Strategic Management in Aviation Industry

The assignment analyzes how strategic management plays a crucial role in the development of the aviation industry. It uses Ryanair as a case study to demonstrate how external factors of the business environment affect the overall industry and companies. The report also explores new methods for achieving goals in emerging markets and discusses strategic directions that companies can take to increase market demand.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Ryanair Background information............................................................................................1
2. External: Airline Industry Analysis........................................................................................1
3. Brief Competitor Analysis......................................................................................................2
4. Internal: Strategic Capabilities................................................................................................3
5. Strategic Directions Options...................................................................................................4
6. Strategic selection and Justification. ......................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Strategic management is all about identification and description of the strategies that
managers can carry to achieve better performance and a competitive advantage for their
organization. Strategic management is the process of planning, monitoring, analysis and
assessment of all that is necessary for an organization to meet its goals and objectives. Present
study will be based on strategic management which will based on Ryanair, it is the largest budget
airline in Europe. Ryanair was founded in 1985 by the Ryan family to provide schedules
passenger services between Ireland and the UK, as an alternative to then state monopoly airline.
Present study will be explains about the external or internal industry. It also analysis
strategic directions options and strategy selection and justification for the Company future
generation.
1. Ryanair Background information.
Ryanair is known for its cheaper prices to provide scheduled passenger services between
Ireland and the UK (Bigne and et.al., 2018). In initial time of the Ryanair it was a service carrier,
with two classes of seating, leasing three different types of aircraft. Due to having less budget
line Ryanair was not able to perform the less effective work option and long lasting work.
Besides, after some time, Ryanair never looked back and create new services for their customers.
A new management team, led by Michael O'Leary, was appointed. Ryanair floated on the Dublin
stock exchange in 1997 and is now quoted on the Dublin and London stock exchange and on the
new strategic direction.
2. External: Airline Industry Analysis.
PESTLE Analysis
Political: Political factor generally vary upon the between the nations. However, aviation
industry is global and spans the entire globe. As per the report of industry, it is globally
generated $709 Billion in 2016 (Dale and et.al., 2016). Political factors get influenced by
government changing policies in order to regulate or address concerns like safety, passenger
security and several other issues. This factor given negative impact on the overall functions of
business activities. The biggest fear in aviation industry due to which companies facing issues
hurdles such as accidents, safety related incidents, terrorist attract, high jack etc.
Economical:Economic factors are the another external driven force that directly affect the
company functions in different manner. In other words, Aviation industry is highly dependent
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upon the economic conditions. Inflation crises are the major threat present in the economic factor
due to which companies get affected. Due to inflation the demand of aviation industry will
decline and law competitively others. All these kinds of situation made difficult for Ryanair to
generate income or profits. Besides, airline companies also facing hurdles due to increasing the
labour demands from the parts of employees in Europe.
Social: Airline companies meet the needs of the clients in order to incorporate the good changes
within the environment (Dess and et.al., 2019). Social factors has given very bad impact on the
demands of aviation industry.
Technological: Technological factor has been given significant effect on the aviation industry.
Such as with the help of internet, customers are often book their tickets at anytime anywhere. In
other words, technology increases the chances of high assess of airline services. Such as Ryanair
wanted to become a leader in the industry by offering low cost pricing and highly invested
amount in digital technology. It created its own labs where more than 150 team working on a
new digital platform.
Legal: Legal factors has always taken in serious manner in order to maintained the customer
security and their good performance (Douglas and Tan, 2017). Many countries have introduced
safety precautions for clients. In earlier times before, Ryanair criticized by their employees for
providing poor working conditions they provide to their employees. So in order to define, that
due to legal issues company has facing several problems.
Environmental: nowadays, customers are very well known about their own security issues or
areas on which they need to focused on. Airline industry depends on the weather conditions and
make sure to be have the safe drive in critical weather climate.
3. Brief Competitor Analysis.
Competitive analysis Matrix.
There are three major competitors of Ryanair are EasyJet, British Airways, Thomas Cook
Basis Competitor 1 EasyJet Competitor Thomas
Cook 2
Competitor 3 British
Airways.
Security As per the security
level, easy jet provides
effective security
services to their clients
On the basis of
security purpose.
Thomas Cook is very
serious and also
As comparatively in
security basis British
airways is very
powerful. They
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so that they fly safe
with the company.
provides different help
panel for the
customers.
provide high security
in order to reduced the
uncertainties.
Services Easy jet provides
online booking for
their clients (Eaton,
2017).
Thomas Cook also
having their own
hotels. Provides
services through app.
Besides, company also
merchandise bags,
pens, jacket etc.
British airways
provides great full
experience to their
clients. BA having
attractive interior
design inside the plan,
ambience of the flight,
beautiful colours etc.
Prices In terms of pricing,
EasyJet is clearly
known for its low
prices which is highly
competitive and
challenging.
Prices or fairs of the
company generally at
reasonable prices in
order to be
competitive and
challenging.
In terms of price basis
British Airways,
company believes that
everybody should be
able to afford the
tickets prices of the
company.
From the basis of above competitive analysis matrix each company has providing the
similar services at reasonable prices. In order to be competitive and challenging, Ryanair
required to be more unique and offer new services to attract people or new buyers. They also can
adopt new market expansion by providing its services at the new market as well.
4. Internal: Strategic Capabilities
SWOT Analysis
Strength : Strengths of the company will always help them to gain new market
opportunity and overcome from its competitors. The biggest strength of the Ryanair is the lowest
cost base offers they provide to the clients. Another strength is huge network range with more
than 1,500 routes across 28 countries in Europe and North Africa, It has overall 178 airports.
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They having a huge growth as compare to other competitors. This strength is the capability for
the company to gain client attraction and growth (Flouris and Oswald, 2016).
Weaknesses : The biggest weaknesses of the aviation industry is seasonality of earnings.
There profit is highly depends upon the summers. Due to inconvenience times of departure
Ryanair having low frequencies on its route comparative to other competitors.
Opportunity: Ryanair has opportunity to gain its market and share by planning to reach
120m passengers annually over the next decade, equivalent to 4%-5% p/a and this looks very
achievable suitably priced aircraft order during that time.
Threats : The biggest threat arise from the external sources. Such sources or happening
such as Economic earthquakes, volcanic ash disruption. Ryanair relatively focused geographic
exposure arguably events and natural phenomenon.
5. Strategic Directions Options.
Ansoff matrix for Ryanair
Market penetration: Market penetration is one of the greatest strategy for the company
that can adopted for the company growth and betterment (Grant, 2016). Comparatively, others,
this strategy is less risky to leverages many of the firms existing resources and capabilities. The
reason to adopt this strategy is to promote the existing product in the market. By adopting this
strategy, Ryanair would help to promote their existing services offer into some more unique
manner. It helps to gain customer focus or retained the existing customers. For example:
Ryanair taken action to make better customer service by launching the AGB campaign to get
more traffic from the load factor and yield.
Market development: this is the another strategic choice for the Ryanair that they could
adopt into their business functions for growth. This strategy generally used by the company
when they planning to launch new services in the market. Such as Ryanair can adopt this model
by launching a new product or services. Such as Ryanair expands its market in new geographical
areas in Jordan with a network. This strategy of Ryanair helped them to become a third largest
operator in the Aviation industry (Holloway, 2017). This is the best strategy for the companies
who planning to distribute channels, new product dimensions, different pricing policies etc.
Product Development: Product development is the name given to a growth strategy
where a business aims to introduce new products in the market to gain new customer attraction
and potential development areas. This would help to declare the long lasting development growth
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in order to gain the market challenge and new developing growth results. This strategy required
to adopt new competencies and requires the bushiness to develop modified the new product or
servicing target market. This strategy requires some major elements and goals such as investment
on Research and Development and innovation, Detailed insights into customer need and being
first to market (Vargas-Sánchez and Moutinho, 2018). This strategy generally company adopt
when its existing services are well dealing in the market as long term range of the services and
growth. In other words, new product development or service can give more value and revenue to
the company.
Diversification: This is the new strategy that can company could adopt, if their new
service or product is differently new in the distinct market. As compare to other strategies, it
involves higher risk weather accepted by clients or not. Such as Airline companies also provides
other products created by own or sell into the flights just to make customer more different.
However, this is the reasonable choice if the high risk is compensated by the chance of a
high rate of return (Lin and et.al., 2018). Other advantage of diversification includes the potential
gain taking by the company. From the above strategies any of the strategy can be taken by the
Ryanair for their future strategic directions.
6. Strategic selection and Justification.
Strategic planning is the process of organizational management activity that is used to set
priorities in order to focus energy and resources in order to strengthen major activity and goals.
Besides, in order to gain future in the market Ryanair should need to adopt market diversification
in order to gain sales or profitability ratio.
Justification
From the given above four strategic direction, Ryanair needs to take market
diversification strategy in order to retained or attract new customer base. Company can open
their routes at those places where they never deal before (Mahtani and Garg, 2018). There are
many reasons for which company should need to adopt this strategic plan such as through market
diversification Ryanair can make more money, gain market share, sustained business growth,
Mitigate Against Risk, etc.
There are given some more reason for which company needs to adopt this strategic planning.
Such as by diversify its services into the new place so they better gain or reach to new customers.
Through company can gain more sales revenue or reduce operation stress etc (Singh, 2016).
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Market diversification can get the best outcomes in order to sustained in the new developing
market growth. The best advantage that company get is brand image into the new market with
good presence.
CONCLUSION
As per the above report it has been analysed how much strategic management play a
crucial role into the development of aviation industry. Present report based on the case study of
Ryanair which is the largest low fair aviation company in Europe. It has been described in the
report, that how external factors of business environment affect the overall industry and
companies. However, study also explained about the new methods of goals in order to gain in the
new market and growth. In the study, it also been described that what are the strategic direction
company can take to gain more market demand.
Recommendation company could adopt:
 Ryanair company should need to follow legal legislations and ethical consideration.
 They need to adopt some new employee beneficiary services or some development plans.
 They also need to adopt some new growth for the aviation industry for the new
development areas and growth.
 Ryanair should also need to gained employee interest by providing them some
development opportunity.
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REFERENCES
Books & Journals
Bigne, E. and et.al., 2018. The impact of social media and offline influences on consumer
behaviour. An analysis of the low-cost airline industry. Current Issues in Tourism. 21(9).
pp.1014-1032.
Dale, C. and et.al., 2016. Business planning and strategy. Operations Management in the Travel
Industry. p.21.
Dess, G. G. and et.al., 2019. Strategic Management: Creating Competitive Advantages.
McGraw-Hill Education.
Douglas, I. and Tan, D., 2017. Global airline alliances and profitability: A difference-in-
difference analysis. Transportation Research Part A: Policy and Practice. 103. pp.432-
443.
Eaton, J., 2017. Globalization and human resource management in the airline industry.
Routledge.
Flouris, T. G. and Oswald, S. L., 2016. Designing and executing strategy in aviation
management. Routledge.
Grant, R. M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Holloway, S., 2017. Airlines: Managing to make money. Routledge.
Lin, Y. H., and et.al., 2018. A content analysis of airline mission statements: Changing trends
and contemporary components. Tourism management perspectives. 28. pp.156-165.
Mahtani, U. S. and Garg, C. P., 2018. An analysis of key factors of financial distress in airline
companies in India using fuzzy AHP framework. Transportation Research Part A: Policy
and Practice. 117. pp.87-102.
Singh, A. K., 2016. Competitive service quality benchmarking in airline industry using
AHP. Benchmarking: An International Journal. 23(4). pp.768-791.
Vargas-Sánchez, A. and Moutinho, L., 2018. New Strategic Developments in Tourism. Strategic
Management in Tourism, pp.332-349.
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