Review Case Study Dogfight over Europe: RyanAir Essay

1. Overview of RyanAirRyanAir was founded in 1985 by Tony Ryan who former has been worked in Aer Lingus. It established to contribute schedule passanger duck soupline services between Ireland and UK as an alternative flight to the state monopoly gondola carrier, Aer Lingus. Initially, RyanAir was a full-service conventional respiratory tract, with two classes of seating and leasing three contrary types of aircraft.RyanAirs objective was to maintain its position as europiums leading low-f ar airline, operating frequently point to point flights on short-haul flights, principally out of regional and supplementary airports.Its outline was based on providing a no-frills service with low fare designed to stimulate demand, specially from cypher-conscious leisure and task travelers who powerfulness not have travelled at all.MissionRyanair aims to render low fares that generate impr all overd passenger trade while maintaining a continuous focus on cost loading and operatin g efficiencies.VisionTo firmly establish itself as Europes leading low-fares scheduled passenger airline through continued improvements and spread out offerings of its low-fares service.ValuesRyanair is committed to bring nodes the lowest fares and most on-time flights out in equivalence to all competitors. Most importantly are prophylactic issues, punctuality, near-perfect baggage handling, and the green insurance.GoalsRyanair devices to increase efficiency and lower costs even make headway in comparison to industry rivals. The party call fors to become the 2nd largest planetary airline.2. Internal AnalysisRyanairs success was based on a skilful adaptation of the Southwest Airline model focusing on the cost leadership. It benefits from the first mover advantage as it has implemented the budget model first in the European market by negotiating outdo rates possible with secondary airports. Ryanair has established a single type aircraft fleet that saves on produceing costs, point-to-point flights that enable fast turn-around times and flights to secondary airports that save airport fee costs. All of them enable Ryanair to keep its trading trading operations extremely efficient.Furthermore, Ryanair sub contracts employees on temporary basis, which again saves the company colossal expenses making it flexible and adaptable to environmental changes. enrol A2 illustrates all the reveal points as a summary. Further savings are generated through Ryanairs website where no advertisement is necessary. Through ancillary revenues as e.g. on-board gaming and car renting Ryanair come throughs to generate heightsly satisfying 20% of its revenues. The low-cost business strategy has been undefeatedly integrated into the Porters Value Chain. The resourcefulness Based View Model shows the internal analysis as a summary.3. External AnalysisPESTLE Analysis is a suitable musical instrument in order to analyse the external environment. It summarises all the externa l factors, which efficacy create opportunities or cause significant threat to Ryanairs operations. policy-makingThe political institution European Union affects Ryanairs strategy and operations by establishing jurisprudences and restrictions in the airline industry. For example, the regulation setting a hood on flying hours in order to prevent pilots fatigue forces Ryanair to hire more employees. In addition, the EU demands to refund air passengers in case of delays or cancelled flights. Also, the EU might increase the emission fees. All those EU regulations must be considered and Ryanairs strategy has to be accordingly adjusted in order to avoid a negative impact on the business. In addition, Ryanair should be aware of regional distinctions as the Irish tourist tax and national government laws acting in favour of national airlines that increase Ryanairs costs, e.g. national employees contracts in other countries have different terms and conditions that must be use and are m ore expensive.EconomicalRyanair saves costs by operating over secondary airports. In that way they avoid primary airport charges and extra costs. The economics downturn in 2009 has shown that Ryanair as the leading budget airline can offer the cheapest flights attracting nodes and still generate returns. As long as the low fares are tackled Ryanair entrust do well in comparison to its competitors. But if fuel price fluctuations occur, an increase in price result lead to an increase of Ryanairs operating costs causing bothers to guarantee low fares, which stand for the core competence of Ryanair. Failures in hedging, as it happened in year 2008, should be avoided. Also exchange rates should be ascertained as they might lead to supply chain disruptions. favorableCustomers descry Ryanairs customer service as poor, as the passengers expect to be compensated for cancelled and delayed flights. The poor working conditions cause legitimate and recourse issues that can scare establi shed and potential new customers away. Additionally, the arouse and jerry-built advertisements lead to a bad image of Ryanair from customer perspective. Those kind factors should not be ignored, as customers are key for further process and market working out.TechnologicalRyanair has successfully demonstrated how to make use of new technology in order to save costs. Ryanairs online check-in policy and marketing on Ryanairs website demonstrates how to make use of the Internet technology avoiding expenses of travel agents and excessive advertising. Besides, if technology such as on-board Internet conjunctive and television are offered for a fee they can generate excess revenue on board.LegalRyanair is involved in a hardly a(prenominal) legal battles with Stansted and Dublin airport that elevation their departure duties. Besides, Ryanairs misleading and provoking advertisement assault media law and civil law resulting in amply penalty fees. The poor working conditions and insufficient teaching might be an issue of labour law. Additionally, the poor working conditions lead to safety issues and can cause a bad image. All those legal issues are causing handling-, penalty fees and court expenses that should be limited.4. Porters 5 Forces AnalysisThe Porters Five Forces Framework helps to identify the magnet of an industry in terms of five combative forces. In Ryanairs case it determines if the European budget airline industry is an attractive one. (see Figure A6)1) The Threat of EntryThe low fares industry, especially, with established leading players as Ryanair, is actually hard to enter. The entrants need high capital requirements in order togenerate high economies of photographic plate to compete in the European market. Besides, access to distribution bring is required. That means that the factor threat of new entrants is pretty low.2) The Threat of SubstitutesA service that creates equivalent value to the customers as the airline industry does is the line networks, sea transports and car rental firms. The exclusively significant threat is the train service because the other options are too expensive. Even though Europe has a good train network like EuRail, the disadvantage of trains is the expedition time. It takes much longer to reach a destination by train than by plane, which results in a higher opportunity & exercise costs. To conclude, the threat of substitute is low.3) The bargain power of buyersCustomers have a high bargaining power because switching to another airline is simple and thither are no additional expenses required (e.g. EasyJet and Virgin Express). Especially, in a strategy of cost leadership each customer becomes important. Besides, an increasing problem is that more and more competitors break to offer cheap prices, as well.4) The bargaining power of suppliersThe bargaining power of suppliers is high, as there are only two manufacturers competing in the aircraft industry. Supplier switching c osts are high, as the pilots will need to be retrained and high capital investments must be made. Ryanairs main supplier has traditionally been Boeing. But Ryanair can appropriate itself to change suppliers because of its healthy cash flow and because it has already tried to acquire Airbus aircrafts after the purchase of 200 jets from Boeing got cancelled.5) The achievement of Rivalry between competitorsThe heel of competitors that are trying to imitate Ryanairs cost leadership is increasing. As the market share of the budget airline is only 30% of the all in all airline industry the market contains the potential to grow. This might also be the problem for Ryanair and its expansion strategy. As the threat of entry is high the extent of rivalry stays as middle.5. SWOT Analysisa) Strength1) Point-to-Point flights.2) misfortunate Fare3) Low Operating Cost (Outsourced)b) Weakness1) Less customer service2) Poor working conditionsc) Opportunity1) Market share expansion2) Establish g ood relationships with labour unions as BALPA3) Ryanairs website presence and new(a) technology4) Competition Committee who control harm competitorsd) Threatness1) EU regulation2) Oil price3) Legal Issues4) Substitute Transportation6. Evaluation of Michael OLearys LeadershipMichael OLeary is an extraordinary figure and key constitution in Ryanairs focus. He owns an aggressive and innovative leadership style. His statements are provoking and direct. Even though he has a deep pecuniary understanding and became a wealthy person by selling 5 billion of Ryanairs shares, he still lives the life of a bourgeois person.Strong Leadership styleOLeary has an energetic, motivating leadership style. reason employees are praising his leadership style and he received a the European Businessman Award from the magazine Fortune.Innovation abilitiesOLeary persuades Ryanair to pad the strategy model of Southwest Airlines even though the majority of the management team was not willing to do so. He was the inventor of charges for online check-in. technical PromoterOLeary was able to bring Ryanair to the customers by doing provoking stunts and intrusive advertisement. He always managed to attract the attention of the media and was able to put the company Ryanair on the first page in the news.Maintaining Core Competencies and effective organisational Culture Over the years, OLeary managed to build a low-cost shade amongst Ryanair workforce. The corporate culture determines how Ryanair operates and conducts its business.Developing Human and Social CapitalSocial capabilities are OLearys disadvantage. As he is totally focused to squeeze out everything out of the available resource, e.g. the employees, to lower costs and offer the lowest price, he forgets about the social component. If he and the company want to survive they need to start developing closer relationships without exploiting all the resources. Ryanair has to manage to move away from an autocratic leadership style and transfer to a democratic one.7. RecommendationSO strategyRyanair should decidedly proceed with its plan to open up 146 routes in year 2010 according to its five years plan. Expanding further in the market pursue the goal to achieve economies of scale that provide a guarantee to offer the lowest price in the airline industry. Moreover, Ryanair should make use of the strengths as its young, commonality aircraft fleet and start to promote a Greening-image. Besides, more revenue can be generated by increasing cross-selling over the website.ST strategyRyanair should keep buying the newest aircraft models from Boing as supplier. That will allow Ryanair to minimise its emission costs that will lead to competitive prices. Especially, in time of increased competition Ryanair should promote the greening image. In times of an economics downturn Ryanair can even allow to raise the prices as the competition is forced to do the same and Ryanair possesses a long price difference of 89% compa red to its competitors.WO strategyIn order to liquidate against the bad public image because of controversial advertisement and poor customer service Ryanair should try to look for a dialogue with labour unions and its customers. The successful dialogues with the labour unions should be promoted in marketing channels. Furthermore, Ryanairs website should be equip with a feedback area for customers complaints. The complaints must be constantly reviewed and responded.WT StrategyRyanair should definitely pay attention to its public image. The poor customer service and safety issues can scare away customers. All problems concerning safety must be eliminated. In order to decrease the pressure from employees more staff should be hired.