Ryanair Strategic Management and Business Planning Case Study
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Published: Mon, 5 Dec 2016
Following report is based on the SWOT and PESTEL analysis of the Ryanair. This report will describe about the strengths, weakness, opportunities and threats of the ryanair. We will also examine about the external environmental effect by using the political, Economical, social, technological, environmental and legal analysis. There is briefly history of the ryanair which explain the investments and starting problems and till now, about the condition of internally and externally environment of the ryanair. Firstly discuss about the external environmental impact on the Ryanair and related to the strategy of the Ryanair. Basic objective and aim is to provide low cost fare services and increase profitability and to be a leader of market. By using the technique of PESTAL analysis can forecast the environmental change. For the examiner of environmental change have used different approaches like Bowmen’s strategy clock, Anoffs matrix, Michael’s porter’s strategy.
In addition, for determinant explain the porter’s five force model which have help out in the analysis of the competitive advantage ,new entrants, threats of substitutes. SWOT analysis is the best way to examine the internally condition of the Ryanair. It has explained about the powerful element and weak elements and also given the information about the new opportunities that Ryanair can get.
Strategy is the way and scope of an organization which achieve their goals in changing environments through its configuration of resources and competence with the aim of fulfilling stakeholder desires over the long term periods.
There are following points which explain the term strategy:
Strategy is concerned with the long term planning of any organization.
Strategy is concerned with scope of any organizational activities.
Purpose of strategy is to achieve some advantages for the organization over competition.
Strategy is also affected by the values and expectation of those who have power in and around the organization, not only environmental forces and strategic forces.
Main purpose of strategy is to achieve its aims and goal of organization.
History of Ryanair:
Ryanair is one of the most aircraft in the world including 44 bases and the 1100+ low fares more than 26 countries connecting with 175 countries. Ryanair has been launched by Ryan family in 1985 with the share capita £1 and 25 staff members. In 1986 ryanair has taken permission from British airways and Aer linguis. Services are launched 1st turbo 46 seats aircraft from Dublin to London in May. After three year rapid growth , in 1990 ryanair faced £20m accumulated losses and Ryan family has invested more £20m and as copying the southwest airlines it was relaunched again and made new strategies under the new managerial systems and reduces their fares from £99 to £59 return tickets. In 1991 ryanair has changes its bases from Lutin to new airport of London Stansted which had new terminal and direct link of rail services. With the passage of time, ryanair has seen many changes every year. In 1995, Ryanair had untaken the British airways and Aer linguis. And also celebrated its 10th birthday with the great celebration. It becomes biggest air route in the Europe and internationally and also lowest fare rate airline domestically. Ryanair growth increased rapidly and employees receives shares of Ryanair and Ryanair received new Boeing aircrafts. In 2000, Ryanair has launched its website for the benefit of customers like booking, accommodation, train facilities and many more allowances as well. Furthermore, Ryanair has employed new employees and has developed career. Ryanair also promoted staff in 2007 and 2008.
Ryanair is largest low cots airline in the Europe. Ryanair is the largest investing and achieved its growth in friendly environment. Ryanair strategy is trying to improve its performance more. Ryanair has replaced its old Boeing aircraft to the new developed technology aircrafts. Ryanair also reduces the use of fuel and minimise the ratio of CO2 per passenger. Strategy of Ryanair is low cost fare and more profitability. Ryanair also use the point to point journey planner and tried to not landing during the way. It also tried to reduce the time. Ryanair also reduced to affection and disturbance by the noise or aircraft. It used new technology for less noise like new winglets and its help out in reduction of noise. Ryanair is the very low cost which is not offered to passenger for free food, drinks and many things. It safe thing not waste it. Ryanair has increased in tourism, employment level, and infrastructure. Theses external element has great impact on the strategy of the ryanair. Ryanair has basic objective low fares and high profit and giving good customer service to the passengers. With the [passage of time strategy of ryanair is developed and many changes incurred in it. Ryanair strategy is reducing the costs which include personnel, equipment cost, airport access rather than its competitors. Moreover, Ryan air with the high productive source is trying to improve its productivity which helps in reducing the labour cost.
After examine the SWOT analysis and Ryanair capabilities now we can easily describe about the strategy of Ryanair. Ryanair has cost minimization strategy through this it want to be leader of market and want to gain competitive advantage. Ryanair strategy is trying to focus on the aviation industry, new fleets, and airport charges route services and managing marketing cost etc. Basic aim and objective of ryanair is to increase low fares services and by doing continues progress want to be European low cost scheduled airline.
Moreover, Ryanair providing low cost fares for those people who have travelled by other means of transportation and also those people did not ever travel at all. According to the statistical data Ryanair has maintained the recode of punctuality. Ryanair do point to point and non-stop routes which has reduced the cost of services. It also increase the productivity level by using work force which has help out in minimising labour cost. Ryanair also offers Bonuses, compensation, commission on the basis of hours for the encouragement of staff and personnel and crew member and pilot. Ryanair has new reservation system developed internet facility. Ryanair does not compensate with its safety rules, staff training and quality insurance and do not extend its low cost strategy in theses area. For the repairing of the crafts it has contract with the third party according to the European airlines otherwise repairing and maintenance work done by itself in London. Except all of these things ryanair take care about the customer service, providing food, beverage, travel insurance, car rental and accommodation and it also provide telephonic reservation and different facilities.
PESTEL Analysis of Ryanair:
In political analysis of ryanair include the internal and external stability of political condition in Europe countries like Middle East. Ryanair has to follow New EU rules and regulation, expansion and duty free sales of products. Government has help to the ryanair to take it internationally. Government also provided full security system to the ryanair.
Outside and inside economy is different in the Europe. Inside economy is stable while outside economy is non stable. Price of fuel is increasing day by day and depreciation of US dollar also increasing. There are some regional subsidies also preferable in the ryanair analysis. Ryan air also created linkage of between new highly speed trains and airport.
In social analysis of ryanair, there is increase in grey marketing and also lifestyle of travelling is changing day by day. There is also change in consumer’s demographics. Demand and preferences of consumers also changed and fluctuated with the passage of time.
Ryanair bought new fleets and advanced technology aircrafts for the consumer’s satisfaction. It also introduced new software programmes for the improvement in supply chain systems. Ryanair also increase information technology, gambling and competition in the market as well. Ryanair also used satellite television and also try to reduce fuel consumption.
Ryanair has reduced noise pollution. It has used new technological system to reduce the noise. It also saves the environment from dangerous gases like greenhouse CO2 emission.
Ryanair has followed the legal laws. It has removed the illegal subsidies from airport. Ryanair also claim illegal advertising on the airport.
Forecasting Environmental change:
Michael’s porter generic strategy:
Porter’s generic strategy explains about the cost advantage and differentiation focus. This technique is suitable for those companies who based on cost leadership and differentiation and focus. By using the cost leadership strategy ryanair got the competitive advantage and market leadership. Ryanair has earned very high profit in very short time period by using the low fares. Leadership strategy has given help to the customer for decision making. It has offered to the customer low fares and secondary to secondary flies by using the differentiation. Ryanair has purchases aircrafts not whole fleets but has given best customer service.
Igor Ansoff focuses on the company’s present and potential product /services and market situation. There are four possible combinations of growth that is existing product with new product, existing market with new market, market development and product development and diversification.
Ryanair has attracted the market towards itself by using the pattern of low cost and reasonable fares. Ryanair has diversified its staff according to the different location and destination. Ryanair is trying to expand its business and developing the staff which will take it towards success.
Bowman’s strategy clock:
Bowman’s strategy clock explains competitive position of a company with comparison of competitors. We can analyse the problem and difficulties of Ryanair through this approach from last few years. There are eight different options which can describe the competitive position. These are as follows: low price, low added value, differentiated, hybrid and focus differentiated, increase standard or price, increased price and low value or standard price. From last few years ryanair has performed very affective changes due to its effective managerial system. Ryanair has earned very high profit in very short time by following the affective time schedule giving significant value on the development of Ryanair.
National advantage by using techniques of Ryanair:
There are different techniques through we can analyse the national advantage of ryanair.
Porter’s five force model:
By using the porter’s five force model, we came to know about the value and importance of the ryanair in Europe market. It includes threat of new entrant, threat of substitute, competitive rivalry, bargaining power of supplier hand customer.
Threat of new entrant mean need high profit for coming in the market level and offer customers low fares. It’s difficult high investment. It also need flight authorisation. Ryanair has threat of its substitute like ferries, Euro line, cars and rail services and many other substitutes as well. It has also threat from its customers it doesn’t have loyalty brand, no switching of the prices, no close relationship with the customer. Air bus and Boeing are the two main supplier of the ryanair and the switch cost from one supplier to another is high because if they do this they need to retained their staff again. Ryanair has more competitive power rather than small airlines because they operate regional level in small airports but ryanair operates on bog airports. Ryanair has threat of its customers, if the prices are sensitive than customer can easily move to other airlines through online advertisement, booking and by offering good customer service so we cannot depend on the customers.
Moreover, Price of the ryanair is the main competitive element to others. There is not much differentiation low cost prices to other airlines. As LCC is the high competitive market there are chances to do the same thing. In market there are many competitors they can competition with the prices and profits but in existing situation competitors cannot compete with dead to dead competition by choosing different service routes.
SWOT Analysis of Ryanair:
Swot Analysis describes the internal situation of the organisation. The main purpose of the SWOT analysis is to know about the strength, weakness, threats and opportunities of the organisation. It is also helpful to bring changes in the strategy of the organisation and came to know about the current the situation and where organisation standing and where it should have to be.
Ryanair has strong brand image and due to its strong brand image it has reduced the barrier of entry to new airports and has increased the barriers for new entrant. Ryanair is firstly low fares cost airline in the Europe and still maintained its image. London Stansted is the one of busiest aviation traffic zones where are bases of ryanair operationalsing. Ryanair is the innovative and has aggressive marketing quality. Ryanair has enhanced safety, higher fuel efficiency and properly income planning by offering low fares. Single aircrafts has help out in reducing training, maintenance and supervisory cost. Ryanair has reduced it labour cost by reducing by non-unionised it labour forced.
Negative press report, poor customer services has bad impact on the brand image of the ryanair. Ryanair have low level of trained personnel and also give low level of empathy and moral to the employees but ryanair need well trained craft personnel. If any new taxes are applied on new fares it become cause of misleading, wrong advertisement, misleading website become reason of sensitivity of ryanair. Mobile phones and gambling also not allowed during journey and it is discouraging the customers. Increase in the emission of CO2 and fuel consumption and it has bad impact on environment.
If ryanair start better business routes and start new operation by doing merger and acquisition. If ryanair fulfil the EU market requirements then due to its low fare policy it can develop the economy growth and increase the employment opportunities. OPEN SKY agreement can help out to develop its business route and consolidation of low fares. It can attract middle class people for the travelling. Ryanair can also get new fleet on lease and it will be good source of earning.
There many competitors in the market like LLC are direct competitor of ryanair which has affected the share market. Rich people and upper class people don’t prefer low fare they want good and high class service so that is also threat for the ryanair. It can create problem to make decision in future. New rules and regulation can be threat for the ryanair, might be it can emphasis to increase the cost. Threat of war and bad weather can create problem in journey planners.
Strategic capabilities of Ryanair:
Strategic capabilities mean those skills and ability that help out to achiveve the stage of surveillance of market. It has two types.
Ryanair includes Flights, office equipment, head quarters, finance resources and employees.
Ryanair has also core resources which is CEO Michael O’Leary.
It includes online banking system, operation of on time delivery,
point to point routing.
Core competence of ryanair is low cost, no frill strategy and route policy strategy.
All of these capabilities of the ryanair are the part of the SWOT. We can come to know about the resources of the ryanair and which core concepts and threshold are includes. It is also helpful in analysis of strategy of ryanair.
Ryanair competitive advantage:
Ryanair have competitive advantage because of its low fares, no frills, point to point fights, online booking, tickles boarding and no refund policies and many more. Except theses there are many reasons like marketing on airports, no cargo service, new air craft’s, new fleets and ryanair have corporate partnership which is the reason of high productivity level. Ryanair also provide basic services during journeys.
Conclusion and recommendations:
At the end, in my point of view Ryanair should have to keep on its competitors which strategy techniques they are using like Virgin airline are using Bowman strategy clock so it should have to use it. Ryanair should have to offer high and good quality service with low prices through these customers will attract more. Yip and Johnson has appraised on their article Transforming Strategy that if the company is offering lower cost with the lower strategy has no work and cannot compete with their rivals. Ryanair has tried to hit the specific market like Ireland UK market by organise growth plans. Ryanair thinks that by increasing the quality service and routes from UK to Europe where the high cost service are available, it can increase the sales. Thus, Ryanair strategy low fare, good service , no frill strategy can make more profit and can increase their income level as well as they can bound in relation with the stakeholders customer and passengers.
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