Strategic management ryanair


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Strategic management ryanair

  1. 1. Ryanair – The Low Fares Airline <br />Strategic Management<br />Team members: <br />Ivan Martinov<br />Sabbir S. M.<br />
  2. 2. Agenda<br />Company Overview<br />1<br />Strategic Analysis<br />2<br />3<br />Strategy Formulation <br />4<br />Organizing for Strategy<br />5<br />Conclusion<br />
  3. 3. Company Overview<br />1985, first route with daily flights on a 15-seater Bandeirante aircraft, <br />In 1986 launch fare of £99 return, less than half the price of the BA/AerLingus lowest return fare of £209. First European fare war<br />In 1990, losses of £20m. Adopt Southwest Airlines low fares model. <br />In 1997, Ryanair launches its first four European routes<br />By 2009, traffic grew to 14% compare to 2008, resulting 66.5m passengers in response of reduced of just €35.<br />Covering 44 bases, 27 countries, 160 airports with 254 Boeing 737-800’s<br />
  4. 4. Agenda<br />Company Overview<br />1<br />Strategic Analysis<br />2<br />3<br />Strategy Formulation<br />4<br />Organizing for Stratgy<br />5<br />Conclusion<br />
  5. 5. Porter’s Five Forces - Supplier<br /><ul><li> Boeing is main suppliers
  6. 6. Only 2 possible suppliers of planes – Boeing and Airbus
  7. 7. High switching cost
  8. 8. Price of aviation directly related to the price of oil</li></ul>Threat of <br />Entry<br />Buyers<br />Suppliers<br /><ul><li>Regional Airports depends on one airline
  9. 9. Bigger airports have competitors of Ryan Air</li></ul>Rivalry<br />Substitutes<br />
  10. 10. Porter’s Five Forces – Threat of entry<br /><ul><li> High capital investment
  11. 11. Restricted slot availability makes it more difficult to find suitable airports
  12. 12. Immediate price war if encroaching on existing LCC route
  13. 13. Need for low cost base
  14. 14. Flight Authorization</li></ul>Threat of <br />Entry<br />Buyers<br />Suppliers<br />Rivalry<br />Substitutes<br />
  15. 15. Porter’s Five Forces - Buyers<br /><ul><li>Customers are price sensitive
  16. 16. High Switching tendency
  17. 17. Customers know about the cost of supplying the service
  18. 18. No loyalty</li></ul>Threat of <br />Entry<br />Buyers<br />Suppliers<br />Rivalry<br />Substitutes<br />
  19. 19. Porter’s Five Forces - Substitutes<br /><ul><li> No brand loyalty of customers
  20. 20. No ‘close customer relationship’
  21. 21. No switching costs for the customer
  22. 22. Other modes of transport: Eurolines, ferries etc.</li></ul>Threat of <br />Entry<br />Buyers<br />Suppliers<br />Rivalry<br />Substitutes<br />
  23. 23. Porter’s Five Forces - Rivalry<br /><ul><li> The LCC market is highly competitive
  24. 24. Most cost advantages can be copied immediately
  25. 25. the two major low-cost airlines have avoided direct head to head competition by choosing different routes to serve</li></ul>Threat of <br />Entry<br />Buyers<br />Suppliers<br /><ul><li> Following Ryanair strategy will create heavy pressure on prices, margins,
  26. 26. Price is the main differentiating factor</li></ul>Rivalry<br />Substitutes<br />
  27. 27. SWOT Matrix<br />
  28. 28. PESTLE Analysis<br />Legal<br />Social<br />Political<br /><ul><li>Emission constraints
  29. 29. Corporate Lawsuits
  30. 30. Strong Political Environment
  31. 31. EU Expansion
  32. 32. Trade Union Pressure
  33. 33. Global Carbon Tax</li></ul>Changes in demographics and consumer preferences<br />Frequent short-term trips <br />Threat of terrorist attacks<br />Increased environmental awareness<br />Technological<br />Economic<br />Environmental<br /><ul><li>Rising fuel prices
  34. 34. Weak US dollar
  35. 35. Global crisis
  36. 36. High rates of unemployment
  37. 37. Global warming and CO2 emissions
  38. 38. Noise pollution</li></ul>New aircrafts; with much more efficient engines -> reduced CO2 emissions and fuel consumption<br />Internet <br />High speed trains<br />
  39. 39. Conclusion of PESTLE Analysis<br />Conclusion: <br />Positive sociodemographic factors supported by strong technological innovations <br />Bad legal and environmental aspects <br />Mixed political and economic environment<br />Result of analysis: <br />The Macroenvironement is contradictory<br />
  40. 40. High<br />Keep satisfied<br />Key players<br />Power<br />Minimal effort<br />Keep informed<br />Low<br />Low<br />High<br />Level of Interest<br />Stakeholder Mapping<br /><ul><li>NGOs
  41. 41. Shareholders and Investors
  42. 42. Creditors
  43. 43. Government
  44. 44. Customers
  45. 45. Employees
  46. 46. Competitors
  47. 47. Local communities</li></li></ul><li>Stakeholder Expectations<br />EUR 17 billion for fleet replacement<br />Higher fuel efficiency <br />45% reduction in CO2 emissions<br />Average age of aircraft fleet 2.5 years (average industry 11 years)<br />Noise reduction - fulfilled noise requirements, winglets, operational measures<br />Waste reduction – no free meals, drinks or newspapers<br />Regular financial reports<br />CSR Campaigns – Girls of Ryanair Charity Calendar 2011<br />
  48. 48. Agenda<br />Company Overview<br />1<br />Strategic Analysis <br />2<br />3<br />Strategy Formulation<br />4<br />Organizing for Strategy<br />5<br />Conclusion<br />
  49. 49. Vision<br />Become Europe’s Leading Passenger Carrier<br />Mission<br />No. 1 for offering cheapest air fare<br />No. 1 for punctuality<br />No. 1 for service commitment<br />Vision and Mission<br />
  50. 50. Offer the lowest fares at all time on all routes<br />No fuel surcharge guaranteed<br />Honor the agreed fare after payment<br />Minimize the numbers of passengers facing delays<br />Allow reservation changes<br />Respond quickly to passenger complaints and provide prompt refunds<br />Take measures to speed up check-in<br />Minimize the number of passengers who are involuntarily denied boarding<br />Minimize the number of passengers who are involuntarily denied boarding<br />Ryanair will provide the following information to passengers at the time of booking<br />Ryan Air Passenger Charter<br />
  51. 51. Product Development<br />Diversification<br />New<br />Products<br />Market Penetration<br />Market Development<br />Existing<br />Existing<br />New<br />Markets<br />AnsoffMartix<br /><ul><li>Increased number of passengers
  52. 52. Frequent flights
  53. 53. Increased number of routes offered
  54. 54. Eastern Europe expansion: new EU countries
  55. 55. Turkey?
  56. 56. North Africa – Morocco, … ?</li></li></ul><li>High<br />Stars<br />Question Marks<br />Market <br />Growth<br />Cash Cows<br />Poor Dogs<br />Low<br />High<br />Low<br />Market Share<br />Boston Consulting Group Matrix<br /><ul><li>Hot new destinations: </li></ul>Croatia<br /><ul><li>Unknown popularity: </li></ul>Morocco<br /><ul><li>Small unnecessary destinations
  57. 57. Popular destinations: </li></ul>London, Paris, Milan<br />Madrid, Rome, Barcelona<br />
  58. 58. Strong<br />Globalization <br />forces towards<br />standardization<br />Weak<br />Weak<br />Strong<br />Localization forces towards customization<br />Global integration/local responsiveness grid<br />Global Strategy<br />Transnational Strategy<br />Multidomestic Strategy<br />International Strategy<br />
  59. 59. Agenda<br />Company Overview<br />1<br />Strategic Analysis<br />2<br />3<br />Strategy Formulation<br />4<br />Organizing for Strategy<br />5<br />Conclusion<br />
  60. 60. Strategic Goals<br />Offering Low Fares<br />Frequent point-to-point flights on short-haul routes<br />Choice of routes<br />Low operating cost:<br />Aircraft equipment cost<br />Personnel expenses<br />Customer service cost<br />Airport access fee<br />Maximize the use of internet<br />Commitement to safety and quality maintainence<br />Focused criteria for growth<br />
  61. 61. Overall cost leadership by:<br />Low Aircraft maintainence cost<br />Lowering Personnel expenses<br />Lowering Customer service cost<br />loweringAirport access fee<br />Business Level strategy<br />
  62. 62. Positioning<br />
  63. 63. Balanced Scorecard I<br />
  64. 64. Balanced Scorecard II<br />
  65. 65. Thank you for your attention!<br />