Business Management and Strategic Management

This study analyzes the strategic management of Ryanair airline, the largest budget airline in Europe. It includes a strategic analysis using SWOT, TWOS, and VRIO analysis, as well as Kurt's change management model. The study concludes with strategic recommendations to improve Ryanair's low-cost model.

Running head: BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
Business management and strategic management
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Executive summary
The study that will be represented in the report is a study based on Ryanair airline, which is the
largest budget airline in the Europe. Ryanair is the first budget airline in Europe that is holding its
position at the top with the help of its implementation of its strategic business model. The study
does the strategic analysis of the company, and evaluate its strategies and business model through-
SWOT analysis and Twos analysis, VRIO analysis, Kurt’s change management model and
conclude required strategic recommendations to improve low cost model.

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Table of Contents
Introduction..........................................................................................................................................3
Section 1..............................................................................................................................................3
VRIO Analysis of the Ryanair.........................................................................................................3
Financial Calculations:....................................................................................................................5
SWOT Analysis of Ryanair:................................................................................................................7
TOWS Analysis.................................................................................................................................10
Kurt Lewis Change Management Model:..........................................................................................13
Recommendations on above analysis................................................................................................14
Suitability, Feasibility, Acceptability of Recommendations:............................................................14
Conclusions........................................................................................................................................16
Reference...........................................................................................................................................17

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Introduction
Ryanair is the first and also the largest budget airline in Europe (Creaton 2014), and holding
its position at the top with the help of its implementation of its strategic business model
(Burghouwt2016). However, Ryanair have its own and unique low cost strategic model, where
Ryanair uses its resources to lower its cost of production and hence could provide services and
products at low fares (Barrett 2016). However, when another company EasyJet took over British
airline’s budget airlines, it exceeded the value of Ryanair airlines (Cattaneo et al. 2016). Somehow,
with its improved strategies, Ryanair managed to retain its position later, but with a slight
difference (Pereira and Caetano 2015). The main objective of the analysis presented below is to
analyse the market place and strategic management of the entity with the help of various models-
VRIO analysis of Ryanair, SWOT and TWOS analysis and Kurt Lewis’ change management
model, to identify the mistakes in Ryanair’s strategy and its low cost model, and also some
necessary strategic recommendations are provided for Ryanair strategy development.
Section 1
VRIO Analysis of the Ryanair
Value – Ryanair, being the first and largest budget airline, have managed to create and maintain its
value. The management strategies of the airline company have successfully able to use its resources
to meet the needs and expectations and so as to retrieve its value. Ryanair is able to maintain and
deliver the lowest price to its customer with the help of various strategies and factors such as,
airport charge reductions, government subsidies and its low-price business model and thus the
resources are deployed accordingly to meet the value (Barrett 2016).
Rarity – Government subsidies and airport charge reductions are generally very rare and in the
budget airline business, Ryanair is the only company to have airport charge reductions and
government subsidies (Cattaneo et al. 2016). Hence this is the rarest resources of Ryanair which

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provides him competitive advantage, as none of its key competitors have these resources. The main
reason behind providing Ryanair these resources is its ability to attract customers and its secondary
routes, which helps in developing secondary airports quickly, through attracting more tourists and
thus helps in increasing consumption of the local government (Kuljanin and Kalić 2015).
Imitability – In the mentioned case study, the Ryanair airline is compared with other airlines and its
competitors, on the basis of its low-cost business model, and without considering the resources
mentioned above i.e. airport charges reductions and government subsidies, and still have a big cost
advantage. The key resources mentioned above i.e. airport charges reductions and government
subsidies are not easily transferrable or imitated, as these resources are provided by the government
for special purposes and not provided to any airlines (Cattaneo et al. 2016).
Organisational Support – Ryanair has one of the strongest Organisational support in the airline
industry, consists strong management team and its effective CEO, Michael O'Leary, whose low-
cost strategy helped the company to gain competitive advantage. The organizational support of the
company also includes its effective marketing and operating strategy which helps in deployment of
its resources effectively and successfully (Borbély2016).
Strategic
Capability
Resource or
Competency?
Value? Rarity? Inimitability? Organisational
Support?
1.
Organisational
Resource Yes  Yes  Yes  Yes 
2.
Technological
Resource Yes  No x No x Yes 
3. Competence Yes  Yes  Yes  Yes 

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Intellectual
4.
Financial
Competence Yes  No x Yes  No x
Financial Calculations:
The above table shows the net profit Margin ratio of the company for 2012 and 2011. As
shown the net profit margin of the company for the year 2012 is 0.16 and the same in the year 2011
is 0.13, which shows that the net profit margins have increased from the previous year. It also
means that the company have increased its profit generation capability through optimum utilisation
of resources (Kieso, Weygandt and Warfield 2016). This information is useful for the investor’s
point of view, as they could earn more return from their investment (Williams and Dobelman
2017).
The current ratio of the company as shown in the above table is 2.14 in 2012 and 1.89 in
2011, which means the company have maintained a constant and strong financial position through
the two years. The current ratio of the company is very well and compared to the previous year, the
company’s current ratio have immensely developed, which implies that the company have enough

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current assets and liquid resources to meet its requirement during the operation of the company
(Williams and Dobelman 2017).
The debt to equity ratio of the company as mentioned above in the table is 2.72 in the year
2012 and the same is 2.91 in 2011. The debt to equity ratio of the company for the two years shows
that the company has high creditability. The company believes in generating capital from debt more
than from the equity, which is comparatively less expensive. Hence, the company is able to
minimise its costs and provide services at low fares. Further, not a huge difference is there between
the debt to equity ratio of 2012 and that of 2011 however, comparatively it is more in 2011
(Williams and Dobelman 2017).
The above table shows the total assets turnover ratio of Ryanair for the year 2011 and 2012
that will help to realise how the company is generating assets from sales. The total assets turnover
ratio of the company for the year 2011 is 0.33 and that in 2012 is 0.39. In 2012, the company have
managed income of € 3,504 million and is maintaining almost the constant total assets turnover
ratio over the period of time. The total assets turnover ratio determines the profitability of the
company, which is very stable over the periods and hence the investors of the company can rely on
the company for its profitability (Williams and Dobelman 2017).

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SWOT Analysis of Ryanair:
Strength
The followings are the key strengths of Ryan airlines that are responsible for its successful
operations are:
 Low Costs: One of the key strength as already discussed in the above is that, Ryanair has
the lowest cost per unit than any European airline, and also is the lowest in the world. The
low-cost model is the main strategy of the company to attract the customers. Ryanair
manage to lower its costs through its production capacity and lowering its traffic costs
(Bubalo and Gaggero 2015).
 Low Fares: Due to low costs, Ryanair can manage low fares, which is the main objective as
a part of the management strategy of the company, where customers are attracted by low
fares. Low fares give Ryanair a competitive advantage as the average fares of the company
very lower than its competitors (Bubalo and Gaggero 2015).

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 Innovation: Innovation being one of the key driverS of the company to its success. The idea
of lowering the cost, through various strategies and models are itself an innovative idea at
that time in Europe, and no one in the airline industry could give that low fares to its
customer and the idea also non imitable (Li 2015). In terms of innovation, EasyJet could be
the only competitor in the European market.
 Size: The other major strength of the company is its size in terms of its operations. Ryanair
has the largest short-haul network, with more than 1600 routes across North Africa and
Europe and 186 airports. Since it is the largest short-haul network in Europe, it has a great
brand value, and customer presence, and thus could ensure better services to its customers,
with consistent availability of flights and locations (Creaton 2014).
 Management focus: Ryanair has one of the strongest management supports, under the
leadership of its CEO Michael O’Leary, who have initiated the low cost model. The CEO of
the company along with the other members of the management have made strategies and
had its main focus on the keeping fares and costs low (Borbély2016). The CEO of the
company is the most recognisable person in the company and also most active media
person, and helps in promoting the brand and in its marketing too.
Weaknesses
Two major weaknesses that cause major problems in its operations are briefly discussed
below:
 Brand perception: Ryanair has a brand perception of providing customers what they think
the customers demand and as a result they are providing safe air travel at a low fare and
with punctuality. Though that is the basic and main requirement, but for innovation and
better services, brand should adopt customer perception (Sandada and Matibiri 2016). The
company lack in taking reviews, surveys and other sources to receive customer’s

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perception. Hence, other brand like EasyJet is giving a tough competition to Ryanair in
terms of innovation, because they prefer more customer perception.
 Seasonality of earnings: As for the airline industry in general, Ryanair’s income or earning
is highly depended on the seasonal factors. Ryanair’s earnings increase during the summer,
mainly from July to September, and during winter the income of the airline slows down
gradually, and again takes a raise during the summer. Due to this factor, in winter, the
company has to face an issue in managing its cost. Hence it is one of the major weaknesses
of Ryanair (Sandada and Matibiri 2016).
Opportunities
 Improved customer service: As discussed above in the weaknesses of Ryanair, the company
lack effective communication with the consumers. Hence it can be a major opportunity for
the company to improve its customer services, by providing latest technology and easy
accessible and portable medium for the customer to communicate with the company.
Improved customer service will provide more value to the brand and will also open new
ways to innovate its services (Citeseerx.ist.psu.edu 2019).
 Business travellers: Ryanair has recently launched its new business traveller product, which
includes a bundle of product such as features for a single fee, fast lane security, booking
flexibility, choice of reserved seating in premium rows. Ryanair has been also adding some
more primary airports to increase its operations on certain business oriented routes.
Ryanairs’ focuses on its business travellers will help them to grow its operations more and
can also help to recover during seasonal losses (Shaw 2016).
 New aircrafts: Ryanair have announced to upgrade its aircraft and also announced a firm
order of 100 ‘Boeing 737 MAX200’ aircraft. The configurations of this aircraft include fuel
efficient engines, which will help to reduce the fuel consumption by up to 18%. More

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flights will significantly increase the customer services and can also be more available to
the customers and will also help in maintaining the low costs of the company (Li 2015).
Threats
The followings are the major threats for Ryanair airlines, which are identified above during
the analysis and in general also:
 Accident: Though Ryanair has a strong safety record till date, still due to its low cost and
low fares, there are many rumours claiming that Ryanair cuts costs in the corner of safety.
However, Ryanair never agreed to the rumours or reacted, but if it is so, then it could be a
major threat of accident for the company. The rumours could affect the reputation of the
company too (Ryanair.com 2019).
 Loss of focus: As discussed above, the company’s primary focus is on providing services at
lower costs and lower fares to its customers, but they are not adopting the customers’
perception, which may lead to loss of focus of Ryanair. Any significant distraction to the
management of the company could result to mislead in achieving their corporate objective,
and could damage the image of the company.
 Competitive response: As discussed above, Ryanair core competitive strategy is based on
price i.e. low cost, however they are very successful with this strategy in Europe, but there
are other departments too, where they may lack. For example, in terms of frequent
flights,quality of the airport network, there are many other airlines they providing this
services better than Ryanair. However, still the company decides to compete mainly on
price only, which later may be a threat to the company (Ryanair.com 2019).
TOWS Analysis
TOWS Analysis STRENGTHS WEAKNESSES

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OPPORTUNITY  Launching new aircrafts as a part
of Innovation.
 Improved customer service
will help in retaining
management focus
(Ryanair.com 2019).
 Company relies only on brand
perception, changing it will help in
improving customer service.
 Business travellers can help in
recovering seasonal loss.
THREAT  Loss of Management focuses on
low cost model.
 Low costs of production can lead
to cost cutting in the corner of
safety, that can lead to accidents.
 Brand perception of the company
could lead the competitive
disadvantage.
 Seasonal earnings of the company
can provide competitive
disadvantage (Ryanair.com 2019).
Strength-Opportunity Strategies:
1. As discussed above in the SWOT analysis, innovation is the key strength of the company, on
which the management mainly focuses on, and its announcement of introducing new flights will
help the company in maintaining its low cost, because the new flights are fuel efficient and also be
considered as innovation and improvement in flights.
2. As discussed above, the company’s management focus is very strong and stable. It is one of the
key reasons of the company’s successful operations. The management mainly focuses on its low
cost model, which is definitely for the benefit of the customer, but by improving customer services,
the company can show better presence in the market and can also help in resetting the management
focus (Ryanair.com 2019).
Strength-Threat Strategies:

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1. As already discussed many times, the key strength of the company is its management focus, and
loss of management focus due to any distractions can lead to a threat of wrong execution of the
low-cost model.
2. The low cost model is the main strategy of success for the company, but to maintain low, if the
company does cost cutting in safety, it would be a risk (Morden 2016).
Weakness-Opportunity:
1. Company’s main weakness is its business perception is based on what the company thinks
customer wants, and changing this perception, they can improve their customer services.
2. Due to seasonal earnings, company’s earning reduces during winter, thus the focus on business
travellers can help them in earning more during winter (Morden 2016).
Weakness-Threat:
1. Company’s business perception, as discussed above, can lead to competitive disadvantage, as
they lack in improving customer services.
2. The company should find asolution for the deficit in earnings of the company during winter
season, or else it can lead to competitive disadvantage.

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Kurt Lewis Change Management Model:
In the followings, Kurt Lewis’ change management model is used to identify different types
of strategic change of Ryanair airlines -
Unfreeze Change Refreeze
i) Ryanair has faced many
issues in developing the idea
and the concept and went
through a few turbulent years
in developing unique identity
in operations.
ii) Later came up with the low
cost strategy model, which
allows to provide low fares to
the end users.
i) Later, it had started its low-
costs no-frills carrier, across
England and Ireland.
ii) During early 90’s, Ryanair
was the largest budget airline
in the market.
i) As a result, the company
with its strategy is able to beat
many large companies such as
BA (Hussain et al. 2018)
ii) But, the idea was not able to
sustain in the market and keep
Ryanair in the top, because
EasyJet have overtaken
Ryanair with its unique
strategies (Cummings, Bridgman
and Brown 2016).

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Recommendations on above analysis
The Ryanair case study implies various the effects of change in strategic management and
from the above analysis, some of the strategic recommendations are developed and mentioned
below:
1. Ryanairshould use its key resources, which is airport charges reductions and government
subsidies, not only to lower its cost, but also in developing other strategies such as maximise
aircrafts and less duration in flights.
2. They can maintain its low cost model without using such resources, thus they can use the money
saved from the resources in developing other ideas such as better customer service in airports, and
spending more in terms of safety (Fageda, Suau-Sanchez and Mason 2015).
3. The company should not focus only on the business perception, rather should use the customer
perception, and should divide its strategies in sections, where the first section should be its low cost
model and in other sections they should consider comfort of the consumers, duration of the flight,
convenience in communicating and booking flights, consumer services and so on. The company
cannot sustain forever by adopting a single change and objective (Sandada and Matibiri 2016).
4. Ryanair should change it management focus to expand its business and attracting its customer
with less marketing, but with maximum services. Though, Ryanair should lose its focus in short-
haul airline services, but it is the time, that they should also focus on other routes in order to expand
its market (Pels, Njegovan and Behrens 2017).
Suitability, Feasibility, Acceptability of Recommendations:
The recommendation provided aboveis very much suitable for Ryanair airlines. The
suitability, feasibility and acceptability of the recommendations are discussed below:
Suitability:

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The recommendation 1 is very suitable for the company, as the company is the only
company to have the resources from the government, and from very long duration they are able to
execute its low-cost model without using these resources. Thus, these resources will be more
effective in other use rather than in minimising cost. The recommendation 3 is also the most
suitable recommendations of all recommendations, since the company’s low cost model could not
be forever solely responsible for Ryanair’s successful operations (Ryanair.com 2019).
Acceptability:
In regards to recommendation 3, the acceptability of the of the recommendation is very less,
since the management focus and business perception is the main strength of the company, and the
shifting their business perception to consumer’s perception will not be too easy for the company,
but the strategy will largely be accepted by the consumers of the company. The other
recommendations can be highly acceptable because the change will not change or affect any current
business model or strategy (Ryanair.com 2019).
Feasibility:
All the recommendations mentioned above are very feasible. The recommendations 1 states
the different use of the resources, which is also not included on its low-cost model, and hence using
resources for different purpose will be very convenient and very feasible. The recommendation 3 is
also very feasible, because the change in business perception to customer can be done by surveys or
taking opinions from the customers through its existing medium only such as its website. On the
other hand, the recommendation 4 will take a little more effort on its implication, but for a
company like Ryanair, it won’t be a huge problem of feasibility (Orsmond, G.I. and Cohn, E.S.,
2015).

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Conclusions
From the above analysis it can be concluded that airline industry in Europe is much more
competitive than other continents, where the major competition is in developing more routes and
airports. Airline industries, overall can compete in short-haul and long-haul routes as well, but most
of the competition is in short haul routes only. The study also concludes that Ryanair’s low-cost
model is preferable for on short haul only, but is depend on the resources provided the governments
and the airports which are not accessed to other airlines. Hence, the Low-cost model may not be
working for every airline and should not be followed in long-haul routes.

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