Strategic Management Report: Ryanair's Competitive Advantage Analysis

This report provides a comprehensive analysis of Ryanair's strategic management, examining its background, external and internal environments, and competitive positioning. It begins with an overview of Ryanair, an Irish low-cost airline, and then delves into its external analysis using PESTLE and Porter's Five Forces frameworks, assessing political, economic, social, technological, legal, and environmental factors, as well as competitive rivalry, the threat of new entrants, supplier and buyer power, and the threat of substitutes. The report also explores Ryanair's internal strategic capabilities using the VRIO framework and identifies strategic direction options via the Ansoff Matrix, evaluating market penetration, product development, market development, and diversification strategies. The report concludes with a critical evaluation of Ryanair's future strategies, assessing their suitability and providing recommendations for continued success in the competitive airline industry.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1.Background information of Ryanair....................................................................................1
2.External analysis of Ryanair................................................................................................1
3. Competitor analysis............................................................................................................3
4. Internal: strategic capabilities.............................................................................................5
5. Strategic direction options..................................................................................................6
6. Strategy selection and justification.....................................................................................8
CONCLUSION AND FUTURE RECOMMENDATION..............................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management is a process of planning, organizing, analysing and monitoring all
the activities of the organisation that is needed to achieve organisation goals and targets. It is also
an ability to set the goals for short term as well as long term. Present study is based on Ryanair
company. It is an Irish low cost airlines established in 1985. its headquarter in Europe(Barrett,
2016).
The report will include the background of the Ryanair. It defines the PESTLE analysis
and porter's 5 force analysis of the company. Report will also highlight the strategic direction
tool which evaluates the Ryanair's strategic choices and future strategic directions.
MAIN BODY
1.Background information of Ryanair
Ryanair is an Irish low cost airlines which is founded in 1984. Its headquarter in Dublin
airport, Ireland. It operates 400 plus Boeing 737-800 aircraft with revenue of £7.151 billion in
2018. It holds more than 13000 employees with the net income of £1.145 billion. It was the
largest European budget airline which carries international passengers more than other airlines in
2016. The parent company of Ryanair is Ryanair holding plc. Ryanair's main business strategy is
implemented its low cost business model and rapid expansion. It offers low cost fares to its
passengers that enhance their number of passengers. Its main attractive strategy is provided the
lowest fare with increasing routes in UK(Ahmed & et.al.,2019).
2.External analysis of Ryanair
PESTLE analysis
 Political factor: it impacts greatly to the airlines' industry. Ryanair have to consider
political system in their airlines. There are some major political factors that affect
Ryanair such as uncertainty over Brexit and frequent terrorist attacks in Europe. The
uncertainty over Brexit is majorly affected the overall environment of the Ryanair.
 Economical factor: there is major economical factor that effect Ryanair. One of this is a
taxation policies of the government. The taxation policies are unfavourable for the
company because it impacts the revenue of the company. Further, the increasing fuel
rates is also influenced the profit of the Ryanair(Graham,2016).
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 Social factor: this is also impacted the Ryanair because consumers preferences are
changed with high speed that effects organisations strategies. In present the consumers
are willing to spend more for the lower cost airlines that attract customer towards the
Ryanair because Ryanair is provided low cost fare.
 Technology factor: it impacts greatly on the Ryanair. Ryanair uses the latest
technologies in their business operation that reduces pollution as well as cuts down the
unnecessary luxuries supplier. With the use of technology, Ryanair provides so many
facilities to their customers like online booking and make website for customers services
that attract existing customers as well as create new customers(Caputo & Borbely,2016).
 Legal factor: it is also widely influence the airlines' industry because as an airlines'
industry, Ryanair have to face lots of government interference in their business
operations. For example, Ryanair have to face Ireland's government interference in the
merger with Aer Lingus because the government believes that is not in favour of the
Ireland's people.
 Environment factor: the Ryanair produces eco-friendly products that is not harmful for
the environment. It has the lowest emissions' intensity among the peers. They also take
initiatives for the environment.
Porter's five force analysis
competitive rivalry:
The competitive rivalry of Ryanair is high because there are number of airlines that uses
low cost fare and the similar route to Ryanair. There are so many competitors such as Go, Easy
jet, Wizz Air and many more. But still Ryanair able to drive out of their competitors because of
large fleet size and experience(Schuetz, Mair & Schrefl,2018).
Threat of new entrants:
The threat of new entrants in airline industry is very low because it is an expensive
industry. There are so many entry barriers in airline industry such as getting slots at airport is
costly for new airlines, purchasing of jet is also so costly. For new entrance the marketing is
needed to spread awareness that is also expensive. The staff is required for the airline such as
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pilots and stewardesses are expensive and tough to find qualified staff. So the new entrance is
not a threat for Ryanair.
Bargaining power of suppliers:
The bargaining power of supplier is high for Ryanair because there are only two
manufacturers of air-planes that is Boeing and Airbus. Ryanair is purchased its planes from
Boeing. They both are charged higher prices for the manufacturing of the aircraft. Boeing's
highest purchasing customer is Ryanair because Boeing provides less price to the Ryanair from
the standard prices(Borbély, 2016).
Bargaining power of buyers:
The bargaining power of buyer is high for Ryanair because it provides low fare to the
customers from their competitors. The customers and brand loyalty lacks in airline industries.
Customers are only loyal to the low fare. The airline industry can win the great number of
customers through low fare because the switching cost of the customer is zero. All the industries
are working on reducing their operational cost and enhance customer facilities as well as proving
low fare. So, the bargaining power of buyer is very high.
Threat of substitute:-
The threat of substitute is low because in Europe, there are number of other systems
available such as train, buses and cars but there fares are high than the air-plane and also takes
long time from the air-plane. Ryanair provides the comparison of the rates and train fares on
their websites that attract people to use their services rather than transportation that reflects the
low threat of substitute for Ryanair(McLaughlin,2018).
3. Competitor analysis
The main competitors of the Ryanair are Easy jet, British airways and Austrian airlines.
The competition in airlines industry is heavily increased and the top five airline covers 31%
market share in the airline industry. According to recent research the three airline have both
competitive competence and financial in the Europe such as Air France, KLM and Ryanair. Even
no airlines has a large share in the industry and only few rivals exist in the industry. Majorly
Ryanair and Easy jet are dominant in the market because of low fares(Das, 2016).
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There are number of airlines that provide low cost fare as Ryanair. These are Easy jet,
Whiz air and many more. Each of the competitor follow the similar route as Ryanair mean low
cost fare and reducing their operating cost and enhancing the customer facilities. But still
Ryanair is able to drive out from the competitors because of its large fleet size and experience. It
is also increased the quality of the product as well as number of the product which helps to
attract their customers and enhance their passengers that adversely impact the competitors.
There competitors only focuses on low fare whereas Ryanair makes strategies not only for low
fare but also provide the best customer facilities and enhance the satisfaction level of the
customers.
Strategic Sustainability
High Low
1 3
4 2
Low High
(Efficiency)
Perceived Customer Value Delivery
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(Source: Strategy Analysis Airline Industry, 2017)
4. Internal: strategic capabilities
VRIO strategy
Value:-
Do Ryanair offer resources that add values to the customers? Is Ryanair able to exploit
the competition and opportunities with their internal capabilities? (Kulshrestha & Puri,2017)
 No: Ryanair is at competitive disadvantage and they need to reassess their resources.
 Yes: if the values are established than they can move on rare in VRIO analysis.
Rare:-
Do Ryanair control their rare useable resources and capabilities? Do Ryanair have
something important that others do not have?
 No: Ryanair have values but they are lacked in rare resources that position companies
position in competitive parity. There resources are common that makes competitors at
marketplace.
 Yes: with the good values and rare identifying, company can move to next imitate.
Imitate:-
Is it costly to purchase the resources that uses Ryanair? Is it difficult to find substitute of
the Ryanair?
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Illustration 1: Strategic Group Map of
European Airline Industry

 No: if the resources of the Ryanair is valued and rare, but easy to copy and affordable
than the company have temporary competitive advantage. It requires more efforts to
differentiate their services and staying in front of their competitors.
 Yes: Ryanair offers valuable, rare and imitate. So, the Ryanair can move to organized in
VRIO analysis and focus on their organisation's functions.
Organized:-
Does the Ryanair have organized process, structure, culture and management system?
 No: without the support of the internal organisation, it is difficult for the Ryanair to
realize the potential values, rare and imitate of resources. The company have unused
competitive advantage and needed to reassess.
 Yes: the company can achieve their long term competitive advantage when there is a
successfully identifying the components of VRIO analysis.
Tows matrix:-
External factors/
internal factors
Strengths weaknesses
Opportunities (Strength opportunities)
 low cost base
 growth of market share
 the lowest fares
 further aircraft order
(weakness opportunity)
 Fully online
 increase ancillary
revenue
Threats (strength threat)
 continues cost reduction
 innovation
 management focus
(weakness threat)
 develop the similar
operations by
competitors
 accident
5. Strategic direction options
Strategic direction tool:-
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Ans-off matrix is essential for strategic marketing planning and for future strategic
direction to Ryanair. This matrix is given the strategic direction to the Ryanair for further
development(Ansoff Matrix,2019).
Existing New
Existing
Market penetration and consolidation
it is one of the effective strategy for
Ryanair in their marketing planning.
Its aim to increase their market share.
 Increased number of routes
 market share growth
 customer value improvement
 providing low fares from their
competitors
 enhance number of flights
 Merger with other low cost
airlines
Product development
With the help of product development
strategy, Ryanair develops new
products for targeting its existing
customers.
 Offering free flights to their
existing customers and attract
new customers
 develop the websites for their
product marketing
 extend existing product
New
Market development
It targets new market segment by
offering existing products.
 Finding new marketplace
 uses websites for offering
additional facilities to
customers
 provide existing facilities to
new market segment
Diversification
The Ryanair is diversified by entering
new business with new product for
new market.
 Ryanair is offered discounts to
their customer if they book
car to Hertz car rentals.
 Upstream integration with
suppliers
Future strategy for Ryanair:-
 Corporate level strategy- in this strategy, the airlines targets international customers by
shifting from the transnational strategy to international strategy that is more important for
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globalisation. The positive impact of this strategy is that enhance the opportunities for the
Ryanair to expand their business operation(Barrett, 2016). Its negative impact is that if
they enhance their operation on international level that effect adversely on their cost
leadership strategy.
 Business level strategy- At business level, Ryanair adopt cost leadership that offers air
travel service at lower fare. It is the best strategy of Ryanair and it provides competitive
advantage to the company. The focus of the Ryanair is both cost leadership and
differentiation from their competitors (Graham,2016). The positive impact of this strategy
is that offer low fare to the customers that attract their customers as well as connect new
customers. The negative impact of this strategy is that low fares only provides current
marketing advantage. There are risk is available for future expansion and growth (Ahmed
& et.al.,2019).
6. Strategy selection and justification
Critical evaluation of future strategy:-
 Suitability:- Suitability is the most important factor in critical evaluation in strategy
evaluation. Suitability is the key to that identify whether the strategy will be suitable for
the company or what do company want to do with it strategy. Ryanair can make use of
suitability in order to understand and evaluate if usage of suitability can allow the
organisation to reach required level of growth and development. Suitability is assessed in
different criteria like environmental suitability, expectation suitability capability
suitability, these reflects the company's specific needs that the effectively use of the
strategy by the Ryanair company.
 Acceptability:- Acceptability is the key aspects of the strategic evaluation which is all
about the measuring the risk in the future, reaction of stakeholders and returns which is
basically in term of the benefits that stakeholder expects from the company. Raynair can
make use of acceptability in order to evaluate the reactions of its key stakeholders and
understand if the strategy is appropriate to take further or not. Also, It can measure that
the company is ready to accept any kind of risk and return.
 Feasibility:- It refers to that Ryanair has the required resources, capabilities to implement
the strategy in practice to be successful. Feasibility can allow the Raynair to make use of
easy practices in order to ensure that right sustainability is being achieved. Along with it,
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it ensures that required growth is being achieved within the organisation. Financial
feasibility is assessed by forecasting and analysing the cash flow, performing break even
analysis and a number of pother financial models.
Justification:-
Based on the above analysis it is analysed that only cost leadership is not enough for long
run strategy. The company's current strategy is good but the competition is increased day by day
that can be create big issue for company for their future growth. Ryanair maintain a positive and
valuable image to the target market/consumer's mind as lowest fares airlines that will helps to
separate their market segment.
CONCLUSION AND FUTURE RECOMMENDATION
From the above study, it is concluded that strategic management is an important tool in
order to achieving organisation goals. The report is explained the external and internal analysis
of the Ryanair. Apart from that it is described the competitive analysis of the Ryanair.
Furthermore, it evaluates the future strategy and justification.
As per the above evaluations, it can be recommended that Raynair makes use of
suitability strategy in order to achieve required growth and development for the organisation.
Suitability strategy can allow the organisation to understand the suitability of the implemented
strategies and understand and in what manner the organisation can achieve required growth and
development.
It has been recommended that the company should improve their customer services. The
company should enhance their sales through advertisement. The company should even pay
emphasis on increasing its profit margin to rise from the bottom line.
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REFERENCES
Books and journals
Ahmed & et.al., (2019). Ryanair: A low-cost business model in the european airline industry.
Barrett, S. D. (2016). Ryanair and the Low-cost Revolution. In Air Transport in the 21st
Century (pp. 163-178). Routledge.
Borbély, A. (2016, June). The Firm’s Strategy and its Negotiation Capability: the Ryanair Case.
In Paper presented at the 16th European Academy of Management Annual
Conference (Vol. 1, p. 4).
Caputo, A., & Borbely, A. (2016). The firm’s strategy and its negotiation capability: the Ryanair
case.
Das, R. (2016). United Bank of India: A Strategic Analysis Using the VRIO Method. IUP
Journal of Bank Management.15(2)
Graham, A. (2016). Airport strategies to gain competitive advantage. In Airport Competition (pp.
109-122). Routledge.
Kulshrestha, S., & Puri, P. (2017). Tows Analysis for Strategic Choice of Business Opportunity
and Sustainable Growth of Small Businesses. Pacific Business Review
International.10(5). 144-152..
McLaughlin, E. (2018). The Threat of Low-Cost Competition as a Driver of Airline Alliance
Formation.
Schuetz, C. G., Mair, E., & Schrefl, M. (2018, October). PESTEL Modeler: Strategy Analysis
Using MetaEdit+, iStar 2.0, and Semantic Technologies. In 2018 IEEE 22nd
International Enterprise Distributed Object Computing Workshop (EDOCW) (pp. 216-
219). IEEE.
Online
Ansoff Matrix.2019[Online]. Available through
<http://www.quickmba.com/strategy/matrix/ansoff/>
(Ansoff Matrix,2019)
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Strategy Analysis Airline Industry. 2018. [Online]. Available through;
<.https://www.slideshare.net/mtmexperience/strategy-analysis-airline-industryx/>
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