Management Strategy of Ryanair

This report analyzes the management strategy of Ryanair airlines through VRIO, SWOT, and TOWS analysis. It discusses the company's resource utilization capacity, profitability, liquidity, and efficiency ratios. The report also provides recommendations for the feasibility, acceptability, and suitability of Ryanair's strategies.

Running head: MANAGEMENT STRATEGY OF RYANAIR
Management Strategy of Ryanair
Name of the Student
Name of the University
Author’s note

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Executive summary
The aim of the report is to analyse the management strategy of Ryanair airlines . For analysis
of the management, strategy of the company different tools of management strategy has been
discussed in this report. The first part contains the VRIO analysis, which gives a detail idea
about the resource utilisation capacity of the company. in the second part the report contains a
detail discussion of SWOT and TOWS analysis of the Ryanair airlines ltd. In the last part of
the report recommendation is given regarding the feasibility acceptability and suitability of
the strategies of Ryan air.

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Table of Contents
Introduction................................................................................................................................3
VRIO analysis of Ryanair..........................................................................................................3
Analysis of the profitability ratio, liquidity ratio and efficiency ratio.......................................4
Swot analysis of the company....................................................................................................7
Tows analysis of Ryanair.........................................................................................................11
McKinsey 7s model..................................................................................................................12
Strategic recommendation from VRIO analysis......................................................................14
Recommendation on the SFA analysis of the Ryan air............................................................14
Conclusion................................................................................................................................16
References................................................................................................................................17
Appendix..................................................................................................................................20

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Introduction
The strategic policy of Ryanair consists of VRIO analysis swot analysis and the tows
analysis which gives an idea about the performance of the company and how it competes
with the competitors. VRIO analysis gives an idea about the relative importance of the
resources of the firm. From the swot analysis it can be ascertained the strength weakness and
the threat and opportunity of the company. TOWS framework on the other hand is just the
opposite of the swot analysis.
VRIO analysis of Ryanair
VRIO is the resource-oriented analysis of Ryan air airlines plc. The VRIO analysis is
based on the presumption that the strategic resources of the company will opportunity to
build a sustainable competitive advantage over the rivals of the organisation. The resources of
an organisation can be classified in to two categories tangible and intangible resources. The
tangible resources of the company include lands buildings plant equipment inventory and
money. Intangible resources are the brand names, goodwill, intellectual property rights
copyrights, trademarks, and relationship with the supply chain management.
The four components of VRIO used in Ryanair holdings plc analysis are
Value
In this component, it is analysed that whether a particular class of assets are valuable
to the firm or not. it has been observed that the following class of assets are valuable to the
organisation these are financial resources human resources marketing expertise and operation
management.

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Rare
In this component it is analysed that the resources are rare or not in comparison to the
competitors of the company. if the resources of the company are not rare in comparison to the
resources of the other companies then it will become a threat for Ryanair to sustain in the
airlines industry.
Costly to imitate
In the current market situation all, the companies of the airlines industry are facing the
problem of disruption. The core business of Ryan air is difficult to intimate as they have
reached a level of standard that make them pioneer in the industry which will be impossible
for the other companies to imitate.
Organisational competence and capability for optimal utilisation of the resources
It measures the capacity of the company to utilise the resources efficiently. It is
observed that the company has successfully utilised all the resources that is available to it and
managed to reduce the wastage of the resource. The capacity of the company is higher in
comparison to the other competitors.
Analysis of the profitability ratio, liquidity ratio and efficiency ratio
Analysis of the profitability ratio, liquidity ratio and efficiency ratio of Ryan air has
been made to understand the financial strength of Ryan air airlines plc
Liquidity ratio
To understand the liquidity position of the company the quick ratio of the company
has been calculated (Sanidas 2017). The quick ratio measures a company’s ability to meet the
short term obligation with its most liquid assets. The formula of the ratio is
Total current assets – total inventories /total current liabilities

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The quick ratio is more efficient than the current ratio as it excludes inventories from
the current assets. A decreasing trend in the quick assets ratio indicates that the company is
over leveraged and it is struggling to maintain growth rate of sales, it also shows that either
the company is paying too quickly or the company is collecting receivable too slowly. On the
other hand, high or increasing quick ratio stipulates that the growth rate of the company is in
an uptrend, the company is able to convert its receivable in to cash and easily able to repay its
obligation. The higher the quick ratio the better it is for the company. The quick ratio of the
Ryanair airlines in the last three years is shown in the table
The quick ratio of Ryanair airlines indicates that the liquidity position of the company
is strong enough to meet the short-term obligation of the company. The ratio is more than 1
which shows that the company has been able to manage the current assets efficiently and at
the same time it makes timely payment of the short term obligation (Pereira 2017).
Profitability ratio
Operating profit margin is the ratio of operating income divided by the revenue of the
organisation.
Operating margin=operating income / revenue
The operating margin ratio is the indicator of the profitability capacity of the
company. a company with higher operating margin is considered as the most efficient
company in the industry.

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The operating ratio of the company may decline if there is high competition in the
industry. The operating ratio of Ryanair airlines is showing that the company is able to
maintain a steady rate of operating margin in the last three years, which indicates that the
operation of the business is in a steady position in comparison of the other market players. It
is observed that the company fails to improve the rate of operating margin the rate become
stagnant, which is a serious matter of concern for the company (Dizkirici, Topal and Yaghi
2016).
Activity ratio
Assets turnover ratio measures how quickly the company turnover the assets through
sales. The companies having high assets turnover trends to have low profit margin, on the
other hand the companies having low profit margin have higher assets turnover ratio. The
formula of the assets turnover ratio is stated below;
Assets turnover ratio = Revenue/average assets
Therefore, if the asset turnover ratio of a company increases ion a continuous basis
then it is considered as a healthy symbol for the company. If the assets of the company grows
faster than sales then the assets turn over will decline which can be a warning sign for the
company (Leite, 2018).

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The asset turnover ratio of Ryanair airlines is showing an increasing trend, which
indicates that the company is performing well. Despite of the growth in the assets turnover
ratio in the last financial year the company’s asset turnover ratio is 33% low in comparison to
the bench mark of the airlines industry (Morales-Díaz and Zamora-Ramírez 2017).
Swot analysis of the company
The swot analysis is a management tool to find out the strength weakness opportunity
and threats of a particular company. The swot analysis consider the internal environment to
identify the strength and weakness and the external environment to find out the opportunities
that the company can avail from the market and the threat which can affect the performance
of the company (Vargas-Hernández and Garcia 2019).
Ryanair is one of the leading company in the airlines industry the strengths and weakness and
the opportunities and threat are explained below:
strength Weakness
opportunity Threat
Strength
The strength of the company is listed in the following points:
Brand
Ryanair has become a brand name as it charges low airfare from its clients. The
company proclaimed its success in providing best service to the customers at a very cheap
rate which has become the unique feature of the company. The company always give priority
in customer safety and ensure high level of punctuality. This is the core requirement of the
short haul passengers from a low-cost air carrier.

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Low cost base
A well-structured management strategy has made it possible for the company to
reduce the cost of operation which in turn help the company to charge lower air fare from its
client.
New airplanes
The company always invest more to purchase new airplanes that led to the decline in
the cost of maintenance and fuel efficiency. Beside it also ensure the comfort of the
customers.
Cash rich
The company has adequate cash reserve, which gives the company an added
advantage over the other competitors of the airlines industry.
Weakness
Less importance to customer satisfaction
It is observed that the company does not give much priority to the comfort of the
customers.
Seasonal earnings
Ryanair’s earning are highly dependent on the seasons, its profit generally increase in
the month of summer and falls during the winter. Therefore, the company has to depend on
the seasons to earn profit which creates obstacle in the running of its operation.

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Opportunities
Expansion policies
The company currently operates short distance journeys within Europe. The
opportunity that they can avail is from the expansion of the market and providing services
outside Europe. Ryanair is trying to expand its flight in the northern and the eastern Europe
for which they have started to open base in the Zadar and also announced to add bases in
Eindhoven and the police city Krakow and another base in Slovakia.
Improved customer service
Ryanairs continuously focuses on the improvement of the customer services. This
includes the redesign of the company with more advanced display and more users friendly.
Customers will be able to book tickets more quickly with the help of the website from
anywhere. A new mobile app has also been launched which will give details regarding the
schedule of every flight .the company has re introduced the system of seating allocation , and
more relaxation is allowed for baggage restrictions. The company has also decided to reduce
the charges for printing boarding passes and for changing the bookings.
These changes have impacted the performance of the company which results in tpo
the increase of the profit margin within a few years from the date of implication of these
strategies. These strategies have given the company an opportunity to improve its
performance and in taking the company into the top position in the market.
Business traveller product
The business traveller product is another initiative of the company to serve its
customers more efficiently. This is a combination of different products which the customers

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can get by paying a single fee. The product includes the features like booking flexibility, fast
lane security, choice of reserving the seats in premium rows and baggage facilities.
In addition to these, Ryanair has taken more airports on lease to its network and
increased the frequency of operation in the routes that are more business oriented.
Modern aircrafts
Ryanair has ordered 100 Boeing 737 max 200 aircraft which will have 197 seating
capacity compared with the 189 seats of its existing 737-800 model. Besides that, the new
aircraft will provide much better fuel efficiency than the old model aircrafts. The improved
winglets and other aerodynamics technologies of the new aircraft will reduce the fuel
consumption by 18% and also reduce the operational noise emission by 40%. The extra
seating capacity will further decrease, per unit cost to operate a flight (Canelas and Ramos
2016).
The new model will ensure more comfort for the customers which will improve the
customer base of the company. The company estimates that the new aircraft will allow the
company to increase the growth rate by 6% over the next 10years.
Threat
Accident
Though Ryanair has, advanced safety measure technology but it still requires much
improvements. Often the flights faced landing problems due to the technical faults, this is an
area, where the company face problem in the recent years. The company should take
necessary steps to improve these faults\, otherwise this will become a major threat for the
company (Chen and Pawlikowski 2015).

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Loss of focus
The management should keep the focus on its operation. The operation of the
company needs daily attention from the management. The airlines industry is highly
competitive for which the management should always be alert to avoid any operational faults.
Proper attention to be given to the customers so that the company does not feel that they are
neglected and not given proper attention (Tran, et al 2015).
Response to the competition
The unit cost of operation of Ryanair is so unique that any other company cannot
match with them.so the companies in the airlines industry does not give competition on the
basis of the price of tickets but they give competition to the company on the area of customer
service. This an area where Ryanair should give more emphasis to reduce the level of
competition (Egli, 2018).
Tows analysis of Ryanair
Strengths and opportunities(SO)
 Take share from the airlines market
 Add the frequency of the existing routes
 New routes in Europe has been opened
 Expansion of the network of flight in the central and eastern Europe
 Expand in Africa
 Continue aggressive acquisition
Strengths threats(ST)
 Reducing the cost on continuous basis

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Weakness opportunities(WO)
 Making the process of ticket booking system online
 Increase the ancillary options of revenues
Weakness threats(WT)
 Development its smaller operating bases
 Customer service overhaul
 Implementation of the advanced technology
McKinsey 7s model
The Mckinsey 7 s model is a strategic tool that is used to analyse the company’s
organisational design by considering the 7 key elements these are strategy, shared values,
style, staff and skills, all these key areas of Ryan air has been explained in the following steps
Strategy
The strategy is a plan that is developed by a company to carry on its operation.
Ryanair has its unique strategy to sustain in the competitive market. The company has
adopted the strategy of lower price of the air fare and attract more customers. The strategy of
the company worked very well in the short destination of air travel. The strategy framing
process is divided in to two parts that is sort term and long-term strategy. In both the context,
the company has successfully adopted their strategies (Costa, 2017).
Structure
The structure of the company is framed in such a way that all the departments of the
company are linked with each other and no one feels that they are not communicated properly
with the top management. The structure plays an important role in the development of the

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company if all the departments are linked with each other than the operation of the company
can smoothly run.
System
System represents the way the business continue its process of operation. The system
of Ryanair is efficiently framed, which enables the company to run on profit. The stiff
competition in the airlines market can only be controlled by running the operations in a
systematic way. The organisation gives more emphasis on the development in the system of
operations, which made it possible for the company to hold the top position in the airlines
industry from a long time.
Skills
The staffs of Ryan air are equipped with highly advanced training system, which
enables them to handle the challenges that they face from the customers and from the external
environment. The organisation has a transparent policy of keep upgrading the staffs with all
the changes that will come in future and also to make them ready to face all challenges that
the company will face from the competitors.
Staff
Staff element is the most important part for every business. Ryan air has taken all
necessary steps to protect the interest of the staffs. The staffs of the company always get
priority from the top management. The company’s management has the policy of keeping the
staffs happy as they believe that if the staffs of the company feel comfortable then they will
work more efficiently and that will lead to the efficiency in the operations of the company
(Bubalo and Gaggero 2015).
Style

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This element represent the way by which the company managed the top level
managers, ad also analyse the performance of the top management team. Every aspects of the
management policy are analysed and based on that decisions are taken. The style of the
Ryanair is unique from the other market players. The top management by using their strategy
get success in reducing the per unit cost of production for which the company able to offer
low priced air fare to its customer (McLaughlin 2018).
Shared value
The shared value is the core of the 7 Mckinsey theory. The shared values set the
standards that guide the employee behaviour and company actions. The shared value of the
company is to serve the customers more efficiently and accurately (Bôto, 2017).
Strategic recommendation from VRIO analysis
The company should give more emphasis on improving the resources of the company.
The value of the company affected due to the wrong perception in the market that it does not
give emphasis on the customer satisfaction. This effects the company’s performance on long
term basis.
The resources of the company are rare so it requires more emphasis on protecting the
company’s resources that company should frame a security system to protect the rare
resources efficiently.
It is observed that the company is not able to utilise all the resources effectively this is
considered as a major issue on which Ryanair should give more thrust. The management of
the organisation is required to take all necessary steps to make proper optimal utilisation of
the resources that are available to the company (Teker, Teker and Güner 2016).

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Recommendation on the SFA analysis of the Ryan air
Suitability
The suitability is the most important factor in the SAF strategy model, the suitability
is the key to determine whether the strategy of the company is suitable and whether that
strategy will be profitable for the company (Myre, 2015).
In order to measure the suitability of the strategy it is required to ask the question is
that whether the strategy is capable to utilise the strengths of the company or the company’s
strategy is capable to overcome the difficulties efficiently.
Acceptability
The acceptability aspect is about measuring the return, risk and stakeholders reactions
resulting from a particular strategy. The acceptability of the strategy depends on the rate of
return that the organisation will give to the company. The company will only accept the
strategy if it finds that the strategy will provide long term benefits to the organisation as well
as to the stakeholders of the company (Piludis, Jones and Hansen, 2018).
Feasibility
The feasibility part is the final step of the SAF strategy. in this part the company takes
the final decision whether to accept the strategy will be feasible or not. The feasibility is the
key pint based on which the company will be able to take decision and take necessary actions
to implement the strategy (Skar-Gislinge and Grønne 2016).
Going through the SAF strategy it can be stated that the strategies that Ryan air has
taken in order to sustain in the market is able to fulfil all the three requirements of the SAF
strategy and based on that it can be said that all the strategies of Ryan air is commercially
viable (Vargas-Hernández and Garcia 2019).

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Conclusion
Based on the above discussions it can be concluded that Ryanair airlines has taken an
effective strategy to sustain in the competitive market. The main strategy of the company is to
offer low price of airfare to the customers and there by capture the market. The efficient cost
control system of the company has made it possible for the company to achieve its desired
objective.

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Appendix

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