Strategic and Financial Decision

Running head: MANAGEMENT
Strategic and Financial Decision
Name of the Student:
Name of the University:
Author Note:

1MANAGEMENT
Table of Contents
1. Industry Structure:.......................................................................................................................1
2. Resource and Capabilities:..........................................................................................................2
3. Competitive Advantage:..............................................................................................................3
4. Evaluation of the Competitive Advantage:..................................................................................4
References:......................................................................................................................................6

2MANAGEMENT
1. Industry Structure:
Ryanair has been one of the first budget airline of Europe that has been found in the year
1984 with its headquarters in Dublin Ireland. In the year 2016, Ryanair has been considered one
of the largest low cost airline of Europe in terms of the passengers flown. In fact, the airlines
carried more number of international passengers compared to other airlines (ryanair.com 2019).
The airline operated close to over 400 aircrafts. Ryanair can also be characterized by the rapid
expansion due to deregulation of aviation industry in Europe and the immense success of the low
cost model. The route network of the airline served 38 countries that included North Africa,
Europe and Middle East. Ryanair had close to 13,000 people working for it. Most of the
employees have been contracted and employed by the multiple agencies for flying on the
Ryanair aircraft. The revenue of the airlines rose from close to € 231 million in the year 1998 to
close to € 1843 in the year 2003 and to about €3013 million in the year 2010. Over the same
period, the net profits rose from €48 million to about € 339 million.
As far as the industry structure is concerned, Ryanair has a centralized structure and its
key decision are taken from Ireland (Lawton 2017). The functional heads directly reports to the
CEO, Michael O’ Leary. The international strategy of Ryanair also reflects the centralization
with an extensive transfer of the system, process, resources and structure from the headquarters
to the locations abroad. A deeper change in the strategy implies bigger change in the
organizational structure. The diagrammatic representation of the Ryanair structure is mentioned
as follows:
Possible Question:
What is the Industry Structure of Ryanair? Illustrate with a diagram

3MANAGEMENT
Figure 1: Diagrammatic Representation of Industry Structure of Ryanair
Source: (Mack 2013)
2. Resource and Capabilities:
The resource of Ryanair can be explained in terms of the human resources, financial
resources and organizational resources. As far as the human resource are concerned, it can be
said that Ryanair has close to 13,000 employees and had still been expanding the workforce
(Nortilli and Wong 2014). The airline had trained cabin crew and pilot at lower training cost. The
staffs usually multitask and are paid by their performance. The airline also have non-unionized
staffs.

4MANAGEMENT
As far as the organizational resources are concerned, the airline had close to 200
aircraft in 2009 that has been fitted with the performance enhancing winglets and required lower
training cost and maintenance. The airline also have 45 business jet based in the Bergamo and
Stansted Airport that has primarily been used for quicker transportation of the maintenance
personnel as well as smaller parts within network. In the year March 2013, Ryanair signed new
order for 800 aircraft and confirmed that it ordered five additional aircraft for adding to the fleet.
In the year 2014, Ryanair finalized the order for Boeing 737 MAX 200 an advanced version of
737 MAX 8 with a capacity of carrying 200 passengers. In addition to this, Ryan air had the
largest penetration across Europe, encouraged internet booking and had partnerships with rental
car companies, hotels and the ancillary service providers. The company also had the reputation
of running reliable and punctual flights.
In regard to the financial resource, it can be said that, Ryanair had stronger margins of
operation, balance sheet and cash generation. The airline presently utilizes the cash balance for
buying back stocks and paying dividends. The airline also has lower agent commission and
innovative monetization of the ancillary revenues. Ryanair also receive attractive subsidies from
the secondary airport. The airline does not have any issues related to pension plans.
Capabilities can be defined in terms of scale, experience and scope (Caputo and Borbely
2016). In terms of scale, Ryanair have a stronger position in the market and faces limited
competition. It also has higher turnaround fleet and the payment structure of staff linked to the
performance. In regard to experience, the amount of business Ryanair does allows it in having
greater bargaining power with the airports. The airline also have lower maintenance cost and
optimization of the spare parts and seat occupation. The scopes for Ryanair includes the

5MANAGEMENT
partnerships created with the car rental and the hotel service, credit card companies, airport
parking and the train and bus transfer.
Possible Question:
How can you explain the resource and capabilities of Ryanair?
3. Competitive Advantage:
The competitive advantage of the company lay in low cost strategy and its point to point
model instead of the conventional hub and the spoke model where passengers needed to change
the aircraft in transit at some of the major airports with the aim of reaching more number of
destinations (Thomas 2015). The new model allowed Ryanair to add more number of indirect
flights to the portfolio that began with the newer transfer hub of Rome-Fiumicina airport. In spite
of being an Irish Airline, it presence has been felt in Italy, France, Germany, Poland, Spain,
United Kingdom and the other countries of Europe. In addition to this, Ryanair has also launched
charter flights besides focusing on the scheduled operation. The subsidiary came to be known as
the Ryanair Sun.
The competitive advantage also lies in the launch of the website that allowed online
booking. The online booking of air tickets reduced flight prices by excluding cost paid to the
travel agents. In addition to this, the enlargement of the European Union in the year 2004,
allowed faster addition of newer routes and newer bases that enabled the growth of the
passengers. Ryanair also acted unconventional in reducing the overhead cost by implementing
the payment of the online check-in. The airline also put across various improvements in the
customer service through lowering the reprinting fees of the boarding pass, minor change in

6MANAGEMENT
booking without any charges provided it is done within 24 hours and permitting a cabin luggage.
Besides, the airline also launched a packaged holiday service in United Kingdom, Germany and
Ireland. Further, in the year 2017, Ryanair started to issue tickets for the connected flights which
implied that customer can be rebooked for a missed flight without any additional charges.
Possible Question:
In spite of having considerable number of competitors how is Ryanair able to gain a competitive
advantage?
4. Evaluation of the Competitive Advantage:
The competitive advantage of Ryanair can be evaluated based on the following points:
1. Dynamic and Meticulous Choice of Routes: Ryanair chose low cost and smaller
airports with close to 25 min turnaround time and active route management thereby aiming
towards maximum profit.
2. Revenue earned via Ancillary Service: This accounts for 20 percent revenue of
Ryanair. The services in this category ranges from car hire, travel insurance, hotels, in-flight
sales and the surface transport.
3. Had Single Aircraft Fleet: Ryanair had higher level of seat density, higher level of
load factors, lesser amount of training expense, greater efficiency of fuel, lower cost of
maintenance and better level of customer perception.
4. Have Flexible and Productive Labor Force: The airline has non-unionized labor
force of which 50 percent of the flight crews are the employed contractors (Giurgiu and Borza
2015).

7MANAGEMENT
5. Increased level of Innovation: Ryanair is considered a pioneer in setting the base
across Europe after the liberalization that abandoned the free catering service, moved away from
travel agents to the internet sales, removed the desks for check in, installed non-reclining seats,
placed advertisements on the overhead bins and the boarding pass and persuaded the customers
to not check the hold baggage (Hinterhuber and Liozu 2017). Although other companies
followed similar strategies, Ryanair was able to have a competitive advantage.
Possible Question:
How do evaluate the competitive advantage of Ryanair?

8MANAGEMENT
References:
Caputo, A. and Borbely, A., 2016. When strategy meets negotiation: the negotiation capability of
Ryanair. In Academy of Management Proceedings (Vol. 2016, No. 1, p. 13571). Briarcliff
Manor, NY 10510: Academy of Management.
Giurgiu, C. and Borza, A., 2015. Strategy from conceptualization to competitive advantage. The
Annals of the University of Oradea, p.1109.
Hinterhuber, A. and Liozu, S.M., 2017. Is innovation in pricing your next source of competitive
advantage? 1. In Innovation in Pricing (pp. 11-27). Routledge.
Lawton, T.C., 2017. Cleared for take-off: Structure and strategy in the low fare airline business.
Routledge.
Mack, R., 2013. A study on airline strategy: comparing Ryanair and Lufthansa to determine the
best strategy in the industry. How They Could Impact the Largest Swiss Watch Company, Swatch
Group, p.49.
Nortilli, A. and Wong, K.C., 2014. A case analysis of the organisational behaviour of ryanair and
its impact. Journal Contemporary Management, 3, p.73.
ryanair.com, 2019. [online]. Available at https://www.ryanair.com/gb/en/useful-info/about-
ryanair/about-us [accessed 26Dec, 2019]
Thomas, M., 2015. Ryanair: success before love. Strategic Direction, 31(8), pp.1-3.

9MANAGEMENT