Strategic Management at Ryanair: SWOT Analysis, Porter's Five Forces, and Growth Strategies | Desklib

This report discusses the strategic management approaches adopted by Ryanair, including SWOT analysis, Porter's Five Forces, and growth strategies. It also provides a critical assessment of the European airline sector. The report does not mention any specific course code or college/university.

Strategic Management
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Question 1 a) Strategic development approaches which are adopted by Ryanair and an
explanation the balance of perspective & emergent strategy formulation processes..................3
Question 1 b) Strategic Leadership by Ryanair’s CEO...............................................................4
Question 2 a) SWOT analysis by identifying the issues that Ryanair faces along with an
effectiveness of Ryanair responses to the major changes in the macro environment..................5
b) Using Porter’s five force model a critical assessment of strengths & attractiveness of the
European airline sector................................................................................................................7
Question 3 a) An environmental analysis through ‘Always Getting Better (AGB) strategy......9
b) Ansoff Matrix for the assessment of growth strategies adopted by Ryanair within Europe.10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
The concept of strategic management refers to a company’s planning or structure that is
being developed in order to have smooth & well-structured strategical actions into business. This
involves an analysis or market as well as industry competition along with its proper scanning so
that company can be able to take corrective actions and attains competitive edge in market. This
involves a deeper understanding of company’s internal & external analysis through SWOT,
Porter’s five force and competitive analysis. The strategic management also involves a step
towards organisational growth through Ansoff Matrix. The present report involves a highlight
upon the strategic management concepts at Ryanair UK. The report talks about company and its
internal analysis. Further, it also comprises of company’s leadership which its CEO adopts, the
application of Porter’s five forces and critical analysis of market environment. Lastly it talks
about growth matrix of Ryanair UK.
MAIN BODY
Question 1 a) Strategic development approaches which are adopted by Ryanair and an
explanation the balance of perspective & emergent strategy formulation processes
The different strategic approaches adopted by Ryanair UK are mentioned below:
Perspective approach:
Within this technique, the company’s, vision, mission & the core values are mentioned, or
the objectives are stated before the strategic execution starts. This shows that the firm would
intentionally formulates & performs a rational intended strategy based on to preferences &
priorities of top level management. Therefore, this approach adopts a top to down hierarchical
structure as well as authoritative style of management. The prescriptive process is linear that is
from strategic evaluation to strategic development & then to its implementation. Hence, in
relation to Ryanair the strategic planning is experienced as a rational, orderly, deterministic or
systematic procedure that is suitable for having a stable organisational environments. The present
approach comprises of 3 schools of thought that are designing, planning as well as positioning.
The main limitation of this approach is that such types of companies does not carries full
information or are lacking with information which is highly essential for the effective business
decisions to carry out the proper systematic analysis of strategy.
Emergent Approach:
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Within an emergent approach of strategic planning, the strategies emerges as a managers
formulates the strategic as well as operational decisions time to time which results into a certain
technique. This shows that the firm realises its strategy that would not be far from the intentional
planning of company from top but emerges from the decisions or the actions which are taken,
interpretations of certain events & the complex communication at lower levels thus leads to the
bottom-up emergence. Therefore, strategy formulation under this is an interactive, gradual as
well as the unplanned procedure that permits flexibility or the adaptation as the company’s
environment fluctuates. However, the moment strategy emerges by the pattern of decisions, this
could be documented in a form of annual reports or the strategic plans of Ryanair.
The main limitation of this approach is that it is highly impractical in nature as such type of
companies does not have clear direction or the company’s managers feel themselves out from the
decision making board.
Initiatives adopted by Ryanair
Initially the company Ryanair was operating its business with huge losses but later on
when the company analysed its strategy then found the need of change within it. After this the
company has implemented the methodology of low cost business through eliminating the
business class or with the launch of single model plane. This has lead towards the enhancement
of its sales as well as helped in the generation of higher revenues. Also, Ryanair has also taken
an initiative of providing online booking services to its clients so that can attract customers from
large part of market with a facility of convenient bookings.
Question 1 b) Strategic Leadership by Ryanair’s CEO
The strategic leadership within Ryanair by its CEO is autocratic leadership style. The
autocratic style is categorized as an authoritarian style in which a CEO or a leader is being
characterized by personal control upon all the decisions related to business. Such type of leaders
generally does not prefers to have suggestions or views form their staff members or from their
employees. They feels that they by themselves are enough capable of handling things and
making decisions, or they carries full knowledge about the business affairs. The CEO at Ryanair
use to take organisational decisions based on to his judgement and knowledge without asking
from his team.
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The autocratic style is beneficial in case of contingency or in a workplace where the
employees are not much capable of taking decisions. But on the other hand provides a negative
environment to the employees as they feels dejected.
The CEO or Ryanair must continue with this strategic leadership style to some extend but on
the other hand should also adopt democratic leadership style so that can provide opportunities to
their employees so that they can share their views or can take part in decision making. This
provides a positive or healthy environment into the business and in the eyes of employees which
helps in enhances the employee’s productivity in the organisation.
Question 2 a) SWOT analysis by identifying the issues that Ryanair faces along with an
effectiveness of Ryanair responses to the major changes in the macro environment
SWOT analysis of Ryanair
Strengths
 The company Ryanair is operating with
the lowest cost in its units in the world.
The company’s traffic cost is lesser
than its competitors which attracts more
customers towards its business.
 Ryanair Company puts its fares with
lesser amount in against of its
competitors within the industry that
provides a high competitive advantage
to the firm.
 The company’s management team has a
high focus upon its management style
that focuses upon low cost & fares but
on the other hand functions with
innovative approach.
Weaknesses
 The company is having its income
based on to the season as the travellers
use to decide the destination based on
to the season which has a great impact
upon the profitability of company.
 The customers of Ryanair are not
satisfied with its refund policy that
allows them to prefer less with Ryanair.
 The company has faced a bad
experience in context to control the
pilots’ strike and could not be able to
have a favourable judgement towards it.
Opportunities
 The company is having a great
opportunity in context to enhance its
customer service and develop effective
Threats
 Being an international airline industry
the company has a fear form changing
governmental policies which differs
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interaction with them. So that can
attract large customers and regain its
brand image.
 The company can attract talented and
skilled employees for their business so
that can have productive outputs and
can be able to compete with rival firms
effectively.
 The Ryanair UK is having an
opportunity of attracting governmental
funding’s as well as assistance from it
after the happening of Covid so that can
be able to sustain its business after a
horrible set back within industry.
from country to country and becomes
tough for effective implementation
within business.
 The different restrictions due to Covid
within different nations leads to have
negative impact upon the business and
its sustainability.
 A high competition within industry
with other firms such as British
Airways or with others can impact
business in highly unfavourable
manner.
Effectiveness of Ryanair response to major changes in the macro environment
The effectiveness to the major changes in the macro environment can be analysed
through the application of PESTLE model in context to Ryanair Company:
 Political: Since the adequate future regulations that governs air traffic among the UK as
well as with other EU countries, in respect to the agreements fails to assure free trade
flights between the UK & EU, has a potential to reduce EU airlines entrance to the UK
market. The airline company Ryanair is registered in Ireland, though, being an airline
company it is required to maintain the largest bases within the UK. The unfavourable
effect from Brexit has influenced negatively to the company.
 Economic: After the happening of Brexit there the UK economy has experienced a
situation of recession into the market and the low-cost airlines earning profitability within
the industry has effected negatively. Although the recession in UK economy would not
have impact upon its EU operations but can have a negative influence upon the business
operations and can hamper the organisational performance of company.
 Social: The low-cost airlines expansion is generally related to the growth in context to the
disposable income of middle class & the lifestyle fluctuations which characterise the
young generation travellers to bear multiple trips every year. In against to the older
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generation travellers, the young generation travellers possess completely distinct
expectations from the services. The youth expects a great a level of customer service
without an extra pay to the companies & commonly values to such air services that offers
highest technological services to them or solutions in order to manage their travel
journey.
 Technological: In context to the technological changes within industry it involves an
integration of digital channels within company’s distribution as well as in marketing
strategies. The current market trend is more of technology that is highly preferable by the
customers especially by the youth. Also, the enhanced reliance upon the technology
provides airlines a great opportunity to attain a deeper understanding of their customer
behaviour through analysing the customer data which is shared on voluntarily basis via
digital platforms.
 Environmental: The main concern in today’s time with environment for airline industry
is of heat waves which is becoming a common phenomenon in which temperatures
increasing above the aircraft heights ground operations temperature, the airlines might
have to look for an alternative operational strategy in order to adjust the change within
climate. Even if the company Ryanair is utilizing the latest or the fuel efficient aircrafts
fleet, there is still growing dissatisfaction related to the low cost contribution towards the
carbon emissions in environment.
 Legal: The legal issue with the European flight industry is experiencing revolves also due
to the effect of Brexit. On the other hand, the UK airline industry and other countries
have different laws in terms to the airline regulations. In case of Brexit the company is
required to make reduce its cost or air travel restrictions that it has to face with a high
negative impact upon the business. The company Ryanair's recent reaction presents that
the suspension of all flights between EU & UK has led to legal issues and needs to be
diversified from the policies of UK soon.
b) Using Porter’s five force model a critical assessment of strengths & attractiveness of the
European airline sector
Porter’s Five Force Model
 Threat of entry: The Company Ryanair is a famous for low-fares flight services in
Europe from year 1985 & performs like a strong airline brand. If any company wishes to
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enter into the airline industry then they are required to invest a large amount of money
into the business along with a long legal and political formalities which takes lot of time.
So it is tough for businesses to enter into industry and compete with Ryanair having
strong brand image within market. On the other hand, this also demands for a large level
of advertisement in order to attract large customers which again involves huge investment
into the business.
 Competitive rivalry: The Company Ryanair carries a good competitive advantage over its
rival firms, no-frills or the low-fares are the organisational policy. It expands the short-
haul routes flights, utilizing point-to-point strategy as well as shorten the flight routes to
minimize the cost. Though, the other airlines use to compete within the cost rising
competition, for higher price sensitive travellers providing higher consumers benefit,
utilizing price wars among the rival companies. At the lower price flights, the company
EasyJet is one of the main competitor, but not highly develops a competition with
Ryanair. The main aim of the competitive rivalry within this segment is threat that results
into less sales.
 Bargaining power of Suppliers: In the airline industry the suppliers are majorly limited
to the flights & the supply of fuel. The company Ryanair had developed highly good
relationship to its different flights suppliers. Ryanair has a large amount of contract with
Boeing which is an aerospace company within the economic recession in year 2002 while
other companies on hold the aircraft buy, & the Boeing needs to serve up to 150 of 737-
800 forms of aircraft for Ryanair. By the expansion of the aircraft, the company Ryanair
could be able to expand to larger destinations within Europe & can offer low-fare tickets
to the travellers, this makes Ryanair becomes the youngest flight services in Europe &
categorized as the second largest company worldwide then to the Southwest airline. The
fuel prices is being governed by the world trade as well as fuel market is being dominated
by the Middle Eastern nations. Ryanair Company was dependent upon the hedging,
dependent upon the educated estimation for the fuel, to experience its low-fare policies.
 Bargaining power of buyers: Within the airline sector, they have standardized services,
flexible need, flight brand & the quality services for the consumers in order to identify &
concern. Ryanair use to sell the airline ticket for its customers by its official website
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through online system, which is the major reason that could offer competitive prices that
in the sector level.
 Threat of substitute: In the regions of Europe, the country offers well-furnished railway
trains that is being connected to the main cities where Ryanair could fly to, but the tickets
for train is highly expensive as compared to Ryanair & also requires to endure a long
journey. The choice is driving a car travel from place to place, but also is a highly time
consuming as compared to Ryanair & might experience a lot of road issues as well as
hassles.
From the above discussion it can be identified that the most influencing factor this
competitive environment is of threat from the new entry which is not an easy concept for any
other firm as this involves long term and high amount investment.
Question 3 a) An environmental analysis through ‘Always Getting Better (AGB) strategy
The year 2018 in a form of Always Getting Better Plan by Ryanair comprises of a present
range of service, environmental, digital, as well as the ancillary initiatives. The company feels
themselves very pleased to launch its environmental plan that covers their commitment towards
the elimination of all non-recyclable plastics from their operations for the coming five years from
year 2018. For their customers on board, this would mean different initiatives like a switch
towards the bio-degradable coffee cups, wooden cutlery & the removal of unnecessary plastics
from their range of in-flight items. The company also introduces a certain scheme to permit
customers for offsetting the carbon cost of airplanes by a voluntary climate donation through
online. The company is also unveiling the concept of Try Somewhere New, as a different travel
hub on the website of Ryanair, hosting some exclusive travel guidance as well as destination
videos in seven different languages. While the Ryanair continues to innovate, the concept of low
fares that they promises would not be beaten by anyone & the European consumers could still
enjoys the biggest & best option for destinations, with the highly on-time arrival & a fantastic on
board service to the customers.
The airline company Ryanair has disclosed its year 2018 “Always Getting Better” (AGB)
plan that forms five years of its consumer’s experience enhancement programs.
A number of some latest initiatives has been considered by Ryanair & would be rolled out for the
coming year that is from 2018, including:
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 Price Promise: Under this they finds a pocket friendly fare as well as the company
Ryanair would refund the variation of €5 into the customer’s “MyRyanair” account
digitally.
 Punctuality Promise: The Company aims for 90 percent of flights to arrive or land on
time so that the time of customers can be saved.
 Simple Bag Policy: They offers 2 free cabin bag carriage plus enhanced checked bag
volume for less than €25 for each 20kg.
 Dedicated Claims Team: This is valid with EU261 claims that would be processed in a
period of only 10 days.
 Greenest Airline: Ryanair would remove all its non-recyclable plastics from the
company’s operations in the coming five years which has started from year 2018 along
with a new carbon offset initiative for its customers.
 Ryanair Rooms with Travel Credit: The money off flights at the time of booking hotels
with Ryanair.
 Ryanair Transfers: This has a broader choice of ground transport along with a new
partnership with CarTrawler.
 Connecting Flights: They provides connecting flight services in Rome, Milan & Porto,
with a combination of long-haul connections
 “Try Somewhere New”: The exclusive content upon Ryanair.com that is in relation to
travel guides as well as video within the 7 languages.
The Ryanair’s Chief Marketing Officer, mentioned that “The “Always Getting Better”
program, initiated in year 2018, continues to attains greater heights & the company is highly
dedicated towards its AGB plan that provides sustainable achievement to the firm.
b) Ansoff Matrix for the assessment of growth strategies adopted by Ryanair within Europe
Ansoff Matrix
Market penetration strategy: This is being used by a firm in can when it carries potential to
grow its present market share within the existing industry. This includes a sales driven way in the
current environment. The market penetration could be attained through reaching directly to
consumers, raising the basket share of consumer total spending, enhancing the sales touch points,
raising dealer network, improving the consumer life time value, and by many others. The Ansoff
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matrix is a highly competitive strategy evaluation technique. The Leaders at company Ryanair
could utilize the Ansoff Matrix to determine the ways through they can be able to penetrate the
market and attain high competitive strategy.
Market development strategy: This includes efforts on part of company Ryanair to develop a
new markets as well as channels for its current products. This might involve an entrance to the
international markets, entrance of a new domestic markets, collaborating with some
complimentary companies in order to drive sales of its current products or many others. One of
the main aspect of market development is to offer same product in new market so that can attract
more customers.
Product development: This includes company Ryanair either in an addition of a new
characteristic towards the existing product or in relation to the development of a new items for
the present market. One of the main notion for this is that Ryanair utilizing product development
strategies is to have a different version of its products into the market with time. The customers
as well as the markets for the product majorly remains the same but simultaneously the company
initiates the launching of enhanced version of its items to cater the existing market.
Diversification: The Company Ryanair could utilize a diversification strategy when both the
item and market is new to the company. Diversification strategy is utilized in a time when the
firm looks for an opportunity in an adjacent sector or within a full distinct industry. For instance
Ryanair entry into the cardboard or plastic free servings. Both the product as well as the
customer segment are latest to the firm or it had to develop a completely unique distribution &
revenue model from that using in UK or in other countries.
CONCLUSION
From the above report it can be said that the strategic planning is highly essential for the
firm and needs a deeper understanding of its concepts. It is very much important to analyse the
company’s internal as well as the external environment analysis which can be done by SWOT
and PESTLE analysis. The SWOT analysis presents the strengths and weak areas of the
company along with an opportunity & threat areas which it can have from other factors. On the
other hand, the PESTLE framework presents a clear understanding & analysis of the market
external factors such as political, social, economic, legal, technological and environmental. Other
than this it has also been analysed that there are two main strategic planning theories such as
perspective theory and the emergent theory that can be applied during the development of plan
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for company’s strategic actions. The company can also look into the aspect of Porter’s five force
when it comes to the analysis of competitive industry and the forces from it. The company
Ryanair use to operate upon an Always Getting Better plan that helps them to enhance their
operational activities or decisions with higher strength each year. This initiative was launched in
year 2018 by company. In order to have a growth evaluation strategy the firm can apply Ansoff
Matrix strategy and can work upon it through analysing the best suitable growth strategy for
them.
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