Ryanair: Strategic Management, Business Model, and Performance

This report provides a comprehensive analysis of Ryanair's strategic management, focusing on its business model and performance within the European airline industry. It begins with an overview of Ryanair's vision and competitive advantages, emphasizing its cost-leadership strategy and the importance of customer experience. The report then applies Porter's Five Forces model to assess the competitive environment, examining the threats of new entrants, the bargaining power of buyers and suppliers, the threat of substitutes, and industry rivalry. Furthermore, the report delves into Ryanair's business model, highlighting its cost-effective approach and generic strategies, including cost leadership, differentiation, and focus. Finally, the report discusses Ryanair's strengths and weaknesses, providing a balanced perspective on its market position and operational challenges. This analysis offers valuable insights into Ryanair's strategic choices and their impact on its success in the competitive airline industry.

Running Head: Strategic Management
Ryanair
Strategic Management and Leadership

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Table of Contents
Q1....................................................................................................................................................2
Porter’s Five Forces Model..........................................................................................................2
Q2....................................................................................................................................................4
Ryanair’s business model and its performance............................................................................4
Ryanair’s generic strategy............................................................................................................4
Strengths and Weaknesses of Ryanair.........................................................................................5
References........................................................................................................................................6

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Q1
European airline industry is growing rapidly and Ryanair is one of the airline industry’s
companies in Europe. It is known for rendering air services at cheaper rates. Their primary vision
is to get the peak position in the European airline industry through providing unique offers and
services to its consumers. Ryanair is known for rendering low fares air services but they have
also concentrated on the quality of the services provided to its customers (Adair & John, 2009).
This helps the organization to develop unique and positive image in the customer’s mind. There
are a number of companies are engaged in the European airline industry but Ryanair has made
their separate image through rendering improvised services, enhancing customers’ experience at
very cheap rates. This is the biggest competitive advantage they have gained in the European
Airline industry. As per the Association of European Airlines, Ryanair has maintained their rate
of cancellation of flights and along with this; their flights are always on time which is the major
factor for enhancing the customer experience (Anderson, Narus & Narayandas, 2009). Human
resource management of the Ryanair is capable enough to resolve the queries of the customers
from loss of bags to any severe issue on priority basis. Apart from these services, organization
has also adopted the strategies of feedbacks and surveys which include the taking feedbacks from
the customers after availing the services of the company. This helps the organization to make
their services better with the implementation of the suggestions given by the customers (Bamber,
et. al., 2009).
In terms of the competitive business environment, there are two types of people, one who wants
to avail the luxurious services without considering the amount to be paid and the other one who
wants to save the money for their future unexpected expenditures and still wants to avail some

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luxurious services. Ryanair is helping the other category of people through rendering them the
luxurious and air services at cheaper fares (Hill, Jones & Schilling, 2014). This is the most
attractive strategy of the Ryanair which has helped the organization for enhancing the demand
for their services as well as it has also provided them appropriate competitive advantage in the
European airline industry. Primary competitors of Ryanair are British Airways, EasyJet,
Lufthansa, Alitalia, and Air France. Primary competitive factors amongst these airline companies
are price, promotional offers, seating capacity, quality of service, etc. All airline companies need
to evaluate certain strategies and the techniques for enhancing their importance in the European
airline industry (Ho, 2014). This is because small mistake could generate negative results for the
organization as well as the goodwill of the organization will also be ruined. While big airline
companies carry competition on different level such as introduction of the new routes,
introduction of non-stop flights between the most visited placed, implementation of the
passenger’s feedbacks in the operations, etc. in order to gain competitive advantage as well as to
enhance their opportunities for expanding their business in the international market (Jiang & Li,
2016).
Porter’s Five Forces Model
The threat of New Entrants: European airline industry is struggling with aggressive
competition. In these conditions, new entrant’s needs to adopt some unique strategies through
which they could render some extreme services those are not rendered by the existing airline
companies in Europe. This factor is tolerable because there are no such services left which are
not rendered by the existing airline companies (Johnson, Scholes & Whittington, 2008).

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The bargaining power of buyers: Ryanair is gaining adequate advantage from this factor
because bargaining power of buyers is quite high in Europe because they have various options.
As per the behaviour of the buyers, it is generally noticed that buyers choose the services on the
basis of experience, fare, quality, etc. Thus in Europe, there are a number of airline companies
are available and amongst them, budgeted airlines are EasyJet, Virgin Express, and Aer Lingus.
While Ryanair offers lowest prices for the same services provided by the other airline companies
(Merkert & Hensher, 2011).
The threat of Substitutes: Substitutes for airline industry are road transport, railways, sea
transportation services, etc. All these substitutes are time-consuming in comparison with the
airline services. While rail network of Europe is quite strong and responsive, this could act as the
barrier in relevance with the airline services. ‘EuRail’ is the rail services rendered in the Europe
which connects the big parts of Europe i.e. central part, southern part and the western part of
Europe with each other (Mulhearn & Vane, 2011).
The bargaining power of suppliers: Number of suppliers in the airline industry is high whereas
a number of manufacturers are majorly two. Suppliers bargaining power is quite high due to
huge switching costs and huge capital investment required which also includes the huge training
costs for pilots and other employees engaged in the operations of the airline company. Ryanair
has tied up with the Boeing supplier which helps them to gain appropriate competitive advantage
in the European Airline Industry.
Industry Rivalry: In terms of evaluating the industry rivalry between the companies in
European Airline Industry, it has been noticed that intensity of the rivalry between the
competitors is quite less whereas the threat of new entrants is quite high and they could adopt the

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cost-effective strategies of Ryanair for developing their position. While Ryanair acts as the
leader of the airline industry in Europe and to maintain this position, organization needs to cope
up with the dynamic requirements of the consumers (O'neill, 2011).

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Q2
Ryanair’s business model and its performance
Ryanair has developed their effective image in the airline industry using cost-leadership model
of business. It is also known as the leader of the airline industry in the Europe and their major
strength is providing airline services at low-cost fares. Cost-leadership business model defines
the goals of being the least cost manufacturer through which organization would be able to attain
the image of providing the products and the services at minimum prices in comparison with its
competitors.
Ryanair has gained the position of being the leader in the airline industry of Europe and with
this, they have gained the power to set the fare prices. Being the dominant leader in the industry,
Ryanair has adopted various strategies and techniques in order to improve their services as per
the recent trends and demands of the customers. In every industry, firms with the business model
of cost-effectiveness have the power to rule the industry through with the help of price and the
quality of the services and the products. This leads those to enhance their profit margins as well
as the turnover of the organizations also increase. Along with the enhancement of the revenues
and the profit margins, enterprises with the cost-leadership business model acts as the primary
barrier for the new entrants in the industry. As well as the existing organizations also need to
consider the strategies and the policies set up by the organization in order to maintain their
position in the industry (Schneider, Brück & Meierrieks, 2010).

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Ryanair’s generic strategy
Ryanair majorly concentrates on its cost reduction and to perform this in an adequate manner;
various strategies are being adopted to reduce their costs in order to be the leader of the airline
industry Europe as well as to attain its desired goals and the objectives. They have developed
their goals in order to render the airline services at low fares and due to this; customer base is
large in comparison with the other airline companies. In terms of Porter’s generic strategies,
Ryanair’s position will be evaluated in the industry with the help of following generic strategies:
 Cost leadership;
 Differentiation; and
 Focus.
Cost-leadership strategy helps the organization to reduce its costs incurred to provide value-
added services in the airline industry. This helps the organization to maintain their image as the
low fare providing company as well as it also enhances the demand for the company’s services
(Anwar, 2016).
Differentiation strategy promotes the adaptation of the unique aspects of the organization
through which appropriate results could be gained. Combination of cost-leadership and the
differentiation strategies provides customers unique benefits such as unique value-added services
at least prices from the other airline companies. It also builds positive image for the organization
in customer’s mind-sets.
With the help of focus strategy, organization has focused on the area where least competition
level was available i.e. low budgeted services. When every airline company was engaged in

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providing luxurious services to its customers for attaining the competitive advantage, Ryanair
focused on the area with least competition and initiated the campaign under which airline
services were provided at the least fares. With the help of this, they gained the position of leader
of European Airline industry (Singh, Mehta & Varsha, 2011).
Strengths and Weaknesses of Ryanair
Primary strengths of Ryan air are low-fare, advanced aircrafts which require less maintenance,
economies of scale in European Airline industry. With the help of these strategies and the
techniques, it is known as the dominant leader of the airline industry in Europe. While certain
weaknesses of Ryanair are usage of secondary airports in order to save the costs which reduce
the customer satisfaction level. Along with this, an aggressive competitive strategy used by its
competitors which reflects the negative image of the organization in the market also acts as the
weaknesses for the organization and it affects the performance (Geiger, 2016).

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References
Adair, & John, 2009, Effective Strategy Leadership, Pan Macmillan Limited.
Anderson, J. C., Narus, J. A., & Narayandas, D, 2009, Business market management:
Understanding, creating, and delivering value. Pearson Prentice Hall.
Anwar, K, 2016, Comparison between cost leadership and differentiation strategy in
agricultural businesses. Cyprus International University.
Bamber, Greg J.; Gittell, Jody Hoffer; Kochan, Thomas A.; von Nordenflytch, Andrew,
2009, Up in the Air: How Airlines Can Improve Performance by Engaging their Employees,
Cornell University Press.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic
analysis. European academic research, 2(5), 6478-6492.
Jiang, C., & Li, X. (2016). Low cost carrier and high-speed rail: A macroeconomic
comparison between Japan and Western Europe. Research in Transportation Business &
Management, 21, 3-10.
Johnson.G, Scholes.K, & Whittington, R, 2008, Exploring Corporate Strategy" pp636-38
Performance, New York: The Free Press.

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Merkert, R., & Hensher, D. A. (2011). The impact of strategic management and fleet
planning on airline efficiency–A random effects Tobit model based on DEA efficiency
scores. Transportation Research Part A: Policy and Practice, 45(7), 686-695.
Mulhearn, C., & Vane, H. (2011). Economics for business. Palgrave Macmillan.
O'neill, J. (2011). The Growth Map: Economic opportunity in the BRICs and beyond.
Penguin UK.
Schneider, F., Brück, T., & Meierrieks, D. (2010). The economics of terrorism and counter-
terrorism: A survey (Part II).
Singh, T., Mehta, S., & Varsha, M. S. (2011). Macroeconomic factors and stock returns:
Evidence from Taiwan. Journal of economics and international finance, 3(4), 217.
Geiger, M. (2016). Easy Jet (Doctoral dissertation).