Ryanair Strategic Management Report

This report analyzes Ryanair's strategic management, covering its background, external environment, competitors, internal capabilities, and strategic directions. It uses frameworks like PESTLE, SWOT, TOWS, and Ansoff Matrix to evaluate Ryanair's strengths, weaknesses, opportunities, threats, and potential strategic options. The report concludes with recommendations for Ryanair to maintain its competitive advantage in the dynamic airline industry.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Ryanair – Background Information............................................................................................1
External: Airline Industry Analysis............................................................................................1
Brief Competitor Analysis..........................................................................................................3
Internal: Strategic Capabilities....................................................................................................4
Strategic Directions Options.......................................................................................................5
Strategy Selection and Justification............................................................................................6
Conclusion & Recommendations....................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic management refers to the process of continuous planning, analysing, monitoring
and assessing of all the necessary factors that are required by business organisation to meet the
overall goals and objectives. The strategic directions of company helps in accomplishing the
long-term goals and objectives. Ryanair DAC is an Irish low cost airline that was founded in the
year 1984. in the present report, detail background information is provided on the low cost
airline industry- Ryanair. The report includes internal analysis, external analysis and competitive
analysis of Ryanair airline industry. Strategic direction tools are used for evaluating the Ryanair's
strategic choices and future strategic directions. The report further provides the justification and
recommendation for the strategic direction and management.
MAIN BODY
Ryanair – Background Information
The airline industry Ryanair is a low cost airline industry that was founded in 1984. the
headquarter of Ryanair is situated in Swords, Dublin, Ireland. The are various operating bases
list of the company. Ryanair company operates approx 400 Boeing 737-800 air-crafts and with
single 737-700 are primarily used as charted air-craft. The Ryanair airline industry is one of the
largest airline of Europe in terms of number of passengers, Upadhaya & et.al., (2018). The
business strategy of this industry focuses on operating business by providing low cost fares than
generating increased passenger traffic. The company has approx 1000 route network that serves
around 37 countries such as in North America, Morocco, Israel, Jordan, Europe and many more.
The strategy of company focuses on low cost and no frills airline.
External: Airline Industry Analysis
The external analysis of Ryanair airline is done by using PESTLE framework. The
PESTLE analysis is a strategic tool that helps in effectively analysing the macro business
environment that can affect the business organisation. Changes and influences in macro
environmental factors brings direct impact on the Ryanair airline industry which is briefly
explained as follows:
Political factors: It includes rules and regulations that governs the air traffic between UK
and other EU countries. Ryanair is a low cost airline company that has limited air routes and
destinations. The political regulations of a country and its relationship with other countries may
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lead to bring great influences on the Ryanair. The political factors that can greatly influence and
affect the Ryanair are: legal regulations regarding contract enforcement, political stability of
country, trade and tariff regulations, risk of invasion of military and industrial safety frameworks
in service industry, Tran (2019).
Economic factors: Ryanair can get influence due to economic situation of the country
such as inflation rate, economic cycle and operation country's economic system. The intervention
of government in free market, skill and education level of country's workforce, interest rate,
labour cost and economic productivity and regional airlines industry's infrastructure quality can
also lead to bring great impacts on the company.
Social factors: This includes demographical factors of business that may lead to bring
great influences on the culture of organisation. Beliefs and attitudes of people of operational
country can bring influences on the Ryanair airline, Křupka, Kantorová & Haile (2018). For
Example, Millennials chooses the airline industry that provides quality services at premium rate
rather than that airline that provides affordable prices. The broader nature and attitudes of
society, leisure interest, education level and culture can lead to bring great impacts on the
business activities of Ryanair airlines.
Technological Factors: The airline industry needs to cope with the technological
changes happening in the environment in order to sustain in the competitive markets.
Technological changes are important to be considered and it includes changes in value chain
structure, changes in product offering techniques, increasing use of mobile and internet. The
increased reliance on factors of technology will lead to provide effective benefits for Ryanair
airlines.
Environmental factors: Changes in weather and climate can lead to bring great
influences on the airlines industry and their network routes. Ryanair industry can get influenced
and impacted through changes in its environmental factors such as waste management of service
sector, recycling laws, regulations for environment pollution and attitude towards ecological and
green products.
Legal factors: Every industry gets impacted through legal factors of country as it
provides legal and regulations that needs to be followed. The Ryanair can get influenced due to
laws relating to intellectual property rights, laws of consumer protection, discrimination law,
data protection and health and safety regulations.
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Force analysis: It is used to analyse the external environment of Ryanair. The force analysis
helps in determining if low prices of Ryanair airlines is attractive or not.
 Bargaining power of customers: There are choices lots of choices available to
customers for low-fares, Brueckner & Flores-Fillol (2019). Therefore, Ryanair lacks
loyalty of customers as switching cost for buyer is less. Thus, bargaining power of
customers is relatively high.
 Threat of Substitutes: There are various options for travelling such as buses, trains and
cars that can be used by customers. But Ryanair provides low cost fares for customers as
compared to other options available. Therefore, threat of substitute is relatively low.
 Bargaining power of suppliers: there are limited manufacturers and suppliers of air-
planes within UK. Airbus and Boeing are the only two manufacturers available in the UK
markets. Thus, bargaining power of suppliers is relatively high as switching cost will be
high for Ryanair.
 Threat of new entrant: The airline industry is one of the expensive industries and it also
have lots of entry barriers, Bigne & et.al., (2018). Business activities of airline industry
are also expensive such as buying or leasing jets or air-crafts. Thus, entry of new entrants
in the airline sector is relatively low.
 Threat of competition: There are various airline industries available in the UK markets
that provides low cost fare services to customers. Intense competition can be provided by
companies like Easy Jet, Go, Wizz Air and many more. Thus, threat of competition is
high for Ryanair airlines.
Brief Competitor Analysis
Major competitors of Ryanair are British Airways, Austrian airlines and Easy Jet.
Emergence for entering of new airlines in the Europe has lead to heavily increase the
competition level in the industry. Competition has increased to a extent that 31% market share is
combined by the top five airline companies within UK, Tran (2019). The five biggest US airline
companies captures the 67% of market share. The recent research study shows that Ryanair, Air
France and Lufthansa has gain achievement of increasing the financial and competitive
advantages in the country Europe. Every industry does not have full control or effective share at
large, there are few rivalries that exist in the sub-industry markets. For example, Ryanair and
Easy Jet provides low cost fare services to its customers, thus they dominate the industry.
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Ryanair airline aims at capturing the market and thus focus on providing better services to its
customers. In 2016, Ryanair carried 34% more passengers than Easy Jet. In order to undermine
the intense competition, Ryanair provides cutting prices for particular routes and low fare tours.
The ryanair airline company also focus to setting up new routes for discouraging the current and
new competitors.
Whizz Air, easy Jet and Ryanair airlines are low cost airlines that operates on the same
networking routes. The number of airline companies focus on following the effective process so
that they can minimize the overall cost by reducing the board passengers facility and airport
outlay cost, Upadhaya & et.al., (2018). The Ryanair airline operates on large fleet size on various
routes thus it is able to drive out competition effectively and it also helps in reducing the
competition level on some of the routes. The new airline companies can enter into the UK airline
industry as results of the decrease in the rules and regulations. This leads to increase the
competition level in the airlines industry for the various local and low cost operating companies.
Ryanair is able to compete with the competitors as it has level of unit cost and low cost price that
in not easily matched by the new competitors within the Europe markets, Bose (2018).
Ryanair airline company aims at increasing the value of its products and brand in order to
change the perception of customers and attracting them towards and gaining benefits of
increased passengers. This will help company to gain competitive advantage over other airline
companies. Ryanair company can compete effectively through its low pricing strategies but it
also needs to focus on improving he quality of airport networks and also aim on providing
satisfaction to customers.
Internal: Strategic Capabilities
Internal analysis of Ryanair airline is done using SWOT analysis in order to identify the
strategic capabilities of company.
Strengths:
Ryanair airlines has the low unit cost advantage as compared to any other airline
company in Europe. The low unit cost also enable organisation to provide low fares to customers
and have profitable basis. Ryanair enjoys strengths of low fares and its average fares are
comparatively lower than other airline companies in UK. Ryan air has effectively brought the
changes in nature of short-haul network flying, Brueckner & Flores-Fillol (2019). The airline
company Ryanair also has the strength of strong balance sheet and its consistent shareholders
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return. The strength list of Ryanair also includes its point-to-point flights for short distance
places or locations. This is a established company in the Europe markets that covers more than
200 locations or destinations and total 1800 routes.
Weaknesses:
Ryanair fails to maintain effective relationship with its staff and labour workforce that
may act a great weakness for company, Castiglioni, Gallego & Galán (2018). Thus, changes in
employee arrangement for compensation brings great impact on the business of Ryanair. Ryanair
focus on fleet expansion aggressively that may lead to overcapacity in recent or future times.
Opportunities:
The company has great scope for increasing its ancillary revenue using myRyanair. This
airline company needs to focus on increasing the customer care services and improving their
travel experience. This may lead to bring great advantages and benefits for Ryanair. The
customer care services can be improved by Always Getting Better program. The company have
the opportunities of declining the segmentation of charter flights, Cobeña, Gallego, &
Casanueva, (2019). Ryanair airlines also have the opportunity to increase the business operations
by selling the ancillary products.
Threats:
Ryanair company has the threat due to fluctuation in fuel prices and it may lead to greatly
impact the business model and also profitability. The other airline companies also operates on
the low cost that provides intense competition threat to Ryanair. The strikes and ATC staff
shortage also leads to bring great impact on the business of Ryanair. Threat of increasing in Irish
Corporation tax rates is also faced by Ryanair airlines.
Strategic Directions Options
TOWS Matrix is used for generating the strategic directions for the Ryanair's internal
environment, which is explained in brief as follows:
Strengths Weakness
Opportunities Ryanair airlines can take
effective advantage of its
strong and loyal customer base
to increase the sales of its
The airline company can focus
on providing training programs
to its staff and improve the
customer care services and
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ancillary products, Hwang &
Lyu (2018).
satisfy them effectively.
Threats The Ryanair airlines can
effectively provides
competitive advantage by
charging low fare prices.
Company can effectively react
to the fluctuation in fuel prices
by hedging the prices of oil.
Strategic capability and competitive advantage:
Ryanair can analyse its competitive advantage and strategic capability by effectively
analysing the various threshold resources that includes financial resources, aircraft, staff,
employees and its other official equipments, Islam, Hossain & Mia (2018). Ryanair can analyse
its threshold resources through website or online booking services, point-to-point routes and its
low cost operations. Strategic and unique capability of Ryanair airline helps in gaining
competitive advantage and it is because of its effective management team and their core
competencies. The low cost fares and cost conscious organisational culture also provides
company to gain competitive advantage over intense competition in the Europe markets.
Strategy Selection and Justification
Ryanair aims at using transnational strategy instead of international strategy for its
corporate level. Because it is more in demand according to the globalisation factors. At its
business level strategy, Ryanair aims at using cost leadership strategy that focuses on offering
effective air travel facilities and services at low unit cost. This strategy effectively helps business
to gain competitive advantages and also in wider perspective, Kahungu (2018). In this strategy,
focus of Ryanair airlines is on both cost leadership and differentiation.
Ansoff Matrix is used by Ryanair in order to do strategic marketing planning and also for
future strategic directions. This is explained in brief as follows:
Existing New
Existing Ryanair can make use of market
penetration and consolidation
strategy as this focuses on:
The company can make use of product
development strategies by:
 offer free flights
 developing information
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 low fares
 frequent flights
 increasing routes
 merge with other low cost
airlines
technology and promote online
booking facility
 expanding industry into existing
product range
New Ryanair can make use of market
development strategy by using
connecting flights and enhancing
more customers, Křupka,
Kantorová & Haile (2018). It can
also develop new routes and
destinations.
Ryanair can also make use of
diversification strategy through
increasing long haul flights.
Based on internal and external environmental analysis, is is clear that cost leadership
strategy will not bring benefits on the long run. As the competition level is increasing day by day
in the airline industry, Wensveen (2018). And according to the strategic planning, Ryanair
markets their airline business in the minds of customers as the low cost airlines that leads to
separate the market segmentation.
Conclusion & Recommendations
The SWOT and PESTLE analysis is used to analyse the internal and external
environment of business effectively. The strategic tools helps in understanding the internal
business environment such as SWOT. TOWS matrix and strategic capability analysis are also the
strategic tools that are used by business organisation to analyse the various affecting factors. In
this report, business organisation also analyses about the 3 competitors using competitors
analysis.
In order to capture the large market share, it is recommended that business needs to focus
on improving the quality of customer services so that it leads to increase the trust and loyalty of
customers. Improved quality of customer care services will also lead to provide benefit of
improved brand image of the company in the airline industry. It is recommended that company
needs to provide proper training sessions so that they can improve their skills and capabilities
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and improve the customer care services. The company also needs to focus taking advantage of
the website for promoting the and advertisement purpose and this will lead to bring positive
impact by increasing sales and profits.
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REFERENCES
Books and Journal
Bigne, E. & 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).
1014-1032.
Bose, I. (2018). The Strategic Environment of the Aviation Industry in UAE: A Case Study on
Etihad Airways.
Brueckner, J. K., & Flores-Fillol, R. (2019). Market Structure and Quality Determination for
Complementary Products: Alliances and Service Quality in the Airline Industry.
Castiglioni, M., Gallego, Á., & Galán, J. L. (2018). The virtualization of the airline industry: A
strategic process. Journal of Air Transport Management. 67. 134-145.
Cobeña, M., Gallego, Á., & Casanueva, C. (2019). Diversity in airline alliance portfolio
configuration. Journal of Air Transport Management. 75. 16-26.
Hwang, J., & Lyu, S. O. (2018). Understanding first-class passengers' luxury value perceptions
in the US airline industry. Tourism management perspectives. 28. 29-40.
Islam, M., Hossain, A. T., & Mia, L. (2018). Role of strategic alliance and innovation on
organizational sustainability. Benchmarking: An International Journal. 25(5). 1581-
1596.
Kahungu, L. (2018). Strategic Decisions in Managing Energy Resources.
Křupka, J., Kantorová, K., & Haile, M. (2018). SWOT ANALYSIS EVALUATIONS ON THE
BASIS OF UNCERTAINTY-CASE STUDY. Scientific Papers of the University of
Pardubice. Series D, Faculty of Economics & Administration. 26(43).
Tran, Y. (2019). Challenges the airline industry faces at present (Doctoral dissertation).
Upadhaya, B. & et.al., (2018).Bigne, E. & 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). 1014-1032.
Bose, I. (2018). The Strategic Environment of the Aviation Industry in UAE: A Case Study on
Etihad Airways.
Brueckner, J. K., & Flores-Fillol, R. (2019). Market Structure and Quality Determination for
Complementary Products: Alliances and Service Quality in the Airline Industry.
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