Strategy and Case Analysis Report

MNG 93002 Strategy and Case Analysis
Name
(Affiliation institution)

Executive Summary
1. The main aim of the report was to conduct internal environment of Ryanair Company
using VRIO analysis, external environment using PESTEL Analysis as well as
competition using Fiver porter’s forces to determine the company’s strategic position and
strategic choices.
2. The Competition Forces analysis showed that European Industry has a medium threat of
new entrant, medium threats on availability of substitute, high bargaining power of
customers and suppliers as well as a high competitive rivalry. The analysis showed that
with an effective strategic position the industry is still attractive for doing business.
3. PESTEL Analysis shows that government restrictions, hikes on oil prices, currency
fluctuations, and uncertainty over Brexit, COVID19, changing government policies and
environment acts are threats that may impact the company even at 2030 scenario.
Changing patterns of customers and growth in technology are opportunities in the market
4. VRIO analysis shows that the company has core competencies in finical resources,
intangible and tangible assets which form part of its strengths.
5. Expansion of the products using both differentiation and diversification strategies, use of
business stability strategy in its operations, reviewing prices structures as well as training
of employees are recommended strategic choices for the company to sustain competition.

Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................3
Context.............................................................................................................................................4
Overview of the European airline industry and Ryanair..............................................................4
Theory..............................................................................................................................................4
Analysis...........................................................................................................................................5
Competitive Forces Analysis.......................................................................................................5
PESTEL Analysis........................................................................................................................6
VRIO Analysis.............................................................................................................................8
Discussions......................................................................................................................................9
Conclusion.....................................................................................................................................10
Recommendations..........................................................................................................................10
References......................................................................................................................................11

Introduction
Conducting internal and external environment that an organization operates enables
businesses to derive effective strategies for penetrating and operating in domestic and
international markets. A research conducted by Ghezzi, Balocco and Rangone (2010 p.213)
shows that big companies fail to impress in various markets due to poor strategies and
positioning which is largely contributed by insufficient knowledge about the market
opportunities and threats. Particularly, in the Airline industry which has been very competitive in
the last decades, some big airlines have found themselves expanding to various markets in
pursuit of profitability. The strategies they adopt in the market to deal with threats and explore
the opportunities have been a key determinant of their success. Therefore, the report seeks to
present an analysis of competitive forces to determine the attractiveness of the European airline
industry and determine how Ryannair should manage the competitive-forces it faces. Besides,
the report will also conduct PESTEL Analysis to develop a scenario analysis targeted at the year
2030 and examine the scenario that presents an opportunity and threats. The report will also
conduct VRIO Analysis to determine the resources and capabilities of Ryanair and provide a
recommendation on strategic choices that the Airline should adopt to improve its chances of
being persistently profitable.
Context
Overview of the European airline industry and Ryanair
European Airline industry consists of over 50 large European Airline which operates in
the continent and around the globe (European Union Aviation Safety Union, 2020). The
European airlines offer a variety of transatlantic or intercontinental flights, transcontinental
flights and domestic flights. The most dominant Airline in European Airline industry includes
Lufthansa Group (flies over 80 countries), Ryanair (flies over 40 countries), International Airline
Group, Air France-KLM, Easy Jet, Turkish Airline, Aeroflot as well as Swiss Airline (European
Union Aviation Safety Union, 2020). Ryanair is one of the companies which had operated in the
market for over 25 years. Currently, Ryanair holding plc. is categorized as the largest airline
group across Europe. Ryanair is the parent company of Ryanair DAC, Malta, Lauda and Buzz.

The company was founded in 1985 by the Ryan family with 25 employees and a capital of £1
million. The Airline carries over 2400 daily flights (equivalent to 154 million per year) from 82
bases (Ryannair, 2020). Furthermore, on the fleet of 47470 aircraft, Ryanair connects to over 200
destinations in 40 countries (Ryannair, 2020). Currently, Ryanair has a team of over 19000
aviation professional who is very skilled and knowledgeable about the industry (Ryannair, 2020).
Theory
The strategic tools that determine opportunities, threats, and competition levels for
Ryanair to make effective strategic choices include PESTEL, Five porter’s forces and VRIO
Analysis. Competition forces analysis is conducted through a framework called Potter’s Five
Forces. According to Sohel, Rahman and Uddin (2014 p.40), Potter’s five forces is a framework
that companies use to identify and analyze the five competitive forces which influence every
industry and assist to determine its weaknesses and strengths. Besides, organizations use the five
competition forced to determine their position strategy and understand the level of competition
for enhancing long-term profitability. The five competitive forces include entrant of new
products in the market, the rivalry between the companies, the bargaining power of customers,
availability of substitutes and bargaining power of suppliers (Sohel, Rahman and Uddin (2014
p.40).
PESTEL is an acronym for Political, Economic, Social-Cultural, Technology,
Environmental and Legal factors (Pourmohammadi et al., 2020 p.1). Organizations around the
world conduct PESTEL Analysis to determine the opportunities and threats that exist in an
environment where a company operates. Furthermore, companies usually use the results from
PESTEL Analysis to make a strategic decision of how to operate or penetrate in a particular
market.
VRIO is an acronym of Vale, Rarity, Imitability and Organization. The four elements
making up VRIO are approached in the style of a decision tree (Cardeal and Antonio, 2012
p10159). Organizations use VRIO Analysis to uncover and protect capability and resources that
give them a long-term competitive advantage.

Analysis
Competitive Forces Analysis
Threat new product: The threat of new entreat is medium. European Airline Industry demands
a huge investment of capital to either enter or exit and it is also saturated with diverse segments
of prices. Airline leaving the industry have to write down and incur huge losses. Furthermore, the
industry is highly regulated and not every company can enter or leave the industry. The
sophisticated expertise and knowledge are needed. Besides, with European Industry synergies
from the economies of scale and leveraging the efficiencies, the exit and entry are leading to a
declining level of direct competitors. In the context of Threat of new entrant, the market is
attractive for doing business.
Availability of substitutes: The threat of substitutes and complementarities in the European
Airline Industry is high in domestic markets but low in foreign markets. In a domestic context,
consumers opt for cars, trains and busses when travelling on short distances. Besides, new
technologies such as video conferencing and Skype has reduced the need for people to travel
(Nursey-Bray et al., 2694). However, when moving in cross- borders, consumers usually prefer
aircraft as there are no other forms of transport which are convenient for a long journey. Overall,
in the threat of substitute context, the market is attractive for doing business.
Bargaining power of customers- European Airline industry has a high bargaining power of
customers. The industry has low switching costs on buyers and therefore customers can switch to
other carriers if companies such as Ryanair fails to meet their demands. With internet growth,
potential customers in the market are usually informed about the prices via the internet and
therefore they can book the cheapest Airline (Katsikeas, Leonidou and Zeriti, 2019 p.1). In the
power of buyer context, the industry is unattractive as customers are price sensitive.
Competition Rivalry within the Industry- The competitive rivalry in the European Airline
industry is extremely high with the consideration that the industry is very competitive due to
various reasons such as tight regulations with passengers’ safety being paramount which has led
to high operating costs (Chen, 2017 p.171). Besides, the growth rates of the industry are very
slow with high fixed costs and low levels of product differentiation. Ryanair is experiencing high
competition from low budget carriers and national carriers competing for the market share in the
industry. In the context of Competition rivalry, the attractiveness of the European Airline
industry is medium as a result of increased in competition resulting in overcapacity of airlines

Bargaining power of suppliers: The bargaining power of suppliers is immense with the
consideration that the industry has three inputs including labour, aircraft and fuel which are
significantly affected by macroenvironment. For example, the aviation fuel prices are determined
by the rate of currency fluctuations in the oil global market which can be influenced by
geopolitically and other macroenvironment forces (Kristjanpoller and Concha, 2016 p.496).
Labour is subject to Powers of a various union in Europe who impacts the costs of Airlines.
Furthermore, European airline needs aircraft on a wet-lease basis or outright sales and therefore
the entire industry has to depend on the key manufactures such as Boeing and Airbus for their
aircraft needs. The switching costs from one supplier to another in the European Airline Industry
is very high as mechanics and staff have to be retrained. In the context of suppliers’ power, the
market is not attractive for doing business.
PESTEL Analysis
Political forces
(Includes government policies that affect how an industry
operates)
Economic forces
(Includes macroeconomics factors that impact business
operations)
-Government restriction- The United kingdom has
implemented a strict compulsory security restriction and
measures as a result of previous terrorism attacks. Ryanair
Industry was forced at one time to cancel 279 flights after
terrorism incidence refunding 40,000 passages their fares
worthy £2.7 as the company suffered a loss of £1.9 as a
result of booking reduction (Ryannair, 2020).
-Taxation- The corporate taxation of most of the European
countries is medium. The taxation rates range from 12 to
25%. However, the passengers’ tax has increased
significantly contributing to low sales. UK government has
increased tax 3 times in 24 years for long and short journey
hence customers opting for alternatives (European Union
Aviation Safety Union, 2020).
-Change in government policies- The rapid change in
Hikes in oil- There have been price hikes in oil leading to
the Airline to charge high prices.
Currency fluctuations- The weakening of pound and
uncertainty of Brexit deals has led to a change in
consumer behaviours of customers on leisure products.

government regulation impacts decision making of the
Ryanair Company. For example, in 2005, the European
Union proposed to regulate the inconveniences which are
caused to customers via cancellations (European Union
Aviation Safety Union, 2020).
-Uncertainty over Brexit deal.
Social-cultural forces
(Includes demographic factors which impact operations of
an industry)
Technological forces
(Involves how innovations and Technologies changes how
an industry operates)
- Changing patterns of consumers- Europeans have
become more interested as compared to previous
years in travelling. Researches indicate that 9/10 of
have gone for a holiday (European Union Aviation
Safety Union, 2020)
- High population- European Nations have
experienced high population reaching over 750
million creating a high demand for Airline products
(European Union Aviation Safety Union, 2020).
Innovation- the high rate of innovation has fastened
process hence increasing profitability. The rise in the
mobile banking system has resulted in high bookings of
tickets through online systems and ambiguity avoidance
through checking flights status.
Internet- With social media popularity increasing,
advertising of the products has been easier.
Environmental forces
(Involves natural disaster that impacts operations of an
industry)
Legal forces
(Includes Laws that are imposed by regulators and which
affects how an organization operates.
- Pollution and environmental Acts- with Airlines
being associated with high pollution, there are strict
guidelines which governments have imposed and
very expensive. Airlines are supposed to pay high
taxes to an environmental board for their
contributions towards the issue of global warming.
Currently, aviation accounts for approximately five
percent of emission in the UK although research has
revealed that the figures are likely to reach 25% by
2030 (European Union Aviation Safety Union,
Ryanair is forced to comply with various regulations
imposed by the European Union and the United Kingdom
which may make the operations difficult.

2020).
- COVID 19- The eruption of COVID 19 has
facilitated most of the Aircraft in the Ryanair being
grounded due to movement restrictions by
governments. Uncertainty over the virus is a great
concern for the industry.
VRIO Analysis
Valuable Rare Imitable Organizational
Support
conclusion
-Financial
resources of
Ryanair are
valuable
-Financial
resources are
rare
-Finical resources not
imitable by other
Airlines
- Financial resources are
effective and
efficaciously arranged in
the market.
-Financial resources are a
sustainable competitive
advantage.
-Human resource is
non-valuable as
there are
relationship issues
between pilots and
management
- Human
resource not
rare
Human Resource is
imitable
-Human resource is not
effective and it is none
efficaciously arranged
and deployed in the
market.
-Human resource is not a
sustainable competitive
advantage
-Tangible Assets
like planes are
valuable
-Tangible
Assets are not
rare
-Tangible assets are
imitable
Tangible Assets are
effectively organized
with young planes
which are eco-friendly.
-Tangible Assets are a
sustainable competitive
advantage

-Intangible Assets
like Technology,
value chain
maintenance,
supply chain
efficiency, trade
name are valuable
-Intangible
Assets are rare
-Intangible Assets are
imitable
-Intangible Assets are
highly organized.
-Intangible Assets are a
sustainable competitive
advantage
Discussions
The VRIO, Porters forces and PESTEL analysis, indicated that there are opportunities
that Ryanair can utilize to make effective strategic decision and choices. The company must
focus on improving its human resource capability and core competence for it to achieve and gain
a competitive advantage in the dynamic European Airline industry. Ryanair Company has
financial resources, tangible and non-tangible resources which are not imitable, valuable and rare
indicating that the company can capitalize the core competencies to make effective decision in
the context of enhancing the operations through business stability and expansion strategy.
By 2030, some various opportunities and challenges exist in the Airline industry and
which the company need to consider. The uncertainty over COVID19 is a future threat to the
company. The world can experience an economic recession by 2030 resulting in Ryanair
Company changing its corporate and business strategy. The environmental acts mean by 2030,
Ryanair may be forced to focus on Corporate Social Responsibility in its operation to maintain
its operations in align with the governments' regulations. The changes might be very expensive
for the company. The technological advancement is an effective opportunity for Ryanair to
maximize its profits by 2030. The technology is evolving and consumers are digitalized and

therefore by 2030 Ryanair can automate process and production line to gain a competitive
advantage in the changing market. The Uncertainty over Brexit deal can still have an impact on
currency fluctuations by 2030 which may interfere with tariffs rates of import and exports. The
main suppliers of the industry are based in the United States and therefore rise in indicates high
costs of raw materials which in turn may lead to price hikes in the industry. By 2030, with the
bargaining power of customers being high, the companies operating in the industry will be
forced to reduce their prices. The reduction will result in marginalized profits especially for
companies struggling with finances.
Conclusion
Ryanair operates in a very competitive environment with many indirect and direct
competitors. Companies with an effective strategic position will be successful in the market. The
macroenvironment factors indicate that although the competition is intense, there are various
opportunities such as changing consumer patterns that Ryan Air can use to remain profitable.
The company need to put effective strategic choices to deal with the threats and competition
forces like high power of customers, availability of substitutes as well as the power of suppliers.
The report was limited to European nations and therefore did not provide comparison with other
continents for effective determination of strategic choices.
Recommendations
 Expansion of its products or client base (Diversification strategy) - The company should
consider offering a wide range of products to increase its profitability. The wide offering will
increase market segmentation enabling the company to obtain large markets.
 Business stability – with consideration of financial stability of the company, Ryanair should
adopt business stability which will involve the company upgrading its technology and
improving its services which will assist to gain customer loyalty as well as the reputation of
the company. With good reputation and customer loyalty, the company will achieve
repetitive purchases which will make the company experience long-term profitability.
 Fostering positive environment- Ryanair Company should work towards enhancement of
“clan culture” that is heavily rooted in strong relationships and collaboration. According to
martin, positive environment motivates employees to perform extraordinarily. Therefore,

with a conducive environment, Raynair’s employees will work with efficiency which in turn
will boost productivity as well as productivity.
 Reviewing the current pricing structure- Ryanair Airline should try lowering the prices of
its products and services slightly with the consideration that the industry has involved, direct
and indirect competitors have increased as well as the market changed. Despite the lowering
of prices resulting in reduced profits, the number of customers will increase which is a long
time will lead to increased profitability.
 Training of staff members- Offering the best training in the market will help to speed up the
production process as well as maintaining the levels of accuracy. With accuracy and time
being saved, Ryanair will be able to make more sales hence contributing to high levels of
productivity.

References
Cardeal, N. and Antonio, N.S., 2012. Valuable, rare, inimitable resources and organization
(VRIO) resources or valuable, rare, inimitable resources (VRI) capabilities: What leads to
competitive advantage?. Cardeal, N., António, (2012), pp.10159-10170.
Chen, P.J., 2017. Airline Passenger Safety or Customer Satisfaction?. International Journal of
Business and Economics, 16(2), pp.171-175.
European Union Aviation Safety Union, 2020. Overview of the Aviation Sector. [Online]
Available at https://www.easa.europa.eu/eaer/air-quality/overview-aviation-sector [Accessed 19
April 2020].
Ghezzi, A., Balocco, R. and Rangone, A., 2010. How to get strategic planning and business
model design wrong: The case of a mobile technology provider. Strategic Change, 19(5‐6),
pp.213-238.
Katsikeas, C., Leonidou, L. and Zeriti, A., 2019. Revisiting international marketing strategy in a
digital era. International Marketing Review.
Kristjanpoller, W.D. and Concha, D., 2016. Impact of fuel price fluctuations on airline stock
returns. Applied energy, 178, pp.496-504.
Nursey-Bray, M., Palmer, R., Meyer-Mclean, B., Wanner, T. and Birzer, C., 2019. The Fear of
Not Flying: Achieving Sustainable Academic Plane Travel in Higher Education Based on
Insights from South Australia. Sustainability, 11(9), p.2694.
Pourmohammadi, K., Bastani, P., Shojaei, P., Hatam, N. and Salehi, A., 2020. A comprehensive
environmental scanning and strategic analysis of Iranian Public Hospitals: a prospective
approach. BMC Research Notes, 13(1), pp.1-7.
Ryanair, 2020. About us. [Online] Available at:
https://www.ryanair.com/gb/en/useful-info/about-ryanair/about-us [Accessed 19 April 2020].
Sohel, S.M., Rahman, A.M.A. and Uddin, M.A., 2014. Competitive profile matrix (CPM) as a
competitors’ analysis tool: A theoretical perspective. International Journal of Human Potential
Development, 3(1), pp.40-47.