SlideShare a Scribd company logo

Global Strategy assignment (1)

Download as DOCX, PDF
M
Matthew Geddes

This document provides an analysis of Ryanair's corporate and business level strategies. At the corporate level, Ryanair aims to cement its position as a market leader through its low-cost pricing strategy. Internally, Ryanair uses Porter's value chain model to drive down costs and maximize efficiency at each stage. Externally, Porter's five forces model shows Ryanair faces high competitive rivalry but low threat of substitution or new entrants due to its low-cost advantages. Ryanair has faced criticism over its customer service but is now improving its sustainability strategy in response.

1 of 19
Downloaded 18 times
1
2
Most read
3
4
Most read
5
6
7
8
9
10
11
12
13
Most read
14
15
16
17
18
19
ContentsPage Executive Summary Introduction CORPORATELEVEL STRATEGY Corporate Strategy Ryanair’s Organisational Structure and GrowthDirection Financials BUSINESSLEVEL STRATEGY Internal AnalysisusingPorter’sValue Chain External Analysis usingPorter’s5Forces CSR / SustainabilityStrategy EVALUATION Evaluationof StrategywithSWOTanalysis Conclusion References Appendices
Executive Summary Introduction Thisreportwill examine the strategyof airline operatorRyanair. Ryanairare a low cost Irish airline dealingwith over1600 shorthaul flightstomore than 180 destinationsspanning30 countries across Europe. (Mintel,2014) To ensure thisprocessrunssmoothlylike inanyorganisation,itisvital a business strategyisinplace.Strategyishardto define asitisviewedthroughdifferentperspectives, Porter(1996) feelsthatstrategyisputtinga planinplace to gaina sustainable competitive advantage overcompetitors,howeverbelievesthereisafine line betweenstrategyandoperational excellence. JohnsonandScholes(2008) state that Strategyis the directionandscope of an organisationover the longtermin whichachievesadvantage forthe organisationthroughitsconfigurationof resources withinachallengingenvironmentwhich meetthe needsof andto fulfil stakeholderexpectation. It becomesclearthatthere isno single definitionof strategythatiscorrectas theoriststendtohave differentperspectives,thisisknownasstrategyformation. Thisreportwill analyse andexaminethe corporate andbusinessstrategyof Ryanairby analysingthe waystheyhave made theirstrategyso effective, beforefocussingonInternal andExternal Analysis and the company’sCSRsustainabilitystrategy.The reportwill thenevaluate the strategybefore concludingthe report.
Corporate Strategy 1.1 Corporate Strategy Corporate strategyis “The overall scope anddirectionof acorporationandthe wayinwhichits variousbusiness operationsworktogethertoachieve particulargoals”.(Businessdictionary.com) Good strategiesare generallysimple,thisenablesthe companiestogenerate aparticularfocusand not try to be all thingsto all people orasPorter 1996 states “stuck in the middle”. The lowcost airline strategywasfirstinitiatedbySouthwestAirlines,thiscompanyofferedshort haul flightsforcheapwithonlyone class.Ryanair’smodel hasevolvedfromthatbutismore catered price crunchingand beingefficient.One of the waysRyanairkeeps costslow isjustcharging customersforthe ticket,everythingelse isextra,whetheritisa case,foodor drinkor a boarding pass.This enablespeopletravellinglighttotravel cheaperandthe plane tocarry lessweight optimisingfuel consumption.(Mintel,2014). Goals Ryanair’sgoalscan give usan indicationof the company’slongtermvision,howeverdespite the fact these goalswill heavilyinfluence the overallstrategyitisimportanttonote that these are separate entities.(Rumelt,1980) Ryanairaimsto cementitspositionasmarketleaderthroughitscheappricingstrategy.Through doingthistheyaimto increase growthandmarketshare by enteringnew countriesandaddingmore routesto existingcountries(Ryanair,2014).Ryanair’sstrategyisto be cheaperandmore efficient than anyotherairline operatorbyofferingthis,theyofferapointof differentiationtoitsnearest competitorseffectivelygivingthe organisationcompetitive advantage.Thisisreflectedthroughthe wayRyanair act in businessasthe companyaimstoofferthe cheapestandmostefficientformof travel. ‘Asour businessmatures,andourgrowthratesslow somewhat,we are committedtoimprovingour customerexperience inadditiontoprovidingourguestswiththe lowestfares,the moston-time flights,the fewestlostbags,andthe fewestcancellations.’Ryanair,2014). 1.2. – Ryanair’sOrganisational Structure andGrowthDirection
The Ryanair organisational structure istraditional comprisingof a teamof functional directorswho reportdirectlytothe CEO. The boardcomprisesof one executive(MichaelO‘Leary) andnine none executives.ThisisintegratedwithRyanairholdings,enablingthe boardtomake changesthroughout the organisation.(Ryanair,2015) Ryanairruns operationsinthe UKand across Europe,as a resultof thisthe companyundertakesa formof growth,thisisdone by settingupnew activities(internal growth)butcanalso be undertakenbybuyinganotherfirm(acquisition),thisisknownasdiversification. (De Wit&Meyer 2012). There are twotypesof diversificationmoves;horizontal andvertical. Verticaldiversificationiswhen a firmentersotherbusinessesupstreamordownstreamwithinitsownindustry. AccordingtoPorter (1987), enteringintoanotherbusinessshouldonlybe done if the propositionisattractive,financially beneficial andthe companywill be betteroff inthe longterm. Ryanairdemonstrated thisbyacquiringAerLingus,anIrishairline towhichtheyown30% inan attemptto getintothe mainairports. Thiswasalsothe case when the companydecidedtobuyBuzz as it enabledthemtooperate more planes,effectivelyincreasingoperationsfromStanstedairport. (Daily Mail ,2003) Ryanairannually move vertically byenteringnew countrieswiththe producttheyhave.Firmscan alsoenterhorizontallyforinstance,Virginpossessmanydifferentoperationsthroughthe same company.(Gyms,trainsplanesetc.) Thisisknownashorizontal diversificationastheyare entering businesses outsidetheirindustry. Ryanairtendto use internal growth,astheirstrategyiseasilyadaptable toothercountries,thisis highlightedthroughthe newcountriesthe companynow flytosuchas Russia. “Ryanairhas announcedplanstobeginregularflightsfromDublintoMoscow andSt. Petersburg. Expertsbelieve thatthe newroutescouldincrease trafficbetweenthe citiesby35-40 percentand revive competitioninthe market.”(RBTH,2013) We can see thatRyanair have attemptedtoexpandbydifferentmeansinthe airline market.Thisis done annuallybyofferingtheirlowcostproductindifferentmarkets.Now Ryanairtendstokeepto thistype of growth howeverhave alsotriedtogrow throughthe assistance of othercompaniessuch as AerLingusand Buzz to increase theiroperationsandmarketshare. Financials Ryanair’snearestcompetitorisEasyJet,appendixbshowsa graphof profitaftertax for the two companies.AsEasyJetprofitscontinuedtoincrease (EasyJet,2015),Ryanairsprofitsincreaseduntil 2014 whentheydecreased,thisindicatedthat thisindicatesthatthe strategyinplace neededtobe tweakedtopreventdeclining profits.
BCG Matrix Market Growth- Ryanairin termsof the BCG matrix is evolvinginto a“cash cow,thisisbecause ithas a highmarket share and withdevelopmentintonewcountriesannuallythere isplentyof potentialtocontinue achievingmarketgrowth., howeverwithlesscountriestomove intothe growthmayslow down hence the decisiontoimprove customerservice toincrease customerretention. BusinessStrategy Internal Analysis Accordingto Porter(1985) the conceptof value creationliesat the heartof competitive advantage ? Ryanair Market Share 
“Dividingthe organisationupintoseparate value addingactivitiesbymeansof the value chaintool allowsthe analysttoidentifywhatthe companydoesmore cheaply orbetterthanitscompetitors (Porter,1985). Essentially, bybreakingupall the operationsthatgoonwithin an organisationsuchas Ryanair enablesthe companytobreakdowntheirservicesandlookatwhere theycanimprove inaccordance withtheirbusinessstructure.Thisisalsoknownasoperational excellence asitisanalysinga businessineverydetail. Managers adoptinganinside outperspective believethatstrategiesshouldnotbe builtaround external activities,insteadtheyshouldbe builtaroundacompany’s strength;itisarguedthat a build-upof strongresourcescandeterminethe successfulnessof acompany.(De Witand Meyer 2012) PrimaryActivities Inboundlogistics Inboundlogisticsare placedfirstonthe value chainasit isthe firstopportunityfora businessto create value.Ryanair’sinboundlogisticsare measuresputinplace tomake sure the companydrives downcost. FirstlyRyanairchargesitsstaff for initial training(Dispatches),thisnotonlykeepsthe costlow for the companybut alsoensurescommitmentfromthe staff,as it iscomingout theirownpocket,soif someone wastodrop outit isat nodirectcost to the company. A factor keyto Ryanair’scostdrivingstrategyisthe sourcingof planes.Asthere are onlytwomajor airline manufacturers,adeal withRyanairismajorlybeneficialtoeitherairline manufacturer,this givesRyanairandChief Michael O’Learythe bargainingpowertonegotiate adeal bestsuitedto Ryanair.Alsoitenablesextraseatingdue tothe planesbeinglargerandmore efficientonfuel fitting inwithRyanair’sstrategy. InSeptember2014, Ryanairnegotiatedadeal withBoeingworthnearly £14 billion,thiswill “Offermore seats,18pc fuel savingsandallow the low costairline toalmostdouble insizeoverthe nextdecade,”(Telegraph,2014). Anotherfactorfor drivingdowncostsisthe use of secondaryairports,thisisbecause itischeaperto pay groundrentthenthe main airports. “The low-costmodel motivatesairlinestonegotiatecontractsthatsignificantlyreduce aeronautical revenues,leavingairportstocompensate byseekingcommercial revenuesfromthe increase in passengers”(Francis,2003) OperationsManagement At the centre of Ryanair’soperationsisthe tagline “low costnofrills” ,everytaskundertakenis cateredtowardsdrivingdowncostinan attemptto make the ticketprice as cheap as possible for the customer.
Thisapproach had been effectiveasitenabledRyanairtoestablishitself asa marketleader (Appendix A).Thisalsoenabledthe companytogrow instature and increase theirprofitsyearon year.In 2013, Ryanair’sprofitdropped(seeappendixB) thisindicatesthatthe strategyinplace neededtobe tweakedtopreventdeclining profits.Thisadaptationmayhave beendowntobad reputationdue tonegative pressandsocial media,becauseof badcustomerservice andpoor customerretention. OutboundLogistics Ryanairdidholdthe biggestshare of the low costairline market,theirclosestrival isEasy Jet.(appendixa) EasyJetseemto offerbettercustomercare butRyanairdifferentiatebybeing more efficient(Mintel,2014),one of the waysRyanairachieve thisisthroughthe quickturnaroundof planes(Panorama).ThisenablesRyanairtochartermore flightsthenitsnearestcompetitors.With the introductionof improvedcustomerservice andmore efficientplanes,indicatesthatRyanairwill be perceivedtobe strongcompetitorsinthe nextfew years.Thissectionof the value chainis importantfromRyanairas it helpsachieve whathasbeenpromisedtothe consumer.If outbound logisticsissuccessful thenRyanairare able tocontinue offeringhighlevelsof efficiencyand maximise theirprofitsenablingthemtocontinue theircompetitive rivalry. Marketingand Sales FiguresfromOAG(AppendixA) showthatRyanairownsthe biggestmarketshare forlow cost airlines.Ryanairhave shownincreasingnetprofitfrom2009- 2012, howeverin2012 netprofit droppedslightly(Fame) (Appendix b).Thismayhave been because of negative mediafrom newspapersandprogrammessuchasPanoramaand Dispatches. Ryanairoperate online meaning that no moneyisspentonpremisesenablingthe companytodrive downcost.Throughtheirwebsite theyare able toofferlowcost promotions,althoughthisisseenbymanyascontroversial asextra chargesmisleadsthe customerandoftenleadsthe consumerintopayingmore thanexpected.(BBC News,2010). However,due toa mixture of mediapressure anddropinnetincome,Chief executiveMichael O’Learyhas enforcedsome changestomake iteasierforcustomerswhenbookingonlineand decreasingchargesforforgettingonline boardingpasses.Thishasinturnledto an increase insales inthe lastquarterof 2014. “If I hadknownthat beingnicertoour customerswasgoingto resultinhigherloadfactors[a measure of howfull itsaircraftare],I wouldhave beenniceryearsago,”Mr O’Learysaid.“Noone is goingto be nicerto our customersnowthan me.” (Financial times,2014). It seemsRyanairhave alsosteppeduptheirattemptstochange people’snegative perceptionof the companythroughmarketing.Inearly2014, Ryanairbroughtout theirfirstadvertfor25 years highlightingthe recentchangesmade towebsite,baggage allowance andintroductionof allocated seating.(Smith,2014) Service As Ryanairoperate online,the costof offeringthisserviceisverylow,thisisanessential partof the Ryanairbusinessplanasitfurtherincreasesoperatingthe companiesoperatingcosts.
SupportActivities Ryanairoperate througha traditional boardmade upof a chief executive and nine none executives.( Ryanair,2014) These figureheadsformthe basisof how the companyisran. Through keeping the strategysimple andcheap,the companycan maximise itsprofitseasily,thisishighlightedthrough the online systemprovidedofferingcompetitive advantageoverthe firmswithshopsnationwide. Ryanairalsoemploytheirstaff onperformance contractswithflightattendantsoncommissionfor sellingproductsonflights,thisenablesstaff toworktowardstargetschemeseffectivelyincreasing companyprofits.(Panorama,2009) External Analysis
Porters5 forces Porter’s5 forcesframeworkshowsthingsfromadifferentperspective.Itallowsacompanyto be viewfroman external perspective.The outside inperspective believesfirmsshouldnotbe self- centredandtake intoaccountthe environmentwhencreatingtheirstrategy,itisarguedbysome that successful companiesare externallyorientatedandmarketdriven(Day,1994). Competitive Rivalry The industryas a whole offersbroadcompetitionwithlotsof companiesofferingdifferent parameterssuchas price,comfort and efficiency.(Appendix c) Threat of newentrants WithRyanair’spricingstrategytwinnedwiththe cheapdealsalreadybeingnegotiatedwithairports and manufacturers,makesathreatof a new entrantseemunlikely,astheyare not likelytobe able to compete onprice. “The number ofpeople flying with the Irish carrier climbed 20 per cent on the same period in 2013 to 6.02 million. Seat occupancy rose 7 per cent to 88 per cent and in the year to December itcarried 86.4million passengers.” The onlythreat would be onquality;however, more people are willingtosacrifice thiscommodity for cheaperflights.(See appendix c) Competitive Rivalry High Threat of New Entrants Low Suppliers Bargaining Power Medium Buyers Bargaining Power High Threat of Substitution Low
Newentrantswouldhave todifferentiate onstrategyandhave massive financial powertoindent themselvesonthe market. Newentrantsmayneedtooffersomethingunique andhave lotsof equitytocompete inthe market. Threat of substitution Threat of substitutionislowasalternativemethodsof transportare generallylessreliable, expensive andmore time consuming.Airlines,especiallylow costcarriers offerthe cheapestand mostefficienttravel aswellasone of the quickest.Alternativetransportwouldbe more thanlikely indirectandmore costly,as well asmore likelytoencounterdelays. Buyersbargainingpower As there are so manyairlinesinthe sector,buyerscanchoose the bestparametersof whichtofly e.g.luxury,time of flight,cost,bestcustomerservice etc.(appendix c) Thissignifiesthatbuyers bargainingpowerishighdue tothe highlevel of competitionbetweenfirminthe sector. Suppliersbargainingpower Airline operatorsare reliantonfuel,if fuel pricesfluctuatethiscanhave a detrimental effectonthe operator. “Fuel priceshave a profoundeffectonthe airline industry.Muchof an airlinescoststructure is basedon fuel beingavailableata certainprice”. ( EHow,2014) Anotherfactoroperatorshave to consideriswhere tosource theirplanes.There are currentlytwo majorplane manufacturers,BoeingandAirbus.The biggerthe operatorthe more theyare able to negotiate withthe operatordue tofearof loss.Operatorsalsohave toconsiderthe competitionandthe offersonpurchases,thiscouldcause anoperatorto examine their strategy.
CSR /SustainabilityStrategy Ryanairhave beenat the forefrontof bothmediaandcustomerattentionformanyyears,thisisdue mostlytothe waythat the companyhave acted intryingto get the mostmoneyoutof their customersina viewtomaximisingcostsandadheringtotheirstrategy.Thishasbeendone inmany differentcircumstances,firstlywhenbookingonline Ryanairtendtohide hiddencosts,soalthougha flightmayappearto be cheap bythe time baggage,creditcard feesandvariousotheroptionsare added,the figure increasesmuchfurther. ResearchsuggeststhatRyanairislesslikelytobe trusted by consumers,perhapsbasedonnegativenewscoverageearnedfrombeingprofitcentric.(Mintel, 2014)(Appendix E) “…is because of Ryanair’spoliciestocharge for..well,justaboutanything.O’Learycharged customersif theyhadn’tprintedouttheirboardingpassorif theylostitbetweencheck-inand arrivingat the airport,if theyhad an extrabag, andfor failing tocheckinonline”( Thisis money.co.uk,2014). Dispatches (2012) alsoclaimedthatRyanair’schangeroundwastooquickto cleanthe planesanddo the necessary safetychecks,puttingpublicsafetyatriskhoweverthisclaimwasdismissedbyRyan air claimingthatthe BBC showwas biasedanduntrue. “It’ssurprisingthatdispatchesare againinventingfalseandunsubstantiatedclaims”(Kiely, 2013) ResearchsuggeststhatalthoughRyanairhasdismissedmostclaims,the amountof negative attentionbroughttothe companybelieve thatCSR wasnot initiallyapolicythattheyfeltwas beneficial tothe company.Ascompanyfigureshave droppedthishasforcedthe companytorethink the strategyand tailoritmore towardsthe needof the customer. Evaluationof Strategy
The strategyput inplace by Ryanairfocussedonlow cost deals andefficiency.The proceduresputin place such as 30 minute turnaroundsandthe introductionof online checkinsallowedRyanairto achieve bothbeingthe cheapestin the marketaswell asthe mostefficient. Howeverpunishingthe customerswithfinesandnotseemingtobe “sociallyresponsible”ledtoa decline inprofitsduring 2013 . Thisway of acting had eventuallycaughtupwithRyanair,thismeantthatRyanairhad to adapt theirstrategy. Asa resultof this, Ryanairhad to tailorthemselvesmore toretaining the customerwithbetterservice skills,after puttingthisintopractice in2014 there hasbeena record highinsales I will evaluate thisstrategy withaSWOT analysisshowingRyanair’sstrengths,weaknesses, opportunitiesandthreats.Thiswill be assessedonthe internal andexternal analysisIhave conducted. Strengths  Leading low cost airline  Good aggressive strategy under Michael O ‘Leary  Quick, Efficient Cheap and direct routes  Established for over 20 years in the industry( good foot hold in the market)  Profits set to increase after increased customer care  New aircraft  Strong financial performance Weaknesses  Cash flows could fluctuate by taking on new routes  Customer service still needs improving  Treatment of staff could be investigated.  Fluctuating cash flows, increases till last year, this year has shown improvement but this year’s annualreport yet to come out.  Flights to secondary airports Opportunities  Plan to expand out of Europe, also increasing flights on routes already established.  New fleet of planes will help the company expand and become more efficient  Increase market share as low cost leader.  Growing industry Threats  Ryanair still have a bad reputation through customers, media and social media (may take time to repair).  In a competitive market, lots of discounts and competition  Bad relationship with media may lead to being exposed for anotherissue  Britain a recovering economy  Customer retention, although customer service has improved its early days in terms of figures. Conclusion
In conclusion,myfindingshowthatthe strategyusedbyRyanairhas beenveryeffective.Ryanair insteadof concentratingonthe customer aimedtogrow theirbusinessfortheirexceptionallycheap flights.A parametermirroredbythe consumer (see appendix),thisworkedasitenabledthemto become the leadersof thatsectorwhichhelpedthem innegotiation. O’Learyfeltbyofferingthese cheapdealsandmakingextramoneyonextracharges and inair saleswouldmake the strategybe a success.For manyyearsthiswas successful,andalthoughitwasgivingRyanairabad reputation amongstcustomers,saleswere increasing.Whenthe numbersdroppedin2013, the strategythen neededadaptingtobe more tailoredtowardsthe customers’needsratherthansolelythe companies.This approachclearlyworkedasit enabledRyanairtoretaincustomerseffectively contributingtorecordsalesinDecember2014. References Academic.mintel.com. (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716352/?highlight#hit1 [Accessed 19 Jan. 2015]. Academic.mintel.com. (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716353/?highlight#hit1 [Accessed 19 Jan. 2015]. Academic.mintel.com. (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716354/?highlight#hit1 [Accessed 19 Jan. 2015]. Academic.mintel.com., (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716351/?highlight#hit1 [Accessed 3 Jan. 2015]. Airport-Airline Interraction. (2003). Journal of Air transport management, 9(4), pp.267- 273.
App.newscron.com, (2015). Newscron. [online] Available at: http://app.newscron.com/render/3003318/362985535 [Accessed 19 Jan. 2015]. BBC News,(2010). Ryanair reprimanded over offers.[online] Available at: http://www.bbc.co.uk/news/10626652 [Accessed 27 Jan. 2015]. Kiely. (2013). Check out Ryanair’s heated exchange of letters with ‘Dispatches’…. [online] TheJournal.ie. Available at: http://www.thejournal.ie/ryanair-channel-4-letters-1035331- Aug2013/ [Accessed 3 Dec. 2014]. BusinessDictionary.com, (2015). What is corporate strategy? definition and meaning. [online] Available at: http://www.businessdictionary.com/definition/corporate- strategy.html [Accessed 19 Jan. 2015]. Day, G. (1994). The capabilities of market driven organisations. The journal of Marketing, pp.37-52. De Wit, B. and Meyer, R. (2012). Stategy An International Perspective. 5th ed. Thomas Rennie, pp.245-260. De Wit, B. and Meyer, R. (2012). Strategy An International Perspective. 5th ed. China: Thomas Rennie, pp.237-245. De Wit, B. and Meyer, R. (2012). Strategy An International Perspective. 5th ed. Thomas Rennie, pp.265-269.
Financial times, (2014). Ryanair raises full year guidance as being nice pays off. [online] Available at: http://www.ft.com/cms/s/0/0613430a-632d-11e4-9a79- 00144feabdc0.html#axzz3PH2YZ32y [Accessed 19 Jan. 2015]. Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring corporate strategy. Harlow: Prentice Hall. Porter, M. (1985). Competitive strategy. New york Free press. Porter, M. (1987). From Competitive advantage to corporate strategy. Harvard Business Review, 65(3), pp.43-59. Porter, M. (1996). What is strategy?. Harvard Business review, 61. Proactiveinvestors UK, (2015). Ryanair - Annual Financial Report - Proactiveinvestors (UK). [online] Available at: http://www.proactiveinvestors.co.uk/companies/rns/140730rya7552n [Accessed 19 Jan. 2015]. Rbth.co.uk, (2013). Ryanair to enter Russia Ryanair to enter the Russian market | Russia Beyond The Headlines. [online] Available at:
http://rbth.co.uk/news/2013/11/27/ryanair_to_enter_the_russian_market_32055.html [Accessed 19 Jan. 2015]. Rumelt, R. (1980). The evaluation of business strategy. Business policy and strategic management, pp.359-367. RUMELT, R. (1980). Corporate Strategy. Journal of Business Strategy, 1(2), pp.63-65. Ryanair annual report 2013. (2015). [online] Available at: http://corporate.ryanair.com/docs/corp/investor/2013/final_annual_report_2013_130731.pdf [Accessed 19 Jan. 2015]. Ryanair.com, (2015). Ryanair annual report 2014. [online] Available at: http://corporate.ryanair.com/docs/corp/investor/2014/final_annual_report_2014.pdf [Accessed 19 Jan. 2015]. Ryanair.com, (2015). Ryanair Places Order For Up To 200 New Boeing 737 Max 200 Aircraft Worth Up To $22bn. [online] Available at: http://corporate.ryanair.com/news/news/14908-ryanair-places-order-for-up-to-200-new- boeing-737-max-200-aircraft-worth-up-to-22bn/?market=en [Accessed 19 Jan. 2015]. Smith, O. (2014). Ryanair unveils TV advert - will it convince you to fly with the airline? - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/travel/travelvideo/10754299/Ryanair-unveils-TV-advert-will-it-convince- you-to-fly-with-the-airline.html [Accessed 27 Jan. 2015]. Strategy An International Perspective. (2012). 5th ed. Thomas Rennie, pp.300-360.
This is Money, (2014). Ryanair loudmouth Michael O'Leary admits: We can learn from easyJet. [online] Available at: http://www.thisismoney.co.uk/money/news/article- 2631283/Ryanair-loudmouth-Michael-OLeary-admits-We-learn-easyJet.html [Accessed 2 Jan. 2015]. Thomas, N. (2014). Ryanair: $22bn Boeing order will usher in 'new era of price wars in Europe' - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/newsbysector/transport/11082057/Ryanair-22bn-Boeing- order-will-usher-in-new-era-of-price-wars-in-Europe.html [Accessed 19 Jan. 2015]. Appendix Appendix A Appendix B
Appendix c 0 100 200 300 400 500 600 700 2010 2011 2012 2013 2014 2015 Graph comparing Easy Jet and Ryanair Profitafter Tax Ryanair Easy Jet
Appendix D

More Related Content

PPTX
Wal-Mart’s Cost Leadership Strategy
Asams VK
 
DOCX
DRIVING THE FUTURE: HOW AUTONOMOUS VEHICLES WILL CHANGE INDUSTRIES AND STRATEGY
Nauman Hussaini
 
PDF
Managing Strategic Change done by Lidl to overcome Brexit effects
MarioKhoury2
 
PDF
Unilever introduction
Fiverr
 
PDF
MBA Strategic Management Assignment: Business Level Strategy and Corporate L...
Rofidah Azman
 
PDF
Value chain nestle analysis
Mohammad Alfian
 
PPTX
Unilever Strategic Management Assignment
Dhaifina Idznitia
 
DOCX
MBA assignment for Strategic Management
Yousef S. Hamad
 
Wal-Mart’s Cost Leadership Strategy
Asams VK
 
DRIVING THE FUTURE: HOW AUTONOMOUS VEHICLES WILL CHANGE INDUSTRIES AND STRATEGY
Nauman Hussaini
 
Managing Strategic Change done by Lidl to overcome Brexit effects
MarioKhoury2
 
Unilever introduction
Fiverr
 
MBA Strategic Management Assignment: Business Level Strategy and Corporate L...
Rofidah Azman
 
Value chain nestle analysis
Mohammad Alfian
 
Unilever Strategic Management Assignment
Dhaifina Idznitia
 
MBA assignment for Strategic Management
Yousef S. Hamad
 

What's hot (20)

PPTX
Presentation p&g final
abumuiz82
 
DOCX
Report on Volvo, Marketing Strategy
Tabata Schmidhauser
 
PPTX
Mars Incorporated Marketing Analysis
Emily Crowther
 
PPTX
Leadership style of Coca Cola Company
Morshed Jahan Mamoon
 
PDF
Juhayna Food Industries - Initiation of Coverage - 22 February 2016
Omneya El Hammamy
 
PPTX
IKEA Porter's Five Forces and Value Chain Analysis
National University of Malaysia
 
PDF
Zara case analysis
Pradeep Kumar Tiwari
 
PPTX
Edita.Logistics Management
sally sanhory
 
PPTX
Operations management of IKEA
Mahir Haque
 
PPTX
Competitive Advantage of H&M
Slawomir Starzec
 
PDF
Business model of zara
Kanika Verma
 
PPTX
Nestle Good Food, Good Life - SPACE Matrix, BCG Matrix and Product Positionin...
Mita Angela M. Dimalanta
 
PPTX
Nestle Analysis
mehmetavsar
 
PPTX
Ikea Strategies
Mita Angela M. Dimalanta
 
PPTX
Renault ZOE marketing plan
Maged Makar Morcos
 
DOCX
Strategic management
Càn Long
 
PPTX
Starbucks operation management
Azeem Waqar
 
PPTX
Strategy Management of Ford Motor Company.
Zahra Rezwana
 
DOCX
advanced project 5000 words copy 1.docx
NadiaRiaz5
 
PPTX
Globalization strategy - Walmart
Pradeep Loganathan
 
Presentation p&g final
abumuiz82
 
Report on Volvo, Marketing Strategy
Tabata Schmidhauser
 
Mars Incorporated Marketing Analysis
Emily Crowther
 
Leadership style of Coca Cola Company
Morshed Jahan Mamoon
 
Juhayna Food Industries - Initiation of Coverage - 22 February 2016
Omneya El Hammamy
 
IKEA Porter's Five Forces and Value Chain Analysis
National University of Malaysia
 
Zara case analysis
Pradeep Kumar Tiwari
 
Edita.Logistics Management
sally sanhory
 
Operations management of IKEA
Mahir Haque
 
Competitive Advantage of H&M
Slawomir Starzec
 
Business model of zara
Kanika Verma
 
Nestle Good Food, Good Life - SPACE Matrix, BCG Matrix and Product Positionin...
Mita Angela M. Dimalanta
 
Nestle Analysis
mehmetavsar
 
Ikea Strategies
Mita Angela M. Dimalanta
 
Renault ZOE marketing plan
Maged Makar Morcos
 
Strategic management
Càn Long
 
Starbucks operation management
Azeem Waqar
 
Strategy Management of Ford Motor Company.
Zahra Rezwana
 
advanced project 5000 words copy 1.docx
NadiaRiaz5
 
Globalization strategy - Walmart
Pradeep Loganathan
 
Ad

Viewers also liked (9)

PDF
Strategy 3 Assignment
charul singh
 
PDF
Sample Report on Developing and managing performance By Expert Writers
Amelia Jones
 
PDF
Volvo
Eman Abbas
 
DOCX
Assignment adil aziz (operation strategy)
Sheema Adil
 
PDF
Corporate Strategy Assignment - The Global Pharmaceutical Industry
Amany Hamza
 
PDF
Global Strategy Assignment
James Bowyer
 
PDF
market entry strategy of kohinoor basmati rice in Tunisian market - MIB Assig...
Samik Sarkar
 
PDF
Slideshare Agnes Jumah, Advanced Marketing Strategy, Shimano Case Study
iQ Student Accommodation
 
DOC
Market entry strategy
Vijay Singh Chouhan
 
Strategy 3 Assignment
charul singh
 
Sample Report on Developing and managing performance By Expert Writers
Amelia Jones
 
Volvo
Eman Abbas
 
Assignment adil aziz (operation strategy)
Sheema Adil
 
Corporate Strategy Assignment - The Global Pharmaceutical Industry
Amany Hamza
 
Global Strategy Assignment
James Bowyer
 
market entry strategy of kohinoor basmati rice in Tunisian market - MIB Assig...
Samik Sarkar
 
Slideshare Agnes Jumah, Advanced Marketing Strategy, Shimano Case Study
iQ Student Accommodation
 
Market entry strategy
Vijay Singh Chouhan
 
Ad

Similar to Global Strategy assignment (1) (20)

PDF
Ryanair - Accounting, finance & control project
filippo cheli
 
PPTX
Presentationryanair 140224071313-phpapp02
Magda Elswesy
 
PPTX
Ryanair Strategic Management & Marketing Strategy
Joost Narraina
 
PPT
A summer training report
Hitesh Patel
 
PDF
Kmart Aquisition
Lisa Martinez
 
PDF
Cost leadership
Petra Smith
 
PDF
Fast track to sustainable value through airline cost transformation
accenture
 
PDF
Integrated Business Reporting Publication_2Dec2015_FINAL
Christian Leusder
 
PDF
Strengths And Weaknesses Of Sabre
Jessica Howard
 
PDF
The Supermarket Group Business
Pamela Wright
 
PDF
The Strategic Route To E Procurement Success 2001
Julian Curtiss
 
DOCX
78598483 study-of-working-capital-on-pepsico
Ranjan Jha
 
DOCX
Ryanair industry analysis – A case study report
Paulius Bagdanskas
 
PDF
The cost boomerang
Alfonso Gadea
 
PDF
Strategic management of emirates airline
Instant Assignment Help
 
PDF
The Golden Triangle of Value Creation - Paul Lim
Paul Lim
 
DOCX
International Supply Chain Management - Outsourcing for a competitive advantage
Mustafa Mert Dikmen, MSc
 
DOC
Daniels11 im
Keerthi Ram
 
PDF
Zara Competitive Advantage
Amber Moore
 
PPTX
Ryanair - Brand Audit
Joshua Peace
 
Ryanair - Accounting, finance & control project
filippo cheli
 
Presentationryanair 140224071313-phpapp02
Magda Elswesy
 
Ryanair Strategic Management & Marketing Strategy
Joost Narraina
 
A summer training report
Hitesh Patel
 
Kmart Aquisition
Lisa Martinez
 
Cost leadership
Petra Smith
 
Fast track to sustainable value through airline cost transformation
accenture
 
Integrated Business Reporting Publication_2Dec2015_FINAL
Christian Leusder
 
Strengths And Weaknesses Of Sabre
Jessica Howard
 
The Supermarket Group Business
Pamela Wright
 
The Strategic Route To E Procurement Success 2001
Julian Curtiss
 
78598483 study-of-working-capital-on-pepsico
Ranjan Jha
 
Ryanair industry analysis – A case study report
Paulius Bagdanskas
 
The cost boomerang
Alfonso Gadea
 
Strategic management of emirates airline
Instant Assignment Help
 
The Golden Triangle of Value Creation - Paul Lim
Paul Lim
 
International Supply Chain Management - Outsourcing for a competitive advantage
Mustafa Mert Dikmen, MSc
 
Daniels11 im
Keerthi Ram
 
Zara Competitive Advantage
Amber Moore
 
Ryanair - Brand Audit
Joshua Peace
 

Global Strategy assignment (1)

  • 1. ContentsPage Executive Summary Introduction CORPORATELEVEL STRATEGY Corporate Strategy Ryanair’s Organisational Structure and GrowthDirection Financials BUSINESSLEVEL STRATEGY Internal AnalysisusingPorter’sValue Chain External Analysis usingPorter’s5Forces CSR / SustainabilityStrategy EVALUATION Evaluationof StrategywithSWOTanalysis Conclusion References Appendices
  • 2. Executive Summary Introduction Thisreportwill examine the strategyof airline operatorRyanair. Ryanairare a low cost Irish airline dealingwith over1600 shorthaul flightstomore than 180 destinationsspanning30 countries across Europe. (Mintel,2014) To ensure thisprocessrunssmoothlylike inanyorganisation,itisvital a business strategyisinplace.Strategyishardto define asitisviewedthroughdifferentperspectives, Porter(1996) feelsthatstrategyisputtinga planinplace to gaina sustainable competitive advantage overcompetitors,howeverbelievesthereisafine line betweenstrategyandoperational excellence. JohnsonandScholes(2008) state that Strategyis the directionandscope of an organisationover the longtermin whichachievesadvantage forthe organisationthroughitsconfigurationof resources withinachallengingenvironmentwhich meetthe needsof andto fulfil stakeholderexpectation. It becomesclearthatthere isno single definitionof strategythatiscorrectas theoriststendtohave differentperspectives,thisisknownasstrategyformation. Thisreportwill analyse andexaminethe corporate andbusinessstrategyof Ryanairby analysingthe waystheyhave made theirstrategyso effective, beforefocussingonInternal andExternal Analysis and the company’sCSRsustainabilitystrategy.The reportwill thenevaluate the strategybefore concludingthe report.
  • 3. Corporate Strategy 1.1 Corporate Strategy Corporate strategyis “The overall scope anddirectionof acorporationandthe wayinwhichits variousbusiness operationsworktogethertoachieve particulargoals”.(Businessdictionary.com) Good strategiesare generallysimple,thisenablesthe companiestogenerate aparticularfocusand not try to be all thingsto all people orasPorter 1996 states “stuck in the middle”. The lowcost airline strategywasfirstinitiatedbySouthwestAirlines,thiscompanyofferedshort haul flightsforcheapwithonlyone class.Ryanair’smodel hasevolvedfromthatbutismore catered price crunchingand beingefficient.One of the waysRyanairkeeps costslow isjustcharging customersforthe ticket,everythingelse isextra,whetheritisa case,foodor drinkor a boarding pass.This enablespeopletravellinglighttotravel cheaperandthe plane tocarry lessweight optimisingfuel consumption.(Mintel,2014). Goals Ryanair’sgoalscan give usan indicationof the company’slongtermvision,howeverdespite the fact these goalswill heavilyinfluence the overallstrategyitisimportanttonote that these are separate entities.(Rumelt,1980) Ryanairaimsto cementitspositionasmarketleaderthroughitscheappricingstrategy.Through doingthistheyaimto increase growthandmarketshare by enteringnew countriesandaddingmore routesto existingcountries(Ryanair,2014).Ryanair’sstrategyisto be cheaperandmore efficient than anyotherairline operatorbyofferingthis,theyofferapointof differentiationtoitsnearest competitorseffectivelygivingthe organisationcompetitive advantage.Thisisreflectedthroughthe wayRyanair act in businessasthe companyaimstoofferthe cheapestandmostefficientformof travel. ‘Asour businessmatures,andourgrowthratesslow somewhat,we are committedtoimprovingour customerexperience inadditiontoprovidingourguestswiththe lowestfares,the moston-time flights,the fewestlostbags,andthe fewestcancellations.’Ryanair,2014). 1.2. – Ryanair’sOrganisational Structure andGrowthDirection
  • 4. The Ryanair organisational structure istraditional comprisingof a teamof functional directorswho reportdirectlytothe CEO. The boardcomprisesof one executive(MichaelO‘Leary) andnine none executives.ThisisintegratedwithRyanairholdings,enablingthe boardtomake changesthroughout the organisation.(Ryanair,2015) Ryanairruns operationsinthe UKand across Europe,as a resultof thisthe companyundertakesa formof growth,thisisdone by settingupnew activities(internal growth)butcanalso be undertakenbybuyinganotherfirm(acquisition),thisisknownasdiversification. (De Wit&Meyer 2012). There are twotypesof diversificationmoves;horizontal andvertical. Verticaldiversificationiswhen a firmentersotherbusinessesupstreamordownstreamwithinitsownindustry. AccordingtoPorter (1987), enteringintoanotherbusinessshouldonlybe done if the propositionisattractive,financially beneficial andthe companywill be betteroff inthe longterm. Ryanairdemonstrated thisbyacquiringAerLingus,anIrishairline towhichtheyown30% inan attemptto getintothe mainairports. Thiswasalsothe case when the companydecidedtobuyBuzz as it enabledthemtooperate more planes,effectivelyincreasingoperationsfromStanstedairport. (Daily Mail ,2003) Ryanairannually move vertically byenteringnew countrieswiththe producttheyhave.Firmscan alsoenterhorizontallyforinstance,Virginpossessmanydifferentoperationsthroughthe same company.(Gyms,trainsplanesetc.) Thisisknownashorizontal diversificationastheyare entering businesses outsidetheirindustry. Ryanairtendto use internal growth,astheirstrategyiseasilyadaptable toothercountries,thisis highlightedthroughthe newcountriesthe companynow flytosuchas Russia. “Ryanairhas announcedplanstobeginregularflightsfromDublintoMoscow andSt. Petersburg. Expertsbelieve thatthe newroutescouldincrease trafficbetweenthe citiesby35-40 percentand revive competitioninthe market.”(RBTH,2013) We can see thatRyanair have attemptedtoexpandbydifferentmeansinthe airline market.Thisis done annuallybyofferingtheirlowcostproductindifferentmarkets.Now Ryanairtendstokeepto thistype of growth howeverhave alsotriedtogrow throughthe assistance of othercompaniessuch as AerLingusand Buzz to increase theiroperationsandmarketshare. Financials Ryanair’snearestcompetitorisEasyJet,appendixbshowsa graphof profitaftertax for the two companies.AsEasyJetprofitscontinuedtoincrease (EasyJet,2015),Ryanairsprofitsincreaseduntil 2014 whentheydecreased,thisindicatedthat thisindicatesthatthe strategyinplace neededtobe tweakedtopreventdeclining profits.
  • 5. BCG Matrix Market Growth- Ryanairin termsof the BCG matrix is evolvinginto a“cash cow,thisisbecause ithas a highmarket share and withdevelopmentintonewcountriesannuallythere isplentyof potentialtocontinue achievingmarketgrowth., howeverwithlesscountriestomove intothe growthmayslow down hence the decisiontoimprove customerservice toincrease customerretention. BusinessStrategy Internal Analysis Accordingto Porter(1985) the conceptof value creationliesat the heartof competitive advantage ? Ryanair Market Share 
  • 6. “Dividingthe organisationupintoseparate value addingactivitiesbymeansof the value chaintool allowsthe analysttoidentifywhatthe companydoesmore cheaply orbetterthanitscompetitors (Porter,1985). Essentially, bybreakingupall the operationsthatgoonwithin an organisationsuchas Ryanair enablesthe companytobreakdowntheirservicesandlookatwhere theycanimprove inaccordance withtheirbusinessstructure.Thisisalsoknownasoperational excellence asitisanalysinga businessineverydetail. Managers adoptinganinside outperspective believethatstrategiesshouldnotbe builtaround external activities,insteadtheyshouldbe builtaroundacompany’s strength;itisarguedthat a build-upof strongresourcescandeterminethe successfulnessof acompany.(De Witand Meyer 2012) PrimaryActivities Inboundlogistics Inboundlogisticsare placedfirstonthe value chainasit isthe firstopportunityfora businessto create value.Ryanair’sinboundlogisticsare measuresputinplace tomake sure the companydrives downcost. FirstlyRyanairchargesitsstaff for initial training(Dispatches),thisnotonlykeepsthe costlow for the companybut alsoensurescommitmentfromthe staff,as it iscomingout theirownpocket,soif someone wastodrop outit isat nodirectcost to the company. A factor keyto Ryanair’scostdrivingstrategyisthe sourcingof planes.Asthere are onlytwomajor airline manufacturers,adeal withRyanairismajorlybeneficialtoeitherairline manufacturer,this givesRyanairandChief Michael O’Learythe bargainingpowertonegotiate adeal bestsuitedto Ryanair.Alsoitenablesextraseatingdue tothe planesbeinglargerandmore efficientonfuel fitting inwithRyanair’sstrategy. InSeptember2014, Ryanairnegotiatedadeal withBoeingworthnearly £14 billion,thiswill “Offermore seats,18pc fuel savingsandallow the low costairline toalmostdouble insizeoverthe nextdecade,”(Telegraph,2014). Anotherfactorfor drivingdowncostsisthe use of secondaryairports,thisisbecause itischeaperto pay groundrentthenthe main airports. “The low-costmodel motivatesairlinestonegotiatecontractsthatsignificantlyreduce aeronautical revenues,leavingairportstocompensate byseekingcommercial revenuesfromthe increase in passengers”(Francis,2003) OperationsManagement At the centre of Ryanair’soperationsisthe tagline “low costnofrills” ,everytaskundertakenis cateredtowardsdrivingdowncostinan attemptto make the ticketprice as cheap as possible for the customer.
  • 7. Thisapproach had been effectiveasitenabledRyanairtoestablishitself asa marketleader (Appendix A).Thisalsoenabledthe companytogrow instature and increase theirprofitsyearon year.In 2013, Ryanair’sprofitdropped(seeappendixB) thisindicatesthatthe strategyinplace neededtobe tweakedtopreventdeclining profits.Thisadaptationmayhave beendowntobad reputationdue tonegative pressandsocial media,becauseof badcustomerservice andpoor customerretention. OutboundLogistics Ryanairdidholdthe biggestshare of the low costairline market,theirclosestrival isEasy Jet.(appendixa) EasyJetseemto offerbettercustomercare butRyanairdifferentiatebybeing more efficient(Mintel,2014),one of the waysRyanairachieve thisisthroughthe quickturnaroundof planes(Panorama).ThisenablesRyanairtochartermore flightsthenitsnearestcompetitors.With the introductionof improvedcustomerservice andmore efficientplanes,indicatesthatRyanairwill be perceivedtobe strongcompetitorsinthe nextfew years.Thissectionof the value chainis importantfromRyanairas it helpsachieve whathasbeenpromisedtothe consumer.If outbound logisticsissuccessful thenRyanairare able tocontinue offeringhighlevelsof efficiencyand maximise theirprofitsenablingthemtocontinue theircompetitive rivalry. Marketingand Sales FiguresfromOAG(AppendixA) showthatRyanairownsthe biggestmarketshare forlow cost airlines.Ryanairhave shownincreasingnetprofitfrom2009- 2012, howeverin2012 netprofit droppedslightly(Fame) (Appendix b).Thismayhave been because of negative mediafrom newspapersandprogrammessuchasPanoramaand Dispatches. Ryanairoperate online meaning that no moneyisspentonpremisesenablingthe companytodrive downcost.Throughtheirwebsite theyare able toofferlowcost promotions,althoughthisisseenbymanyascontroversial asextra chargesmisleadsthe customerandoftenleadsthe consumerintopayingmore thanexpected.(BBC News,2010). However,due toa mixture of mediapressure anddropinnetincome,Chief executiveMichael O’Learyhas enforcedsome changestomake iteasierforcustomerswhenbookingonlineand decreasingchargesforforgettingonline boardingpasses.Thishasinturnledto an increase insales inthe lastquarterof 2014. “If I hadknownthat beingnicertoour customerswasgoingto resultinhigherloadfactors[a measure of howfull itsaircraftare],I wouldhave beenniceryearsago,”Mr O’Learysaid.“Noone is goingto be nicerto our customersnowthan me.” (Financial times,2014). It seemsRyanairhave alsosteppeduptheirattemptstochange people’snegative perceptionof the companythroughmarketing.Inearly2014, Ryanairbroughtout theirfirstadvertfor25 years highlightingthe recentchangesmade towebsite,baggage allowance andintroductionof allocated seating.(Smith,2014) Service As Ryanairoperate online,the costof offeringthisserviceisverylow,thisisanessential partof the Ryanairbusinessplanasitfurtherincreasesoperatingthe companiesoperatingcosts.
  • 8. SupportActivities Ryanairoperate througha traditional boardmade upof a chief executive and nine none executives.( Ryanair,2014) These figureheadsformthe basisof how the companyisran. Through keeping the strategysimple andcheap,the companycan maximise itsprofitseasily,thisishighlightedthrough the online systemprovidedofferingcompetitive advantageoverthe firmswithshopsnationwide. Ryanairalsoemploytheirstaff onperformance contractswithflightattendantsoncommissionfor sellingproductsonflights,thisenablesstaff toworktowardstargetschemeseffectivelyincreasing companyprofits.(Panorama,2009) External Analysis
  • 9. Porters5 forces Porter’s5 forcesframeworkshowsthingsfromadifferentperspective.Itallowsacompanyto be viewfroman external perspective.The outside inperspective believesfirmsshouldnotbe self- centredandtake intoaccountthe environmentwhencreatingtheirstrategy,itisarguedbysome that successful companiesare externallyorientatedandmarketdriven(Day,1994). Competitive Rivalry The industryas a whole offersbroadcompetitionwithlotsof companiesofferingdifferent parameterssuchas price,comfort and efficiency.(Appendix c) Threat of newentrants WithRyanair’spricingstrategytwinnedwiththe cheapdealsalreadybeingnegotiatedwithairports and manufacturers,makesathreatof a new entrantseemunlikely,astheyare not likelytobe able to compete onprice. “The number ofpeople flying with the Irish carrier climbed 20 per cent on the same period in 2013 to 6.02 million. Seat occupancy rose 7 per cent to 88 per cent and in the year to December itcarried 86.4million passengers.” The onlythreat would be onquality;however, more people are willingtosacrifice thiscommodity for cheaperflights.(See appendix c) Competitive Rivalry High Threat of New Entrants Low Suppliers Bargaining Power Medium Buyers Bargaining Power High Threat of Substitution Low
  • 10. Newentrantswouldhave todifferentiate onstrategyandhave massive financial powertoindent themselvesonthe market. Newentrantsmayneedtooffersomethingunique andhave lotsof equitytocompete inthe market. Threat of substitution Threat of substitutionislowasalternativemethodsof transportare generallylessreliable, expensive andmore time consuming.Airlines,especiallylow costcarriers offerthe cheapestand mostefficienttravel aswellasone of the quickest.Alternativetransportwouldbe more thanlikely indirectandmore costly,as well asmore likelytoencounterdelays. Buyersbargainingpower As there are so manyairlinesinthe sector,buyerscanchoose the bestparametersof whichtofly e.g.luxury,time of flight,cost,bestcustomerservice etc.(appendix c) Thissignifiesthatbuyers bargainingpowerishighdue tothe highlevel of competitionbetweenfirminthe sector. Suppliersbargainingpower Airline operatorsare reliantonfuel,if fuel pricesfluctuatethiscanhave a detrimental effectonthe operator. “Fuel priceshave a profoundeffectonthe airline industry.Muchof an airlinescoststructure is basedon fuel beingavailableata certainprice”. ( EHow,2014) Anotherfactoroperatorshave to consideriswhere tosource theirplanes.There are currentlytwo majorplane manufacturers,BoeingandAirbus.The biggerthe operatorthe more theyare able to negotiate withthe operatordue tofearof loss.Operatorsalsohave toconsiderthe competitionandthe offersonpurchases,thiscouldcause anoperatorto examine their strategy.
  • 11. CSR /SustainabilityStrategy Ryanairhave beenat the forefrontof bothmediaandcustomerattentionformanyyears,thisisdue mostlytothe waythat the companyhave acted intryingto get the mostmoneyoutof their customersina viewtomaximisingcostsandadheringtotheirstrategy.Thishasbeendone inmany differentcircumstances,firstlywhenbookingonline Ryanairtendtohide hiddencosts,soalthougha flightmayappearto be cheap bythe time baggage,creditcard feesandvariousotheroptionsare added,the figure increasesmuchfurther. ResearchsuggeststhatRyanairislesslikelytobe trusted by consumers,perhapsbasedonnegativenewscoverageearnedfrombeingprofitcentric.(Mintel, 2014)(Appendix E) “…is because of Ryanair’spoliciestocharge for..well,justaboutanything.O’Learycharged customersif theyhadn’tprintedouttheirboardingpassorif theylostitbetweencheck-inand arrivingat the airport,if theyhad an extrabag, andfor failing tocheckinonline”( Thisis money.co.uk,2014). Dispatches (2012) alsoclaimedthatRyanair’schangeroundwastooquickto cleanthe planesanddo the necessary safetychecks,puttingpublicsafetyatriskhoweverthisclaimwasdismissedbyRyan air claimingthatthe BBC showwas biasedanduntrue. “It’ssurprisingthatdispatchesare againinventingfalseandunsubstantiatedclaims”(Kiely, 2013) ResearchsuggeststhatalthoughRyanairhasdismissedmostclaims,the amountof negative attentionbroughttothe companybelieve thatCSR wasnot initiallyapolicythattheyfeltwas beneficial tothe company.Ascompanyfigureshave droppedthishasforcedthe companytorethink the strategyand tailoritmore towardsthe needof the customer. Evaluationof Strategy
  • 12. The strategyput inplace by Ryanairfocussedonlow cost deals andefficiency.The proceduresputin place such as 30 minute turnaroundsandthe introductionof online checkinsallowedRyanairto achieve bothbeingthe cheapestin the marketaswell asthe mostefficient. Howeverpunishingthe customerswithfinesandnotseemingtobe “sociallyresponsible”ledtoa decline inprofitsduring 2013 . Thisway of acting had eventuallycaughtupwithRyanair,thismeantthatRyanairhad to adapt theirstrategy. Asa resultof this, Ryanairhad to tailorthemselvesmore toretaining the customerwithbetterservice skills,after puttingthisintopractice in2014 there hasbeena record highinsales I will evaluate thisstrategy withaSWOT analysisshowingRyanair’sstrengths,weaknesses, opportunitiesandthreats.Thiswill be assessedonthe internal andexternal analysisIhave conducted. Strengths  Leading low cost airline  Good aggressive strategy under Michael O ‘Leary  Quick, Efficient Cheap and direct routes  Established for over 20 years in the industry( good foot hold in the market)  Profits set to increase after increased customer care  New aircraft  Strong financial performance Weaknesses  Cash flows could fluctuate by taking on new routes  Customer service still needs improving  Treatment of staff could be investigated.  Fluctuating cash flows, increases till last year, this year has shown improvement but this year’s annualreport yet to come out.  Flights to secondary airports Opportunities  Plan to expand out of Europe, also increasing flights on routes already established.  New fleet of planes will help the company expand and become more efficient  Increase market share as low cost leader.  Growing industry Threats  Ryanair still have a bad reputation through customers, media and social media (may take time to repair).  In a competitive market, lots of discounts and competition  Bad relationship with media may lead to being exposed for anotherissue  Britain a recovering economy  Customer retention, although customer service has improved its early days in terms of figures. Conclusion
  • 13. In conclusion,myfindingshowthatthe strategyusedbyRyanairhas beenveryeffective.Ryanair insteadof concentratingonthe customer aimedtogrow theirbusinessfortheirexceptionallycheap flights.A parametermirroredbythe consumer (see appendix),thisworkedasitenabledthemto become the leadersof thatsectorwhichhelpedthem innegotiation. O’Learyfeltbyofferingthese cheapdealsandmakingextramoneyonextracharges and inair saleswouldmake the strategybe a success.For manyyearsthiswas successful,andalthoughitwasgivingRyanairabad reputation amongstcustomers,saleswere increasing.Whenthe numbersdroppedin2013, the strategythen neededadaptingtobe more tailoredtowardsthe customers’needsratherthansolelythe companies.This approachclearlyworkedasit enabledRyanairtoretaincustomerseffectively contributingtorecordsalesinDecember2014. References Academic.mintel.com. (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716352/?highlight#hit1 [Accessed 19 Jan. 2015]. Academic.mintel.com. (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716353/?highlight#hit1 [Accessed 19 Jan. 2015]. Academic.mintel.com. (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716354/?highlight#hit1 [Accessed 19 Jan. 2015]. Academic.mintel.com., (2015). [online] Available at: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/716351/?highlight#hit1 [Accessed 3 Jan. 2015]. Airport-Airline Interraction. (2003). Journal of Air transport management, 9(4), pp.267- 273.
  • 14. App.newscron.com, (2015). Newscron. [online] Available at: http://app.newscron.com/render/3003318/362985535 [Accessed 19 Jan. 2015]. BBC News,(2010). Ryanair reprimanded over offers.[online] Available at: http://www.bbc.co.uk/news/10626652 [Accessed 27 Jan. 2015]. Kiely. (2013). Check out Ryanair’s heated exchange of letters with ‘Dispatches’…. [online] TheJournal.ie. Available at: http://www.thejournal.ie/ryanair-channel-4-letters-1035331- Aug2013/ [Accessed 3 Dec. 2014]. BusinessDictionary.com, (2015). What is corporate strategy? definition and meaning. [online] Available at: http://www.businessdictionary.com/definition/corporate- strategy.html [Accessed 19 Jan. 2015]. Day, G. (1994). The capabilities of market driven organisations. The journal of Marketing, pp.37-52. De Wit, B. and Meyer, R. (2012). Stategy An International Perspective. 5th ed. Thomas Rennie, pp.245-260. De Wit, B. and Meyer, R. (2012). Strategy An International Perspective. 5th ed. China: Thomas Rennie, pp.237-245. De Wit, B. and Meyer, R. (2012). Strategy An International Perspective. 5th ed. Thomas Rennie, pp.265-269.
  • 15. Financial times, (2014). Ryanair raises full year guidance as being nice pays off. [online] Available at: http://www.ft.com/cms/s/0/0613430a-632d-11e4-9a79- 00144feabdc0.html#axzz3PH2YZ32y [Accessed 19 Jan. 2015]. Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring corporate strategy. Harlow: Prentice Hall. Porter, M. (1985). Competitive strategy. New york Free press. Porter, M. (1987). From Competitive advantage to corporate strategy. Harvard Business Review, 65(3), pp.43-59. Porter, M. (1996). What is strategy?. Harvard Business review, 61. Proactiveinvestors UK, (2015). Ryanair - Annual Financial Report - Proactiveinvestors (UK). [online] Available at: http://www.proactiveinvestors.co.uk/companies/rns/140730rya7552n [Accessed 19 Jan. 2015]. Rbth.co.uk, (2013). Ryanair to enter Russia Ryanair to enter the Russian market | Russia Beyond The Headlines. [online] Available at:
  • 16. http://rbth.co.uk/news/2013/11/27/ryanair_to_enter_the_russian_market_32055.html [Accessed 19 Jan. 2015]. Rumelt, R. (1980). The evaluation of business strategy. Business policy and strategic management, pp.359-367. RUMELT, R. (1980). Corporate Strategy. Journal of Business Strategy, 1(2), pp.63-65. Ryanair annual report 2013. (2015). [online] Available at: http://corporate.ryanair.com/docs/corp/investor/2013/final_annual_report_2013_130731.pdf [Accessed 19 Jan. 2015]. Ryanair.com, (2015). Ryanair annual report 2014. [online] Available at: http://corporate.ryanair.com/docs/corp/investor/2014/final_annual_report_2014.pdf [Accessed 19 Jan. 2015]. Ryanair.com, (2015). Ryanair Places Order For Up To 200 New Boeing 737 Max 200 Aircraft Worth Up To $22bn. [online] Available at: http://corporate.ryanair.com/news/news/14908-ryanair-places-order-for-up-to-200-new- boeing-737-max-200-aircraft-worth-up-to-22bn/?market=en [Accessed 19 Jan. 2015]. Smith, O. (2014). Ryanair unveils TV advert - will it convince you to fly with the airline? - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/travel/travelvideo/10754299/Ryanair-unveils-TV-advert-will-it-convince- you-to-fly-with-the-airline.html [Accessed 27 Jan. 2015]. Strategy An International Perspective. (2012). 5th ed. Thomas Rennie, pp.300-360.
  • 17. This is Money, (2014). Ryanair loudmouth Michael O'Leary admits: We can learn from easyJet. [online] Available at: http://www.thisismoney.co.uk/money/news/article- 2631283/Ryanair-loudmouth-Michael-OLeary-admits-We-learn-easyJet.html [Accessed 2 Jan. 2015]. Thomas, N. (2014). Ryanair: $22bn Boeing order will usher in 'new era of price wars in Europe' - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/newsbysector/transport/11082057/Ryanair-22bn-Boeing- order-will-usher-in-new-era-of-price-wars-in-Europe.html [Accessed 19 Jan. 2015]. Appendix Appendix A Appendix B
  • 18. Appendix c 0 100 200 300 400 500 600 700 2010 2011 2012 2013 2014 2015 Graph comparing Easy Jet and Ryanair Profitafter Tax Ryanair Easy Jet