Strategic Management - Assignment

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background information of Ryanair...........................................................................................1
External strategic tools to analyses the external environment....................................................1
Competitor analysis ....................................................................................................................3
Internal strategic capabilities.......................................................................................................4
Ryanair's strategic choices and future strategic direction...........................................................5
Evaluation and Justification........................................................................................................7
CONCLUSION AND FUTURE RECOMMENDATION..............................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic management is defined as the process planning, monitoring and analysing all
the activities which are necessary for an organisation to accomplishing their goals and objective.
Strategic management includes the strategic planning which defines the ability of the firm to set
both the short term and long term goals and then determining the decision and actions which are
required for achieving those goals(Ansoff and et.al., 2019). Ryanair holdings company
established in 1985 and it is the first low cost airline of the Europe. This assignment present the
external analysis and brief competitor analysis of the airline industry. It also defines the swot
analysis of the Ryanair company. Report also highlights the strategic direction tool which
evaluates the Ryanair's strategic choices and future strategic directions.
MAIN BODY
Background information of Ryanair
Ryanair is a low-cost airline which is founded in 28 November 1984. The headquarters
are in Ireland, sword, Dublin with its operational bases of primary which based in the London
Stansted airports. There are list of operating bases. The slogan of the company is low fairs, made
simple. It operates more than 400 Boeing aircraft with the single used primarily as a charter
aircraft and also backup and also training for the pilot. It has been characterised for its rapid
expansion of the results which deregulation of the industries. The revenue of the company is
7.151 billion and the employees of the company is 13,000. It is Europe's largest airline with the
low cost and it operates the carrier with comprehensive network for services and across Europe.
It proposed to the charter business in unit of Ryanair PIc and headquarters at Warsaw. There are
more than 2000 daily flights from 86 bases which connecting the 222 destinations in more than
37 countries on fleet of 430 Boeing and further it will enable to lower the fairs and also grows
the customers to 200 million(Zahari and Romli, 2018.).
External strategic tools to analyses the external environment
Political environment:-
The political environment of the Ryanair in Europe is stable and it only concerns the
supports of the local government for their own carriers of the national.
Economic environment:-
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For Ryanair it has been cautions for its outlook in 2007. Few things which create
problems for the company in the economic of the Europe is downturn. There are so many things
such as increasing the price of fuel, raw materials, products and the last is terrorist attack which
affect the organisation in very negative manner.
Social factor:-
Its necessary to understand the preference s of the customers which runs the company in
a flow. Even for Ryanair it provides the poor customer services which from the cheap and low
fairs it attracts the customers and also retain the consumers(Widya Yudha, Tjahjono and Kolios,
2018).
Technological factor:-
It has made to use the new technologies of the internet which provide so many facilities
checking and making the websites, online booking, and also the websites which is most useful
fort the customers and organisation. From technological factor of the Ryanair it is leverage for
the traffic of the website to sale and promote the ancillary products.
Environment factor:-
It producing the less emission products which doesn't harm the environment because it
ecofriendly emissions which especially focus on the legacy of the carriers. It manufactures that
products which is good for the environment and also pollution free.
Legal factor:-
It currently involved the legal battles with the cases field against the cases and cases
filled by it. It's all depend upon the decision of the government which regardless the case is win
or losses. It faces so many problems due to the expanses of legal factors and also the attention of
the management which could divert the business from running smoothly(Javid and Brown,
2019.).
Force analyses
It determines the low price of the airline Europe industry is attractive or not.
 Bargaining and powers of buyers:- The barging powers if the buyers is high because
there are lots of choices such as the lower price tickets in airline market industry.
Sometimes it becomes threat because from the mind set of the customers which are
changing day by day.
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 Bargaining power of supplier:- The power of the bargaining of aircraft manufacturer is
high because there are only 2 suppliers in the market. It lowers the prices for converting
the single model of the aircraft and from it becomes dependent on the manufactures of
the aircraft and also the suppliers of the fuel are only 2 in the market which price is quite
high.
 Threats of substitute products and services:- It is the biggest threat that customers
might be switch to the other resources for travelling such as train or bus but at that time
the point of transportation with other countries and flying is most convenient option for
customers(Brueckner and Flores-Fillol, 2019).
 Threats for entrants:- The price barriers for entry is quite high and there are so many
duplicates for entering and successive in the market from the existing low price of the
airline but for the new entrants there are so many challenges which is acquiring the slots
of landing and gates of both secondary and primary which is existing the airlines for most
of the slots and gates.
Competitor analysis
The main three competitors of the Ryan-air is Easy-jet, British airways and Austrian
airlines. The emergence of entering new airline in the European country heavily increased the
competition in the industry. The competition in the Europe has increased at the level that the top
five airline in the industry have a combined market share of 31%, whereas the five biggest US
airlines have the 67% market share in the Europe. According to a recent research three airline
have both financial and competitive competence in the Europe such as Ryan-air, Air France
KLM and Lufthansa. Evan no airline has an effective share of industry at large, fewer rivals exist
in the sub-industry market. For example low cost carriers, Ryan air and easy-jest which dominant
the market of industry, Ryan-air carried 34% more passenger than easy-jet in 2016. Ryan-air
provides the low fares tours and cutting price on specific routes to undermine competitors. It also
setting up the new routes to discourage new competitors(Belton, 2017).
There are number of low cost airline operating on the routes similar to Ryan-air which
includes Easy-jet, whiz-air and so on. Each of the competitor in the industry follow the process
in terms of minimizing their cost by reducing on board passenger facilities and airport outlay
cost. Ryan-air ha been able to drive out competition due to its experience and large fleet size on
many routes which results reducing competition on some routes. The deregulated airline industry
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providing the easy way to new companies for entering in the airlines of the European countries
and increase the competition for the local operators such as Ryan-air(Grant, 2016).
Ryan-air can effectively compete with its competitors because it has a level of unit cost
which is unlikely to be matched by the competitors in the Europe and so other airlines are
unlikely to be able to compete with it on price. The Ryan-air also moves to increase the
perception of its products and brand which helps in attracting more business passengers that have
an impact on the basis of competition(Khan, Kim & Kim, 2018). It can effectively compete with
its competitors only through its less pricing strategy but there will also be an extent to which
other dimension of the competition which plays an important role in the market place which
includes the quality of airport network and the level of customer satisfaction.
Internal strategic capabilities
Analysis of internal environment with the use of strategic tools such as:
SWOT analysis of Ryanair
Strengths – the major strength of the Ryanair is that the company charges very low
airfares which has helped the company in building up its brand image as well as in efficient
negotiation with the suppliers. The company has huge customer base. Further, the cost of
maintenance is very low in the new air-planes of the company.
Weaknesses – the major weakness of the Ryanair is that it has negative perception in the
mind of customers(Pisano, Rieple and Pironti, 2017). Customers view the company as less
concerned about their needs and wants. The company provides very poor customer service.
Further the company remains at bottom line because of less profit margins.
Opportunities – the major opportunity that can be grabbed by Ryanair is that, the
company can take benefit of its website. Website of the company is very popular which can be
used for the purpose of advertisements and this in turn would help the company in increasing its
revenue through increase in sales. The company can even increase its sales by motivating the
employees to perform better. Further the company has an opportunity to expand its operations by
selling ancillary products.
Threat – Ryanair is under high pressure because of cash flow which may prevent the
company from rapid expansion. Further, high competition in the market would bring difficulties
for the company to survive and grow in long run(Grant, 2016).
TWOS matrix of Ryanair (in order to generate strategic options for internal environment)
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Strengths weaknesses
Opportunities The company can take
advantage of its customer base
in order to increase its selling
of ancillary products.
Ryanair can improve its
customer service by training
and motivating its staff
members to deliver quality
services.
Threats The company can take
advantage for charging low
airfare prices in order to beat
its competitors.
Ryanair can react better
towards the fuel prices by
hedging its oil prices.
Strategic capability and competitive advantage
Furthermore, the company can analyse its strategic capability and competitive advantage
by analysing its threshold resources such as aircraft, financial resources, employees of the
company and its office equipments. Apart from this, company can analyse its threshold
competencies by online bookings or website, point to point routings and low cost operations.
Further, the unique capability of the company that helped it to gain competitive advantage was
management team and its core competency that helped to gain competitve advantage were low
prices and cost conscious culture (Wheelen and et.al., 2017).
Ryanair's strategic choices and future strategic direction
The strategic choices of Ryanair can be categorised in two parts;
Corporate level- At corporate level, the airlines targets the transnational strategy shifted
from international strategy that is more in demand as the need of globalisation (Corporate level
strategy, 2019).
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Business level- At business level, Ryanair adopt cost leadership that offer air travel
service at lower unit cost than they can (Business level strategy, 2019). It is the best strategy in
competitive scope and in broader perspective, the focus of the airlines is on both cost leadership
and differentiation in order become integrated.
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(Source: Business level strategy, 2019)
Il
lustration 1: Corporate level strategy
(Source: Corporate level strategy, 2019)

Ansoff Matrix
This model is essential for strategic marketing planning and for future strategic direction
to Ryanair.
Existing New
Existing Market penetration and consolidation
It can be one of the effective key
strategic direction for Ryanair. Under
this strategy they should focus on;
 Increased number of routes
offered
 low fare
 frequent flights
 merging with low cost airlines
Product development
Under this strategy they should
develop existing products or service
by;
 offering free flights
 development of information
technology to promote online
booking
 The expansion of industry
into existing products is a
good strategic fit
New Market development
Market development is possible with
the help of secondary airport and by
connecting flights that enhance the
frequency of consumers. Developing
new routes and flying to new
destination is also a good strategic fit.
Diversification
Diversification can be achieved by
Ryanair by long haul flights.
Evaluation and Justification
Based on the macro and micro analysis it has been analysed that cost leadership is not
appropriate for the long run strategy. The company enjoying this currently but as the level of
competition will enter in the market then in that specific situation it can be come in front of the
company in terms of issues Khan, Kim, & Kim (2018). As per their strategic plan, if, Ryanair
effectively market their business in consumer's mind as lowest price airlines that will separate
their market segment. The evaluation of strategies are as follows;
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Suitability
The strategy of the company is sensitive to the environmental and political factors
because a negative condition can affect the operation and profitability of Ryanair. The
diversification in new market help them to increase their revenue. Furthermore, building on the
low cost leadership strategy and decreasing the prices even more will challenge the competition
and lifts entry barriers to new entrants in the market Brueckner & Flores-Fillol (2019). With the
lowering the cost, it is essential for the company to bring innovation in their products and
services that will maintain the standard and image of the company in market.
Acceptability
It is related to the expected performance of the strategy that can be examined in two
factors; risk and return. Risk can be measured on the base of liquidity and leverage of the
company. Company's profitability is decreasing possibly due to the amount of money invested in
new products and expansion plans. In return, the strategy is resulted in better profit that has been
earned by the company in last few years.
CONCLUSION AND FUTURE RECOMMENDATION
From the above assignment, it has been summarised that in order to analyse internal
environment through strategic tools; company used swot analysis, twos matrix and analysis of
strategic capability and competitive advantage. Apart from that, the company used pestle
analysis and porters five force model as strategic tools to analyse the external environment.
Furthermore, company carried out its competitor analysis by taking into consideration its 3 major
competitors.
It has been recommended that in order to capture larger market share, company should
focus on improving its customer service by proper training and motivation to its staff members.
Furthermore, the company should take advantage of its popular website for the purpose of
advertisement as it will help in increasing the sales. The company should even pay emphasis on
increasing its profit margin so as to rise from the bottom line.
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REFERENCES
Books and journal
Ansoff, H. I and et.al., (2019). Implanting strategic management. Springer.
Belton, P. (2017). Competitive Strategy: Creating and Sustaining Superior Performance. Macat
Library.
Brueckner, J.K. and Flores-Fillol, R., 2019. Market Structure and Quality Determination for
Complementary Products: Alliances and Service Quality in the Airline Industry.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Grant, R. M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Javid, M. and Brown, P.M., 2019. Field Analysis and Electromagnetics. Courier Dover
Publications.
Khan, N. T., Kim, Y. H., & Kim, Y. B. (2018). The dynamic impact of low-cost carriers on full-
service carriers and the tourism industry of South Korea: a competitive analysis using the
Lotka–Volterra model. Asia Pacific Journal of Tourism Research. 23(7). 656-666.
Pisano, P., Rieple, A. and Pironti, M., 2017. Strategic approaches. Strategic Human Resource
Management: An International Perspective. 37.
Wheelen, T. L. and et.al., 2017. Strategic management and business policy. (p. 55). Boston:
pearson.
Widya Yudha, S., Tjahjono, B. and Kolios, A., 2018. A PESTLE policy mapping and
stakeholder analysis of Indonesia’s fossil fuel energy industry. Energies. 11(5). p.1272.
Zahari, A.R. and Romli, F.I., 2018. Analysis of suborbital flight operation using
PESTLE. Journal of Atmospheric and Solar-Terrestrial Physics.
Online
Corporate level strategy. 2019. [Online]. Available
Through:<https://getsling.com/blog/business-level-strategy/>.
Business level strategy. 2019. [Online]. Available Through:<https://getsling.com/blog/business-
level-strategy/>.
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