Corporate strategies Essay Example

  • Category:
    Management
  • Document type:
    Math Problem
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    872

Ryanair Case Study

Ryanair Case Study

Ryanair Strategic Purpose, Ownership Model, Key Stakeholders & CSR

Ryanair is one of the world’s leading low-cost airlines operating in more than 175 countries across the globe. The airline’s strategic purpose is to establish itself as the leading passenger airline in Europe through constant improvements and increased offerings of its low-fare services (O’Higgins 2010, p. 613). The airline also seeks to provide its customers with low fares to attract a large number of passenger traffic while ensuring continued cost containment and operating efficiency. Regarding the ownership model, Ryanair is a publicly-owned company having many investors with a stake in the company. The shares of the company are trading in the London Stock Exchange. Ryanair’s key stakeholders include The Ryan, Michael O’Leary, and David Bonderman, Irish Air, Travel Agencies, Trade unions, employees, the European Union, Airports, shareholders (preferred and ordinary), suppliers (Boeing, Aviation Authority and Sec airport), Creditors, environmentalists and competitors. Ryanair, however, has bad reputation when it comes to CSR. The airline ranks among the bottom 10 of an “ethical ranking.” The airline has been accused of posting misleading information on its website regarding emission other issues.

Ryanair Culture

Ryanair has adopted a cost saving culture that is based on the Southwest Airline model. Ryanair promote cost saving as part of its corporate culture in order to become profitable (O’Higgins 2010, p. 614). The cost saving culture has had influence on the airline’s business strategy in the sense that it has made the company commit to pursuing cost-containment strategy that has helped spur the company into growth and success. By being able to keep cut the cost of operations, Ryanair has been able to offer low fares for its passengers and stimulating demand from price-conscious business and leisure travelers.

Ryanair Success Factors

The success of Ryanair is attributed to many factors. First, the airline has been successful because it adopts a cost-leadership strategy that has enabled it charge low fares. By charging low fares, Ryanair has been able to attract a large number of fare-conscious passengers both business and leisure travelers, thus resulting in increased revenue and profits (O’Higgins 2010, p. 613). Second, Ryanair’s success is attributed to the fact that it offers short-haul point-to-point flights frequently. Third, the airline has been so successful because of its quality maintenance and commitment to safety, as well as the fact that it offers customers additional services, such as free internet, as well as the fact that it flies to several destinations across the globe. Lastly, Ryanair has been successful over the years because of the effective leadership provided by Michael O’Leary (O’Higgins 2010, p. 615). O’Leary has steered the company into a successful part by introducing the cost-leadership business model that has seen the airline keep the cost of operation low and attract price conscious passengers. Besides, O’Leary has also promoted the culture of teamwork and customer focus, thus ensuring that the airline maintains good customer relations, and this has helped drive the airline into success.

Sustainability of Ryanair’s Strategy

Porter’s Five Forces Model is a framework that is used to analyze the competitive position of a company in an industry. The Five Forces include the degree of rivalry, threat of new entry, threat of substitution, buyer power and supplier power. Analysis of Ryanair’s competitive strategy and position in the airline industry indicate that its strategy can be sustainable in the long-run. The airline’s main competitive advantage is found in its cost leadership strategy that has enabled it keep the operation cost lower than most of its rivals in the industry (O’Higgins 2010, p. 613). Although other airlines, such as Southwest Airline and Virgin Atlantic have tried to adopt the same strategy, these competitors have not been able to match Ryanair. Cost-leadership strategy has enabled Ryanair to charge low fares that attract a large number of customers. Besides, studies have shown that fare is the number one factor that European customers look for when choosing an airline to fly and this makes Ryanair strategy sustainable in the European market. Ryanair strategy would only be under threat in the American market where customers look mainly for improvements, legroom and comfort when choosing an airline.

Recommendations

The advent of modern technologies such as the Internet has made it easy for customers to access information about a company. As such, to remain competitive considering the changing nature of the business environment, Ryanair should pay more attention to its public image. Secondly, it would be highly recommended that Ryanair give safety priority for it’s to keep its customer base considering that safety has become a critical issue for airline passengers. Additionally, as much as Ryanair provide low cost services, the airline should also focus on improving reliability, and comfort to ensure sustainable competitive advantage. Regarding long-haul flights, it would not make any strategic sense for Ryanair to introduce long-haul flights considering that it does not offer cost advantage to low-cost airlines as do short-haul flight. As a matter of fact, Air Asia was forced to suspend its long-haul flights from Mumbai to Kuala Lumpur and from London to Delhi and Paris because these routes were not profitable for Air Asia.

Reference

O’Higgins, E 2010, Ryanair: the low-fares airline-future directions? Pp. 612-623.