Ryanair's Corporate Strategy: A Comprehensive Analysis

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Applied Corporate Strategy
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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................4
Conclusion................................................................................................................................11
Reference..................................................................................................................................12
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Introduction
In this 21st century, it is mandatory for every organisation to figure out its strategic plan to
expand its business successfully throughout the whole world. For this strategic planning, the
company needs to evolve better corporate strategies in comparison to its competitors.
Corporate strategy can be defined as the decisions and actions taken by the organisation, the
commitments made by them to gain competitiveness with the other firms in this business
field, that also in a strategic way. It is a long term planning of an enterprise to set goals for
the future and act accordingly. Strategy planning for any organisation is nothing but
deliberately incorporating such a set of activities, which would differentiate them from other
competitors. Corporate strategy of Ryanair aims to challenge other airlines companies in the
Aviation sector and incur returns more than average annually. Ryanair is an airlines
company, which was founded in 1985. At present, it operates across 33 countries in more
than 200 airports. Ryanair had successfully followed a strategy of cost leadership since its
foundation. Presently, Ryanair wants to continue their expansion all over the world and as a
step forward, they have ordered more than 400 new Boeing aircraft.
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Discussion
Q1. Discuss the business environment and identify some Opportunities - Os and Threats
- Ts (we expect six issues from the business environment to be discussed in total each of
which concluded as an O or a T). Industry analysis (5 Forces) should be applied to
assess industry attractiveness (each force should be discussed and assessed as High,
Moderate or Low and industry attractiveness should be assessed having those forces in
mind).
In the aviation sector, to understand the business environment completely Ryanair needs to
consider both the internal as well as the external factors. External factors mainly include the
opportunities and threats that Ryanair might face in their business development. As Ryanair
is one of the most successful aviation companies, located in Europe, it should be more
conscious of their threats and opportunities.
If the business scenario is analysed economically, it is evident from the facts that Ryanair
faced saturation in potential earnings although being the low-cost flying airlines. The reason
for this saturation was the political scenario of the UK as an effect of Brexit. This has to be
considered as a threat to Ryanair as well as other airlines companies. After the Brexit
referendum, the GBP has reduced approximately by 20%. Due to this weaker GBP, a portion
of earnings of Ryanair through annual revenues will fluctuate. This would lead to a
depreciation of Ryanair’s financial condition.
An opportunity for Ryanair may be the agreement signed by the government to open up new
markets in the aviation industry. Invasion of new technology is also an effective opportunity
for every airline's company as it is for Ryanair. In addition to the invasion of new technology,
the introduction of new routes is again an opportunity for this UK-based airline company.
Threats due to strong competitors in the aviation industry are a known fact for Ryanair. It is
facing a threat from other regional carriers who have started providing low-cost air tickets to
give a tough competition to Ryanair in the aviation market. Another threat to Ryanair is the
fluctuation of fuel cost globally due to economical and political reasons, which might affect
their business model.
Ryanair is a traditional business unit and is serving the world through its flights for a long
time. They have taken full care of their passenger services so far, including their safety. They
can provide exciting discounts and offers for their regular customers based on special
occasions and international festivals, to increase their satisfaction level and gain their trust.
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This can be an additional opportunity for airline services and attract more passengers for
other airlines as well.
Five Forces Analysis of Ryanair to assess industry attractiveness:
o Based on the threat of new entry- Ryanair’s best strength is their low-cost fares
since they started their services in Europe. In this growing industry, if new aviation
companies try to enter this industry market, they will have to bear a high cost in
promoting and advertising their company to compete with Ryanair. From this point of
view, Ryanair has cleverly opted for online booking services known as ‘Skylights’
and completed its promotion through the local newspaper, television advertisements
and social media. Industry attractiveness, in this case, can be considered high for
Ryanair.
o Based on the competition- Comparison of Ryanair with other rival airline companies
regarding this factor also expresses that Industry attractiveness of Ryanair is high.
They are extending their short haul flight routes along with affordable ticket fare with
the strategy of point-to-point connectivity. Other rival companies are still competing
with Ryanair on the price aspect.
o Based on the power of bargaining by buyers- This particular aspect of Industry
attractiveness can be considered as moderate. Ryanair sells tickets online through its
website, which is the main reason for its position in the market. Competitive pricing
of their tickets is a result of this aspect.
o Based on the power of suppliers- To maintain Industry attractiveness, good
relationship with the suppliers has to be maintained. Boeing Company is the main
supplier of Ryanair. Both of them maintain a healthy relationship, which in turn helps
Ryanair to bargain with its suppliers to maintain its cost effectiveness. Boeing
supplies both aeroplanes and fuel. Hence, it can be concluded that Ryanair has high
industry attractiveness in this case.
o Based on the threat of an emerging substitute- Ryanair faces a threat by the railway
systems in Europe that can emerge as a substitute. Railway fares are more than ticket
fares in Europe, which has acted as a key factor for Ryanair to expand its business in
Europe. If the railway system in Europe manages to cut down their price, then they
can act as a threat to Ryanair. In this regard, industry attractiveness is moderate.
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Q2. Identify and discuss the organisation’s resources & unique capabilities (at least 6
Strengths and Weaknesses should be covered in total). Demonstrate how unique
capabilities link to competitive advantage (use VRIO to identify Core Competences for
the organisation).
Identification of the unique capabilities of Ryanair and its resource analysis can be done by
the evaluation of internal factors that is their strengths and weaknesses. The strategic analysis
of these factors will help them to understand the current scenario of the aviation sector and
work on it accordingly. This analysis would help Ryanair to improve their facilities provided
and at the same take steps to cater to their weaknesses, which might be advantageous to their
leading competitors. In this ever-evolving aviation industry, everybody is fighting to capture
the market share and gain profit. Therefore, to hold back its leading position in the market,
Ryanair must figure out their weaknesses and overcome them.
The main strength or advantage of Ryanair, which helped it to grab the leading position in
the Aviation Industry, is its low-cost base that is they provide tickets at a very low price or
base price. This quality of Ryanair differentiates it form other aviation airlines. Next strength
of Ryanair is that they provide on-time flight services, which attracts and satisfies their
passengers. Moreover, Ryanair was established in the UK and covered a wide geographic
network by connecting more than 200 airports through 1800 routes. In addition to this
strength, Ryanair provides flight route for point-to-point relocation of passengers within short
distances so that they can attract more passengers to avail their airlines for travelling that also
in an affordable price range. Swelling share market and its growth along with consistent
returns from shareholders also play a vital role in the development of the macro-
environment factors of Ryanair. Another remarkable strength of this airline is that it has a
phenomenal stable financial performance, which helps the organisation in the growth of their
new market status and eliminates the threat due to high competition (Barrett, S.D., 2016).
Other than the strengths, some weaknesses have also come in front of the present day
scenario. Passengers have projected disappointment regarding their customer care services.
Complaints like the poor facility of the services provided, infringement of extra charges in
the ticket fare, hidden charges that the passengers are not aware of, un-necessary agreements
to bind passengers to their airline services. Moreover, Ryanair might face problems for
overcapacity in sheer future due to an excessive number of passengers because of their low-
cost ticket fares. They might fail to provide flight services as per requirement at the
scheduled time. Expansion of routes is good but excessive expansion in a short period might
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lead to several unexpected problems, which would be much more problematic. To expand the
business market, if Ryanair changes remuneration arrangement of the existing employees,
then that would be hazardous. If the employees do not get their deserving compensation, then
they might revolt against the organisation. The airline's agency has to understand the
consequences that they might face if they take a wrong step. High rising fuel costs is also a
great matter of concern. Just by expanding, the flight routes and the number of aircraft would
not be enough to incur a long-term profit. The increase of flight routes would in return
increase the fuel costs as well as a result it would be quite impossible to continue their flight
services with low-ticket fares. Hence, Ryanair might run in loss (Armstrong et al., 2015).
VRIO analysis stands for the four factors- Value, Rareness, and Imitability &
Organisation. It is an analytical technique to analyse the main resources of a company &
thus to evaluate the competitive advantages of that company. Ryanair is considered as the
company whose VRIO analysis is used to assess the situation inside the company.
Value:
One of the most valuable things that Ryanair has is the leadership qualities of Michael
O’Leary. He is the Chief executive officer (CEO) of the company. Under his leadership, the
company achieved the successive goals they required to compete with other airlines. Ryanair
belongs to the short-haul airline’s category; its main income depends upon the local or
domestic passengers. Now for their local outlets, they have appointed a group of local
employees in certain countries. They give a moderate value to the local passengers giving
them proper communication & luxuries (Caridá and Bonizio, 2018). Under the leadership of
Michael, Ryanair launched a brand new outlook of the baggage-handling department, which
saves more time than before. Though it is not an economic issue, it helps them to give
comfort to the passengers.
Rareness:
Ryanair has preferably low fare rates, which are very rare for all the short-haul airlines in the
European land. The rare feature that Ryanair provides to their passengers is the beverages for
even small trips with proper food processing & packaging. As mentioned earlier, another
rareness of the company is their lower ticket rates. This is because they do not have any
ticket-booking agent. The passengers only from their unique official website (Singh et al.,
2018) book all the e-tickets. There is no issue of third party involvement. This reduces the
cost effectively without the commission of the travel agencies. Ryanair also has separate
values for its service performances.
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Imitability:
Ryanair is popularly known for its punctuality in flight timings. Due to the effective
management operations & plannings, it leads others to imitate. The tangible & intangible
factors like knowledge management, organisational culture & software infrastructure can be
imitated. The strategies of the company like giving quality foods, effectively low fares, and
easy ticket booking methods can also be imitated. It becomes difficult for other airline firms
to compete with Ryanair while considering the factors like path dependencies & time
compression. This particular competition scenario is helpful for making a good profit for
Ryanair in a global prospect (Gomes, 2018).
Organisation:
Without proper internal organisation, it becomes impossible for a company to understand the
potential of all the four aspects discussed in the VRIO analysis. Being an international airline
company for more than 24 years, Ryanair possesses very strong passenger reliability. Ryanair
is well organised to capture all the possible values of its capability (Christoffer, 2019). The
flight handling departmental staffs have all kind of skills for protecting the passengers in the
lounge area of the airport. The HR & team leaders are appointed to look after the staff
performances. This strategy separates them from other firms in making a good passenger
impression.
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Q3: Choose a recent strategy that the company undertook and evaluate it using the
three SAFe tests.
The recent strategies that made Ryanair attractive to passengers are their short-haul flight
trips, new business models, new low fare rates, new standing rooms in every aircraft, new
salary packages of pilots & crew staffs. All of these business strategies have profited the
company anyhow. The company has achieved its goal under the leadership of Michael
O’Leary. Under his guidance, these new strategies are successfully executed & he is now
planning to grow the airlines business by spreading their web more frequent outside Europe.
Among all these, the feature of a short-haul trip is selected as the prime strategies (Grant,
2017).
SAFe test stands for Suitability, Acceptability & Feasibility. It helps in formulating a
particular strategy of a business firm. Under the light of this test, this particular strategy is
analysed as below-
Suitability:
It is probably the most important part of the SAF strategy model. It is the key to the fact that
whether a strategy undertaken by a company will be able to fulfil their goals or not. In case of
the Ryanair airline, the suitability for this strategy of short-haul flights is quite suitable.
Ryanair is a European airline. Now, geographically, the European land consists of plenty of
small countries. This helps in counting the profit of short-haul airlines like Ryanair. They
even get international passengers for a short-haul trip on a regular basis. Moreover, for larger
countries, they just require to operate in a domestic airport. This reduces their maintenance
cost as a whole including staff salaries as they are less in secondary airports concerning
international airports.
Environmental Suitability for European flights mainly depends upon the services of their
winter flights, because the summer days are almost negligible with compared to winter in
European countries. Seasonal flight fares are comparatively high in Ryanair airline. Most of
the festive seasons are found in winter in Europe. Therefore, this counts a huge profit for
them.
Ryanair has a 33-year safety record in the aviation industry. Therefore, their Exceptional
Suitability stands for mainly their passenger’s security & comfort factors. Currently Ryanair
has more than 14,500 professionally skilled aviation staffs. All of them are given specific
duties according to their qualification and passenger’s complains about any issues are treated
with special care. These records make the company exceptionally suitable for business.
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Ryanair is capable of taking 2000 daily flights worldwide. This throws a challenge to other
airlines on the same route also this feature accounts for Capacitive Suitability helping them
in their growth. (Amelio et al., 2018)
Acceptability:
This part measures the risk, return & stakeholder’s reactions against a particular investment.
This is a form of account of whether a particular strategy should be taken by a company or
not. Ryanair’s strategy of short-haul trip has pretty much acceptability all over the world
collaborated with their time-consuming issues like punctuality, smart baggage handling unit
& all. Their internet technologies make the domestic online ticket bookings very easy with all
internet banking & payment facilities and can be handled from any user interface. Every
single passenger can book or cancel their e-tickets from Ryanair’s official website very
easily. It has a very comfortable web design, which is very much user-friendly.
Feasibility:
Feasibility measures about a company’s new strategy whether it can be feasible to implement
for a company or not. This feasibility depends upon the company’s available manpower,
financial conditions, equipment, raw materials & technologies. Since when Ryanair has
undertaken the new strategy of short-haul trips, it became feasible in all means including
financial, cash-flow studies & all. In the year 2017, there was an overcapacity caused
resulting difficult trading condition including rising fuel price. The situation had recovered
from September 2017 after they delivered a strong performance, which includes-
 Pilots & crewmembers have contracted new five-year pay deal.
 Unit costs are reduced by 1%
 Took the delivery of more than 50 Boeing 737 flights since 2017.
 Ryanair has promoted over 600 employees & created 1,500 new job vacancies. This
may lead to the chance of inventing new ideas.
 Shareholders have been paid back over €800 million as return that implies how much
they recovered after that abrupt scenario in 2017.
After analysing all these statistics, it can be concluded that the feasibility towards the
company’s growth has a future exposure & also there are few more chances of improvements
in the numbers (Aragão, 2015)
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Conclusion
Ryanair airline has its flights operated in almost 200 airports in about 33 different countries
worldwide. There were some initial problems in their new routes, but after the appointment
of Micheal O’Leary as their CEO, new strategies were made under his leadership to solve the
problems. His decision-making abilities as a leader made the flight fares flexible. The
seasonal changes in the ticket price helped the company to maintain a constant passenger
count. They set a low fare rate such that all kind passengers can find themselves comfortable
although achieving the profit goal. The social, economical, cultural, environmental &
political factors influence their fare changes accordingly. After the complete research works
in the context of this report, it can be concluded that most of the external & internal factors
that are associated with this company have both positive & negative impacts. The main thing
that an airline company has to consider is their adjusting ability with the behavioural nature
& the number of passengers. Ryanair has different plans for summer & winter flights for this
reason. Still, Ryanair needs to develop its technological efficiencies considering the modern
airline market in a global prospect (Caputo et al., 2018).
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