Easy Group's Planned Entry in Uk
easyGroup’s Planned Entry into the UK Cinema Market
Generic Strategy Choice
In the industry-wide scope, the EasyGroup adopted the cost leadership strategy, focusing on the cost-conscious or price-sensitive customers. From their past achievement in the airline business, EasyJet, it successfully won the market share by operating at a lower cost than its rivals. In their new venture plan: the EasyCinema, they planned to deploy the principles of yield management for the pricing strategy, plus to adopt automated process of ticket service and to get rid of snack stands, based on the core concept of EasyGroup: ‘no-frills’. However, there are some costs that are inevitable and high, which needed to be considered as primary barrier to entre cinema industry, such as film rent, multiplex site acquirement (either to build a new one or to acquire an existing chain).
“EasyGroup tended lower cost on the promotion and service phase in the cinema exhibition business value chain.”
Porter’s Five Forces
The Porter’s Five Forces analysis shows that the cinema exhibition business is a business with large threats, mainly due to high degree of competition and strong barriers to entry; therefore, in that the forces are intense, little chance will easyCinema earn attractive returns on investment.
* Supplier Power
The suppliers, which is the distributors in this case, have large power over the admission price and the film rental contract. * Buyer Power
Although the number of customers is large, the need for going to cinema may fluctuate with the economy situation. * Competitive Rivalry
The degree of competition is very high because the “products” are highly homogenous. Also, customers may be loyal to certain cinemas. * Threat of Substitution
There are a lot of substitutes as in DVDs, TV, online video website provides exactly the same content that cinemas provide. * Threat of New Entry
It requires high capital requirements to enter the industry. It is also
Generic Strategy Choice
In the industry-wide scope, the EasyGroup adopted the cost leadership strategy, focusing on the cost-conscious or price-sensitive customers. From their past achievement in the airline business, EasyJet, it successfully won the market share by operating at a lower cost than its rivals. In their new venture plan: the EasyCinema, they planned to deploy the principles of yield management for the pricing strategy, plus to adopt automated process of ticket service and to get rid of snack stands, based on the core concept of EasyGroup: ‘no-frills’. However, there are some costs that are inevitable and high, which needed to be considered as primary barrier to entre cinema industry, such as film rent, multiplex site acquirement (either to build a new one or to acquire an existing chain).
“EasyGroup tended lower cost on the promotion and service phase in the cinema exhibition business value chain.”
Porter’s Five Forces
The Porter’s Five Forces analysis shows that the cinema exhibition business is a business with large threats, mainly due to high degree of competition and strong barriers to entry; therefore, in that the forces are intense, little chance will easyCinema earn attractive returns on investment.
* Supplier Power
The suppliers, which is the distributors in this case, have large power over the admission price and the film rental contract. * Buyer Power
Although the number of customers is large, the need for going to cinema may fluctuate with the economy situation. * Competitive Rivalry
The degree of competition is very high because the “products” are highly homogenous. Also, customers may be loyal to certain cinemas. * Threat of Substitution
There are a lot of substitutes as in DVDs, TV, online video website provides exactly the same content that cinemas provide. * Threat of New Entry
It requires high capital requirements to enter the industry. It is also