Categories: Strategy

Strategic Analysis and Business Strategy of Jet2

&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad1" id&equals;"quads-ad1" style&equals;"float&colon;left&semi;margin&colon;0px 0px 0px 0&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;<p><&sol;strong><strong>-&gt&semi;<&sol;strong><&sol;p>&NewLine;<h1 align&equals;"justify">7 Performance Indicators<&sol;h1>&NewLine;<p align&equals;"justify">&NewLine;The strategies that will be devised for the company will attempt to seek one major goal&semi;<br &sol;>&NewLine;1&period; Increase the handling capacity of the airlines&period;<&sol;p>&NewLine;<p align&equals;"justify">The KPI’s for the following strategy would be&semi;&NewLine;<&sol;p>&NewLine;<h2 align&equals;"justify">Performance Indicators<&sol;h2>&NewLine;<p align&equals;"justify">Goal&colon; Handling Capacity<&sol;p>&NewLine;<p align&equals;"justify">Monitor the increase in the number of flights annually&period;<&sol;p>&NewLine;<p align&equals;"justify">Monitor the increase in the number of passengers annually&period; <&sol;p>&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad2" id&equals;"quads-ad2" style&equals;"float&colon;none&semi;margin&colon;0px 0 0px 0&semi;text-align&colon;center&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;<p align&equals;"justify">The increase in the number of airport hubs&comma; hangars and other handling operations at airports&period; <&sol;p>&NewLine;<p align&equals;"justify">Monitor the revenue generation for the year&comma; and evaluate the increase percentage&period; <&sol;p>&NewLine;<p align&equals;"justify">Monitor the increase in the fleet size of the airlines&comma; and the total capacity of the fleet size&period; <&sol;p>&NewLine;<h1 align&equals;"justify">8 Future Strategy<&sol;h1>&NewLine;<h2 align&equals;"justify">8&period;1 Overall Objective <&sol;h2>&NewLine;<p align&equals;"justify">Expanding of the Operational and Handling Capabilities of the Airlines<&sol;p>&NewLine;<h2 align&equals;"justify">8&period;2 Strategy Type<&sol;h2>&NewLine;<p align&equals;"justify">Expansion Strategy&NewLine;<&sol;p>&NewLine;<h2 align&equals;"justify">8&period;3 Direction<&sol;h2>&NewLine;<p align&equals;"justify">The strategy will attempt to increase the number of aircraft and passengers that the airline can accommodate&period; &NewLine;<&sol;p>&NewLine;<h2 align&equals;"justify">8&period;4 Objective<&sol;h2>&NewLine;<p align&equals;"justify">The objective of the strategy is to raise sufficient capital to invest in expansion activities&period; &NewLine;<&sol;p>&NewLine;<h2 align&equals;"justify">8&period;5 Strategic Implementation<&sol;h2>&NewLine;<p align&equals;"justify">&NewLine;The strategy will have several aspects to it as the expansion of an airline is a very extensive task&period; The overall selected strategy will have smaller components into it as well&period;<&sol;p>&NewLine;<h3 align&equals;"justify">8&period;5&period;1 Organizing and Resourcing<&sol;h3>&NewLine;<p align&equals;"justify">&NewLine;The major objective of the strategy is to enable the organization to raise capital&period; As the expansion of the handling capacity of the organization cannot take place until it has enough capital to invest&period; The methods that would be used for that are two-fold&period;<&sol;p>&NewLine;<h4 align&equals;"justify">8&period;5&period;1&period;1 Raising Equity<&sol;h4>&NewLine;<p align&equals;"justify">&NewLine;As the organization is not directly listed on the stock exchange&comma; the only viable way for it raises its equity is through its parent company&comma; Dart Group PLC&period; The group is a big organization&comma; with a market cap of almost USD 1 billion&period; Jet2 airways cover the majority of the portfolio for the organizations&period; Hence&comma; the equity would be raised through this organization &lpar;Dart Group&comma; 2016&rpar;&period; <&sol;p>&NewLine;<p align&equals;"justify">&NewLine;Several airlines have utilized this strategy in the past&comma; including big names like Lufthansa&comma; Emirates&comma; and the American Airlines&period; The method that would be utilized would be increasing the volume of shares in the market&period; The Dart Holdings group has a good market reputation&comma; with the current share price hovering at a modest level &lpar;GBP 680&rpar;&period; The current volume of shares in the market for the company is about 1&period;5 million &lpar;Dart Group&comma; 2016&rpar;&period; Hence the organization can only dilute the shareholder position by a small fraction and then release an additional amount shares in the market&period; The releasing of the shares would invite new investors&comma; and the organization would be able to raise a sufficient amount of capital easily&period;<&sol;p>&NewLine;<h4 align&equals;"justify">8&period;5&period;1&period;2 Control System<&sol;h4>&NewLine;<p align&equals;"justify">&NewLine;The control system for this part of the strategy would be the level of dilution versus the capital raised&period; If the organization is to dilute a greater part of the equity to raise a sufficient amount&comma; then this strategy would be halted and would be referred to its other component&period;<&sol;p>&NewLine;<h4 align&equals;"justify">8&period;5&period;1&period;3 Issuing Debt<&sol;h4>&NewLine;<p align&equals;"justify">&NewLine;The second option for the company and the preferred option under the strategy is to issue debt&period; Debt issuance costs less for the company and is far more convenient for the shareholders and the owners of the organization&period; As both organizations Jet2 and Dart Group have a good reputation&comma; the idea to raise debt from the market would be welcomed with a good market sentiment&period; The company can provide the market with high yield bonds with an average of almost five years to maturity&period; As the company aims to increase its expansion swiftly&comma; high yield bonds in the market would be priced higher&period; Allowing the organization to raise capital &lpar;Dart Group&comma; 2016&rpar;&period; <&sol;p>&NewLine;<h4 align&equals;"justify">8&period;5&period;1&period;4 Control System <&sol;h4>&NewLine;<p align&equals;"justify">&NewLine;The control system for the following aspect would be to analyze the organization debt to equity and the current ratios&period; If the current ratios start to fall below 1&comma; then it would be an indicator to stop implementing this strategy for the time being&period; Similar is the case for the other ratio&period; If the ratio increases above 1&comma; then the debt being issued should be stopped&period; Until the organization can recover &lpar;Henckles&comma; 2015&rpar;&period; <&sol;p>&NewLine;<h3 align&equals;"justify">8&period;5&period;2 Time Cycle of the Strategy<&sol;h3>&NewLine;<p align&equals;"justify">The strategy which is being proposed is cyclical&period; The idea of the strategy is to allow the organization to keep expanding&period; The continuous expansion would increase the fleet size&comma; the number of consumers and the revenue generated&period; Hence there so specific time limit till which the strategy can be implemented&period; However&comma; to overcome the airline&&num;8217&semi;s current situation&period; The following strategy will be able to deliver in one year&period; As the capital can be raised effectively from the strategy&comma; however&comma; the investment and the construction of handling facilities is a time-consuming process&period;<&sol;p>&NewLine;<h1>9 References<&sol;h1>&NewLine;<p>Arif&comma; M&period;&comma; Gupta&comma; A&period;&comma; &amp&semi; Williams&comma; A&period; &lpar;2013&rpar;&period; Customer service in the aviation industry–An exploratory analysis of UAE airports&period; Journal of Air Transport Management&comma; 32&comma; 1-7&period;<br &sol;>&NewLine;Capobianco&comma; H&period; M&period; P&period;&comma; &amp&semi; Fernandes&comma; E&period; &lpar;2004&rpar;&period; Capital structure in the world airline industry&period; Transportation Research Part A&colon; Policy and Practice&comma; 38&lpar;6&rpar;&comma; 421-434&period;<br &sol;>&NewLine;Chicago&nbsp&semi;&nbsp&semi;&nbsp&semi; <br &sol;>&NewLine;Dart Group&period; &lpar;2016&rpar;&period; Annual Report&period; Leeds&period;<br &sol;>&NewLine;Dougan&comma; M&period; &lpar;2002&rpar;&period; A political economy analysis of China&&num;8217&semi;s civil aviation industry&period; Psychology Press&period;<br &sol;>&NewLine;Gössling&comma; S&period;&comma; &amp&semi; Peeters&comma; P&period; &lpar;2007&rpar;&period; &OpenCurlyQuote;It does not harm the environment&excl;’An analysis of industry discourses on tourism&comma; air travel&comma; and the environment&period; Journal of Sustainable Tourism&comma; 15&lpar;4&rpar;&comma; 402-417&period; <br &sol;>&NewLine;Gulliver&period; &lpar;2015&rpar;&period; The world&&num;8217&semi;s largest airlines Domestic Bliss&period; Retrieved 2016&comma; from <a href&equals;"http&colon;&sol;&sol;www&period;economist&period;com&sol;blogs&sol;gulliver&sol;2015&sol;06&sol;worlds-largest-airlines">http&colon;&sol;&sol;www&period;economist&period;com&sol;blogs&sol;gulliver&sol;2015&sol;06&sol;worlds-largest-airlines<&sol;a><br &sol;>&NewLine;Henckles&comma; E&period; &lpar;2015&rpar;&period; Airline Industry Overview&period; Columbia&period;edu&period;<br &sol;>&NewLine;Jet2&period; &lpar;2017&rpar;&period; Company History&period; Retrieved from Jet2&period;com&period;<br &sol;>&NewLine;Lee&comma; I&period;&comma; Lochhead&comma; S&period;&comma; Ritter&comma; J&period;&comma; &amp&semi; Zhao&comma; Q&period; &lpar;1996&rpar;&period; The costs of raising capital&period; Journal of Financial Research&comma; 19&lpar;1&rpar;&comma; 59-74&period;<br &sol;>&NewLine;Shleifer&comma; A&period;&comma; &amp&semi; Vishny&comma; R&period; W&period; &lpar;1992&rpar;&period; Liquidation values and debt capacity&colon; A market equilibrium approach&period; The Journal of Finance&comma; 47&lpar;4&rpar;&comma; 1343-1366&period;<br &sol;>&NewLine;Smith&comma; C&period; W&period; &lpar;1977&rpar;&period; Alternative methods for raising capital&colon; Rights versus underwritten offerings&period; Journal of financial economics&comma; 5&lpar;3&rpar;&comma; 273-307&period;<br &sol;>&NewLine;Smith&comma; C&period; W&period; &lpar;1988&rpar;&period; Raising capital&colon; Theory and evidence&period; The Investment Banking Handbook&comma; hrsg&period; Von J&period; Peter Williamson&comma; New York ea&comma; 71-93&period;<br &sol;>&NewLine;Transportation&comma; U&period; S&period; &lpar;2016&rpar;&period; Airline Domestic Market Share August 2015 &&num;8211&semi; July 2016&period; Retrieved 2016&comma; from <a href&equals;"http&colon;&sol;&sol;www&period;transtats&period;bts&period;gov&sol;">http&colon;&sol;&sol;www&period;transtats&period;bts&period;gov&sol;<&sol;a><br &sol;>&NewLine;Tuttle&comma; B&period; &lpar;2014&rpar;&period; New &OpenCurlyQuote;Basic’ Airline Ticket Is Worse Than Any Low-Fare Carrier Option&period; Retrieved<br &sol;>&NewLine;Vespermann&comma; J&period;&comma; &amp&semi; Wald&comma; A&period; &lpar;2011&rpar;&period; Much Ado about Nothing&quest;–An Analysis of economic impacts and ecologic effects of the EU-emission trading scheme in the aviation industry&period; Transportation Research Part A&colon; Policy and Practice&comma; 45&lpar;10&rpar;&comma; 1066-1076&period;&NewLine;<&sol;p>&NewLine;<p><&sol;p>&NewLine;<p align&equals;"justify">&NewLine;&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad3" id&equals;"quads-ad3" style&equals;"float&colon;none&semi;margin&colon;0px&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;

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