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Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
Case study:RYANAIR -European Pioneer of Budget Airline Travel
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Case study:RYANAIR -European Pioneer of Budget Airline Travel

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Ryanair is the first budget Airline in Europe inspired by the U.S Budget Airline, Southwest Airlines. The report is based on the case study by Eleanor O’Higgins, University College Dublin, and …

Ryanair is the first budget Airline in Europe inspired by the U.S Budget Airline, Southwest Airlines. The report is based on the case study by Eleanor O’Higgins, University College Dublin, and Republic of Ireland in 2007

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  • 1. Acknowledgement No one walks alone on the journey of life. First and foremost, we would like to thank to our lecturer Mr.D.N.N.Rohan, for the valuable guidance and advice for this analysis of Ryanair. He inspired us greatly to work in this case study. His willingness to motivate us contributed tremendously to our group work. Finally, an honorable mention goes to our friends for their understandings and supports on us in completing this group work. Without helps of the particular that mentioned above, we would face many difficulties while doing this. . i
  • 2. Table of Contents Introduction.................................................................................................................... 1 Overview of Ryanair ...................................................................................................... 2 External environment analysis ....................................................................................... 3 PESTEL Analysis of Ryan Air ...................................................................................... 4 Ryanair - Porter‟s Five Forces Analysis ........................................................................ 6 Strategic group analyze .................................................................................................. 8 Evaluating the strategies of other airline company in market .................................... 8 Strategic group map analysis in European airline industry........................................ 9 Evaluate the strategic leadership of Michael O‟Leary ................................................. 14 Competitive strategies.................................................................................................. 15 Business Process Reengineering to maintain the competitive strategy through Information Technology and Information System ................................................... 16 Resources and Competencies....................................................................................... 17 Main Resources and Capabilities ............................................................................. 17 Ryanair‟s Resources ............................................................................................ 17 Ryanair's Competencies ........................................................................................... 18 Innovative cost cutting method: ........................................................................... 18 Alternative revenue generation method: .............................................................. 18 Critical Issues............................................................................................................... 19 Conclusion and Recommendation ............................................................................... 20 Conclusion ............................................................................................................... 20 Recommendation ..................................................................................................... 21 References.................................................................................................................... 22 ii
  • 3. Table of Figures Figure 1: Porter's five forces model.................................................................................................. 6 Figure 2:Operating cost strategic group analyse ............................................................................ 10 Figure 3:Customer complain 2002/2003 ........................................................................................ 11 Figure 4: Airline Ratings ................................................................................................................ 12 Figure 5: Strategic group map ........................................................................................................ 12 Figure 6: Relationship between analytical tools ............................................................................. 20 iii
  • 4. Introduction Ryanair is the first budget Airline in Europe inspired by the U.S Budget Airline, Southwest Airlines. The report is based on the case study by Eleanor O‟Higgins, University College Dublin, and Republic of Ireland in 2007. The case by Eleanor O‟Higgins is based on the Strategy of Ryanair against the backdrop of the European airline industry and the burgeoning budget sector. The case discusses the opportunities and challenges faced by the industry and the firm. Leadership of Ryanair‟s CEO, Michael O‟Leary is highlighted. According to the case study of Ryanair we group number 04 conduct a strategic analysis of the environment, the industry, company in order to get knowledge of identifying and applying Business Strategy course theories and concepts based on the case study. Therefore an environmental analysis consisting of a macro environment analysis carried out initially in order to conduct detailed strategic analysis and provide recommendations in the future. 1
  • 5. Overview of Ryanair Ryanair was founded in 1985 by the Ryan family to provide scheduled passenger airline services between Ireland and the UK, as an alternative to the then state monopoly carrier, Aer Lingus. Initially, Ryanair was a full-service conventional airline, with two classes of seating, leasing three different types of aircraft. Ryanair‟s objective was to maintain its position as Europe‟s leading low-fares airline, operating frequent point-to-point flights on short-haul flights, mainly out of regional and secondary airports. The heart of its strategy was based on providing a no-frills service with low fares designed to stimulate demand, particularly from budget-conscious leisure and business travelers, who might otherwise have used alternative forms of transportation, or who might not have travelled at all. Company Vision- “To firmly establish itself as Europe‟s low fare, schedule passenger airline through continued improvements and expanded offerings of its low fare service”. Company Mission- “To become Europe‟s most profitable low cost airline by rolling-out proven low fare, no-frills service in all markets in which we operate to the benefit of passengers, people and stake-holders”. 2
  • 6. External environment analysis External Environment analysis in conducted to analyze the nature of the environment the firm operates in. It identifies the forces in the environment affecting the firm and its degree of impact. It also identifies the opportunities, threats and challenges faced by the company. The external environment analysis for Ryanair consists of a macro-environment analysis, industry analysis and external factor analysis. The macro environment scans and indentifies the general environment factors that can have an impact on the organization whereas the industry analysis focuses on the competitive situation of the company.  Macro Environmental Analysis The macro-environment is composed of major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include the Political, Economical, Social, Technological, Environmental and Legal forces (PESTEL). These forces do not change frequently, but when it does, it has a major impact on the organization. The PESTEL analysis looks at the general environment in which the organization is operating in and helps to realize the risk associated with the market growth or decline.  Industry Analysis The second stage of the external environmental analysis is to assess the industry environment and the aim of this analysis is to identify those factors that could contribute to or affect the industry profitability. To aid in the industry analysis, Porter‟s Five Forces Model will be used. Porter developed a technique analyzing five forces that affect industry profitability known as “Five Forces Model”. These forces shape the industry and increase the intensity of competitiveness, and therefore, the profitability and attractiveness of the industry. This model helps to identify the dynamic factors of the industry and the market to compete effectively. . 3
  • 7. PESTEL Analysis of Ryan Air Ryanair PESTEL analyses are those external factors that could hinder their operation which would be analyzed based on the case study by Eleanor O‟Higgins. Political: As a big political factor European Union expansion affect the direction and strategy planning of Ryanair. The enlargement is positive as it increases the flow of migration, thus increasing the company passengers. Also, the tighten security may have increased their security system. This could increase costs because it has to be regularly monitored and maintained. Economical: For Economic factors, there is unstable fuel price that could affect the company operating costs. It can be said that, the biggest costs for any airline is fuel. The rise in fuel prices means that operation costs would increase therefore pushing prices to increase and relatively affecting the company growth and profitability. This situation was badly affected to the Ryan air while they are run for least price. Also the depreciation of US Dollar, availability of efficient substitute transport methods and also reduction in distribution costs from customers adapting to online check-ins where identified as the factors that has high influence regarding the economical influence. Social: Social factors link with political and economic in terms of stable development that would allow a more sociable lifestyle. The enlargement of EU for instance has increase the number of people moving from region-region to work, for graduation trips, backpackers, or leisure. The enlargement (EU expansion) has affected Ryanair by providing the bases to attract a wide demographic of prospect. The effect of this capacity on Ryanair is that, it could increase their operating market, segmentation and productivity. Also, the company low-fares strategy means they can fly frequently because there is demand. Technological: Technology expansion has enabled the company change their market focus from third-party agents to on-line bookings. This has increased the competition level between airlines, consequently driving Ryanair to further reduce costs in order to remain competitive in the aviation industry. Ryanair admitted that in order to keep costs down all aircraft are made by Beoing. Availability of satellite Television and Internet services on flights for a fee increased their revenue in order to enhancing the revenue through ancillary services. Environmental: Environmental factors for Ryanair include noise level controls, global warming, green house gas effects and corporate social responsibility policies and environmental protection laws. There is evidence of the company implementing certain policies to reduce pollution. Despite their environmentally friendly strategy, the company has been diminished by bad publicity. Thus Ryanair should adhere to good business practice for sustainability and high performance. 4
  • 8. Legal: Legal factors can affect the company's image and reputation. In August 2003, Ryanair ceased operations at strasbourg after losing a court case brought by Air France. Also the EU had devised new rules to cover overbooking that result in boarding denials to passengers by airlines. Before to the EU decision at the Central London Country Court, a disable man won a landmark case against Ryanair after it charged him €18 for a wheelchair he needed at Standsted to get from the check-in desk to the aircraft. The passenger awarded €1,336 in compensation from Ryanair. 5
  • 9. Ryanair - Porter’s Five Forces Analysis Porter‟s Five Forces analytical tool assists in analysing competitive environment for Ryanair. Barriers to Entry Supplier Bargaining Power Existing Competitive Rivalry Customer Bargaining Power Substitute Figure 1: Porter's five forces model 01. Bargaining power of suppliers. Boeing has been traditionally Ryanair‟s main supplier, as well as increased level of efficiency associated with energy consumption. This fact signals about Ryanair‟s increasing bargaining power towards its main supplier, Boeing. However, the supplier switching costs for Ryanair is extremely high due significant amount of expenses involved associated with pilot retraining needs. Because there is no abundant supply of highly qualified and experienced pilots. Nevertheless, Ryanair enjoys rapidly increasing power towards a different category of its suppliers. 02. Bargaining power of customers. Ryanair customers enjoy high bargaining power because switching to another airline is simple and not associated with additional expenses. Increased level of price sensitivity of Ryanair customers is another factor that contributes to their bargaining power. 03. Competitive Rivalry. The competitive rivalry in Ryanair is increasing due to deregulation, more competitors on more routes creating overcapacity and growing power of buyers. Potential trend among some competitors to add some „frills‟ and flexibility, e.g. Virgin Express adds comfort, easyJet adds flexibility. 6
  • 10. 04. Threat of substitute products and services. A substitute is a product or service of another industry, which creates an equivalent value for the customer.The threat of substitute products or services is a major factor upon the level of profitability of an industry.Substitute services for airline industry in general and Ryanair in particular include railway networks, sea transports, coach transport, as well as, car rental firms. The threat of main substitute, trains are occasionally addressed by Ryanair in a proactive manner through providing price comparison prices of Ryanair services with train services on the company website and other sources. Nevertheless, it is fair to state that the threat of substitute products and services for Ryanair is insignificant compared to many other industries in the marketplace. 05. Threat of new entrants. The threat of new entrants is low for Ryanair due to the significant entry barriers associated with entering airline sector that include economies of scale, capital requirements, access to distribution channels etc. Moreover, significant capital requirements associated with entering airline industry include, but not limited to obtaining physical facilities, dealing with inventories, engaging in marketing activities and attracting qualified workforce represent another significant barrier. Difficulties associated with gaining access to distribution channels is another considerable barrier faced by new entrants in airline industry. Local and international airports may not be able to create additional slots in their platforms in order to serve new entrants into the market. 7
  • 11. Strategic group analyze In the European airline industry consist with the airline service providing companies. In the strategies perspective we can identify their same strategic dimensions as Extent of technological leadership, Product quality, Pricing Policies, Distribution channels, Customer service and etc. This Help identify barriers to mobility that protect a group from attacks by other group, competitive position, chart the future directions of firms‟ strategies, assess the implications of industry trends for the strategic group as a whole. Evaluating the strategies of other airline company in market The next stage in industry analysis is the evaluation of those competitors that compete in the same arena as Ryanair. This evaluation helps to predict the actions of individual competitors and the impact of those actions on Ryanair. Again, the websites of the individual competitors detailed above should be sourced Easyjet, Aer Lingus and Ryanair are in the same strategic group and so compete closely. When the group analyst we can identify the main competence airline company in the European market. When we consider the individual organization their main strategic can be mention as given. Aer Lingus:  legacy rival of Ryanair, full service Irish national carrier, 100% government owned, but government hoping to sell off; subject of MBO bid in July 2004;  traditionally high cost, almost completely unionized;  reinvigorated after near bankruptcy in 2001/02; recovery thanks to cutting one-third of staff and severe cost-cutting plan;  styled as a no-frills low-fares airline on many European routes, although still uses seat assignments, primary airports;  a direct competitor to Ryanair on some routes out of Dublin and out of the UK,London generically;  member of One World strategic alliance; EasyJet:  most direct rival to Ryanair; inherited slots at Stansted from Go, rivals Ryanair on value-for-money image;  stabilizing after aggressive growth spurt, including digesting Go;  better customer satisfaction and load factor than Ryanair, but poorer punctuality record;  Shaky profit record - less deep pocket than Ryanair for price war. 8
  • 12. Virgin Express:  Generally loss-making, no clear strategy;  Past best cost provider strategy (legroom, pampering, primary airports, etc.) seems to be failing, because not taking in high yields - high break-even load factor;  Seeking expedient takeover by SN Brussels Airlines, as Richard Branson‟s interest and attention directed elsewhere;  Leases most of its aircraft, may be expensive, creating low operating margin; not take advantage of fluctuations in supply of aircraft  Diminished threat to Ryanair Strategic group map analysis in European airline industry A strategic group map is an effective technique for identifying the relative strategic positioning of competitors. when consider the Ryanair it have more competitor as above mention .we have identify the various key factors that discriminate among the competitors. Among them below mention the highlighted factors 1. 2. 3. 4. 5. 6. 7. 8. Operating cost Customer complaints cabin crew amount Check in staff Entertainment facilities Legroom facilities Seat allocation Route system When we consider the operating cost with the airline competitors the Raynair has recorded the 2nd lowest operating cost in 2003.It is second only for the Virgin Express operating cost. Reference: exhibit 1a table and the comparative airline financial statistic table in the Ryanair case study, Eleanor R.E.,Higgins, Exploring corporate strategy, person education Ltd, Uk,England. Ryanair Aer Lingus British Airways Essyjet Luthansa Southwest Virgin Express Year :2003 Total operating cost (Million) 579 814.2 7309 883.4 16742 5454 224.7 9
  • 13. Figure 2:Operating cost strategic group analyse When we consider the customer complain with the airline competitors the Raynair has recorded the 2nd highest customer complain rate in 2002/2003.It is second only for the Bmibaby customer complaint. Reference: Exhibit 5 Table in the Ryanair case study, Eleanor R.E.,Higgins, Exploring corporate strategy, person education Ltd, Uk,England. Company Name 1 Ryanair 2 Aer Lingus 3 British Airways 4 essyjet 5 Luthansa 6 Air France 7 KLM 8 veigin Atiantic 9 Bmibaby 10 lberia 11 BMI Year:2002/2003 Customer Complain per Million passengers 12.7 3.2 6.8 9.3 0.6 3.6 5.9 7.9 53.7 1.6 4.2 10
  • 14. Figure 3:Customer complain 2002/2003 This two factor show us though the Operating cost is lower the customer complaints are high in the Ryanair. It give us the customer haven‟t good satisfaction regarding the service of the Ryanair. So Ryanair have only the low cost strategy when compare with the other strategic group. They can provide low fare ticket to the customer. To identify the position of the Ryan air we could implement the Strategic group map. We get the below reference data to implement the map. Catering and value of money used as the strategic function. Then assign numeric value to represent below image data which are in between worst and best.1-worst, 2-bad, 3-good, 4-better,5-best.finnaly implement the strategic map according to the airline rating by using the excell. Reference Exhibit 4a Airline Rating table in the Ryanair case study, Eleanor R.E.,Higgins, Exploring corporate strategy, person education Ltd, Uk, England. Exhibit 4a 11
  • 15. Catering Value for money Go Virgin Atlantic Buzz easyJet BMIbaby BMI British Midland Ryanair British Airways Flybe British European Aer Lingus Lufthansa MyTravel Airways 2 4 3 2 1 3 1 3 3 2 3 2 Index Worst bad good better best 1 2 3 4 5 Figure 4: Airline Ratings Figure 5: Strategic group map 12 5 4 3 5 5 3 5 3 3 2 2 2
  • 16. According to the above map we can identify the Ryan air, BMIbaby companies are good to provide value to money. But they are not provided the good catering service. The map area we can divide to main 4 sections. Section 1: only Good for provide value to money section2: Good for provide value to money and good for catering service Section 3: not good for both services section4: only good for catering service According to this section we can analyst the strategic position/level of the competitors. Virgin Atlantic is in the section 4 and it represent the higher position when consider the above mention services. 13
  • 17. Evaluate the strategic leadership of Michael O’Leary The Michael O‟Leary is become the head of the team of managers in Ryan air. This new team was appointed by the Tony Ryan .After this appointment the company enter the path of success. The leadership style of Michael O‟Leary the CEO of Ryan air always repays careful scrutiny. He is famously rude to passengers with disabilities, his staff and regulators. His language is the litany of the anti-hero, the self-styled champion of no frills service with low cost fares. His entrepreneurial model is, by his own proud admission, an unashamed copy (of Southwest Airlines) and delivered with a culture of iconoclasm to beat the traditional airline model. By any measure, he has succeeded and delivered wealth to his shareholders beyond their wildest dreams. His leadership model is a clever one. As a leader, Michael O‟Leary is a risk taker, a hands-on day-to-day decision maker. He is an asset and liability to Ryanair. He had pros and cons in his leadership of the company. The characteristics that have driven the company forward – his enthusiasm and energy, his strategic insight, his determination and mission orientation – can be carried too far. The capacity to irritate may bring about conflict and change. Also, in Michael O‟Leary‟s favor, as Ryanair‟s largest single shareholder, he literally „puts his money where his mouth is‟. Another way of looking at Michael O‟Leary‟s leadership is whether he was the right person for the job during the change era, but does the company now require more of a „manager‟ than a „leader‟ during a consolidation era. Leadership style in the Micheal o leary       Autocratic style of leadership, Determining strategic direction. Effectively managing the firm‟s resource portfolio. Exploiting and maintaining core competences. Developing human and social capital. Sustaining effective organizational culture The leadership style O‟Leary has instituted at Ryanair finds expression in a sort of transition: a movement from autocratic leadership to democratic one. Thus, O‟Leary‟s leadership structure as at when he joined Ryanair in 1988 as Tony Ryan‟s personal enforcer to 1994 when he became the CEO of the airline and now has undergone variation to suit different situations. Debates could arise as whether O‟Leary‟s style would work in different circumstance(s), but there is no doubt that he is a perfect situation match for the Ryanair revolution. The remit of this study limits more investigation in this direction. 14
  • 18. Competitive strategies Customer evaluates an organization‟s offer in comparison to other competitive offerings. It is the customer that is the sole judge of whether any element of the offer gives a competitive advantage. Rayan Air also focuses on take high competitive advantages to their airline. So Ryanair main competitive strength is in the ability to control its cost, through cost efficient operating strategy. Ryanair continued to have more aggressive but innovative plans to develop their new competitive approach. For example avoiding interlining or connecting journey tickets, removing airport lounge service and company retail ticket outlets, no meals for delay customers, having no frequent flyer programmers, stricter penalties for „„no show‟‟ passengers. Ultimately they all lead to quality improvements, such as increased on time works, reduced lost bags, and no overbooking which other airlines find hard to eliminate. Ryanair is famous in being tough on employees and ignoring trade unions, possibly in favor of managing outsourced contract staff efficiently and easily creating their own corporate culture. Operating in a single economy class structure enable Ryanair to simplify its layout with assistant of unarranged seating, therefore making passenger board the plane at much greater speed. Ryan air has a very special brand name through its 14 years in the LCC market has developed a very well recognized brand name. This is most special competitive strategy in ryan air. They maintain very strong brand name. and also Ryanair seems to reap the most of the benefits of flying to secondary airports as point-to-point, a feature the main rival easyJet did not concentrate on. Michael O'Leary was especially keen on this selection of bases that turned out to be a main source of cutting down operational costs, and turnaround times. easyJet, in contrast focused on business passenger, emphasizing on big cities and exposed to risks by major airlines and recorded losses. Michael O'Leary himself states that airlines who try to operate in a hybrid no-frills / low-cost form fail to succeed in the market. Ryan air has a uniform fleet saves on maintenance and training costs and also they provide high service performan. These give a good image of the company‟s reliability. This is occurring to be best among their competitors. Ryan air has high aircraft utilization it flies its planes for longer thus generating more revenue from its assets. 15
  • 19. Business Process Reengineering to maintain the competitive strategy through Information Technology and Information System Specially ryanair is one of the famous airline which maximizing the use of the Internet. During January 2000, Ryanair converted its host reservation system from the British Airways Booking System to a new system hosted by Accenture. The Skylights system allows internet users to access Ryanair's host reservation system and to make and pay for confirmed reservations in real time through Ryanair's website. It is also a great asset in terms of producing companion revenues. Ryanair will continue to use the internet as its primary point of sale. Over the next 5 years the aim is to have 100% of bookings via the internet so as to eliminate the costly call centers. Management believes that Ryanair‟s operating costs are among the lowest of any European scheduled passenger airline. Ryanair strives to reduce or control aircraft equipment costs, personnel productivity, customer service costs , airport access and handling costs. This also be a competitive advantage of the ryanair. Ryanair favours secondary airports with convenient access to major population centers and regional airports. Firstly these have more competitive access and handling costs. Ryanair‟s alternative strength is in their highly visit website, which is unforeseen intention of lowering ticket issuing transactional cost. Therefore, through the use of information system to enhance customer relationship and intelligence data minding created a competitive strength for the business. 16
  • 20. Resources and Competencies The origins of competencies were fully based on how advanced end product technology manufactures exploited their unique core skills and resources among the organization, and across their market. The main vision was on the “collective learning of an organization, especially how to coordinate diverse production skills and integrate multiple skills of technologies”, and a model for transforming competencies into end product through the development of core products was presented. The strategic capability analysis helps in identifying the core and threshold competencies and resources of a company. Ryanair‟s core competencies are that it is Europe‟s leading low cost airline as it provides low fares to all its customers. Ryanair does this to stimulate demand. It targets fare conscious leisure or business travelers who may not travel at all or use other methods of transport such as car, coach or trains. It can further build on this competency by conducting market research to understand his customer needs. It can then develop deals, products and services that will attract and retain customers. Main Resources and Capabilities Ryanair’s Resources Ryanair‟s unique resources are its employees. It can build on this resource by training and developing its existing staff in their jobs to increase their skills and for achieving excellence in service delivery. They always will re-train all of their main staff in people skills. Another special resource in ryanair is its competent leadership. This can further be improved by encouraging young talent and by training and developing key employees to become tomorrows‟ leaders. And main advantage in Ryanair is they have knowledgeable pilots. These pilots need to keep themselves informed of the changes in international flying regulations to efficiently do their jobs. The resources of Ryanair are,     Physical Resources – consists of the resources that are needed to operate such as aircraft fleet, headquarter, secondary airports. Human Resources – the company has talented and knowledgeable employees. Financial Resources – The finance comes from the Ryan Family, shareholders, investors and creditors. Intellectual Capital – these are the knowledge, skills, abilities and talents that every in Ryanair possesses 17
  • 21. Ryanair's Competencies Ryanair‟s major competencies are its customer services and agreements with airports. It can further develop its customer services by developing and delivering standardized way of delivering customer service throughout the organization.Ryanair possesses the sophisticated and able technology that can cater to the fast changing global marketing management trends. It has core competence in its use of information technology that can support its management and marketing operations. Ryanair will continue to use the internet as its primary point of sale. Thus, adding to its innovations in service providing among the wide range of clientele. Its IT supports competent procurement of services (e.g. bookings and ticketing) in emarketing or online aspect. After establishing its website in January 2000. Ryan air Core competencies are;   Innovative cost cutting Alternative revenue generation Innovative cost cutting method: The main point of Ryanair's strategy involves reduce cost at wherever possible and pass the savings to the customer with low ticket prices. All the activities in its process are designed to increase efficiency and reduce costs. Ryanair is continuously come up with very Innovative Cost reduction method as a example Ryan Air doesn't have to have personnel in by offering a very few services at the airport, like limited airport check-in facilities or removal of baggage transfer, these areas. Lower customer service cost and riddance of ticket agent fees by high fixation of internet to sell tickets. By having a uniform fleet, it has helped to lower its maintenance costs and time. They also don‟t provide meals to passengers facing delay. They do not provide wheelchair services to disable passengers. This reduces cost in maintaining only fewer inventories of aircraft maintenance parts and training of maintenance engineers. Ryanair flies offers only point-to-point route and flies to less expensive secondary airports which charges lower airport fees. Since these airports are not very populous, Ryanair can attain fewer delays and higher turnaround times. Alternative revenue generation method: Ryanair's ultimate goal is to offer free flights by generating revenue through other means. It always creative in finding new sources of revenue onboard their flights. Some examples of this are inflight advertisements, on-board shopping and gambling, pay-preview television. All the flight attendants get commission on the items they sell onboard. Food and beverages, airport check in, baggage checking and any other additional passenger service is charged higher than normal charge. RyanAir will not provide refreshments or meals to passengers facing delays. Anyone who wish to avail themselves of such services will be asked to pay for them directly to service provider. RyanAir currently generates non-air revenue from third party service provides like car rental, hotel reservation, travel insurance, ground and rail transportation which it sells on its website. 18
  • 22. Critical Issues  Customer service satisfaction - Ryanair has eliminated traditional in-flight services such as seat allocation, complementary meals and drink and newspapers. Ryanair earn profit from such secondary services by charging customers for in-flight services and other travel expenses such as travel insurance, car hire, Internet. Ryanair is extremely sensitive in changing the fair value. Ryanair is raising its checked luggage fee from 15 to 20 per bag. Although the Ryanair has remarkable track record for punctuality, flight completion the perception of the softer side of its customer service has not always been good. -  Risks & Challenges - Extra capacity building would create uncertainty about the success of new routes and locations  Fuel Prices -Vulnerable to rising fuel prices -Represents 35 % of the operating costs  Industrial Relations -IR with pilots was fraught -Unions were not recognized  Safety Issues -Poor staff morale  Unwillingness and failure to recognize unions - Ryanair is also fired for providing poor working conditions for its workforce. Understanding that employee‟s and the customers are the factors that decide the success of the company Ryanair should solve these critical issues. 19
  • 23. Conclusion and Recommendation Conclusion The Ryanair is the cost effective leader in the European airline market. It maintains the lowest operation cost, when compare with other computers. Below figure show the relationship between the environment and the analysis tool. PESTEL analysis is a useful tool for understanding the “big picture” of the macro environment. It helps to identify operating opportunities and threats in the macro environment. Then that PESTEL analyst data can used for understand the market sector compaction via the Porter‟s 5 forces analysis. Especially this model help to analysis the competition in the industry .Then the Ryanair Company can use the strategic group analyst to identify the position of the compactor‟s. Competitive strategies, resource and competencies and leadership strategy can be aligning according to the competitors and airline sector conditions. As example when the fuel price increases in economic sector it affects each level in the Ryanair‟s environment. So we can identify the above relationship between this all analytical tools. 1. 2. 3. 4. Ryan air Competitors and market EU airline sector Macro environment Figure 6: Relationship between analytical tools 20
  • 24. Recommendation According to the study the Ryanair only consider reduce the cost as their strategy. Also it has the good leadership strategy. When consider the customers service it is not in good condition. Below list mention our suggestion regarding the company development 1. 2. 3. 4. 5. Increase the customer service Increase the customer loyalty Should invest on the Information Technology Need day to day updated completive strategy Further reduce the cost 21
  • 25. References      CASE TEACHING NOTES Ryanair – The Low-Fares Airline Eleanor O‟Higginshttp://pgsm.co.uk/members/teaching/strategic/ryanair.pdf Exploring Corporate Strategy 7 th edition , Gerry Johnson ,Kevan Scholes ,Richard Whittington, Copyright Pearson Education, Inc. Publishing as Prentice Hall http://www.uncg.edu/bae/people/acquaah/491/lecture6.ppt (Strategic Groups ,Slide share ) http://www.amazon.com/books/dp/3640744314 http://www.pricecheck.co.za/offers/44936598/Ryanair%27s+Strategy+From+A+Pers pective+Of+Core+Competencies+%28ebook%29 22

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