Case Study Analysis Ryanair The Low Fares Airline Management Essay

Case Study analytic thinking Ryan tune The Low F ars air hose focus EssayThe f exclusively upon objective of this report is to critic wholey guess the schema of Ryanair against the backdrop of the European air blood line patience and the bludgeoning calculate sector, in response to the ch anyenges facing the persistence as a whole and Ryan air in particular as well as has evaluated the Ryan air bid for associate Irish carrier, Aer Lingus. This evaluation is d peerless(prenominal) by utilize a strategical outline of surroundings and the exertion as neat as the company, hand strategic survival of the fittests recommended untried strategic initiatives and areas for improving strategy implementation utilise Macro- environs epitome, Industry analysis and inhering analysis.The analysis has been done by using signifi basist theories such as PESTEL analysis, Porters five forces, strategical mathematical gathering framework, key success reckons and value cha in etc. k in a flashledge on Ryanair. finished the Ryanair environmental analysis unproductive strategic decisions devour been identified and at last suggest the recommendations to develop Ryanairs free-enterprise(a) gain in the future.(2.0) IntroductionThis chronicle is based on the typeface pictured Ryanair the utter gear-fairs Airline which was written by Eleanor OHiggins, University College Dublin, land of Ireland in 2007. Ryanair is Europes first and largest law coiffes skyway stock which started 1985 by Ryan family. (Ryanair website) Its an Irish respiratory tract with head office in Dublin and its biggest operational base at London Stansted Airport in the UK (Ryanair Europes greenest airline n.d).Ryanairs has rebeln steadily to now in the virtually environmentally friendly way by drop in the latest aircraft and engine technologies which admit reduced give the sack sheer and CO2 e tutelages and the implementation of certain operational and commercial deci sions.According to the case the report has critically evaluated the strategy of Ryanair against the backdrop of the European air line industriousness and the bludgeoning Budget sector, in response to the challenges facing the Industry as a whole and Ryan air in particular withal has evaluated the Ryan airs bid for fel petty(a) Irish carrier, Aer Lingus.For this evaluation as a appendage of the heed consulting firm I have provided a strategic analysis of environment and the industry as well as the company, commit strategic choices recommended smartfound strategic initiatives and areas for improving strategy implementation using Macro-environment analysis, Industry analysis and Internal analysis from this document to the senior care team of Ryanair.The analysis of this report was done with the support of the provided case information, Ryanair website, industry cerebrate to information from academic books, journals, websites, and other publicly available secondary entropy s ources.(3.0) Overview of RyanairRyanair is a global airline which provides scheduled rider airline work between Ireland and the United Kingdom. Starting in 1985 Ryanair preserveed the example of Southwest Airlines. It was hard-boiled up with a share capital of muchover 1 and a advanced staff base of 25. Since 1985 to now it has grown massively into one of the Europes largest number 1 fare carrier. In 1990 the company suffered a 20 cardinal loss and was forced to completely restructure and a parvenu management team was brought in headed by Michael OLeary who made study changes to the airline. Ryanair restructured itself and became a low-fares, no -frills carrier. After the next few years Ryan air crucially slash its fares further and managed to open up many new roadways. Today, Ryan Air has destinations in 26 countries with 950 routes. Also the headquartered in Dublin, employs close to 4,200 people, operates with a fleet size of it of 120 Boeing 737-800, carries approx imately 35 Mio passengers a year and had a derangement of 1,692.5 Mio in 2006 with a dinero friendlyness of about 10% (Mayor, 2007). further much revenue has risen from 231 million in 1998 to 2,714 million in 2008 and net profits have change magnitude from 48 million to 480 million, over the identical period despite the worldwide recession and the high oil equipment casualtys.(3.1) batchRyanairs CEO, Michael OLeary, has a vision of a world where the fare could drop to cipher as local communities would subsidize the airline to bring a truelove traffic of business people and tourists to their region. (Ryanair Report, 1997)Mission StatementRyanair will turn over Europes most profitable lowest follow airline by rolling out our proven low-fare-no-frills service in all markets in which we operate, to the benefit of our passengers, people, and shareholders. (Mayor, 2007)Ryanair betokens to offer low fares that generate increased passenger traffic with a continuous focus on cos t-containment and operating efficiencies. barely Ryanair has main objective and other objectives to stay as the favorable and low cost airline in Europe. ( revel Refer appurtenance 01). Also call forth Appendix 02 for financial analysis.(3.3) Critical Issuesthough Ryanair has gone quite well all the way to now I have identified downstairs critical problems through out the case.Major critical issues are forbid public image due to aggressive CEO and unfriendly staff. light-green handling of sensitive issues such as criticizing politicians, disabled passengersMisleading advertisements and messy website.Unreasonable ancillary charges for example wheelchair charges, check in baggage charges, regress handling charges etc.Leadership issues(4.0) environmental compendEnvironment has a great impact on functioning of any business. Environmental analysis is the process of monitoring the organizational environment to localise both present and future threats and opportunities that may inf luence the firms ability to reach its goals. (Certo Peter 1991). Its distinguished to a business to adapt to the environment to be prospering indeed it expects to be analysis both internecine and external environment.(4.1) external Environment AnalysisPurpose of an external environment analysis is to identify or develop a finite list of opportunities that could benefit a firm and threats that could be avoided. Firms should be able to respond either objectionably or defensively to the factors by formulating strategies that take advantage of external opportunities or that minimize the impact of potential threats. The external analysis can be divided into macro environment and industry analyses.(4.1.1) Macro Environment Analysisthither are several influences of macro-environment on Ryanair within their operating countries. Political, Economical, Social, proficient, Environmental and effectual factors had created a considerable impact in macro environment on the performance in a company. This is realisen as PESTEL Analysis. Please Refer Appendix 03(4.1.2) Industry AnalysisIndustry can be defined as a congregation of organization or business unit producing close substitutes (Fletcher 2003). The aim of this analysis is to assess the industry environment and answer the side by side(p) questions.Whatre the forces within the industry which are dissuademining the profitability of the industry?Howre the forces changing and expected to change overtime?How will those changes view future profitability?For the analysis of Ryanair industry environment have utilise porters five forces model and Strategic group. Please refer the Appendix 04 05(4.2) Internal Environment AnalysisAn internal analysis should be conducted in- sanctify to identify the strengths and weaknesses of an organization. It also assist the firm to find-out its resources and capabilities in-order to utilize those resources to the best potential. The main objective of internal analysis for this case is to measure the Ryanairs resources in terms of other study competitors such as Easy jet and South West air lines. For the internal analysis have used value chain model and key successes factors. Please Refer Appendix 06.(4.2.1) spot palmy FactorsKey successful factors are both(prenominal) of the important factors which are necessary in business. It brings a comparative advantage to the business.It is highlighted that low-cost companies concentrate on crack the lowest prices as the first critical success factor. Although Ryanair had encountered different problems in particular in line with its cost structures, the company had been able to survive and grow in the marketplace. They have implemented different marketing strategy to devise the company survive in the competition and to gain a competitive position in the airline market. Ryanair has treasure recently as the most punctual airline between Dublin and London and also recognised as the second largest airline in Uni ted Kingdom and Europes largest low-fares airline because of the strategy of it.Technology relatedExpertise in given industry technologyScientific technology expertise in airline industryMaking Internet the main(a) base of distri howeverion and marketing dispersal relatedAccurate filling of customers ordersA sozzled network of talk via internetLow diffusion costMarketing relatedFast, perfect technical assistanceCourteous customer serviceClever advertizingManufacturing relatedAccess to adequate supplies of skilled laborA strong brand identity among the buyersLow cost marketing and distribution methodsSkills related outstanding work function talentAbility to develop new products and product improvements.Expertise in technologyOrganizational capabilitySuperior information systemExperiential top managementSWOT AnalysisThe SWOT analysis given at a lower place is to help Ryanair to achieve their mission and objectives by capitalizing on opportunities using their strengths and redu cing their weaknesses and threats.Strengths Ryanair is the 1st to launch low cost flights in Europe and has continuously maintained the low fare policy.They have a strong brand image and strong talk terms berth in airport deals.Aggressive and Innovative leadership (CEO- Mr. Michael OLeary). large market shareNew fleets results in maximum aircraft utilization.Weaknesses Earn promotional material through negative press reporting which feign brand image.in truth poor customer relations which is damaging to the success.Low level of arrangement for employeesMisleading advertisements about ticket fares and destinations.In-flight mobile phones and gambling can deter some(prenominal) customersOpportunities Withdrawal of traditional companies from most of the less traffic discriminating point to point routes using regional airports.Industry growth in European air travel industryBeing an fine choice of most of the market due to recessionThreats Upper middle row economy travelers may s eek greater value proposition than just low fares.Increasing expenses of Oil Markets and fluctuating currency issuesTerrorism impend legislations for environment protection.Recommendation.The whole analysis has summarized both pluses and minuses in the company. Through examining the Treats and weaknesses the following recommendation could be illustrates. Following strategies can be used to light the weaknesses and avoid threats of the company and improve its competitive upgrading.Total Quality wariness The low cost strategy has hided the tonus of the service. To attract and retain the customers Ryanair has to follow an effectual total quality management process. Efficient total quality management values could make a great difference in the service quality. It will not only enhance the quality but also it will increase the productivity. Thus effective quality management will make the brand identity stronger and make a more brand loyalty with in customer base.Competitors Compet itors like easyJet, Air Berlin, raw material Air are catering to the value market division and have established slots at some main airports and providing introductory cost effective services. Later acquiring the Aer Lingus would increase Ryanairs showings in stock market and swift growth in to the value oriented market pieces. Therefore Ryanair need to be more concern about the low price strategy. customer Relationship watchfulness In the service sector what is important is the merriment of the customers. Due to poor facilities and ancillary services Ryanair has lost their customer human relationship. Therefore, a strong CRM strategy should be implemented to minimize the weaknesses of the company. Apart from the CRM strategies Ryanair could lam on to CSR projects to draw the corporate position to the organization.(7.0) ConclusionRyanair is the most favorable low fare airline in the Europe and with this they have been successful all the way so far. But now I can conclude fr om the above analysis that Ryanair have to develop a successful strategy not for only winning the low fare strategy but gaining a stable position in the value segment and in new non-European markets.ReferencesBarrett, S., (2000), Journal of air transportation of Transport Management Vol.6, pp. 13-27 (Butterworth-Heinemann Oxford)David, F. R. (2005). Strategic Management (10th Ed.). NJPrentice hallFletcher, J. (2003). Strategic Management study guide and plan. Edith Cowan University.Lynch, R. (2003), Corporate Strategy, 3rd ed., Prentice Hall pecuniary TimesMayer, S. (2007). Ryanair and its low cost flights in Europe. University of the Sunshine Coast Queensland (Business Faculty). Retrieved April 23, 2010, from http//www.grin.com/e-book/87815/ryanair-and-its-low-cost-flights-in-europePaul, V. (2007). french Accent Ryanair Slow on Emotion, Retrieved from April 27, 2010, from http//www.brandchannel.com/brand_speak.asp?bs_id=72Ryanair case study analysis (2009), Retrieved from April 27, 2010, from http//ivythesis.typepad.com/term_paper_topics/2009/04/case-study-analysis-ryanair.htmlRyanair and its low cost flights in Europe (2007), Retrieved from April 28, 2010, fromhttp//www.grin.com/e-book/87815/ryanair-and-its-low-cost-flights-in-europeRyanair Europes greenest airline. (2006). Retrieved from April 28, 2010, from http//www.ryanair.com/en/about/ryanair-and-the-environment(9.0) addendumAppendix 01Ryanair main objective is toOffer the lowest fares at all time on all routesRyanair main objective is to establish itself as Europes leading low-fares scheduled passenger airline through continued improvements and blow ones stacking offerings of its low-fares service.Ryanair other objectives are toContinue to find ways of reducing costsThough Ryanair has the lowest cost base of any of its competitors Ryanair can continue to land its cost base as it grows even if at a slow-moving pace.Ryanair 100% onlineRyanair expect continuing to use the internet as its primary p oint of sale and over the next 5 years the aim is to have 100% of bookings via the internet so as to reduce the expensive call centers.Increase the Frequency of Existing RoutesOn the moment Ryanair have an average of 3.88 flights per day per route. This figure, compared to Easyjet and traditional carriers, is very low. It means that Ryanair is losing out on business passengers who need more flexible timetables. If Ryanair can enhance the absolute frequency on some of their routes they possibly will effectively steal some of the passengers from the traditional carriers thus increasing market share.Open New Routes in EuropeThere are many possible routes up to now un-served by low-cost carriers. Ryanair can also open routes where the competition is a more expensive for traditional carrier while attracting customers with the cheaper, no-frills option.Develop Its littler Continental Operating BasesRyanair must look to other operating bases to expand their network. Although in that re spect is not the same demand outside there is still sufficient demand to make a considerable profit.Source http//web accumulate.googleusercontent.com/ try?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfHYPERLINK http//webcache.googleusercontent.com/ expect?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkHYPERLINK http//webcache.googleusercontent.com/search?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkcd=1HYPERLINK http//webcache.googleusercontent.com/search?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkHYPERLINK http//webcache.googleusercontent.com/search?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair 04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkhl=enHYPERLINK http//webcache.googleusercontent.com/search?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkHYPERLINK http//webcache.googleusercontent.com/search?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkct=clnkHYPERLINK http//webcache.googleusercontent.com/search?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkHYPERLINK http//webcache.googleusercontent.com/search?q=cacheFfQQcO538yAJsolvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf+http//solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdfcd=1hl=enct=clnkgl=lkgl=lk)Appendix 02Financial AnalysisAppendix 03PESTEL ANALYSISPoliticalIn political factor focused on Gove rnment stability, Taxation policy, foreign trade regulations and Social welfare policies but in the Ryanair case according to the provided information have-to doe withed toIncrease of route charge by the government In 2006, airport and handling charges increased by 21%, slower than the growth in passenger numbers, reflecting a net reduction in costs from deals at new airports and bases despite increased costs at certain existing airports such as Stansted.Increase in trade union printing press Some of the countries in Europe have formed a trade-union among each others and due to this it gives the pressure for Ryanair to do business in these countries. Furthermore the Europe Union (EU) has expand in the past few years and it is a big factor that affects the direction and strategy planning for Ryanair.Government passed The law for carbon rise to aviation industry to compensate further taxes Ryanair replaced its fleet of old aircraft with new more environmental friendly aircraft. The newer aircraft produced 50% less emissions, 45%less fuel burn and 45% lower randomness emissions per seat.UK government wander on compulsory security measures and restrictions due to terrorism attacks on airlines in August 2006, UK authorities imposed severe security measures at all airports in the face of an alleged imminent terrorist plot to attack up to 10 aircraft on transatlantic routes.EconomicalAccording to the Fletcher, 2003 The health of a nations economy affects the performance of individual firms and industries. The economic environment refers to the nature and direction of the economy in which a firm repugns or may compete (Fletcher, 2003, M.3, P. 4)Economical Analysis consists of GDP, Price fluctuations, unemployment trends, depreciation of U.S dollars, interest rates and economies of measure etc.In Ryanair case they have affected by risque price ceiling of petroleum products and fuels From 2005 fuel prices are increased and Ryanairs fuel costs represented 35% of operating costs in 2006 compared with 27% the year before. Energy and fuel costs are cause of misgiving Also jet fuel cost fluctuations are unpredictable and not controllable.SocialThe socio-cultural environment represents the set of values, ideals and other characteristics that distinguish members of one group from those of another according to the Fletcher, 2003, M. 3, P. 3). Organizations need to be aware of these factors because they can straightly affect the way the organizations manage the operations, more importantly human resources and marketing.Change in the mode of travelling due to the terrorist attacks Because of the terrorists attacks there was a treat that passengers would conduct other forms of transport such as trains rather than facing to the chafe and expense of checking in luggage and extra time spent in airport security queues.Increase in travelling life elbow room and flying patterns.TechnologyMany new advances in technologies can affect the way busine sses are competing. Technological developments represent a real hazard for the skillful people who can understand and apply them appropriately. It also facilitatory to reduce its costs effectively and furthermore can maintain good relationship with customers. Technological analysis consists of new communication technologies, product innovations, new product development and application of knowledge etc.Related to the Ryanair occurredTechnological expansion Ryanair has introduced new technological environmental friendly airlines in order to make profitsHigh fuel efficiency, less noise taint and lessening of carbon pollution using Boeing 737 planes Ryanair tries to reduce pollution.Web gross revenue/services Ryanair tries completely to do online check-in in the future.EnvironmentThis consists of changes in environment that can impact on industries such as tourism and farming etc. nowadays more and more people are concerned about global warming and green house fluff effects.Accor ding to the case Ryanair affect environment byContributing global warming though Ryanair contribute to the global warming up to some certain they have introduced new aircrafts that reduce fuel burn in 45%.Noise level controls Also they have lower the noise emission in 45% in their new aircrafts.LegalLegal analysis consists of competition law, health and safety, employment law and product safety.As in the case Ryanair affected byAllegations of misleading advertisement Ryanair incriminate it of misleading passengers on its website by exaggerating the prices of its competitors in making comparisons.Safety measures pilots and passengers In July 2006 the Irish high court found out that Ryanair had bullied pilots and forced them to run to a new contract, pilots had to pay 15000 for retraining on a new aircraft if they left the airline. In 2006 pilots of Ryanair lodged a pay claim stating that there is significant difference in take home pay between Ryanair and Aer Lingus pilots it also claimed that training pilots were working for nothing. Also the case says Ryanair has charged more property for the insurance than its actual amount.Appendix 04Porters Five Forces Model.This five forces model is positive by Michael Porter and it described five forces which are talk terms causality of Suppliers, Bargaining power of customers, New entrants, Threat of Substitutes and Competitive Rivalry. These forces have canvass below according to the Ryanair.Source http//notesdesk.com/wp-content/uploads/2009/04/porters-five-forces-model.jpgBargaining Power of Suppliers Aircraft Suppliers Boeing is Ryanairs main supplier. There are only 2 possible suppliers of planes. They are Boeing and Airbus.Fuel Suppliers Price of aviation fuel is straightly related to the cost of oil (Ryanair controls these through hedgerowRegional and larger Airports Regional Airports have little bargaining power as they are heavily dependent on one Airline. Bigger airports, where Ryanairs compet itors operate, have greater bargaining power. Ryanairs policy is to try and avoid these airports.Bargaining Power of CustomersLow price Customers are price sensitive and they know about the low cost of supplying the service from Ryanair.Distribution power of travel agents was decreasing as prospects used to book tickets from internet or through direct booking. So it was a threat to travel agents, so they employed to offer complete travel solutions to customers. Direct bookings on the Ryanair website has meant that there have been savings in the region of 42.6% in marketing and distribution costs.New EntrantsSome barriers to entry there are some regulations when entrance to the European countries.High capital investment at the beginning of the new airlines need big financials otherwise there is a threat of losing money. limit slot availability makes it more difficult to find suitable airports European countries have many landing slots that were reserved or used by national carr iers. Also for new entrants have a need for low cost bases.Threat of SubstitutesOther modes of transport the treat of substitutes to the airline industry comes in three main forms. These are road, direct and boat service. Of these, rail would seem to suggest the maximum threat because, certainly around Europe, it offers a brilliant continental service around the main cities that Ryanair fly to.No switching costs for the customer there is no switching cost when changing the traveling mode and there is no close relationship between customers.Competitive RivalryMost cost advantages can be copied immediately However if any company does choose to race on the same basis as Ryanair there will be large(p) pressure on prices, margins and hence on profitabilityLow frills and low price Ryanair has a benefit over other airlines because their policy of pack low frills and low prices together means that they are competing for the more price responsive customer.Appendix 05Strategic Group Mo delStrategic group is a group of firms in an industry following the same or a homogeneous strategy along the same strategic dimensions. (Fletcher 2003) It consists of competitors competes with similar strategic dimensions such as product, quality, target market, geographical area. Firms are competing straight off with the aligned strategic groups as they hold same strategic scope. (Porter 1980) The below graph represent the strategic group analysis for the airline industry. The classify has been done accordance to the dimensions of quality and price.1st strategic group This is the basic strategic dimensions of this strategic group and Ryanair provides low cost fares with no frills. Ryanairs major competitor in this strategic group is Easy jet as they contain a similar resource promise in the industry.second strategic group These companies targets the middle class hence they offer fares for a moderate cost and the service contain reasonable quality. The major players in this st rategic group are Ethihad, Thai, Qatar and Kuwait air ways.3rd strategic group Emirates, British airways and Singapore airways generally targets the high end people. They provide a luxuries service with a high pricing system.According to the Strategic group Model Identifying Strategic group layers would enhance the understanding about the direct competitors, Different bases of competitive rivalry within the strategic group and also the threats and opportunities could be examined very clearly as it narrow downs the major players in the same category.