governments from most of the countries throughout the world have forbidden their citizen from traveling, most people are actually scared to fly again, it is a double whammy for EasyJet, they will have to gain their customer's trust again as well as take the heat on their prices for a while, people have lost a lot of money with the pandemic, traveling is not as important as it use to be for people.

Here are some social factors that must be considered when conducting a Pestle analysis:

-Demographics and skill level of the population

-Culture (gender roles, social conventions ...).

-Leisure interests

-Class structure, hierarchy, and power structure in the society.

Technological

The competition is fierce in this industry, today more than ever, airlines will go to any extend in order to win market shares, convince people to use their services, people will want safety and comfort when flying, it is therefore at the utmost importance to make sure the planes are regularly upgraded, or at least their technology, this will drastically affect the airline's revenues, technology comes to a cost and they have to make sure that upgrades they'll be investing in will not be irrelevant within a few months. The technological world evolve at an insane speed, we get new technology every single day, it is hard to keep up, following what the competition does is a great way to keep up with them, also listen to their customers needs will help the airline decide what should be done when it comes with things like upgrades.

Here are some technological factors that must be considered when conducting a Pestel analysis:

-Technology's impact on product offering

-Impact on cost structure in Travel & Leisure industry

-Recent technological developments by easyJet Plc competitors

Legal

EasyJet PLC has it's headquarter within the United Kingdom, ano deal Brexit would you make it difficult for EasyJet do you keep trading with the rest of Europe, EasyJet currently bypass local (rest of Europe) laws because the United Kingdom is part of the European Union, therefore the right to fly within the European airspace falls under the EU laws, however some countries legal system is still very week and does not protect the intellectual property rights of such organisation. It is difficult to deal with the legal aspect when you flight within so many different countries, each have their own laws, yes some of those laws have to be accepted the the European government but a lot don't, it is therefore very important for EasyJet to get involved with the ministers in charge in each of its operating countries in order to keep up with the legal requirements.

Here are some legal factors that must be considered when conducting a Pestel analysis:

-Copyright, patents / Intellectual property law

-Health and safety law

-Employment law

-Data Protection

-Anti-trust law in Travel

Environmental

When it comes to the environment, airlines have a long way to go, EasyJet operates within Europe, most of the countries in Europe are part of the Paris accord, which means those countries have to reduces their carbon emission drastically or pay fines and else, each country has a different ratio, therefore EasyJet has to work with the government of each countries in order to fall within their allowance. The environment must be one of the biggest cause of our generation, people are more and more worried about it, it is important to show customers that the airline listens to their concerns, by upgrading their fleet with low carbon emission planes for example, using reusable utensils on planes, ... by showing the customers that the airline is involved in the environmental fight it will convince people to use them rather than drive or take trains ( if this option is available )

Here are some environmental factors that must be considered when conducting a Pestel analysis:

-Climate change

-Laws regulating environment pollution

-Attitudes toward and support for renewable energy

-Recycling

Political economical social technological environmental legal

Factors and effects

Legal and political factors

Political factors include how regulations and guidelines imposed by local government could influence the way you do business. Let us take for example, the taxes system, an increase or decrease of taxes could make it difficult to do business with certain countries or even wasteful in certain case, this will directly affect the business itself. At a local government level, there may be restrictions on the category of businesses tolerated in certain locations.

Some of the factors that could directly affect business (legal and political):

-Employment and discrimination laws

-Health and safety laws

-Tariffs

-Environmental laws

Economical Factors

Firstly, it is important to point out that political and legal factors can and will affect the factors. It is extremely difficult for a business to control the economical factors, those are often out of their control, a government could suddenly decide to change their tariffs without prior notice for example, this would have heavy consequences for a company like EasyJet that generates billions of euros and other currencies, in fact the exchange rates are a factors that can affect the business. the size of the Market where they operate, the population of a small country might not generate an income worth it but it might be a major destination ( heavy demand ), all those reasons and more make it important for a business to evaluate economic conditions to make sure this will be a viable market.

Here are some of the macro and micro factors that are essential to look at:

-Inflation, tariffs, exchange rate (macro)

-Is there an actual demand (micro)

-Competition (micro)

Environmental Factors

This is 2020, most people need to have a cause, and it seems like at the moment the environment is the major cause, as seen with the extreme weather, fire bushes, deforestations, food waste, ... people want and need to feel involved in this, therefore business have to show their involvement in those causes. A company like EasyJet uses a huge amount of fuel on each flight, a lot of that fuel is not even used and if actual disposed of and not used, that not only is a waste that makes it difficult for people to accept but it also contribute to the air pollution, a major issue the world is facing at the moment.

Here are some factors that must be looked at:

-Political and legal factors (Paris accord for example)

-Technological Factors (is the fleet up to date?)

-Ecological Factor

-Social factors

-Pollution, climate change, ressources, recycling ...

Changes to the business environment

Diversification: This is fairly straight forward, EasyJet operates mostly within the European/Schengen area, It is necessary for EasyJet to operates in most countries possible, to offer as many routes as possible to its customers, the reasoning is very simple, if they don't, a competitor will, and therefore EasyJet will lose some market shares

Collaboration : EasyJet is a solo player, it is a low cost that is extremely competitive, most current airlines would not be able to match their prices which gives them a huge advantage, also they mostly operate small to medium size planes which fills up quickly, and they operate to most major European cities. At the moment they are not looking to fly further than Europe, that could change, and it will most than likely have to change if they want to keep growing and gaining market shares, the biggest downfall for EasyJet is that they are not part of any kind of Alliance which limit drastically their interactions with other airlines and make it almost non-existent.

Brand Building: EasyJet has a strong back up, image. History, follow-up,... the company is branded, no matter your destination your plane will all look identical inside out, staff will be wearing the same uniform, catering onboard will be the same,... over the years they marketed their image to the point of it being one of the most known company in the world almost by the looking at the colours of their logo.

Use of the latest technology: Technology has a cost, a hefty one! Low-cost airlines function on small margins, they will work on the amount of customers using their services rather than how much each customers will bring them ( or at least this is the ideal), aeronautic technology is one of the most expensive around, therefore their planes are not really upgraded and you tend to fly in older planes, to counter this problem, their do keep up with their planes maintenance, the upkeeping is regular so that their fleet stays as usable for as long as possible with as little trouble as possible.

Market Orientation: this is really about the customer's needs and want, It is vital for EasyJet to not only listen to its customers but also ask them what they need, customers will want new services, new destinations, new flight times and so on, by listening to their queries it will be much easier to develop relevant products/offers and by doing so saving time and money. The business really must keep up and look for the new always changing trends so that their offers stays relevant and get those changed when this is not the case anymore.

Changing relationship between public and private sector

EasyJet is the kind of company that has to deal with both private and public sectors, when it comes to the most important matters it tend to have to be dealt with the public sector ( central government, state gov, local gov, municipalities,...), flying requires a lot of certificates, insurances, authorisations but also has a lot to do with local politics and international relationship, a sudden crisis between two European countries could see EasyJet lose their rights to fly to a certain country. For example if we take the current international events, EasyJet is a UK base companies, it however operates flight between France and turkey, right now the relationships between those two countries are not at their best, it is not in EasyJet's interest to see that relationship degrade itself even more than it already is, it is therefore very important for the airline to keep a close eye and ear with the local governments of each country is flies to. Another current example, Brexit, currently no deal has been agreed between the united kingdom and the rest of Europe, as the current laws stand EasyJet has the right to fly in the European airspace, but what will happen in a few months if the UK does not get a deal ? the airline has to work closely not only with the British public sector ( government), but also with each one of the countries with which in works and also brussels.

To sum up:

-The public sector will regulate the action of the business

-The public sector will prescribe the rules, use the services, protect the competition

-It will set the environmental guidelines to be followed

-By accepting public sector's regulations, private sector can solve social problems or simply make a profit.

-The private sector cannot really operate without the public sector (gov, police, passport, NHS, ...)

-It is important to note than an organisation part of the public sector can become part of the private sector. However until then organisations in the public sector are state owned.