Ryanair's Generic Business Strategy and Initiatives

This text discusses Ryanair's generic business strategy of low-cost leadership and the initiatives adopted to implement it. It also explains why this strategy was chosen and its success. The text concludes with a discussion on whether this strategy will continue to be successful. The subject is Strategic Management in Tourism, and the course code is TOUR335.

Homework #4: Strategy Development
Where are we now?
1. Review the broad and operating environment to identify strategic issues
2. Review the internal environment of the firm to identify whether the company
has or needs a sustainable competitive advantage
1. What strategic issue did Ryanair take advantage of when the airline started up in
1985? (1 mark)
Ans. Not in the year 1985, rather in the year 1986, the organization was able to focus
on the Dublin to London route which had no other organizations operating in the
route other than Aer Lingus. Ryanair was able to obtain the license for a route which
was experiencing significantly less amount of competition and had the potential to be
profitable for them.
2. In 1985 Ryanair did not exist so internal analysis not required
Where do we want to be?
1. Set the strategic direction – mission, vision, values, objectives
Ryanair’s vision statement is:
Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled
passenger airline through continuous improvements and expanded offerings of its
low-fare service.
How will we get there?
1. Choose which generic business strategy the company will follow – low-cost
leadership, differentiation, best value
2. Develop the initiatives related to all areas of the business to implement the
generic business strategy – Firm Infrastructure, HR, Technology, Operations,
Procurement, Marketing and Sales, Inbound Logistics, Outbound Logistics, Service.
Which generic business strategy did Ryanair adopt? (1 mark)
Ryanair was significantly focused in offering the lowest possible price to their
customers by reducing the operational cost.
Why do you think the airline chose this strategy? Explain your answer using course
concepts. (2 marks)
The airline chose this concept to make an impression on the customers that the
organization was determined in producing the scope to avail the air carriers to the
people of all the financial segments of the society. The organization largely focused on
the reduction of the operating cost by the usage of strategies like usage of secondary
airports, reduction in the expenditure on the staffs, reduction in maintenance cost,
rapid turnaround, point to point routing and so on.
Identify 3 initiatives (in total) adopted to implement this generic business strategy. (3
marks)
Firm Infrastructure Reduction in the cost of maintenance by buying aircrafts
of same model.
HR
Technology
TOUR335: Strategic Management in Tourism 1

Homework #4: Strategy Development
Operations Point to Point Routing
Procurement
Marketing and Sales
Inbound Logistics Usage of the Secondary Airports
Outbound Logistics
Service
Do you think these initiatives are appropriate for the generic business strategy chosen
by Ryanair? Explain your answer (Refer to page 172 and 180 in the text). (3 marks)
The above mentioned three strategies were significantly helpful for the organization
as the organization’s objective of producing low producing low pricing was viable with
such business strategies. The organization was able to cut down the maintenance cost
by purchasing aircrafts of same model. Hence the maintenance was simple. Along
with this the organization focused in secondary airports rather than the hub airports
which was significant in reducing the fees for airports. The organization was able
ignore the passenger and baggage transfer cost by implementing point to point
routing.
Is this strategy working for Ryanair? Explain your answer using evidence from the
case. Hint: refer to the appendix in the case. (2 marks)
The financial statement of the organization was significant in specifying that the
strategies were profitable for the organization. The organization was able to generate
an amount of 459 million US dollars as operating profit in the Fiscal year 2005 and
was able to complete with heavyweights of global market even with a precise focus
on the Europe only. Apart from that the organization had an increased operating
margin of 21.8% and was able to increase the number of passengers to approximately
50 million as a result of the strategies mentioned above.
Going forward, do you think Ryanair’s strategy will continue to be successful? Explain
your answer using course concepts. Hint: what do customers value? Is Ryanair
providing customer value? (2 marks)
The organization will be able to survive by following the mentioned strategies and will
be significantly efficient for the customers in cases of low price, perfect timing, safety
and security along with perfect luggage transfer.
Total: 14 marks
TOUR335: Strategic Management in Tourism 2