Ryanair has potential market in already existing airports in which it does not fly to but has to compete with the various airlines already operating in such airports, but however its low fare is a very competitive strategy in order to break into new markets. It has continued to develop and has cemented its place as Europe's most profitable. Due to a uniform fleet, Ryanair have benefitted from low training costs of crew and pilots. Founded in 1985: 2 Aircrafts Carried 82,000 Passengers 1991: Michael OLeary Appointed Transformed to Low Cost Airline 1997: Floated on Dublin SE and Nasdaq Rapid Expansion (2008 Figures): 169 Aircrafts 794 Routes 148 Destinations, Across 26 European Countries 58 Million Passenger Annually Source: European Low … After this, we will discuss the, Ryanair's Competitive Advantage Ryanair at the moment is the biggest low cost carrier I will analyse how the have come to be in this position and I will compare it to Easyjet. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. There are a number of low-cost airlines operating on the routes similar to Ryanair. The airline also develops its services by the provision of ancillary services such as hotel services, travel insurance, excess baggage changes, flight changes fees, car rental services, in- flight sales etc. There are also cost that are irrelevant to be charged to the passenger such as delay or... Company's Competitive Advantage. Sustainable competitive advantage according to Lynch of Urinary is: the low cost basis, offering of the cheapest ticket prices and the abilities of the management and the CEO leadership of Urinary. Buyer power is low as passengers have little or no choice within the industry due to the low air fares offered by Ryanair. From the Porter Value Chain above it is clear to see that Ryanair have been very competitive and it has worked to their advantage. Such are as:- Value – Along with this, resources are very valuable for the organisation, they helps in increasing customer value. The firm wanted to enhance its revenue through ancillary services offered in conjunction with its core airline services. Ryanair competitive advantage would be analysed using two models namely; Ryanair operations identifies with cost leadership competitive advantage strategy which provides airline transport services at low cost and operates a broad scope as it carries over 42 million passengers out of 18 European countries at the cheapest rate, however due to its short haul point to point routes and taking Europe as its major market its strategy can also be viewed as a Cost focus strategy. Flying to cheaper, less congested secondary airports: This allows Ryanair to charge lower fares for their passengers making them a far more attractive option for the average consumer. However, low fares (based on low costs) will remain its key competitive advantage. Free resources to assist you with your university studies! Competitive advantage can be defined as strategies, skills, knowledge, resources and competencies that differentiate a business, Issues Due to the different barriers that exist in detracting Ryanair from expanding its market share, the future of the airline may lie in uncertainty but due to the expanding size of the airline industry and the possibility of providing its services in totally new countries the future looks bright for Ryanair. Ryanair Holdings: Sustainable Disadvantage And Competitive Advantages Ryanair Business Level Strategy. Behind the success of Ryanair is the very effective alignment of its customer value proposition with its low-cost operating … The Ansoff matrix model “is used by marketers who have objectives for growth. The purpose of Ryanair is therefore to provide a cheap, no frills flight service that is profitable. The Competitive Advantage Of Ryanair Management Essay COMPETIVE POSITIONING. Ryanair will be always known as a revolutionist of the Airline industry in Europe. Such are as:- Value – Along with this, resources are very valuable for the organisation, they helps in increasing customer value. No plagiarism, guaranteed! By 2010 Ryanair had transformed itself into Europe 's leading low cost airlines with 232 aircrafts flying to 153 destination. Show More. Ryanair aims to offer air travel services at low rates and this attracted many passengers while at the same time it maintains a continuous focus on cost reduction, operating efficiencies and continuous improvements. 1 Ryanair’s competitive strategy (2013, МВА Formative assignment) 1. Ryanair is now carry over 76 million passengers on 346 low fare routes across 24 countries, Strengths – Ryanair is one of the largest European airline company and it keeps growing by launching new routes and opening new bases. 2. Competitive advantage can be defined as strategies, skills, knowledge, resources and competencies that differentiate a business from its competitors (Wang, 2009). Travel concessions and participation in the share option program is granted to all employees. There are following factors in VRIO framework, that impact on Ryanair's competitive advantages analysis. Ryanair case study Ryanair increases its competitive advantage by increasing its flight fleet, making planes to be more cost effective. 3. Ryanair boasts having the best customer service in the industry: with 92% of flights leaving on time, the fewest number of flights canceled, and the least number of bags lost in the industry. The improvement on technology by aircraft manufacturers has also impacted on Ryanair positively, this is due to the manufacturing of new and improved Boeing 737 with 45% less fuel burn and 45% lower noise emission and larger passenger seat capacity. In the UK there exists a culture of travelling on holidays to other European countries as well as outside Europe, this in turn is good for the Airline industry to which Ryanair belongs, therefore in the long run Ryanair stands to gain from this life style, however the recent epidemic of swine flu first discovered in the Middle East and the Asia-Pacific region (WW1) has definitely changed the rate of travel as people are scared to travel and this in turn will definitely affect the profit of Ryanair as there will be passengers reduction. A PESTEL analysis is the impact of Political, Economical, Social, Technological, Environmental and Legal factors on an organisation. Last Update:15.Sep.2009 About Ryanair. Identify whether your company has a competitive advantage or disadvantage in its primary industry. Ryanair’s scheduled passengers grew from a already huge 90.6 million to 106.4 million in 2016, this was a 18% increase for Ryanair … It may include- intellectual capital, assets, skills or distribution network. Introduction: Technological 9 Ryanair boasts having the best customer service in the industry: with 92% of flights leaving on time, the fewest number of flights canceled, and the least number of bags lost in the industry. Launched 30 years ago, the Irish low-cost carrier Ryanair disrupted the European airline industry and started the low-cost revolution in Europe. Political/Legal 9 Info: 2679 words (11 pages) Essay Ryanair is one of the cheapest airlines around, very few other airlines even come close. Ryanair is involved in market penetration, i.e breaking into new market with already existing products, however they faces some constraints in their quest of seeking major market penetration in the following ways, Buying off Rivals and consolidation, Retaliation from Competitors, Legal Constraints. In fact, the only airline that can match Ryanair for price is Wizzair, but other than that, all other airlines are more expensive. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. The Texas airline found a unique approach to the … We may also share information with our advertising, analytics and social media partners for their own purposes. The culture of Ryanair is cost efficiency which is reflected in their values, vision and mission where they create their main competitive advantage of being a low cost, frill free airline. Our academic experts are ready and waiting to assist with any writing project you may have. The expansion in airline passenger numbers is … Also already established airline are often granted right to use a slot if it has already made use of it at the same time during the preceding season (Gröteke and Kerber, 2004), this is beneficial to Ryanair. Ryanair goes at length to lower their costs and prices and pride themselves on being the lowest fare/lowest cost carrier in Europe. The Bowman Strategy clock is away to analyze a company’s competitive position in comparison to the offerings of competitors (Wang, 2009). It is obvious that the future of Ryanair lies in its ability to penetrate the market and consolidate on its market share. Outline the key challenges and opportunities faced by their Human Resource Management. Analyzing the operations and future of Ryanair using Ansoff matrix includes the following. Ryanair benefits from this as the airline updated its fleet of airplanes thus having a 2% reduction in fleet fuel consumption; however the airline had to make major investment to effect this change which cost more money (Johnson et al, 2008). Ryanair operates out of two major airports, Dublin and London Stansted. Ryanair Competitive Advantage. Thus, the company should look forward in reducing any unnecessary cost that could escalate the cost of the trip in order to ensure the loyalty of the passenger and being able to sustain in the long run with a stable competitive The strategy of Ryanair is to be a cost leader. There are following factors in VRIO framework, that impact on Ryanair's competitive advantages analysis. Company Registration No: 4964706. Ryanair was foirst to adopt the low cost strategy within the European airline industry giving it a first mover competitive advantage over other traditional carriers British Airways and Air France (Peng M. W., 2014). Porter’s five forces are used to analyse Ryanair’s competitive environment while there is a brief explanation of the segmentation theory and its process. This hinders Ryanair from expanding its market share at present and in the future (Johnson et al, 2008). Ryanair competitive positioning in relation to its internal and external environments. The airline is faced with counter actions from its fellow competitors regarding its strategies and policies. If you need assistance with writing your essay, our professional essay writing service is here to help! Ryanair fleet has grown to 294 Boeing 737-800s with an extra 25 air new 737-800s craft expected later this year according to Ryanair. They can achieve this due to the ever expanding airline industry in Europe. In 2016, Ryanair reported revenue of more than 6 billion Euros. Ryanair competitive advantage … Virgin Atlantic and Ryanair are successful airline companies who achieve competitive advantage in different ways. It is evident from Ryanairs records that they hold a competitive advantage in their area of business. All in all, Ryanair Holdings is not a sustainable competitive advantage in the long run since the company is not fully satisfied the above four criteria. Ryan air developed its product in terms of updating its fleet of aircrafts by acquiring over 100 new Boeing 737-800 aircrafts. Competitive advantage. The Competitive Environment 10 Ryanair has found a source of leveraging a competitive advantage; the knowledge about the opportunities associated with implementing the low cost strategy, which was created by Southwest Airlines. This enables them to do more Management. Ryanair flies over 1500 different routes and carried more than 79 million passengers in 2012. Due to the current Global financial crisis the general spending power of individuals have reduced, however they benefited from the financial crisis period due to their refusal to surcharge passengers on increase in price of fuel. Is Ryanair's strategy sustainable? Ryanair is now Europe’s largest airline with more than 90 million passengers per year and shows record profits of 875 million euros [1]. By clicking “Yes, I agree”, you agree to Ryanair using cookies to improve your browsing experience, to personalise content, to provide social media features and to analyse our traffic. Although the firm faces weaknesses and threats, their, competitors, Ryanair Holding should evaluate their strategy which is low cost business level strategy in the long run. Competitive Advantage of EasyJet and Ryanair. Legal Constraints is a factor that deters Ryanair from increasing market share, as it has to constantly deal with incoming law suits that are cost effective (Johnson et al, 2008). Ryanair has continued to maintain its position in airline industry as the world's most profitable airline, this it has achieved via various practices thus giving it a competitive advantage over others. Strategic Positioning can be defined as “the impact on strategy of external environment on an organisations strategic capabilities and the expectations and influence of stakeholders” (Wang, 2009) can be analysed via the use of strategic models such as SWOT, PESTEL and Porters five forces analysis respectively, this gives an analytic view to the operations of Ryan air and its effects and how it is affected by its environment. Furthermore, tactics and implantation are discussed, and how Ryanair can achieve its objectives through its marketing mix. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. The reduction in oil prices, and the expectation that the prices will remain low should cut the cost of travel and bolster the passenger volume, which should in turn have a positive impact on the financial performance of both EasyJet and Ryanair. The UK/European tourism and airline industries are expected to expand, mainly in response to the improvement in the global economy as well as the favorable oil prices that have seen operating costs fall (MarketLine, 2015b). In 2003 over 30% (639 in total) of employees took part in the stock option program - the average pay per employee was about 53.000 (Annual Report 2004, p. 21). Relative to this development, Ryanairhas also adopted a “red ocean” strategy where it “steals” customers from other market segments (predominantly the cust… It has achieved this by develop new strategies that has given them a competitive advantage over their rivals. It worked for the Ryanair as a competitive advantage. The threat of substitutes exists as there are other means of transportation besides air travels such as road, rail and water, this affects Ryanair as it involves in short haul flights which can easily be replaced by road, rail and water transport. Economic 9 Ryanair became Europe's first low-cost airline in the late 1990’s. 1. All work is written to order. Yes, Ryanair’s strategy is sustainable because it’s core competencies of ‘Low Price’, ‘Cost conscious culture’ and ‘R&D on aircraft design’ (A5) gives it competitive advantage. In fact, the only airline that can match Ryanair for price is Wizzair, but other than that, all other airlines are more expensive. (Porter’s 5 Competitive Forces) 10, 2011 VAT Registration No: 842417633. 06/04/2009 We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Ryanair adopts different employment contract types in the different countries where it operates; this affects it negatively. Ryanair reduced the rivalry among its competitors by undergoing major economies of scale which resulted them the gain of 20% EU market. What is the basis of its competitive advantage or lack of? Ryanair was the first company in reducing ticket costs and keep them low at all times. Executive Summary By making use of the VRIO model to Ryanair resources (Appendix 1) establishes whether it is using the resources and capacities to maintain competitive advantage in the industry. Ansoff’s matrix offers strategic choices to achieve organizational objectives (WW2). Ryanair diversifies its services by providing ancillary services. Ryanair competitive positioning in relation to its internal and external environments. The major strength of Ryanair is in its ability to provide air travel services at low rates; it also provide higher rates of on-time departures and faster turnaround times due to its operations from less congested airports. Table of Contents Currently, 11,458 employees work for Ryanair at various locations across the countries it flies to. 3/20 Ryanair – the low-fares airline Q2. Other airlines may have better services but Ryanairs main catch which is low air fare which keeps the passengers returning even with they have complaints about services on board. Ryanair is situated in a market environment were competition is a major factor due to the amount of airlines that run short haul point to point flights within Europe. Ryanair is one of the cheapest airlines around, very few other airlines even come close. How does Ryanair maintain competitive advantage? Low Price Ryanair’s strategy is … Ryanair was founded in 1985 by the Ryan family to provide scheduled passenger airline services between Ireland and the United Kingdom. Ryanair's Competitive Advantages. Looking for a flexible role? Study for free with our range of university lectures! Ryanair strategic advantage over competitors can also be classified under two systems which are the Hybrid and the Low Price Low Added Value systems. CONCLUSION Concluding from the above evaluation, Ryanair should develop its market globally. Ryanair already had a huge clientele base although it seems 2016 it grew even bigger. These are all means of diversification; it modifies the primary product which Ryan air provides which is low air fare travel and at the same time increases profit as well as ventures into new markets for these various services (Johnson et al, 2008). This essay aims at analysing the competitive positioning and competitive advantage of Ryanair, a short haul point to point airliner located in Europe using academic models and applying ansoff matrix model to the current and future business model of Ryan air. These costs saving are reflected on selling prices that pushes Ryanair to sell a lot to increase its activities. A swot analysis can be defined as the internal effects of strength, weakness, opportunity and Threat of an organisation. Ryanair established in the European market share. Looking at the case study it is evaluated that Ryanair performance is based on focusing the low cost sector specially focusing the budget influenced business and recreation travellers. Add on earning by selling products and service to the airline passengers is again an advantage for Ryanair. 1242 Words 5 Pages. This section classifies the application of Ansoff’s product / market growth matrix on Ryanair business model. This strategy alone is not a basis for competitive advantages, nor are advantages sustainable over time. However, because it could not protect this strategic approach from duplication by other airline companies, it lost a significant market share to other companies, such as Easyjet. Statistics shows that aviation represents 2.6% of carbon emissions in the Europe and this affects Ryanair negatively as the EU has asked airlines to pay environmental tax for their contribution towards global warming, however Ryanair has made progress positively against environmental degradation due to investing in modern fleet of aircrafts which make more than 50% less emissions and 45% less noise pollution (Johnson et al, 2008). The recent evolution of its product and service add new elements to the basis of competition. HR Strategy in Ryanair 6 This gives the aircraft manufacture more power as it can increase prices of aircraft and maintenance cost, another supplier power can be noticed in the fuel suppliers who can set any price standard as Ryan air has little or no control over these prices (Johnson et al, 2008). The three methods for creating a sustainable competitive advantage are through: cost leadership, differentiation, focus. Ryanair flies over 1500 different routes and carried more than 79 million passengers in 2012. Since economy is further growing, Ryanair faces, Ryanair was founded in1985 with one 15-seater aircraft, operating daily from Waterford in the southeast of Ireland to London Gatwick. Human resources: Ryanair employees some 2,700 people who all have multiple skills. Ryanair’s strategy is based on providing a no-frills service with low fares to stimulate demand from budget-conscious travelers. 2006). One more advantage: the … This involves the consideration of the potential value of complimentary products (Johnson et al, 2008), Ryan air is served with lots of opportunities for diversification, providing other channels for making profit ranging from hotels, excess luggage bookings, travel insurance which had climbed by 36% in 2006, also in western European countries alone there are 431 airports (Fewings, 1999) which were underutilised because national airlines concentrated on hub airports, therefore providing greater opportunity for Ryanair. These differences in achieving operational efficiency have different implications for airports, which include bargaining power and risk exposure. Ryanair has these resources for its sustainable competitive advantages… Key points from the article Ryanair’s Integrated Business Strategy Resource-Based View (Inside out) Marketing View (Outside in) Variety of Destinations &Routes Competitive Advantage Competitive position Low Cost Airline Business Model (Passes the costs directly to Ryanair’s customers) 4. The recent evolution of its product and service add new elements to the basis of competition. Bowman considers competitive advantage in relation to cost advantage or differentiation advantage. The use of secondary airports and point-to-point services help to increase fuel efficiency and limit emissions. Key points from the article Ryanair’s Integrated Business Strategy Resource-Based View (Inside out) Marketing View (Outside in) Variety of Destinations &Routes Competitive Advantage Competitive position Low Cost Airline Business Model (Passes the costs directly to Ryanair’s customers) 4. Delphi Technique 8 Cost leadership is a competitive advantage which allows Ryanair to push prices down and to amplify the fiscal pain on higher cost competitors. The competition between low cost airlines and full service airlines within the airline industry is becoming fierce. It is obvious in the loss of 1.9m by Ryan air in reduced bookings due to terrorism and security threats notice in august 2006 (Johnson et al, 2008). Training costs: They only have one kind of plane, so all of their staff are trained to handle only that kind of plane. Registered Data Controller No: Z1821391. Ryanair goes at length to lower their costs and prices and pride themselves on being the lowest fare/lowest cost carrier in Europe. The first advantage is of course the price. However the financial crisis also forced Ryanair into creating alternative sources of revenue which includes hotel travel insurance, excess baggage services as a means of sustained profit. In October 2006 Ryanair was voted the world least favourite airline by a pool of 4,000 travellers conducted by Trip Advisor but however in the same year Ryan air was reported as the world’s most profitable airline by Air Transport world magazine (Johnson et al, 2008) and also The airline increased from 4 million passengers in 1998 to 24 million in 2004 (Gröteke &Kerber,2004).
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