Business Management and Strategic Management

The aim of the report is to analyse the strategic and business management of Ryanair through VRIO analysis, SWOT analysis and TOWS analysis. Based on the analysis the report will recommend the change management model that will help the entity to implement appropriate strategies. Further, the report will highlight the sustainability, acceptability and feasibility of the strategies for the entity.

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Business management and strategic management
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Executive summary
The aim of the report is to analyse the strategic and business management of Ryanair through
VRIO analysis, SWOT analysis and TOWS analysis. Based on the analysis the report will
recommend the change management model that will help the entity to implement appropriate
strategies. Further, the report will highlight the sustainability, acceptability and feasibility of the
strategies for the entity. Ryanair is the largest and low fare airline in Europe based in Ireland.
The company is listed under New York Stock Exchange stocks. It started operating in the year
1985 with 15 flights in day among London Gatwick Airport Waterford and turbine support. It
was the 1st European airline that set up the competition and special low fares within European
short-haul routes.

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Table of Contents
Introduction......................................................................................................................................3
Section 1..........................................................................................................................................3
VRIO analysis..............................................................................................................................3
Section 2..........................................................................................................................................7
SWOT analysis............................................................................................................................7
TOWS analysis............................................................................................................................8
Section 3..........................................................................................................................................9
Models for change management..................................................................................................9
Section 4........................................................................................................................................13
(4a) Strategic recommendations................................................................................................13
(4b) SFA evaluation...................................................................................................................14
Summary and conclusion...........................................................................................................14
Reference.......................................................................................................................................16

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Introduction
Ryanair is the largest and low fare airline in Europe that is based in Ireland. The
company is based in Dublin, New York and is listed under New York Stock Exchange stocks. It
started operating in the year 1985 with 15 flights in day among London Gatwick Airport
Waterford and turbine support. The company started with the commitment of delivering low-fare
air travel to Irish public. Further, it was the 1st European airline that set up the competition and
special low fares within European short-haul routes (Ryanair.com. 2019). Aim of this report is to
present the VRIO analysis for the entity. The report will further state the SWOT as well as
TOWS analysis of the company. Further, it will propose the effective change in the management
methods and the theories that may be used by the entity for assuring the transformational
changes and the way in which the barriers can be overcome for achieving success.
Section 1
VRIO analysis
VRIO analysis is the analytical technique used for evaluating the resources of the entity
which in turn assist to achieve the competitive advantages. The term is used as the acronym from
the initials Value, Rareness, Imitability and organization. It falls into the internal analysis of the
procedure, however is used as the framework for analyzing all the capabilities and resources of
the firm irrespective of the strategic model phase it falls under (Thomas 2015).
For developing the successful strategy, internal strategic capabilities of the entity shall be
understood. This segment will focus on the recognition of key internal weaknesses and strengths.
It can be achieved through examining the competencies and resources for the entity, applying

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VRIO model to the resources and analyzing the performance of different business functions of
the organization. Resource of any organization can be reputation, physical, financial,
organizational, technological and intellectual. For figuring out whether the these resources will
be able to transforming into competitive advantages for the entity, VRIO analysis can be used as
follows –
 Value (V) – it considers whether resources are able to deploy for meeting the
expectations and requirements of the customers. Combining the reductions in the airport
charges, low price business model of the entity and government subsidies, the company
will be able to deliver lowest price that is expected to attract millions of the customers
(Grant 2016).
 Rareness (R) – in the airline business only Ryanair is eligible for receiving subsidies from
the government and reduction in airport charge. On the contrary, its competitors
including the direct competitor EasyJet are not eligible for the same. Subsidies are
provided to Ryanair owing to its ability to attract the customers and the secondary routes
used by it. This in turn will help the secondary routes to develop the airports quickly that
will attract more tourists. However, this resource is rarely transferred.
 Imitability (I) – if Ryanair is compared with other without taking into consideration the
above mentioned resources is a big advantage with regard to cost. Further, this resource
is rarely imitated or transferred (Tran et al. 2015).
 Organization (O) – the entity make good use of its capabilities and resources for
delivering lowest price as well as the cost successfully. Effective CEO, strong team of
management, marketing strategy and successful deployment of resources build up
competitive advantages for the company (Costa 2017).

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Further, the financial analysis for the company can be represented as follows –
Ratio analysis
From the above ratio computation it can be identified that the performance of the
company has been improved over the years. Current ratio as well as the quick ratio that
represents the ability of the company to pay off the short term obligation of the entity is
indicating that the company’s ability to pay off the short term liabilities has been improved over
the years under consideration. The current ratio has been increased from 1.98 to 2.14 and the
quick ratio has been increased from 1.98 to 2.13 (Williams and Dobelman 2017). Activity ratio
determines the efficiency of the entity with regard to converting its assets into sales. Total asset
turnover ratio of the company is indicating that the same has been increased from 0.40 to 0.49. It

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is indicating that the capability of the entity with regard to converting the assets into sales has
been improved. Debt equity ratio indicates the leverage position of the entity that is the capital
component of the entity that is raised through equity and raised through debt (Robinson et al.
2015). Looking into the company’s debt equity ratio trend it can be identified that the debt ratio
of the company increased from 1.66 to 1.91 over the years from 2010 to 2011. It indicates that
the leverage position of the entity has been deteriorated. However, the entity improved its
position in 2012 as the debt equity ratio has been reduced to 1.72. Further, both the profitability
ratios of the entity are indicating that the profitability position of the entity has been improved
over the period under concern (Easton and Sommers 2018). It can be identified that the operating
profit margin has been increased from 13.46% to 15.56% and the net profit margin of the entity
has been increased from 10.22% to 12.76%.
VRIO analysis of Ryanair can be represented through following table –
Strategic
Capability
Resource or
Competency?
Value? Rarity? Inimitability? Organisational
Support?
Organisational Resource Yes  Yes  Yes  Yes 
Intellectual Competence Yes  Yes  Yes  Yes 
Technological Resource Yes  No x No x Yes 
Financial Competence Yes  No x Yes  No x

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Section 2
SWOT analysis
STRENGTH WEAKNESS
 Lowest cost base – per passenger cost for
Ryanair is lowest in Europe, it is almost
1/3rd lower as compared to EasyJet
 Network – it uses 1500 routes over 28
nations including North Africa, Europe that
makes it the largest network for short haul
for any carrier under Europe (Dusseldorf
2016)
 Lowest fares – it is the lowest among
average fares in the European market for
short haul that is 37% below as compared
to the main competitor EasyJet.
 Management focus – key source for
gaining the competitive advantage by
Ryanair is the low cost base and the
aggressive focus of management on this.
CEO of the entity Michael O’Leary is
seemed to be obsessed with the low cost
(Ahmed et al. 2019).
 Financial performance – it is recognised
 Media/Brand perception – frequently the
entity has been caught under survey as the
weakest brand in the European aviation
sector and in consumer business aspect.
Perception of the public regarding the
entity is that the entity is money-grabbing,
uncaring and mean (Caputo and Borbely
2016).
 Low frequencies – it offers lower
frequencies as compared to its competitors
and the departure times are inconvenient.
 Earnings seasonality – earnings of the
entity are significantly seasonal as the
profits of the entity is highly dependent on
summer season, particularly the 2nd quarter
covering the month from July – September
for off-setting the loss-making winter
covering the month of October to march
(Dusseldorf 2016).
 Secondary airports – airport choices by

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that in overall financial aspect the
performance of the entity has been
improved over the years under
consideration.
Ryanair is its main advantage. The entity
has labelled the airport as it is serving the
major city whereas actually the airport is
miles away. It creates irritation among the
passengers.
OPPORTUNITIES THREAT
 Economic outlook – over the time it has
produced the strongest financial
performance even during the economic
downturn through combining the
sensitivity of increased price from the
passengers and through capacity cuts from
number of competitors (Dusseldorf 2016).
 Market share and market growth – though
European aviation sector is going through
sluggish phase, it is still considered as the
growth industry in medium to long term.
As the market leader Ryanair under the
European short haul is well placed for
participating in the growth.
 Further order for aircraft – though the
entity is walked away from the deal with
Boeing for almost 200 aircraft during the
 Taxes for air travel – owing to the price
elasticity, increased taxes on air travel
eventually reduced the demands. Generally,
these taxes represent higher percentage of
price for short haul ticket as compared to
long haul ticket. It makes the entity
potentially vulnerable considering the
recent increase in the air taxes.
 Loss of the competitor capacity – the entity
is currently benefitting from more rational
and disciplined approach to the growth
capacity in the market as compared to the
past instances (Dusseldorf 2016).
 External events – regardless of carrier, air
travel is vulnerable to the natural
phenomena and geopolitical events
including disruption of volcanic ash and

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year 2010, communication among 2
remained open and the entity may place
order in future (Seyedkalali 2019).
earthquake.
 Increase of navigation and airport charges –
the entity is experiencing the increase in
the airport charges in AENA airport of
Spain and the ATC increase in Italy. These
are responsible for increase in unit cost of
ex fuel (Seyedkalali 2019).
TOWS analysis
STRENGTHS WEAKNESSES
OPPORTUNITIES  Tasteful advertisement through
own websites, Ryanair credit cards
and frequent programme for flyers
has significantly high potential for
increasing the customer base as
well as improving the earnings
 It can leverage the huge customer
base and can be better off in
selling the ancillary products
(Ganusauskaitė and Tauraitė-
Kavai 2014).
 Probably the entity can
overcome the poor service
perceived by the customers
through providing better
training and through
motivating the employees
THREATS  The entity shall use the new fleet
for projecting the Green image.
 It can achieve better reaction
for currency fluctuation as

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This will assist it to take the lead
over other entities whenever EU
passes any rules regarding
stronger emission.
primarily the oil industry
deals in USD.
 It can achieve better reaction
for fuel prices through
hedging for the oil prices
(Piludis, Jones and Hansen
2018)
Section 3
Models for change management
GAP analysis – it is the reporting procedure used for improving the processes within different
industries. A strong procedure for gap analysis assists the project managers in determining the
current position of the business and the future position that shall be (Mineraud et al. 2016). 3
steps involved in the process of GAP analysis are as follows –
 Analyzing the present situation – very 1st step of GAP analysis is analyzing the present
position of the entity and where it wants to be in future. This shall be started with
evaluation of present state that includes different qualitative information like
methodologies, processes as well as quantitative information like number of the sales
calls made in each week. Gap analysis procedure must analyse everything that is being
done by the entity at present for getting big and better picture (Stolzer 2017).
 Identification of the ideal future state – once, the big picture of the entity is figured out, it
must be understood how the organization is functioning at present that requires becoming

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strategically idealistic. Further, while the position where the company wants to reach is
being analysed the management shall analyse what are the things those are not happening
but was supposed to be happened, what are the things those could be happened or may
take place in future. However, most crucial fact is to consider what are the things those
are need to be taken place in future (Stolzer 2017).
 Bridge the GAP – the 3rd step that is bridging the gap is the hardest part as the
management needs to determine the existence of gap and how those gaps are preventing
the entity to achieve the goal. However, the better parts to figure out the ways in which
the difficulties can be transcend. Hence, clear objectives shall be established that will
assist to actualize the transition (Stolzer 2017).
(Diagram: GAP analysis)
Taking into consideration the above steps for GAP analysis, the same for Ryanair can be
performed through following –

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 Analyzing the present situation – (i) though the entity is performing well with regard to
earning profit and growth of passengers, numerous other issues are there the entity is not
doing well. For instance, their approach towards customers, employees and business
partners. This may be owing to the low cost strategy of the entity and keeping the low
level cost and it will definitely have adverse impact on the entity on the long run when
the market will become saturated and stable (D’Anselmi, Chymis and Di Bitetto 2017)
(ii) corporate culture is generally originated from the founders or CEO of the organisation
and is thereby spread throughout the organization. However, Ryanair does not process
any such culture that treats the employees and customers with respect (iii) current
structure of the entity does not suit to develop the service culture the company’s
management is considerable strict with regard to cost cutting maters and does not allow
the customers to chose any preference even in case of any emergencies (iv) non-customer
oriented policy and culture led to many issues to customers from employees in past, for
instance, lost bags, missed flights, no assistance even in case of emergencies, poor
communications and flight cancellation (Wohlbrück 2017). However, in maximum cases,
it could have been avoided if the employees were service oriented.
 Identification of the ideal future state – (i) as the low cost strategy of the company will
eventually create competition once the market become saturated and stable, the entity
will definitely prefer to reduce the competition through providing better services to the
customers and making them loyal to brand and the product for long term period
(D’Anselmi, Chymis and Di Bitetto 2017) (ii) in future, the entity will prefer to be in the
better position in terms of treating its employees and customers. In addition to provide
the low cost flights they will focus on the matter related to how they treat their employees

13BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
and customers (iii) the entity shall align the structure in such way that it shall be
interactive and the customers will be offered priority (iv) role of the customers contact
employee through phone, mail or direct contact is high and hence, through fulfilling this
the entity wants to create the customer value as well as functional quality in future
(Wohlbrück 2017).
 Bridge the GAP – (i) for becoming the customer centric organization it is relevant that
the management shall understand which areas of the organization are required to be
changed to achieve the same and which relevant current issues of the entity shall point
out and change (D’Anselmi, Chymis and Di Bitetto 2017) (ii) for creating the orientation
or service environment the entity shall encourage implementing the values for service
culture. Attitudes and shared values shall be clear guidelines for performing daily task of
the employees and it shall be their character while encountering services with customers
(iii) employees shall be empowered with the abilities of taking limited decisions that will
add value to the customers and will enhance the quality of functional services. Further,
incidents that may cause the mental displease to the customers shall be evaded through
empowering the employees. This can be done through changing organizational structure
into new structure that will be service oriented (iv) the employees shall be re-trained for
conveying the message and implementing the same effectively and properly. Properly
skilled and trained personal generally understands the values and requirements of
customers (Wohlbrück 2017).

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Section 4
(4a) Strategic recommendations
Taking into consideration the analysis presented under section 1 as well as section 2
below mentioned changes can be recommended to Ryanair –
 Marketing of the ancillary products – the approach of the entity regarding selling of the
ancillary products during the flight is considered as a push back from the customers who
flies frequently. It is therefore recommended to move into soft sell from hard sell for
selling the same. Further, it may add credit card to the portfolio for ancillary products
(Caputo and Borbely 2016).
 Improving the customer’s perception regarding the entity – one of the major strategic
issues of Ryanair is it does not care for its customers and has no proper communication
system. To sustain in the competitive market, Ryanair is therefore recommended to
change its strategies and consider the customers with 1st preference.
 Succession planning – leader like Michael O‘Leary who is not able to polarize is a good
replacement for the expansion of the entity. Hence, softer image that can be portrayed by
any new leader may help the entity to improve its relationship with EU as well as Irish
officials (Madar 2018).
 Improving the practices for currency hedging as well as oil hedging – internal currency as
well as oil market is considered to be highly volatile and hence, there may be large
fluctuation in the price of oil in case of the attacks from the terrorists or political issues in
the nations those produce oil. Hence, improving the hedging practices may provide safety
against unforeseen increase in the oil prices.

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(4b) SFA evaluation
SFA analysis that includes analysis of the strategies considering suitability, feasibility
and acceptability assists the entity to implement the right and most appropriate strategies.
Suitability focuses on whether any strategy is able to fulfil the requirements for operation.
Further, it takes into consideration whether the strategy is in line with the objective, vision and
mission of the entity. Ryanair’s strategy to give importance to its customers, implementing green
image will help it to retail customer and sustain over long term period (Filimonau, Dickinson and
Robbins 2014). The term feasibility analyses the internal constraints like financial strength that
may restrict the implementation of strategy and option that may improve the performance with
available resources. However, the financial analysis of the entity indicates that the company is
able to meet its obligation efficiently and the financial position is in improving trend. The term
acceptability is concerned with outcome of expected performance of strategy. Changed strategies
adopted by Ryanair are expected to improve its position in the market which in turn will improve
the shareholder’s wealth (Filimonau, Dickinson and Robbins 2014).
Summary and conclusion
From the above analysis of Ryanair it can be concluded that low cost strategy adopted by
the entity will assist to reinforce low cost message all over the organization. However, it needs
to concentrate on the customer’s preference and communication strategy to improve its
competitive advantages. Though the low pricing strategy is considered as sustainable over long
term, with increase in competition it shall focus on other factors like succession planning,
marketing strategy for ancillary products, improving the oil price as well as currency hedging
practices and improving customer’s perception regarding Ryanair.

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