Easycinema's Failure

In: Business and Management

Submitted By gizmogurl211
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* Question 5: Compare the applicability of the easyGroup business model in the airline industry and the cinema industry (examine Exhibits 8 and 18, among others). What problems do you see for the cinema business?
The business model of easyGroup, a concept embodying low costs, no-frills, maximization of the capacity and utilization rate, and price yield management was taken from easyJet and applied to easyCinema. Despite the fact that in the airline industry the strategy was succesful, the cinema business didn’t enjoy the same fame.
In order to compare the applicability of the easyGroup business model in these industries, we first need to identify the differences and the specific traits for airlines and cinemas. The new ventures criteria for idea selection presented in Exhibit 18 is useful in order to observe why the cinema sector didn’t work properly.
Looking at the two industries, there are different customer values and expectations that affected the evolution of these businesses. Whereas for the airline industry, the price represents the crucial factor that influences customer’s choice, for cinema goers it is the value and quality of the movie-going experience. Eliminating advertising and promotional activities and reducing comfort standards could be some of the reasons for the problem faced by easyCinema. Moreover, these ventures of easyGroup are led by different market rules and different actors. From the information given in Exhibit 8, we noticed that easyJet focus on the low-cost concept, reducing operational cost cutting off the advertising expenditures, labor costs and eliminating the ticketing costs making use of technological innovation. Although low price should attract cinema fans as well, there are other important factors that guarantee the success in the film industry.
Under the easyGroup new ventures idea selection criterion, easyCinema fit all…...

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