Ryanair's Corporate Strategy: A Strategic Analysis Report

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Applied Corporate Strategy Assessment: Strategic
Analysis Report
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Table of Contents
Introduction......................................................................................................................................3
1. Carry out external analysis (business environment and industry) to identify a set of
Opportunities and Threats and assess industry attractiveness.........................................................4
2. Analyse the resources and key competences of the organisation and identify core competences
(key factors that may give the company its competitive advantage)...............................................6
3. Choose one strategy that the company implemented recently and evaluate it using SAFe
criteria............................................................................................................................................10
Conclusion.....................................................................................................................................13
Reference List................................................................................................................................14
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Introduction
Every organization becomes popular and rarest using various management strategies. As every
organization Ryanair’s airline became the world’s lowest cost-based airline is the world largest
low cost based airline established in 1985. In 2016, Ryanair’s airline became the largest
European airline by carrying international passengers and scheduling passengers flown than any
other airline carriers. Ryanair’s airline has more than 400Boeing 737-800 aircraft including a
single 737-700 as a charter aircraft. Ryanair’s airline has route network almost in 37 countries in
Europe, Israel, Jordan, and North Africa. Ryanair’s airline has more than 8500 skilled employees
that help to serve the process very fast. The low cost-based idea changed the whole environment
of Ryanair’s airline company (Ahmed et al., 2019). The company also give facilities like the in-
flight sale of foods and beverages, internet services and car hiring services. It offers the
customers to pay for the only services they have chosen. These facilities attract more customers.
Recently the company has entered in USA airline world’s largest aviation market.
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1. Carry out external analysis (business environment and industry) to identify a set of
Opportunities and Threats and assess industry attractiveness.
External analysis of Ryanair’s airline:
Ryanair’s airline is the largest low cost based airline in Europe in recent time. Due to which
Ryanair’s airline faces some major external issues. The external analysis is done to understand
the six external factors affecting the Ryanair’s growth and development. The six external factors
are:
Political:
 The uncertainty over Brexit to be the challenge for the Ryanair’s airline:
UK’s departure of the company from the EU in March 2019 brings in uncertainty to the aviation
business market. If the UK remains in the Open Sky agreement with EU, things can be a big
issue for the Ryanair’s airline and the UK aviation market. Thus, Ryanair’s airline must have to
focus on development away from the UK for the next few years until Brexit is finished.
 Random terrorist attack in Europe affects the air travel demand influencing Ryanair’s
airline:
The terrorist attacks have been increasing in countries like the UK, Belgium, France, and
Germany in the last few years. These attacks have affected tourism to a small extent. If these
attacks continue the tourism, the industry will be affected a resulting decrease in the demand for
air travel influencing Ryanair’s airline (Myska and Harasta, 2016). Government and intelligence
department have put efforts to overcome this problem.
Economic:
The economic condition of a country greatly influences the airline industry. It directly relates to
the trade cycle and the economy. The low-cost Ryanair’s airline is affected less in comparison to
other airlines (Dobruszkes, 2018). The number of passengers reduces when the airline does not
much business activities, which cause a loss of the airline sector results in their revenues. The
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migration trend in the European region can give more benefits to the airline revenues and its
growth.
Social:
The passengers always prefer to travel safely from any airport. In Europe, terrorist attack
frequently happens, due to the passengers may avoid the Ryanair’s airline service. Again, the
low-cost airline may not have many luxurious facilities for the passengers (Schuetz et al., 2018).
The facilities given by Ryanair’s airline are much impressive. The airline provides better
excellent services to the passengers. The passengers prefer the Ryanair’s airline due to its lowest
fare and excellent services.
Technological:
Technological innovation has created many changes in Ryanair’s airline. The passengers can get
all the details including flight time, ticket booking, any changes in the schedule in the official
website the Ryanair’s airline, Ryanair.com. The airline has also launched its mobile application,
My Ryanair, through which the passengers can book a ticket, can buy food and beverages and
have car hiring facilities (Thomas, 2015). With this advanced internet technology, the airline
provides quick services to passengers.
Environmental:
 There might be a rise of costs for Ryanair’s airline due to EU regulation of emission:
EU has passed legislation for which the airlines have to operate under the EU Emissions Trading
Scheme. If the Ryanair’s airline exceeds the CO2 allowance, the excess needs to be produced
from the market organised by governmental agencies. The environmental efficiency needs to be
improved to lower emissions if the granted CO2 allowances change.
 Ryanair’s airline operates a young fleet of Boeing 737-800Ng aircraft with fleet age under
6 years and it has lowest emissions intensity amongst peers:
Ryanair’s airline uses a young and homogeneous fleet of Boeing 787 aircraft. They are able to
maintain the lowest emissions amongst competitors. Ryanair’s airline has only one class of
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aircraft that helps to reduce its maintenance costs and number of workers. The company has
ordered new aircraft, which will be fitted with CFM LEAP 1B engines and it has advanced
technology which will reduce the fuel consumption that helps in reducing emission. This will be
a key strength for Ryanair’s airline of being one of the most eco-friendly airlines (Dvorak et al.,
2018).
 Ryanair’s airline has a strong focus on environments factors:
Focusing on the reduction of carbon footprint and environmental issues is the key factors for any
macro environment company, especially the aviation industry. Ryanair’s airline has always used
the young aircraft and optimum maintenance of all its facilities and operations. Ryanair’ airline
is the first airline to use internet ticketing. The company uses recycling programs, solar power
and LED lighting in all hangers and offices. The company uses mobile boarding passes to reduce
the impacts on the environment. As a result, Ryanair’s airline was introduced as Europe’s
cleanest and greenest airline in 2018. In March 2018, Ryanair’s airline has launched an
environmental policy “Plastic Free” airline, which will be implemented within 5 years.
Legal:
The International Air transport Association (IATA) has launched some regulations to operate
flights across the world. The organisation must have financial credibility. The location of the
company must be freely accessible and should be clearly identified to the people. It is mandatory
to follow these regulations to provide benefits to the customers. Ryanair’s airline has to face the
factor of airport ownership (Tobisová et al., 2018). The airline can give the monopoly to the
authority, which may give a competitive advantage. EU has issued the recent rule to provide
enough rights to the customers, who travel from the EU countries. These regulations will help
the Ryanair’s airline to give service in a better way.
2. Analyse the resources and key competences of the organisation and identify core
competences (key factors that may give the company its competitive advantage).
Strengths:
i. Ryanair’s airline low cost-based strategy is the biggest competitive advantage.
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ii. Ryanair’s airline has a big advantage of using young and homogeneous fleet. This helps
in reducing maintenance, staffs, fuel, and overheads. The airline uses a single fleet that
provides flexibility and economic strength in terms of crew training and rostering and
aircraft deployment.
iii. Ryanair’s airline also maintains the low cost to enable flying in smaller regional airports,
paying less to the workers, and charging ancillary fees (Giorgi and Raffini, 2015).
iv. Under the leadership of Michael O’Leary, the Ryanair’s airline has focused on bets
factors: keeping the fares and costs reducing that result in increasing the number of
passengers as well as the workers.
v. Ryanair’s airline has the largest short-haul network in Europe with more than 1,800
routes in 37 countries in Europe and North Africa.
vi. The initial innovation and the imitation has been the key success to the Ryanair’s airline.
The airlines facilitate online distribution, automated bag drop, handling luggage-only
travel and online checking that attract more passengers.
Weakness:
i. The Ryanair’s airline is not so good at product demand forecasting that reduces in higher
inventory both in Chanel and in house.
ii. The price of the product sold by the airline differs in price from lower to higher. This will
can give the new entrants to take advantage in the market.
iii. The Ryanair’s airline has to build an internal feedback mechanism from the sales
department to tackle the challenges forced by the new entrants.
iv. The profit percentage and the net contribution percentage of the airline are very much
below the industry average.
v. Even the company is succeeding in term of sales but again its unique selling and
positioning are not clearly shown which can lead to giving competitions to other airline
company in this segment.
vi. The day inventory is highly comparable to other airlines, which results in the company to
increase more money to invest in the channel and services. This may impact in the long
term growth of the Ryanair’s airline (Moir and Lohmann, 2018).
VRIO
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The weaknesses and the strengths of Ryan air Airlines can be discussed using the VRIO model.
The VRIO model will assess the internal capabilities, the skill set, the structure and the
performance of the Ryan air airlines. The framework depicts an analytical technique, which is
very essential (Knott, 2015). The technique evaluates the resources of the company, the
competitive advantage the company is having, the difficulties and the internal facilities and
problems it is facing. VRIO determines the strategic schemes and it helps to develop the strategic
schemes of the Ryan air. The VRIO is segregated into four main segments –
Value – The question of value determines whether the firm is capable enough to exploit the
opportunity or neutralize the threats that are coming from outside using the internal resource and
the capability (Dyer et al., 2018).
Rarity – Whether the control of the capability is in the hands of the many or few
Imitability – Whether there is any difficulty in imitating. Whether there lies any risk in
developing, obtaining or even while duplicating the resource of one company by another
company.
Organisation – Whether the firm is ready and developed enough to exploit the resource and the
capabilities to produce something better.
The VRIO of the Ryan air airlines is presented in the table.
Capability/
Resources
Value Rarity Imitability Organization Competitive
Implication
Physical
Resources
Yes No Yes Yes Competitive
Parity
Human
Resource
Yes No No Yes Competitive
advantage is
for short term
Management
capabilities
Yes No Yes Yes Competitive
advantage is
for short term
Value chain Yes Yes Yes Yes Competitive
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network advantage is
sustainable
Brand value Yes Yes Yes Yes Competitive
advantage is
sustainable.
Research
and
development
Yes No No Yes Sustainable
competitive
advantage
Customers’
Loyalty
Yes Yes No Yes Parity in
competitive
advantage
Tactics and
strategy
Yes Yes Yes Yes Sustainable
competitive
advantage
Table 1: The VRIO Model of Ryan air airlines
(Source: created by the learner)
The VRIO analysis of the Ryan air airlines has clearly depicted the Brand Values. The Research
and developments, the strategies adopted, the loyalty of the customers and the value network
chain, which have been analyzed as the company has clearly reached are the sustainable
positions and are measured as the competitive advantage parameter (Vargas-Hernández and
Garcia, 2019).
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3. Choose one strategy that the company implemented recently and evaluate it using SAFe
criteria.
The strategy that the company has recently used is the Cost leadership strategy. This strategy has
stood as a very successful strategy and has made Ryan air the largest airlines in Europe by the
year 2015. In the year 2017, the Ryan air could offer 1800 flights, from 1100 flights, an increase
from the 2010 range. The Ryan air has been trying to build up a competitive advantage over the
other airlines in the markets by having a low cost of the operation in the aviation industry. The
strategy of the cost leadership mainly gets the driving force from the efficiency of the Ryan air
Airlines, the scale, the size, the scope, and the cumulative experience. The cost leadership
strategy mainly defines the production scale, the scope, and the high standard products by using
the technologically advanced methods (Kurt and Zehir, 2016).
The Ryan air has chosen the mix of the strategies to achieve the leadership of the market. The
strategic mix consists mainly of the product leadership and cost leadership. However, cost
leadership differs from price leadership. The Ryan air denotes it has lowered the producing price
of the service and the products. The Ryan air, being a cost leader company, compete on the
prices and they are very effective when there is competition. This is because having low cost
management and the structure denotes competitive advantage. Ryan air has adopted the strategy
in order to increase the efficiency of the organization and to reduce the cost of the production.
They reduce the cost of the production below the industry average and this helps to beat the
competitor at an advantageous level.
In the case of Ryan air, the consumers are there with ample of opportunities to avail. The
competitors would give them low price tickets with the same advantages that Ryan air is giving.
This is the reason why Ryan air is cutting down the production cost and hence giving the
opportunities to the customers, they can get from other companies. The cost elimination of the
Ryan air includes-
 The Ryan air has lowered airport charges. The Ryan air mainly focused on secondary
airports.
 The Ryan air has eliminated the free services to the consumers like all other airlines,
which includes free food service.
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 The Ryan air did not allow the trade unions to interfere in the work of the employees and
this allows the minimum waste of the potentialities through the Unions.
 Ryan air had reduced the passengers and the aircraft handling charges through the third
party contract.
 They have allowed online payments and reduced the charges of the agent cost (Bilotkach
et al., 2017).
They have implemented the strategy; however, the implementation of the strategy cannot be
completed without the formulation of the SAFe Criteria. They are
S- Suitability – This means whether the company wants the strategy to be implemented or not
(Bole-Rentel et al., 2018). This is assessed mainly in a number, which is important and relevant
to the company. The suitability criteria involve environmental, expectation as well as the
capability suitability. The environment is not harmed. The expectation of the consumers is met
and the capability of the company is kept in mind before implementation. The individual
category reflects the need of the company. The suitability of the SAFe criteria generally asks the
question that whether the strategy has the capability to overcome the challenges and can analyze
them. This also denotes the fact whether the strategy has a line of factors to meet the goals that
the business targets.
A- Acceptability – The acceptability factor of the SAFe criteria measures the capability of
acceptance of the changes by the company as well as the consumers (Pinto et al., 2019). This
factor measures the shareholders’ reaction, the risk, and the return. These all depend on the
strategy that has been accepted and the employees and the organization is working upon it. The
returns are mainly measured on profits that the shareholders are getting from the imposition of
the strategy. These returns can be financial as well non- financial and it depends mainly on
decisions of the stakeholders (Vogel, 2016). The profitability analysis, the value analysis of the
shareholder, the analysis of the shareholder calculates the returns of the strategy based on the
numbers of these methods. When risk is mentioned, the Ryan air’s strategy is expected to follow
the right path as they can cope up with the risks and can accept the losses and the failures and
any impact that are expected to affect the company. Risk is measured on the liquidity, on the
analysis of the sensitivity and the reactions of the stakeholder, which deems to state how the
acceptable strategy works.
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F- Feasibility – The feasibility is the make or the break of the strategies that any company makes
(Pinto et al., 2019). The Ryan air has the resource, ability and the aptitude to implement the
strategy. The financial feasibility of the company, the analysis of the break-even performance,
the cash-flows analysis all these are responsible for the feasibility factor of the company (Kachi,
Tsukahara, 2016). The strategy’s feasibility also asks the questions like the labour, the power of
the management and the equipment, which the company of Ryan air can provide. The structure
of the organization and the market strategy needs proper work upon them. The Ryan air follows
the feasibility of the markets, the machinery, the materials, the management, the workforce and
the make-up.
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