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EasyJet, Britain’s second largest low-cost airline proposed to increase shareholder dividends from 33% to 40%, as well as to buy additional 27 current generation A320 aircraft between 2015 and 2018 as their growth strategy. They aim to attract more investors into the business in the coming years. In the competitive European airline market, EasyJet maintains its competitive advantage with its low-cost model. EasyJet submits that the fleet expansion would help it keep costs low since the new A320s would be cheaper to run than its older A319s, enabling them to list lower price to sustain their position in the market. Additionally, the increase in dividend shines a spotlight to the business as larger competitor airlines (such as British Airways and Lufthansa) have not made consistent payouts in the recent years.

EasyJet is the Britain’s second largest airline by number of passengers carried to domestic and international destinations

 My thoughts…

It is interesting to see from the article that EasyJet has not only increased its share of dividend, but also invested in more planes during the unstable economic condition, especially in the airline sector. While its competitors’ focus is on the customers and uses capital towards the improvement of customer loyalty with member exclusive goods and services (to encourage repeating customers), EasyJet instead sees the value in serving their shareholders to create positive relationship and loyalty, leading to increase in future investments and attract potential shareholders. As the market leans more on on-the-budget travels, I truly believe that EasyJet was able to successfully identified their  Opportunity (shift in customer preference) and immediately optimize their Strength of low price to maximize its future revenue. [SWOT reference from TESLA example]. Nonetheless, focusing too much on the “low-cost” ideal could lead to unexpected problem. EasyJet, like the other airline companies have seasonal demands and are at constant price wars,  they ought to develop other areas of their offerings besides price to be more value driven and increase loyalty. Regardless, I am very interested to see how this increase of dividend to reflect on EasyJet’s position.

Work cited

Topham, Gwyn. “EasyJet Expands Fleet and Ups Dividend Payout.” The Guardian. Guardian News and Media Limited, 18 Sept. 2014. Web. 18 Sept. 2014. <http://www.theguardian.com/business/2014/sep/18/easyjet-expands-fleet-dividend-payout>.

Abercrombie’s CEO quits the company!?

An article on Huffington Post immediately lead me to think back to the research paper I worked on during my IB Diploma. The topic I explored was “To what extent do Abercrombie and Fitch’s product and promotional strategies reflect a socially responsible firm?” and elaborated on recommendations for improving A&F’s relationship with their stakeholders. (read here)

SOURCE: http://www.huffingtonpost.com/2014/07/10/abercrombie-diversity_n_5574603.html A&F sells the idea of casual luxury through topless men. Is it ethical?

A&F’s marketing and management strategies has been controversial for many years due to conflicting moral perspectives between the ex-CEO, Michael Jeffries and the public eye, in regards to its:
– Clothing with racially and sexually offensive slogans and names which sparked boycotting activities in 2002 amongst consumers
– Discrimination against employers; “more than 90 percent of Abercrombie’s store associates were white” (Bhasin) and must comply with their “Look Policy”
– Customers favouritism and exclusion; the maximum of size of women’s top was size 10 to exclude the “plus size” customers to wear A&F clothing and the high clothing prices indicates that A&F cater only to customers with high disposable income.

My thoughts…
In spite of all the sinister strategic behaviours demonstrated by A&F, their capability of yielding an exponential sales growth and roof-raising global popularity in their “Casual Luxury” clothing has completely subverted my expectation towards the consequences of being an unethical business. This made me to question about the correlation between corporate social responsibility and short-term sales of a business, and the validity of Freeman’s stakeholder theory today. Is success simply judged by the businesses sales, market share and publicity, and should ethical leadership and social contribution be valued?

I personally believe that in order for A&F to be successful, they ought to opt to better their business ethics and create value for their stakeholders because social corporate responsibility and ethical business practices can encourage prolonged relationship with their main stakeholders; shareholders, customers, employees and community. Since retaining customers is cheaper for A&F than finding new ones, hence why value-based management is not only socially sustainable for A&F but also economically sustainable.

A&F’s proposed scheme of brand reconstruction mentioned in the article clarifies how in today’s ethics conscious society, Friedman’s stockholder theory no longer translate to the maximisation of total pool of economic and social value. Likewise, I believe that focusing merely on profits hinders the competitive advantage of A&F. Businesses, like people, will never be perfect, but, A&F being a large corporation, I urge them to implement beyond those proposed changes to set a responsible example for the smaller scale businesses to be able to learn from.

Work Cited
Bhasin, Kim. “The Man Who Made Abercrombie & Fitch Less White Just Quit.” The Huffington Post. TheHuffingtonPost.com, 10 July 2014. Web. 11 Sept. 2014. <http://www.huffingtonpost.com/2014/07/10/abercrombie-diversity_n_5574603.html>.

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