Group’s Core Competence
What is easyGroup’s Core Competence? In the opening quote Haji-Iannou states, “easyGroup is not about unrelated ventures, but about developing a formula for success that can be replicated across seemingly disparate businesses. ” What is the easyGroup formula? Does it work as a core competence? Helping students develop easyGroup’s formula will likely several follow-up questions. * Pricing: The easyGroup model involves pricing that stimulates primary demand. Several conditions have to be present for the pricing to maximize yield system to work. 1.
Pricing must be demand elastic. 2. Customers typically must be willing to buy in advance (i. e. over the Internet). 3. It is also that the model works better with a mass market. The question of how well this formula works as a core competence will usually lead to students’ concluding that the formula has the potential to work in certain areas. In some industries it is valuable and rare and easyGroup has some experience on the organizational side in implementing it. Imitability is likely problematic for most incumbents who likely depend on price premiums and high margins.
Imitability for other new entrants likely hinges on the extent to which easyGroup is developing capabilities that are difficult to imitate. Pricing and the low-frills model can likely be easily imitated. Yield management skills are probably more difficult to replicate but probably not prohibitively so. easyGroup may be on the road to developing some cost-cutting skills in service delivery that are something like Emerson Electric’s skills at cutting manufacturing costs. If so, those skills could be an important source of advantage.
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What fits the model? I finish with some brainstorming on this point. Some possibilities are budget hotels, cruises, golf courses, etc. The key point here is to identify opportunities that fit the easy business model. To conclude, I like to focus on the dangers of over-extending on how we define the scope of where our core competences will apply and the need to be rigorous in applying core competence logic. What looks good at a broad concept level (i. e. easyCinema) often is not as attractive once we specifically examine the value of the resources and capabilities in the new market.