The Hub and Spoke structure means an investment structure that involves a number of investment vehicles, as each remains independently managed, as they pool together assets in a single investment vehicle. The individual investment vehicles are the ones that are referred to as the ‘spokes’ while the central vehicle is the ‘hub’. This brings a number of benefits to investment managers and among them are; tax savings and economies of scale. This structure is an alteration of the point to point structure (Goedeking 2010).
The point to point strategy is a strategy in which two individually managed together investments vehicles come together and pool their assets as a combined investment vehicle. The benefits may be the same to the hum and spoke structure but that of economies of scale will not be as beneficial as in the first structure based on the fact that two vehicles cannot be compared to more than two in the first structure (Goedeking 2010).
Easyjet and Ryanair are two airlines that operate in Europe and both have been competing for a long time. Easy Jet is a British airline that operates locally and internationally and carries more passengers than other UK-based airlines. On the other hand Ryanair, an Irish low cost airline operates more than 250 Boeing 737-800 between Europe and morocco and is the largest low cost carrier in Europe. Both these two carriers employ different strategies in an attempt to maintain a competitive edge as they operate in the European air.
Easy Jet adopted the Hub and Spoke structure while Ryanair adopted the Point to point strategy in their attempt to maintain a healthy competition. However, this was applied not in the management of the two investment vehicles as mentioned in the definition but rather in the geographical routes that they ply or the transport system. The concept here is similar to that provided in the definition (Button & Stough 2000). In the Hub and Spoke structure that Easy Jet chose to implement, there is a central dispatching centre and each aircraft must come from the central point and be dispatched to a specific destination and back. In this system, there is full concentration to the few routes to ensure that clients are given the best quality they desire. This means that the system is not fully utilized though quality is not compromised (Rodrigue & Slack 2009).
The service frequency is higher in this system and hence there is reduced time of freight between origin and destination. However, this is the best system for airline transport because there is coordination of all the airlines and routes to ensure that all goes well and any technical hitch is noted immediately (Button & Stough 2000). On the other hand, Ryanair opted to go for the Point to point system. This means that there is no central point where all the flights are dispatched from and hence an aircraft may move from lets say point A to B and proceed to C and so on. In this system, there is increased number of routes ensuring that the system is utilized to the maximum as opposed to the other strategy. However, some of the routes have a low service frequency thus minimized time between origin and destination because at times the freights has to pass through some points in between before reaching the final destination (Rodrigue & Slack 2009).
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