EXTENDING THE EASY BUSINESS MODEL Case Solution
The internet cafe initiative of the company was quite young and had not achieved the economies of scale presently to facilitate the break even and inflow of cash and the failure of the rental car services to generate significant value for the business was due to lack of differentiation of the business from the competitors and the absence of the business from the strategic areas of the markets it operated in.
QUESTION 3: Was the same formula likely to work in cinemas? Why / why not?
There are several strengths of the business from which the management of the company can take benefits and motivation for the future initiatives and opportunity areas of the business as they have been one of the major supplements for the success of the company. Some of the major strengths of the organization are illustrated below.
- Low cost
- Differentiation strategy and tradition of the business.
- Greater adoptability and inclusiveness of the technology in the activities and operations of the organization.
There are several weaknesses and limitations of the organization that the management of the Group will also have to consider before pursuing the new initiative of penetrating in the cinema industry of the markets in which it operates. Some of the most critical weaknesses that the management of the company will likely encounter in pursuing this initiative are illustrated below.
- No experience in the industry.
- Partnerships of distributors with competitors in the industry.
- Limited financial resources for building a multiplex cinema.
- No-frills policy may become a negative factor.
There are several opportunities that the management of the company can benefit from in bringing value to the business and greater financial returns for the Group. It is essential that the management of the company realizes these opportunities in the market and develops strategies for obtaining value for the business from them. Some of the opportunities for the management of the company are illustrated below.
- High growth rate in the industry.
- Diversifying the operations of the business.
There are several threats for the business that the management of the company should realize before initiating actions for diversification in this segment of the market. Some of the threats for the business are illustrated below.
- High influence of distributors in the industry.
- Intense competition with multiplex cinemas in the markets.
Analysis for the diversification in cinema industry:
The swot analysis for the initiative reveals that the industry is fairly young and developing with the modernization in technology and it makes this segment of the market quite attractive for the interests of the business. The growth forecasts for the industry are also in the favor of initiating the diversification and penetration of the business in this segment however; the barriers for entry in the industry are quite high as the influence of multinational entities and distributors is quite high in the industry and they are likely to gang up on the company if it enters the industry. Another drawback for the management of the business is that the no-frills policy of the management of the company might not work in this segment as it is an entertainment industry and people will likely prefer frills over no-frills.
The management of the company should diversify the business by launching in the cinema industry and it should be initiated by acquiring an existing entity rather than going for a multiplex, which is a costly initiative and the business does not have the resources to go for it.The management of the company should opt for low-price strategy however, frills should also be offered to the customers as it is a critical secondary demand in the industry.
QUESTION 4: What does the easyGroup example say about the transferability of competitive
The example of the easy Group case study clearly articulates that the critical success factors of the company are transferable to its other operations and product offerings in the markets however; they need to be unique and representative of the needs of the customers…………………….
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