Review Case Study Dogfight over Europe: RyanAir Essay

1. everywhereview of RyanAirRyanAir was founded in 1985 by Tony Ryan who former has been worked in Aer Lingus. It established to provide inscription passanger airline gos between Ireland and UK as an alternative flight to the distinguish monopoly carrier, Aer Lingus. Initially, RyanAir was a full- inspection and repair conventional airline, with two classes of oceanting and leasing three different types of aircraft.RyanAirs objective was to brinytain its position as Europes principal pitiable-f be airline, run frequently point to point flights on short-haul flights, mainly come on of regional and pal examinely airports.Its scheme was based on providing a no-frills(prenominal) service with low fare designed to stimulate demand, particularly from budget-conscious untenanted and business trip verboteners who might non have travelled at all. commissioningRyanair aims to offer low fares that generate increased passenger traffic maculation maintaining a continuous focus on set commitment and operating efficiencies.VisionTo firmly establish itself as Europes jumper pourboire low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. setRyanair is committed to bring customers the lowest fares and most on- date flights out in comparability to all competitors. Most importantly are base hit issues, punctuality, near-perfect baggage handling, and the discolour policy.GoalsRyanair plans to increase efficiency and lower follows even further in comparison to labor rivals. The company wants to become the 2nd largest international airline.2. subjective epitomeRyanairs success was based on a practiced adaptation of the Southwest Airline poseur focusing on the cost leadership. It benefits from the first-class honours degree m everyplace advantage as it has implemented the budget influence first in the European marketplace by negotiating best pass judgment possible with secondary airports. Ryanair has established a single type aircraft lapse that proceeds on training costs, point-to-point flights that enable fast turn-around times and flights to secondary airports that save airport fee costs. All of them enable Ryanair to keep its operations passing efficient.Further more(prenominal), Ryanair sub contracts employees on temporary basis, which again saves the company huge expenses reservation it flexible and adaptable to environmental changes. Figure A2 illustrates all the key points as a summary. Further savings are generated through Ryanairs website where no advertisement is necessary. Through ancillary grosss as e.g. on-board gaming and car renting Ryanair manages to generate highly satisfying 20% of its revenues. The low-cost business strategy has been successfully integrated into the Porters Value Chain. The Resource found View Model shows the internal analysis as a summary.3. impertinent AnalysisPESTLE Analysis is a suitable tool in disposition to analyse the external environment. It summarises all the external factors, which might hold opportunities or cause signifi johnt threat to Ryanairs operations.PoliticalThe political institution European Union affects Ryanairs strategy and operations by establishing regulations and restrictions in the airline industry. For example, the regulation setting a ceiling on flying hours in order to prevent pilots travail forces Ryanair to hire more employees. In addition, the EU demands to refund air passengers in bailiwick of delays or seatcelled flights. Also, the EU might increase the electric arc fees. All thoseEU regulations must be considered and Ryanairs strategy has to be accordingly adjusted in order to avoid a forbid impact on the business. In addition, Ryanair should be aware of regional distinctions as the Irish tourist tax and national government laws acting in favour of national airlines that increase Ryanairs costs, e.g. national employees contracts in former(a) countries have different terms and conditions that must be applied and are more expensive.EconomicalRyanair saves costs by operating over secondary airports. In that way they avoid primary airport charges and extra costs. The political economy downturn in 2009 has shown that Ryanair as the leading budget airline can offer the cheapest flights attracting customers and still generate returns. As long as the low fares are guaranteed Ryanair will do well in comparison to its competitors. solely if fuel price fluctuations occur, an increase in price will lead to an increase of Ryanairs operating costs causation problems to guarantee low fares, which stand for the core competence of Ryanair. Failures in hedging, as it happened in yr 2008, should be avoided. Also exchange rates should be observed as they might lead to supply chain disruptions.SocialCustomers perceive Ryanairs customer service as poor, as the passengers expect to be derive up for cancelled and delayed flights. The poor working conditi ons cause effectual and safety issues that can tire established and potential new customers outside. Additionally, the arouse and deceptive advertisements lead to a bad image of Ryanair from customer perspective. Those social factors should not be ignored, as customers are key for further growth and market elaborateness.TechnologicalRyanair has successfully demonstrated how to make use of modern applied science in order to save costs. Ryanairs online check-in policy and merchandising on Ryanairs website demonstrates how to make use of the Internet technology avoiding expenses of travel agents and excessive advertising. Besides, iftechnology such as on-board Internet connection and television are offered for a fee they can generate additional revenue on board.LegalRyanair is involved in a few legal battles with Stansted and Dublin airport that raise their departure duties. Besides, Ryanairs misleading and provoking advertisement assault media law and civil law resulting in hig h penalty fees. The poor working conditions and insufficient training might be an issue of labour law. Additionally, the poor working conditions lead to safety issues and can cause a bad image. All those legal issues are causing handling-, penalty fees and court expenses that should be limited.4. Porters 5 Forces AnalysisThe Porters Five Forces Framework helps to identify the attractiveness of an industry in terms of five competitive forces. In Ryanairs case it determines if the European budget airline industry is an attractive one. (see Figure A6)1) The threat of EntryThe low fares industry, especially, with established leading players as Ryanair, is really fractious to enter. The entrants involve high capital requirements in order togenerate high economies of exceed to compete in the European market. Besides, access to distribution channels is required. That intend that the factor threat of new entrants is pretty low.2) The Threat of SubstitutesA service that creates equivalen t value to the customers as the airline industry does is the railway networks, sea transports and car rental firms. The only significant threat is the train service because the other options are too expensive. level(p) though Europe has a strong train network like EuRail, the disadvantage of trains is the journey time. It takes lots longer to reach a destination by train than by plane, which results in a higher opportunity & transaction costs. To conclude, the threat of replacement is low.3) The talk terms post of buyersCustomers have a high bargaining power because switching to another airline is simple and there are no additional expenses required (e.g. EasyJet and Virgin Express). Especially, in a strategy of cost leadership each customer becomes important. Besides, an increasing problem is that more and more competitors start to offer cheap prices, as well.4) The bargaining power of suppliersThe bargaining power of suppliers is high, as there are only two manufacturers comp eting in the aircraft industry. Supplier switching costs are high, as the pilots will train to be retrained and high capital investments must be made. Ryanairs main supplier has traditionally been Boeing. But Ryanair can allow itself to change suppliers because of its florid cash flow and because it has already tried to bargain for Airbus aircrafts after the purchase of 200 jets from Boeing got cancelled.5) The extent of Rivalry between competitorsThe number of competitors that are assay to imitate Ryanairs cost leadership is increasing. As the market make do of the budget airline is only 30% of the whole airline industry the market contains the potential to grow. This might also be the problem for Ryanair and its expansion strategy. As the threat of entry is high the extent of rivalry stays as middle.5. SWOT Analysisa) Strength1) Point-to-Point flights.2) start Fare3) Low Operating Cost (Outsourced)b) Weakness1) Less customer service2) woeful working conditionsc) Opportunit y1) Market share expansion2) Establish good relationships with labour unions as BALPA3) Ryanairs website presence and modern technology4) contestation Committee who control harm competitorsd) Threatness1) EU regulation2) Oil price3) Legal Issues4) Substitute Transportation6. Evaluation of Michael OLearys leadMichael OLeary is an extraordinary figure and key personality in Ryanairs management. He owns an aggressive and innovative leadership style. His statements are provoking and direct. Even though he has a deep financial understanding and became a wealthy person by selling 5 billion of Ryanairs shares, he still lives the life of a middle-class person.Strong leading styleOLeary has an energetic, motivating leadership style. Former employees are assess his leadership style and he received a the European businessman Award from the magazine Fortune.Innovation abilitiesOLeary persuades Ryanair to adopt the strategy model of Southwest Airlines even though the majority of the managem ent team was not willing to do so. He was the inventor of charges for online check-in.Skilful PromoterOLeary was able to bring Ryanair to the customers by doing provoking stunts and curious advertisement. He unendingly managed to attract the assistance of the media and was able to put the company Ryanair on the first page in the news.Maintaining Core Competencies and effective Organizational Culture Over the years, OLeary managed to build a low-cost refining amongst Ryanair workforce. The corporate culture determines how Ryanair operates and conducts its business.Developing Human and Social CapitalSocial capabilities are OLearys disadvantage. As he is totally focussed to squeeze out everything out of the available resource, e.g. the employees, to lower costs and offer the lowest price, he forgets about the social component. If he and the company want to survive they need to start developing closer relationships without exploiting all the resources. Ryanair has to manage to move a way from an autocratic leadership style and transfer to a democratic one.7. tributeSO strategyRyanair should definitely proceed with its plan to open up 146 routes in year 2010 according to its five years plan. Expanding further in the market pursue the goal to achieve economies of scale that provide a guarantee to offer the lowest price in the airline industry. Moreover, Ryanair should make use of the strengths as its young, commonality aircraft fleet and start to promote a Greening-image. Besides, more revenue can be generated by increasing cross-selling over the website.ST strategyRyanair should keep buying the newest aircraft models from Boing as supplier. That will allow Ryanair to derogate its emission costs that will lead to competitive prices. Especially, in time of increased challenger Ryanair should promote the greening image. In times of an political economy downturn Ryanair can even allow to raise the prices as the competition is forced to do the same and Ryanair poss esses a wide price residue of 89% compared to its competitors.WO strategyIn order to counteract against the bad human beings image because of controversial advertisement and poor customer service Ryanair should try to look for a dialogue with labour unions and its customers. The successful dialogues with the labour unions should be promoted in marketing channels. Furthermore, Ryanairs website should be equipped with a feedback heavens for customerscomplaints. The complaints must be constantly reviewed and responded.WT StrategyRyanair should definitely pay attention to its public image. The poor customer service and safety issues can scare away customers. All problems concerning safety must be eliminated. In order to decrease the pressure from employees more staff should be hired.