Strategic Position and Strategic Choice in European Airline Industry: A Case Study of Ryanair

This report analyzes the strategic position and strategic choice of Ryanair in the European airline industry, using tools like PESTLE analysis and Porter's Five Forces Model. It provides recommendations for developing an effective strategic position.

Investigate the European airline
Ryannair see the source of a case
study from research and prepare a
report that demonstrates
understanding and application of
Strategic Position and Strategic
Choice
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Executive Summary
Document has showed that Ryanair has good position with aviation industry of Europe.
Also, based on the PESTLE analysis, Ryanair has looked among different aspects, which has
helped company in taking right decisions at different level. Also, Porter’s Five Forces Model
helped company in developing strategic decisions in much more effective and efficient manner.
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Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Main Body.......................................................................................................................................4
Context: Overview of the European airline industry and Ryanair..............................................4
Theory: Provide explanation and relevance of Strategic Position and Strategic Choice tools
and concepts that will be applied in the report............................................................................5
Analysis: Conduct competitive-forces, PESTEL, scenario and VRIO analyses as outlined in
the assessment task. Provide diagrams to depict and summarise main findings of the analyses5
Discussion: Interpret and use findings of preceding analysis to recommend strategic choices
for Ryannair................................................................................................................................8
Conclusions......................................................................................................................................9
Recommendations............................................................................................................................9
References......................................................................................................................................10
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Introduction
In present business world, the term “strategic positioning” is considered to be an effective
strategy that helps firms’s in developing effective position in the particular industry in which it si
performing operations (Lawton, 2017). Strategic positioning helps an organization in making
decisions about the sort of significant worth it will make and how that worth will be made
uniquely in contrast to rivals. In this report, case study has been taken into consideration is of
Ryannair so that it’s strategic position could effectively be analysed. This company is an Irish
budget airline founded in the year of 1984. Including this, report will consider different strategic
tools like VRIO, PESTLE and also Porter’s five forces model. Lastly, report will show some
recommendations in relation to develop an effective strategic position for the chosen company.
Main Body
Context: Overview of the European airline industry and Ryanair
Aviation industry of Europe
Aviation industry of Europe is holding dynamic business nature at current market and the
reason that came in front was that numbers of passenger have significantly boosted, and are half
higher in 2017 than 2005 (Caputo and Borbely, 2016). This is somewhat because of a
progressive move towards flying further in bigger airplane with the normal separation flown up
16% since 2005. Different commitments originate from an expansion in load factors (the part of
seats that are involved) from 70.2% to 80.3%, and the utilization of lighter and slimmer seats so
more travelers can be obliged on a similar airplane. The entirety of the above have brought about
a decrease in fuel consume per traveler kilometer flown.
The absolute payload tonnage on all-freight flights and in the tummy hold of traveler
flights went up by 55% from 2005 to 2017. In any case, the quantity of all-load flights
diminished by 2% over a similar period, showing a move towards paunch freight. Furthermore,
littler all-payload airplane with a drop weight under 50 tons had probably the most keen decrease
in number of flights over that period, demonstrating a move to bigger all-load airplane (Overview
of Aviation Sector, 2020).
Ryanair Airlines
Ryanair is Europe biggest ease carrier administration which has its headquartered in
Ireland. Ryanair is one of the effective ease bearer aircrafts in the European carrier industry. This
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company focuses on ease airfares and acquaints rivalry and developing coalitions in the
European Aviation sector. With its capacity of offering least admissions right now travelers
makes it probably the hardest contender for any new business company, which is looking
forward to expand it’s business within aviation industry of Europe. Ryanair was the primary
European carrier explicitly to offer low fares to its clients on short routes of Europe (Pletenytska,
2018).
Theory: Provide explanation and relevance of Strategic Position and Strategic Choice tools and
concepts that will be applied in the report.
Strategic Position:
If it is talked about the existing strategic position of Ryanair, the throughout the years,
this airlines has opened up new routesnfor it’s clients to different spots of Europe like
Stockholm, Brussels and Paris. Ryanair entered these business sectors with 80% low airfares
when contrasted with other lead carriers. Notwithstanding of its prosperity, Ryanair was
completely dedicated in giving low air charges, expanded frequencies to goals and offering types
of assistance to both business and economy class travelers. Also, it has been found that Ryanair
Airlines consists of strong monetary structure (Lawton, 2017).
Strategic Choice tools: Basically, company has developed its strategic choice to charge
it’s clients with low fares of all the domestic flights in all Europe. In order to understand this
whole strategy, there are a number of strategic choice tools that are going to be utilised like
PESTLE Analysis in order to understand the external factors, which has affected company’s
performance level along with it’s decision making process. Also, Competitive five forces model
is also going to be utilised in order to understand the competitive environment within the
industry i.e. Airlines. Lastly, VRIO model is also going to be taken into consideration as it is
intended to assist associations with revealing and ensure the assets and abilities that give them a
long haul upper hand. The structure ought to be placed into play after the production of a dream
explanation, however before the vital arranging process.
Analysis: Conduct competitive-forces, PESTEL, scenario and VRIO analyses as outlined in the
assessment task. Provide diagrams to depict and summarise main findings of the analyses
Porter’s Five forces model (Competitive Analysis):
Threat of entry: New entries would require to expense a lot of publicizing charge to
contend on Ryanair's battleground, the European aircraft industry. Therefore, for this company
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this force is low in nature. Ryanair after arrangement the internet booking and reservation
framework "Bay windows", it has vigorously advanced its site through paper, radio and TV
publicizing, there have been investment funds the promoting and circulation costs.
Competitive rivalry: Ryanair has a favorable position over other opponent carriers,
straightforward and low-admissions are the organization strategy. It extending the short-pull
flight courses, utilizing highlight point technique and abbreviate the flight turnarounds to lessen
the cost expense.
Bargaining power of Suppliers: This company had made appropriate relationship to
suppliers like Boeing. Ryanair made a huge volume contract with Boeing inside the monetary
downturn at 2002 while different carriers on hold the airplane buy, and Boeing need to give up to
150 of 737-800 sort airplane for Ryanair. Therefore, suppliers also do not consists of high
bargaining power (Caputo, Borbély and Dabic, 2019).
Bargaining power of buyers: In aviation sector, it has been analysed that, adaptable
demand along with the standardized services are offered therefore, aircraft brand and the
administration quality for buyers to decide and concern. Ryanair sold the flight ticket for clients
through its site online framework, this is the fundamental explanation can give serious value
which in the business level.
Threat of substitute: In present context, there are number of elements that are directly
linking like brand loyalty among Customers absent, Other modes of transport present among
destinations along with Customer Relationship absent among low cost carrier service directly
enhance the threat of substitutes for Ryanair within Avaitation Industry.
PESTLE Analysis (External Analysis):
This model consists of different factors that comes from external or macro environment
and some of these are: Economic, Political, Technological, Social, Legal and Environmental
factors. In context to Ryanair all of these elements are presented underneath:
Political Factor: There was political strength in the nations inside Europe, it pulls in
more individuals to go inside Europe and feel security. Center East OPEC had a political power
for the fuel oil. European Union (EU) had development to 27 nations, and nullified the obligation
free deals, this urge Ryanair plan to open new flight routes to pick up benefits and raise
subordinate income.
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Economic Factor: Basically, within the Aviation industry, it has been analysed that
prices of fuel directly affects profits and productivity of an airlines like Ryanair. Therefore, rise
within the prices of petrol has impacted upon Ryanair’s strategic plans and decisions making
process.
Social Factor: Another crucial factor, that has affected Ryanair in different ways (Mostly
Positive). It is said because, society looks forward to pay less and gain maximum benefits and
based on the strategic choice that company has made raised customer engagement in much
effective and in efficient manner.
Technological Factor: Over the years, it has been analysed that Ryanair has kept it’s
focus on utilising wireless technology, which helps them in allowing their customers to consider
utilisation of in-flight mobile phones. This has helped Ryanair to staying connected with internet
in order to develop successful online reservation system.
Environmental Factor: Proper utilisation of effective whole new eco-friendly aircraft
has helped Ryanair in reaching to new heights of building right connection with customers. This
helped firm in sustaining within the market for a longer period of time.
Legal Factor: Ryanair had been frequently associated with fights in court, for example,
the case with European Commission over air terminal appropriations. The contest was the
activity or not of Ryanair as a private financial specialist and the presence of unlawful state help
in Charleroi air terminal (Barrett, 2016).
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VRIO Analysis:
V-value: This emphasizes that whether the resources are being able to be deployed to
meet the needs and expectations of customers.
R-rareness: In the short-haul budget airline business, only Ryanair has government
subsidies and airport charge reduction.
I-imitability: Apparently, it can be seen through the case that Ryanair, compared with
airlines without the resource mentioned above, owns a big cost advantage.
O-organization: Based on the case, Ryanair makes good use of its various resources and
capabilities to deliver the lowest cost and lowest price successfully.
Resource Valuable Rare Imitable Organised Competitive
advantage
Airport
charges
Yes No No No Sustained
competitive
advantage
Government
subsidies
Yes Yes No No Sustained
competitive
advantage
Low price
business model
Yes Yes Yes Yes Long term
competitive
advantage
Marketing
strategy
Yes Yes Yes No Sustained
competitive
advantage
From above discussion it can be said that low price business model is a resource that will
be helping Ryanair company in getting long term competitive advantage as compared to other
three resources that will only provide a sustained or a temporary competitive advantage.
Discussion: Interpret and use findings of preceding analysis to recommend strategic choices for
Ryannair.
Based on the technique that has been taken into consideration by Ryanair is that, it will
be estimated dependent on the influence and liquidity of the organization. As far as liquidity the
organization faces generally safe and can cover its liabilities twice as its present proportion is
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2.01 and its brisk proportion is 2.01. Moreover, its obligation value proportion is 1.08 and shows
that the organization is chiefly financed through obligation, confronting long haul influence
chance (Ahmed and et. al., 2019).
Conclusions
With the help of above mentioned report, it is concluded that with the help of different
strategic choice tools, a company could effectively develop effective strategic position within the
market for a longer period of time. Also, it is said that for a companty like Ryanair, it is needed
to consider different models like Pestle Analysis, VRIO and more as these may help company in
focusing among different regions as it will be help them in creating various strategies to sustain
within the Aviation Industry for a longer period of time.
Recommendations
There are a few recommendations, that can be given to Ryanair and some of these are
given underneath:
 It is recommended that, Ryanair should recognize labour unions, as it will be more people
situated to improve representative connections and energize vocation advancement so as
to effectively deal with their clients.
 Another recommendation that can be given to Ryanair is that, company should keep on
adopting right strategic model and provide quality services to it’s customers while
focusing upon delivering low cost fare based fligths. Here, organisation could effectively
take into consideration of Total Quality Management or Continuous Improvenent Plan.
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References
Books and Journals
Ahmed, J. U., Khan, M. M., Sultana, I., Ahmed, A., & Begum, F. (2019). Ryanair: A low-cost
business model in the european airline industry. SAGE Publications: SAGE Business
Cases Originals.
Barrett, S. D. (2016). Ryanair and the Low-cost Revolution. In Air Transport in the 21st Century
(pp. 163-178). Routledge.
Caputo, A., Borbély, A., & Dabic, M. (2019). Building theory on the negotiation capability of
the firm: evidence from Ryanair. Journal of Knowledge Management.
Lawton, T. C. (2017). Cleared for take-off: Structure and strategy in the low fare airline
business. Routledge.
Pletenytska, O. (2018). Proposed acquisition of Norwegian Air Shuttle by Ryanair (Doctoral
dissertation).
Caputo, A., & Borbely, A. (2016). The firm’s strategy and its negotiation capability: the Ryanair
case.
Online
Overview of Aviation Sector. 2020. [Online]. Available through:
<https://www.easa.europa.eu/eaer/air-quality/overview-aviation-sector>.
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