Strategic Leadership: Ryanair's Competitive Advantage Analysis

This report provides a comprehensive analysis of Ryanair's strategic leadership, focusing on its resources and capabilities using the VRIO framework. The first section identifies Ryanair's tangible and intangible resources, followed by a detailed VRIO analysis to determine its competitive advantage. The second section critically evaluates the VRIO framework, highlighting its advantages and disadvantages, and proposes the Value Chain Analysis as a complementary model to overcome the limitations of VRIO. The report explores the primary value chain activities of Ryanair, emphasizing how Value Chain Analysis can enhance Ryanair's low-cost strategy. The analysis incorporates information from the provided case study, Ryanair's corporate website, and its 2019 annual report to provide a current and relevant assessment of the company's strategic position.

Running head: STRATEGIC LEADERSHIP
STRATEGIC LEADERSHIP
Name of the Student
Name of the University
Author Note

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Q1. Identify Ryanair’s distinctive resources & capabilities and analyse them using the
VRIO framework to determine the organisation’s competitive advantage.
Introduction
The main aim of this question is to identify and discuss about the resource and abilities
that are possessed by Ryanair, and analysing them by the help of the VRIO framework, which
will help to determine the competitive advantage that is enjoyed by the management in order to
obtain the competitive advantage in the market places where they perform. This will help to
identify the resources that has been used by the management of this aviation company effectively
and efficiently, so that the resources can be utilized properly. It can be stated in this context that
aviation sector is one of the most competitive business sectors among all other sectors that exists
in the global business world.
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About the Organization
Ryanair airlines, founded in the year 1984, is a budget airline organization based in
Ireland. It has its headquarters in Dublin airport and has operational bases at London Stansted
airports. Ryanair Holdings is their parent company and their sister airlines are Ryanair Sun,
Ryanair UK, Lauda and Malta Air. The airlines have more than 300 fleet which flies through 225
destinations in Europe, North Africa and the Middle East (ryanair.com, 2020). The distinctive
resources of Ryanair are categorized into tangible and intangible resources. The tangible
resources comprise human resources consisting of almost 2000 employees around the globe;
physical resources that contains 225 brand new Boeing 737-800 aircrafts; financial resources of
having about 1.5 billion shareholder funds. Coming to intangible resources, Ryanair has the

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facility of cheaper slot licenses as it is accessed to multiple airports that are medium sized.
Ryanair was applied less than 7 airport charges on an average. Internet is another distinctive
resource for them that acts a s a major distribution platform gaining huge attraction. The core
capabilities and competences of Ryanair are comprised of multiple elements. The first one being
the low-cost based operations. They thrive to operate on the cheapest cost in terms of payment,
use of efficient aircrafts, utilizing secondary airports and internet as a device for sales and
marketing. They are also capable of sound financial statement, efficient leadership qualities, high
market power and handles employment very effectively (Mack, 2018).
VRIO Framework

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Analysis of Resources and Capabilities using VRIO Framework
Value
The VRIO model can be applied in order to figure out the competitive advantages of
Ryanair airlines. In the VRIO structure, the first component is V which stands for Value. This
component emphasizes about the deployment of the resources of Ryanair. It analyzes the
resources to see whether they are capable enough to fulfil the desires and expectations of the
customers. Ryanair has developed an efficient method to provide the cheapest facilities to its
customers. It combines the government subsidies, reduces the airport charges, operates on
medium size airports and operates on a business model that is quite low-priced. By doing so,

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Ryanair is successful in delivering services at the lowest possible price and thus they attract
millions of people around the globe (Montgomery & Oladapo, 2018).
Rareness
The second component is R which stands for Rareness. Ryanair is the only short-haul
budget business of airlines that has reduced airport charges and government subsidies. EasyJet is
the most direct and the strongest competing airline brand of Ryanair. Even EasyJet do not have
that resource which Ryanair has. Thus, the airport charge reduction and government subsidies of
Ryanair turn out to be unique and valuable. Also, on the other side, these facilities are provided
to Ryanair as they are capable of attract large number of customers and they possess secondary
routes. In turn, this helps the secondary airports to bring more travellers and consumption and
develop rapidly for the local government. Hence, the resources get rarely shifted (Nortilli &
Wong, 2014).
Imitability
The third component is I that refers to Imitability. Apparently, it can be stated that while
comparing Ryanair with any other airlines, the resources that Ryanair has is equal to owning a
huge cost advantage. The resources comprise of large number of work force, aircrafts and share
hold funds. Other resources include accessibility to small sized airports and efficient usage of
internet. As mentioned earlier in the report, these resources cannot be easily copied or imitated or
even transferred to other airline companies (Simatupang, Piboonrungroj & Williams, 2017).
Organization
The last component is the O which stands for Organization. Ryanair is an airline
organization that makes the best use of its wide range of capabilities and different resources. And
with the help of this, they are successful in offering the least cost and least price. Ryanair has a
very efficient CEO and a powerful management team along with efficient marketing strategy and

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appropriate operating strategy. Hence the competitive advantage of Ryanair has built up on the
successful deployment of all of its resources which can be analyzed rightly through the VRIO
framework (Buzatu, Pleșea & Iulian, 2019).
Conclusion
From the above discussion, it can be said that VRIO framework has successfully
identified and analysed the requirements through which Ryanair will be able to benefit the
competitive advantage in the market places where they perform.
Q2. Critically evaluate the VRIO framework and discuss which other model or framework
could be associated to VRIO to overcome its limitations.
Introduction
In this section, the main objective of this discussion will be to critically evaluate the
VRIO framework in the context of the organization of Ryanair, along with discussing any other
model or framework that could be associated with this VRIO framework, which will help to
overcome the limitations of this framework. The other model or framework that has been
selected to discuss in order to overcome the limitations of VRIO framework from the viewpoint
of Ryanair is Porter’s Value Chain Analysis. It can be noted that both the frameworks of VRIO
and Value Chain Analysis are part of the business level frameworks, which are used to identify
the abilities and resources of the organizations like Ryanair to gain the competitive advantage in
the market places where they perform globally (Gonçalves, 2018). The main advantage of using
the framework of Value Chain Analysis as the business level framework is to properly identify
the resources and abilities of an organization that are required to enjoy the competitive advantage
against the rival institutions that are present in the regions where the selected organization

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operates. This helps to allocate the resources ethically and efficiently, mainly in those areas
where the organization lacks the competitiveness, so that it can gain the strength and possess the
competitive power to compete in this global competitive business world.
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Advantages and Disadvantages of VRIO framework
The main advantage of using the VRIO framework to identify various resources and
abilities of the organization of Ryanair that has been discussed in the previous question is the
simple and easiness to follow this framework and its application in the business environment of
the selected company. The unused competitive advantages can be identified by the help of this
framework, which can be reused and help to transform them into the sustainable competitive
advantages that can help that business entity to gain the leading position in the market places
where they operate. It can be stated in this context that advancement in the area of technology
has increased the competition or rivalry between the business houses from a particular sector.
The same has been discussed in the previous question, where the abilities and resources of
Ryanair has been identified and being analysed by using the VRIO framework, which has
analysed from the viewpoint of the value, rareness, imitability and organization of Ryanair in
order to determine the competitive advantage of this aviation business company (Lubis, 2018).
But on the other hand, it is difficult to identify the sustainable competitive advantage that
is enjoyed by different business entities, as the global modern world is changing on regular basis
die to the advancement of technology. It is making the business world easier to work, but a
complex area to operate the business. Apart from this, this framework do not involve the internal
factors that are required to identify the resources and capabilities that are required to gain the
sustainable competitive advantage in the global market place. Thus, it is necessary to consider

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another framework and that is the reason for selecting Value Chain Analysis, which was
designed and recommended by Michael Porter in the year 1985. The picture of the Value Chain
Analysis is given below, which will be used to analyse the organization of Ryanair later in this
paper.
Value Chain Analysis
It can be stated in this context that Ryanair can take the advantage of low cost advantage
by using this Value Chain Analysis, which will help to acknowledge the profitable performances
through value creation and the activities from where the company will not get any kind of
benefits. Cost drivers of each of the processes can be established in value creation of the
activities, through which the company will be able to overcome the limitations of VRIO
framework. Identification of core competencies and activities can also be identified through
usage of this Value Chain Analysis (Miethlich & Oldenburg, 2019). These value-generating
activities will help to overcome the limitations that are faced by the management of Ryanair
while performing VRIO framework. Another major advantage that is enjoyed by the business
entities is that it is a flexible strategy framework, through which the business operations of the

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organization who will be using this framework along with the competitors of that organization
and the places in the business sector where they are operating.
The organisation issues which are involved with the promise of making customer value
commitments and promises can also be understood in a better way by using this particular tool,
as it aims on the activities that are needed to deliver the value proposition through the business
operated by companies like Ryanair (Caleia, 2016).
Primary Activities
The primary value chain activities of Ryanair are directly engaged in creating and selling
the services offered to their targeted people. Analysizing the primary value chain activities which
will enhance the performance of this organization are discussed below (Curry, 2016):
Inbound Logistics
Ryanair can face different kind of challenges in the service development phase, as it is
essential to develop a strong bond with all the suppliers, on whom the management depends to
receive, stock and offer the wide array of services that are offered by the management of this
aviation company. Analysis of these inbound logistics is thus, important for them so that it will
help them to focus on all the individual parts of the transformation process, where raw materials
are turned into the services that are offered by Ryanair.
Operations
The overall process of this transformation can make Ryanair ready to launch their
services in the market places where they operate. Repair and maintenance of the aircrafts are also
part of this category, along with the operations of manufacturing and service. Analysis of these
operational activities will help to increase the productivity of the organization, maximizing the
effectivity level and assuring the competitive achievement of Ryanair in the global market place.

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Outbound Logistics
This involves the activities through which the passengers passes through various
intermediaries. Warehousing, transporting, scheduling, handling of materials, delivering and
transporting are part of this outbound logistics. The management of Ryanair can analyze and
optimize in order to gain the competitive advantage, which will help this company to achieve the
business growth objectives (Tran et al., 2015).
Marketing and Sales
The differences between the services that are offered by Ryanair and its competitors can
be analysed in this section, which will help the management of Ryanair to strategize their plans
to gain the competitive advantage in the market places where it operates. Innovative services
need to be provided, which will help to gain these sustainable competitive advantages.
Services
The pre and post-sale services that are provided by this company can perform a vital role
in the building the loyalty of the purchasers who are availing the services of this organization.
Post-sale services are considered as the essential marketing as swell as promotional activities that
are performed by this organization.
Secondary Activities
The secondary activities perform a vital role in the coordination and facilitation of the
primary value chain activities, the scrutiny of which are discussed as follows (Pesic, Milic &
Stankovic, 2013):
Firm Infrastructure
This involves a series of activities, which involves quality management, accounting,
planning, financing, handling of legal matters and strategic management. Optimized value can be
achieved by Ryanair can be achieved through efficient and effective infrastructure. The

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management can control all these activities related to infrastructure, which is called operational
costs, through which they will be able to gain the competitive advantage in the global market
place.
Human Resource Management
Recruiting, selection, training, rewarding and performance management are the series of
activities that Ryanair follows under this section. Effective human resource management system
will help this company to decrease the competitive pressure through commitment, motivation
and workforce skills within the organization.
Technology Development
Aviation industry fully depends on technology, and Ryanair is also part of this
dependency. Services that are provided by them need to follow the technological development
activities, which involves data analytics, automation software, technological customer service
support and others.
Procurement
This involves purchasing of the inputs, which involves machineries, equipment, raw
materials and other necessary items that are required to offer high quality services to the
passengers. The management of Ryanair need to consider all these procurement activities in
order to optimize inbound, operational and outbound value chain process (Caputo & Borbely,
2016).
Conclusion
From the above discussion, it can be concluded that the value chain analysis possess the
capability to overcome the limitations of VRIO framework, and possess the power to help