Business Strategy and Innovation: A Case Study on Ryanair

This report provides a comprehensive analysis of Ryanair's business strategy and innovation. It begins by identifying key drivers of innovation, such as nurturing talent, product innovation, portfolio management, building relationships, effective teams, systematic processes, and a positive climate and culture. The report then examines factors that enabled Ryanair to differentiate itself in the airline industry, focusing on product innovation and strategic relationships. Furthermore, it explores the strategy framework of cost leadership and market penetration, highlighting Ryanair's implementation of these approaches. The 4 P's of innovation—product, process, position, and paradigm—are discussed in the context of Ryanair's business model. Finally, the report delves into Ryanair's blue ocean strategy, detailing the tools and techniques employed to achieve success, including the strategic canvas and four action framework. The analysis underscores Ryanair's ability to identify and capitalize on market opportunities, making it a significant case study in business innovation.

Strategy and Innovation

TABLE OF CONTENTS
INTRODUCTION .........................................................................................................................1
QUESTION A..................................................................................................................................1
1) Key drivers of innovation.......................................................................................................1
2) Factors affecting Ryanair to do things differently..................................................................3
QUESTION B..................................................................................................................................3
1) Strategy framework of cost leadership and market penetration.............................................3
2) 4 P's of innovation..................................................................................................................4
QUESTION C..................................................................................................................................5
1) Explain blue ocean..................................................................................................................5
2) Various tools that was used by Ryanair to become successful in blue ocean........................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy and innovation are direly related to each other. They both affect the operations
of business and its objectives in different manner. Business strategies are made to bring
innovation in products or markets. It helps in developing products for customers by identifying
their needs. It is impossible to sustain in market without innovation because people’s taste and
preference changes with time. In this assignment, the key drivers of innovation are described that
affects business strategies. Further, strategy frame work related to cost and market penetration is
described. Along with it, 4 P's of innovation is described that brings changes. In the end, the blue
ocean strategy and strategy canvas with 4 action frame work is described.
For undertaking this case study, present organisation selected is Ryanair. The cited firm
belongs to airline industry and operates globally. The existence of the company on such a great
level requires effective business strategies and innovation. Thus, this case study will help in
developing a relevant one for the cited establishment.
QUESTION A
1) Key drivers of innovation
Innovating strategies helps in facing critical situations in an effective manner. There are certain
drivers that forces firms to focus on innovating things like process, product, etc. that will help in
surviving in long run. These drivers bring or create innovation in industry and increases
competition. They are as follows: -
Nurturing talent: - Everyone has the ability to think differently. It helps in creating ideas and
doing things in different manner. This talent is based upon the thinking level and experience of
person. It helps staff to create different ideas to complete the task and helps in improving their
performance (Klingebiel and Rammer, 2014).
Product innovation- It starts with identifying customers’ needs. It is done to create value for
product that is completely different from others. Customer’s taste changes frequently so business
has to identify them and develop product. It is the factor that allows organisation to remain
competitive in the market. It shows the people about the novel feature that business has

incorporated and it is the right product for their demand. Lack of product innovation will create a
difficult situation in which a company will not be able to sustain.
Portfolio management- It allows firm to allocate resources to achieve its goals and objectives.
A balanced management will allow firm to complete activities in specific time period and
increasing the performance of overall organisation. It focuses on bringing innovation by doing
research in the market and focusing on every area. This boosts up the firm’s confidence if there
are new techniques of systems and procedures are adopted. It states that which activities are most
important and how these activities will help in accomplishing tasks. It allots resources on the
basis of short and long-term goals (Johnson, 2017). Portfolio management brings changes in
company by utilising resources in an efficient manner.
Building relationships- Employees and managers are the main pillars of every organisation.
They perform task in order to achieve business objectives and goals. Stronger relationship
between them will help in bringing together their ideas on a table. Several ideas brought together
helps in completing a task in an innovative way. It also enhances employee’s performance and
productivity. Further, it encourages them to take own decision to complete a task. It will bring
creativity in working environment and improving overall business culture.
Building Effective teams- It is the second key for innovation in business. Individual working is
not as effective as working in teams. Teams represent different people from different segments
focus on achieving a single task. This brings them together and several ideas and knowledge is
shared. It creates creativity in each individual and they perform accordingly. Also, problems and
issues are solved among them that encourages them to work hard. It helps in adopting change
and cooperation.
Systematic process- A process must be developed in systematic manner that frequently
encourage innovation to occur (Rudzinski and Uerz,, 2014). For example: six sigma, total quality
management and business process engineering can be implemented in order to bring changes in
process or systems. These methods applied will transform the operations of business and
improves productivity. If it is repetitively applied it will identify gaps and improve them.
Apply tools and techniques- It can be applied to create continuous innovation in business.
These tools and techniques used allows firm to measure their performance and identify areas of

improvement. Then effective business strategy is developed that creates changes. Lean D4
method can be used that includes four phases define, discover, develop and demonstrate.
Climate and culture- It is working environment within the organisation that states relationship
between every individual. An innovative culture in the organisation will encourage employees
and mangers to think differently. It will enhance operations of business and increase in profits.
2) Factors affecting Ryanair to do things differently
Ryanair have successfully innovated their product with the help of product innovation. They
were able to identify the needs of customers and accordingly they created product that was
unique. It was done to attract those people who were not able to travel by air due to high prices.
This allowed Ryanair to develop product that was very effective and cheap to them. Other than
that, they focused on building relationship with secondary airports to do business (Zehir., Can
and Karaboga, 2015) It was useful to airports also as infrastructure and traffic increased
generating revenue for them. This created change in air travel as people were now more attracted
to low price services. This affected airports as Ryanair stared to invest in infrastructure and
development of airport. So, it became necessary for airport to maintain their service quality and
creating favourable conditions than other. This innovation created a positive image of Ryanair in
industry as more new passengers started to use their services. Moreover, building effective team
has helped Ryanair to increase their staff performance and in this way, they have maintained
their service quality. It helped them to increase customer satisfaction that lead to retain them. In
this way, Ryanair was able to use key drivers of innovation that helped them to do things
differently and increase market share. Thus, with these factors they are world's largest low- cost
company in air travel.
QUESTION B
1) Strategy framework of cost leadership and market penetration
It is a framework that consists of strategies and decisions that are taken for growth and
development of business. It focuses on individual roles in implementing strategy. This contains
targets and activities that describes how effective goals can be accomplished. There are various
elements involved in strategy framework.

Cost leadership- It states that how companies lower their cost to attract customers by providing
best services. It is done by finding measures to offer a product at lower price than competitors.
Customers are often attracted to low cost product as they can afford it. Ryanair has able to gain
enough market share in airline industry by understanding customers’ needs and offering low cost
services (Aloini and et.al., 2015) This had made them a leader in European market. They have
successfully entered the industry through blue ocean strategy. It helped them to find loopholes in
this and they started offering services at low cost. Moreover, it was useful for them to grab this
opportunity that lead to increase in customers and ticket sales. It has influenced customers to
change their lifestyle by travelling through air transport.
Market penetration- It is a strategy of developing new market for products to be offered. It is
generally followed by companies to increase their customer base. In this, similar product is
offered in new markets to increase market share and profits. The concept of low cost service
evolved from US (Peschl and et.al., 2014). It provided opportunities for business to grab
European market by identifying customer’s needs. Service is very important element in air
transport. It determines the level of comfort and flexibility to customers. Also, it describes how
company image through its efficiency in time and cost. These business uses modern technology
to provide free services of food and reducing airport taxes. Ryanair’s main purpose was to enter
in different market by using the blue ocean strategy. It developed its focus on other markets by
observing customer living standard. Through their effective marketing and advertising of service,
it has attracted various customers from different markets. Furthermore, it has provided them an
additional advantage over other companies to gain large audience.
2) 4 P's of innovation
In terms of business, innovation means modifying or changing strategies, systems, process, etc.
at global platform. It brings changes in entire industry and deliver goods or services to
consumers. This can be done in any element and by applying various tactics and methods. It is
necessary to bring innovation due to change in taste and preferences of people. This enhances
product quality and encourages living standard in the society. By applying 4 P's of innovation,
performance is enhanced that helps in growth and development of overall organisation. These 4
P's are described below: -

Product innovation- It means to modify existing product or developing new one. This is done to
meet the changing needs of people (Hilman and Kaliappen, 2014). It helps in identifying what
changes has occurred in taste of and what effect will it have in the market. Product innovation is
done to either attract audience or to aware people about the new product. Ryanair offered product
by using modern technology that lead to reduce their product cost. It helped them effectively to
increase revenues and attract more customers. This was completely new modification that was
done in air transport.
Process innovation- It focuses on process through which goods or services are created or
delivered to customers. This helps in improving the performance of organisation by enhancing
their efficiency and effectiveness. It is mostly used in production process to reduce the cost per
unit and in delivering better customers services. Ryanair changed their process by eliminating
agents that influences ticket price (Pisano, 2015). They started operating from secondary airports
and connecting from point to point. That helped in increasing efficiency of staff and attracting
millions of customers.
Position innovation- It focuses on building positive image in the market by offering product in
specific way. This helps in differentiating from competitor’s product by showing special features
and characteristics of product. It is done for developing changes in process or product and then
re- positioning it in different way. Ryanair positioned itself as a low-cost leader in the market
that lead to enhance their operations in Europe. This was beneficial to them to increase
competition in market as classic airlines were not able to respond to this strategy. In this way,
they became the largest low-cost company in the world.
Paradigm innovation- It is the final P of innovation that relates with paradigms of organisation
or industry. This shows how an organisation develops its image in the minds of people. It states
what are the mission and vision of organisation and how it relates to customers’ needs. Airline
company Ryanair showed themselves as a cheap low-cost option to travel. They provided option
for people who were not able to travel. For this, strategy that was followed to cut down cost and
provide better services to people (Christensen, 2017). This helped them to grow in those areas
where they were not existing.

QUESTION C
1) Explain blue ocean
It is based on creating a market within red ocean strategy by differentiating it from others. Its
main purpose is to create customers demand by increasing value of product. There is no
competition as many few firms are operating and company can easily do business without any
pricing policy. Most firms operate in market where there is intense competition, they spend huge
amounts on advertising and selling product to increase sales. Blue ocean strategies provide
opportunities for firm to earn huge profits by creating new demand of the product. Other firms
cannot compete because of superior product features or low price (Cramer, and et.al 2014). For
example- Ryanair successfully identified this strategy and entered in the market by offering low
service. They captured the whole market as they know that most firms were providing service at
very high price. For this, they made effective business strategies of offering high quality service
at very low price. They targeted middle class people and focused on customer service. Several
changes were made by them like operating through secondary airports with only one aircraft,
point to point connectivity, short routes, etc. Thus, it helped them to attract large number of new
passengers and reducing cost of customer service. It entirely changed the overall concept of air
travel that it was for providing luxury goods at high prices.
2) Various tools that was used by Ryanair to become successful in blue ocean
Business uses various strategies to survive in long run. It is done to ensure its existence and
stability in profits. This can be done by identifying markets and needs of people. Strategy canvas
was developed by W. Chan Kim and Renee Mauborgne in 2005 that showed way of not entering
in existing market but by developing own market place. It is followed by identifying new
markets and needs of people and then entering it. This builds a marketplace where there is no or
little competition and other firms finds it difficult to compete. It is basically a graph in which
certain factors are evaluated to formulate a competitive strategy. This is usually used by airline
companies to know what services are offered to customers. Ryanair airlines established itself as a
low-cost carrier company. It expanded its low-cost services to entire European countries that
helped them to gain new passengers all over. Many classic airlines were already existing in this

industry but they were providing services at very high prices. So, people were not finding it
worth for the services that they were getting it (Kaliappen and Hilman, 2014). Also, there was
stiff competition so firm’s pricing policy was dependent upon each other. This created
opportunities for another firm to enter in it and offer product at low price. Ryanair effectively
grabbed that and they were successful in increasing volume of customers in quick time.
The four-action framework is helpful in creating business value of product and adding new
values to it. It was developed in blue ocean strategy and is one of eight tools used in it. In this,
the four actions taken are eliminate, raise, create and reduce that have been explained briefly
under: -
Create- It is the first stage in which an idea is created for new industry factors. The factors
created generate value and new market in which products were not offered before. Ryanair
identified factors like customers service, change in customer value, increase in number of
Illustration 1: Four Action Framework
(Source: Marborgne, K., 2017)

customers in travelling from one place to another. Further, massive influence on use of air
transport and increasing population provided them a way to create value of product which no
firm was offering (Johnson, 2017). Also, innovation of new technology and its use in
transportation gave them an opportunity to generate am idea. These factors helped Ryanair in
creating value of product to enter into new industry.
Reduce- In this stage, the idea of reducing the factors of differentiating the product within
industry is developed. It states how product features or characteristics will be presented in the
market that will help people in buying that product. Ryanair developed a product that provided
low cost service to people. They were easily able to identify difference between classic airlines
and Ryanair. They identified relationship between airports and low-cost carrier. By evaluating
airport cost and service provided, they developed new business approach. In addition, modern
technologies, food charges and other related services were evaluated.
Eliminate- In this step, existing factors within the industry that are the basis of competition are
identified. These factors consist of travelling time, ticket cost, customer service, etc. Ryanair
identified that these factors must be modified and cost must be reduced. They responded to these
factors by offering low cost service (Peschl and et.al., 2014). They used the latest technology and
reduces the cost of food and other services. It enhanced their staff efficiency and increases their
customer base.
Raise- It is a step in which factors are raised that are present in the industry. This can be done by
improving them or by changing its quality. It helps in attracting more new passengers and
advertising of product. Ryanair raised their quality of customer service by reducing its cost and
focused on maintaining it. Therefore, classic airlines cannot do that because they want to
maintain their reputation and dignity. Also, if they lower their cost, it leads to reduction in
profits.
Ryanair successfully entered in this market and they introduced very new techniques to
maintain their service quality. This was the main reason in development of low cost air travel.
They issued cards at Shannon airport to each customer so they do not have to pay airport taxes.
This enabled them to connect to small regional airports thus reducing costs along with ticket

prices. It rises the traffic on small airports and helps in developing infrastructure of that airport.
This is done by using market space in blue ocean strategy.
CONCLUSION
From this case study, it is concluded that using effective strategies like blue ocean helps
in creating a business value product by identifying new market area. Innovation is the main
factor that helps an organisation to enter in the market. Ryanair effectively used blue ocean
strategy to identify new market and develop product. With the help of appropriate strategy
framework of cost leadership and market penetration, Ryanair developed their market. Further,
by applying 4 P's of innovation that includes product, position, process and paradigm, Ryanair
innovated the new market. Moreover, using strategy canvas and 4action framework that includes
create, reduce, eliminate and raise several factors that influence air travel were identified and
evaluated. This benefited Ryanair to become the world's largest low cost company in quick time.

REFERENCES
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