Sample IB HL Business Internal

June 13, 2018 | Author: Konstantinos Polychroniadis | Category:Airlines
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Contents Page:
Letter of Authentication Acknowledgments Executive Summary Research Proposal
1 2 3 4
Introduction Methodology
6 6
Main Results & Findings Current Market Position
7 7
Analysis and Evaluation Investment Appraisal Investment Project I Investment Project II Non-finacial Analysis SWOT Analysis PEST Analysis
9 10 11 12 13 13 13
Conclusions and Recommendations
14
Bibliography Appendices
15 16
1
Acknowledgments
I would like to acknowledge and thank: •
Mr Giannis Dardoufas, easyJet Athens Station General Manager for his time and important data he offered during the interview
2
Executive Summary The management and main shareholders of easyJet plc. have recently expressed interest in growing their business considering the increased demand for private healthcare and more specifically diagnostic services in Greece. As the operational core of the business focuses on this market segment, the report analyses: “Should easyJet plc. further penetrate the Greek market? If yes, should the expansion plan be organic or via a takeover?” The first part of the report deploys the research proposal which presents the research rational, the theoretical framework as well as the methodology followed. Following, an introductory note outlines details of the company as well as sketches the hypothesis of the research
The analysis part is based on both primary and secondary research in the form of personal interviews with the top management (Figure 3), collection of financial reports, and independent sector analysis from the largest market research company in Greece. These data allowed for a detailed evaluation on a financial level (Investment Appraisal and Corporate Financial Analysis) and on a non-financial level (SWOT, PEST)
The conclusions part deploys an assessment of the two possible investment options for easyJet plc. On the one hand, there is a long term, heavy investment project of investing on a large competitor while on the other hand; there is the option of launching a new diagnostic centre anew
Although the ‘new location’ project returns a positive NPV compared to the ‘Equity Purchasing’ which returns a lower NPV, it is important to consider the long term strategic plan of the company and the non-financial analysis. The discussion part suggests that the second option forms a more attractive investment opportunity of easyJet
3
Research Proposal
Research Question “Should easyJet further penetrate the market for air travel between the UK and Greece? If yes, should the expansion plan be organic or via a takeover?” Rationale An investment dilemma is explored whereby easyJet Ltd. UK’s largest low-cost carrier assesses two investment opportunities. On the one hand, the firm examines the possibility of launching a new route between London and Volos in mainland Greece
On the other hand, the firm estimates the possibility of purchasing a majority stake in a Greek competitor who operates charter flights from the UK to Chania airport in Crete. The aim is for easyJet to expand its network to leisure destinations around Greece
Theoretical Framework The analysis of this report is based on a twofold approach. Both financial and nonfinancial considerations will evaluate the potential feasibility of each investment project
Key Areas of Syllabus •
Growth and Evolution

Company Analysis

The external Environment

Investment Appraisal
Methodology The procedure of the study was carried-out at primary and secondary level. Primary Research was conducted with the general manager of easyJet’s station in Athens International Airport (AIA). The company’s representative in Greece was interviewed 4
in order to identify company’s future strategic and financial plan. The interview also contributed to the author’s knowledge and appreciation related to the industry’s structure in Greece, as well as its operating procedures, venture risks and the structure of the company
Secondary Research was carried-out as well in order to collect data and information related to the industry, the market and the environment (internal and external) within the company is operating. The data were collected from various sources such as an industry report and insight on cost structure and market analysis in Greece for year 2009, company’s specific information on strategy and future expansion plans of easyJet plc. and several other resources libraries referring to the Greek legal framework and its characteristics related to the subject
Possible Problems: Biased interview questions because of vested interests Limited point of view as only two interviews have been carried out A degree of risk associated with the company’s unwillingness to provide confidential data
Solutions: Verification of data by using other secondary resources Complementary information from independent sources Ensure data availability in advance
5
Introduction EasyJet plc. Was ” first in February 1994 serving domestic routes in the UK. It has been a product of the deregulation in the airline industry and Sir S. Hadji-Ioannou’s entrepreneurial will. In 2010, sixteen years afterwards, the number of city pairs served by the airline have increased to 254 and competition has been continuously increasing by the emergence of a large number of competing low-cost carriers. Traditional airlines such as British Airways and Olympic Air have been fully adapted to the new challenge, offering simpler and lower cost airfares on routes served by easyJet. The company under examination has gained a unique selling point by providing point-topoint services and by removing onboard and airport frills such as free cabin service and pre-assigned seating. Moreover, the heavily invest in growing their network from secondary airport in order to achieve more efficient, on-time and lower cost flights
The financial performance is depicted in the two figures below
Figure 1: “easyJet plc.” financial performance
Years 2006 2007 2008 2009 2010
Revenue (€) 129.200.000 191.300.000 123.100.000 43.700.000 188.300.000
Cost of Sales (€) 90.440.000 133.910.000 86.170.000 30.590.000 131.810.000
Operating Costs (€) 15.504.000 22.956.000 14.772.000 5.244.000 22.596.000
Net Profit (€) 23.256.000 34.434.000 22.158.000 7.866.000 33.894.000
Figure 2: “easyJet plc.” financial performance graph 250.000.000 Revenue (€) Net Profit (€)
200.000.000
150.000.000
100.000.000
50.000.000
0 2006
2007
2008
2009
2010
Source: easyJet Financial Analysis
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