Subject: Strategic Business Management

Case Study: Ryanair: Flying Too Close to the Sun?

Ryanair: Flying Too Close to the Sun?

Unlike any other European airline, Ryanair DAC had long experienced impressive growth and
performance thanks to its well-designed and ruthlessly executed low-cost carrier business model.
However, the limits of growth did begin to appear, at which time the company adjusted its
business model with an increased emphasis on customer orientation. As a result, cracks in the
business model appeared and labor issues came to the fore.
Case learning Questions

1. What is company’s vision statement?

Ryanair has a vision statement “to firmly establish itself as Europe’s leading low-fares
scheduled passenger airline through continuous improvements and expanded offerings of
its low-fare services”.

2. What is the company’s mission?

The mission statement of Ryanair is “to offer low-fares that generate increased
passenger traffic while maintaining a continuous focus on cost containment
and efficiency operations”.
 3. Pastel Analysis and any identify key factors and counter strategies
Pestel Define Identify/ Reasons Actions/ Strategies
P Political: It defines the extent to BREXIT uncertainty is a This comes in external
which the political environment challenge for overall environments which are
and policies by government business environment. mostly out of control.
affects organizations and even Terrorist attacks in Company can take small
whole industry. It includes policy Europe also affects the actions but cannot
changes, stability in the country demand of air travel completely prevent it.
including trade, taxation and ultimately impacting
fiscal policies. demand of Ryanair.
The laws and
permissions imposed by
the Local government
because the target of
Ryanair is the market of
secondary-airline.
E Economical: The impact of Increase in taxation Purchase oil/fuel on
economic factors on the policy has unfavorable contract basis. This
performance of company which outcomes for the decreases the
impacts organization’s company as it decreases uncertainty of
profitability. These factors can be its revenue. increase/decrease on
change in interest rates, increase Increase in prices of fuel oil prices.
or decrease in unemployment or has negative impact on Decrease fare prices
employment and rates of foreign the entire industry of but don’t make a
exchange etc. aviation. high increase this
However, the prices of may result in loss of
oil prices are expected customers.
stay same at $50 per
barrel. This aids the
operational margins.
After BREXIT, the
weaker can pressurize
fare prices.
S Social: These are the factors Consumers preferring Offer cheaper prices
which focuses on the overall high speed rail more and make airline
social environment and classify than the airlines on accessible for every
the emerging trends. Some shorter routes. consumer.
factors are the changing Consumers’ Introduce new
demographics of families, level willingness of cheaper airplanes.
 of education levels, trends, and spending on ancillaries
changes in attitude etc. in case ticket costs less.
No frills model and
accepting airlines of
lower cost.
T Technological: These are the Digital platforms like Move towards such
factors related to technological mobile phones and platforms. Offer
development, improvement and websites for improving digital services to
innovation which can affect the the experience of customers.
market or whole industry. customer.
E Environmental: These are the Ryanair has few Check the lawsuits
environmental factors and lawsuits imposed by the and work on them to
different ecological features European Commission resolve the issue.
which influence the company. to receive some state Launch CSR
Like CSR activities (Corporate aids at various activities.
Sustainability Responsibility) European airports.
and company’s moving towards
Green environment.
L Legal: These related to the Emission regulation by Ryanair must keep
understanding of laws and legal EU for airlines which an eye on all
proceedings within their can increase Ryanair’s legislations to
operating territories. Companies cost. prevent law suits.
must be aware of changes in Boeing 737- 800NG It should purchase
different legislations which can aircraft’s young fleet for planes with better
impact their business passengers under 6 years and lowest emission
operations. age which should have to meet the
the lowest intensity of requirement.
emission amongst peers

4. Analyze the changing industry structure in which EACH Company is operating by using
Porter’s Five Forces Model. How did Company counter the changes and challenges of the
industry competitive forces in which Company is operating by using Porter’s Five Forces
Model? `
Five Define Identify/ Reasons Level Actions Strategies
Forces Are
Buyer’s Buyer’s power of European market is nearly High Increasing customer loyalty
Power driving prices down. saturated with several airline by ensuring and
corporations as well as maintaining high service.
premium services to economy
categories. negotiation power
 of shoppers is high as low
budget airline an artifact these
days and presence of a lot of
substitutes in European
market. a lot of folks motion
on Ryanair, as a result of they
just like the fare and might
simply afford it.
Supplier’s Supplier’s power of Suppliers of airplanes: In High Ryanair should maintain
Power driving up the prices. aviation Boeing and airliner good business relations
plays duopoly in the with its suppliers.
manufacturing of passenger
aircrafts. Boeing is the main
craft provider for Ryanair,
since its institution. In terms of
supplier bargaining power,
Ryanair holds important scale
of power over Boeing, because
it will simply switch to airliner
anytime in-case of high value
charged by Boeing. Fuel
suppliers, unions, staff, pilots,
hostess, field services will be
the suppliers of Ryanair.
Threats of Possibility of new The short haul “no frill” airline Low Maintain the kind of
New businesses entering in market could be an extremely service quality that
Entrants the industry. profitable business in Europe makes it impossible of
up to now, whereas long- the new entrants to meet.
standing time market in
Europe is experiencing losses
like Air Lingus long-standing
time airlines. So, the business
scope within the short-haul
market might attract new
entrants. Although, European
airline trade is de-regulated
and open for each national and
international firms. Hefty
capital investment is needed to
amass route, fleet, created
 flight maintenance center,
building infrastructure etc. so
as to determine associate
degree operation.
Threat of Products in the market It is a possible threat for High Decreasing cost of flights
Substitute which can substitute Ryanair because passengers domestically can reduce
Products your product. are switching to haul trains for this threat.
the shorter distance travels.
Rivalry Threat related to the Some major rivals of Ryanair High Continue expanding
competitors in the are Lufthansa, Easy Jet, around Europe and
same industry which Iberia, Air Lingus, Air increasing service
has more chances of France, KLM and SAS. This quality.
capturing your is a significant threat for the
customers. Ryanair.

5. You are also advised to conduct a strength, weaknesses, opportunities and threats
(SWOT) analysis for the Company and provide strategic suggestions based on analysis.
Identify
Opportunities: Good scope for increasing ancillary revenues using My Ryanair
Always Getting Better (AGB) program.
Decline the segment of charter flight.
Threats: BREXIT reduction in GDP putting prices downward.
Fluctuations in fuel prices.
Low cost carriers in the region.
Staff shortages in ATC and Europe strikes.
Increased taxes of Irish Corporation.
Strength: Establishment in European market which covers 1800 routes including
plus 200 destinations.
Great Balance sheet.
Consistency in shareholder’s returns.
Low cost base of Ryanair.
Point-to-point flights of Ryanair for short distance locations.
Weakness: Bad relations with labors and change in the compensation arrangements
of employee.
Fleet expansion can result in over capacity.

6. What are the Four Criteria of Sustainable Competitive Advantage which the company
uses its resources and capabilities to get competitive advantage and why is it so
successful in it?
 Flights of short haul with increased efficiency and reduced flight
time. High frequency with 9 flights per day per plane.
Low fare.
No-frills which means no extra charges for unnecessary items.

7. Define the purpose and identify the activities of company’s value chain?

Activities
It is important to break down worth making territories in Ryanair's Industry esteem chain,
which combines it upper hand by conveying those valuable qualities to clients. Worth chain of
any association involves two exercises, essential and auxiliary exercises. Essential exercises are
straightforwardly worried about conveyance of administration and that incorporates inbound
logistics, activity, outbound logistics, advertising, deals and administrations. The help exercises
incorporate authoritative foundation the board, human asset the executives, innovation and
acquisition.

1: Inbound Logistics
Stock control of Food, drinks and Auxiliary deal things: In spite of the fact that, Ryanair is a
"straightforward" carrier, it is making enormous benefit through the deals of food, refreshments
and Subordinate things. Ryanair oversees solid relationship with different nourishments and
refreshments providers, so as to get quality standard products and on time conveyance, which
includes an incentive all through its worth chain.

Course determination and air terminal base: Ryanair just chooses ease course with the
expectation of traffic development. Ryanair has solid relationship with different air terminal
specialists around Europe, in this way they give appropriations in return to high traffic and low
charges.

Stream fuel: This is the hugest info that Ryanair needs to investigate, as fly fuel contributes
around half of the working expense. Very much supported agreements will limit cost, so ongoing
supporting courses of action increases the value of oversee fuel cost in some degree.

Airplanes and Support: Arrangement of single kind airplane Boeing 737-800.

2: Operations
Ryanair's operational exercises incorporates traveler registration, stacking auxiliary and cooking
things in the flights, stuff registration, Accommodation, In-flight administrations and every day
flight activities.
Contemporary online registration framework decreases cost related with staff and keeps away
from traveler lines in air terminals, along these lines it gives advantageous excursion to
travelers. This includes an incentive by empowering fast turnover of flights and brief least
holding up season of trips at air terminals. Moreover, Ryanair has temporary workers at specific
air terminals for tagging, travelers and airplane dealing with (Incorporates stacking different
products into airplane) just as for motor fixes and weighty support at serious rates. These
outsider agreements are more cost-proficient than Ryanair play out these exercises itself.
Efficiency based motivations, this incorporates deals rewards for on-board offer of items by
flight participation to increment subordinate income through remuneration system and pilots are
compensated dependent on number of hours or areas flown, which reduces pointless staff
expense. Ryanair encourage the use of installed portable and electronic gadget for its travelers so
as to include an incentive for clients.

Services, Sales, Marketing and the Outbound Logistics:

Ryanair promote its occasional admissions and other organization related business commercials
on its armada with zero ad costs. Besides extraordinary ticket offers are being publicized on its
site to advance deals. So as to control significant operational expense and tackle high number
of booking, Ryanair has presented new Online Reservation Framework notwithstanding the
host framework. The framework new has been given and kept up by an external temporary
worker, Nava tire. It includes an incentive for travelers by speeding up and stay away from
Ryanair is being on introduction to the danger of settling framework disappointment issues.
There is no business operator commission includes esteem travelers' toll and it includes an
incentive regarding the dissemination cost total almost to zero and advantageous excursion for
travelers. Online stuff guaranteeing framework for things lost travelers, which increases the
value of travelers as it is a simple method to guarantee their packs.

8. How is the Company (each) using its resources and capabilities to get competitive
advantage and why is it so successful in it?
Ryanair has a cost leadership competitive advantage which enables it to push prices down.
This allows Ryanair to amplify the fiscal pain on competitors with higher cost. That’s why
people know Ryanair for the price competition it gives.
Moreover, this company also outsources most of operational services for keeping their
cost and prices low.

9. Describe Company Business Level strategy(s)

The company has a broad and low cost business level strategy. Their strategy is to increase
company’s value by decreasing cost.

10. Describe Company’s overall Business strategies

 Low tickets
Short routes of haul
Frequent point-to-point flights
Route choices
Low operating cost
Personal expenses
Aircraft equipment cost
Cost of customer service
Access fees in the
airport Use of internet
Focused growth criteria
High frequency and productivity with low fares and costs
New base opening by Ryanair at various secondary airports around Europe
Lower employee cost due to point-to-point flights.
Online booking which is tied to chains of hotel and other companies with share of
profits coming from those companies.

11. Who are Company’s competitors?

Easy Jet
Air Lingus
Lufthansa
Iberia
SAS
Air France
KLM
Air Lingus

12. Evaluate the overall attractiveness of the European airline industry

The European aircraft industry is in the cutting edge of these turns of events.
What's more, assessing industry allure dissects the serious powers inside nature of
aircraft industry.
Low Cost Carriers: These are transporters that started their plan of action on practical
activities by giving clients great other options. For example, Ryanair, Easy fly,
southwest carrier, west stream, they do short take administrations with restricted or no
availability. A decent cost administration which decreases their working cost was spread
to clients through low admissions. This gave them an exceptionally unpretentious
section into the market and represented an extreme tested to the FSC.
Full Service Carriers: This kind of transporters is otherwise called Network Legacy
Carriers. They do long stretch administrations and put together their plans of action with
 respect to conveyance of value administration. They serve various urban areas routinely.
They require high activity cost which thus decreased their benefit under an exceptional
rivalry.

13. Has the company influenced the development of the industry

Indeed. Its center capabilities like low admissions, re-appropriating air terminal positions
drove its rivals to follow this procedure as well. The Ryanair Company is without a doubt
one of the most momentous innovative accounts of the previous 10 years in Europe.
Moreover, that Ryanair has built up a candid correspondence style, utilizing promoting and
media to a lot to advance its 'upheaval' in air travel. Ryanair has incredible effect on the
advancement of the aircraft business. In the accompanying reasons;

Ryanair was Europe's unique low-tolls aircraft and it is as yet Europe's biggest low-charges
transporter. In the current year Ryanair will extend 35m. Travelers on 300 low admission
courses across 21 European nations. Ryanair has 15 European bases and an armada of more
than 100 pristine Boeing 737-800 airplanes, with firm requests for a further 125 new
airplanes, which will be conveyed throughout the following seven years
14. How would you describe the company’s business model?

Ryanair carrier plan of action is cost effective it gives tickets at cheaper price. Ryanair target
client are the individuals who travel other vehicle rather than carrier to pull in those
individuals to utilize aircraft for going at low cost.

The Ryanair plan of action is bases on low charges procedure which includes for following
key Strategies. Ryanair's procedure was to offer modest charges so as to profit by the market
including its ease technique through which Ryanair offered prices which were right around
20% lower than the least expensive fare of its rivals.
Ryanair additionally centered around normalization and so as to accomplish this Ryanair flew an
armada involving just of Boeing 737s which improves the expenses of support of the planes,
likewise the mass acquisition of extras and other airplane parts likewise implied economies of
scale. This exertion additionally spared the expense brought about in preparing necessities of
Pilot and lodge team as they need to figure out how to work a solitary kind of plane. Aside from
this Ryanair made a significant part of its benefits by traveling to optional air terminals which
were outside the principle city instead of the significant air terminals.

The advantages of utilizing the auxiliary air terminals which were situated external the urban
communities were significant commitment to Ryanair's benefit. The turnaround time for the
planes it's the "time required for the plane subsequent to arriving, to be prepared for its next
flight" was extremely less when contrasted with the turnaround time for the planes from any
significant air terminal. It used to take roughly 25 minutes for the Ryanair's planes for
 turnaround which helped in a normal of 9 excursions for every day as against the normal 6
of bigger aircrafts making its benefits more gainful and productive.

15. What are the main challenges facing the company?

Ryanair's relations with staff, particularly its pilots, are laden. The organization has
experienced harsh criticism for declining to perceive associations and supposedly giving
helpless working conditions, for instance: staff are prohibited from charging their own cell
phones at work to diminish the organization's power bill.

Ryanair has additionally harassed pilots to constrain them to consent to new agreements,
where pilots would need to pay expenses of €15,000 for retraining on new airplane in the
event that they left the aircraft, or if the organization had to haggle with associations
during the accompanying five years.

Furthermore, there are a few cases going on in the court against the organization for
pilot exploitation. This issue isn't just hurting the notoriety of the organization yet
making the workforce despondent which is driving new gifts of the business to think
once before entering or applying into Ryanair.

16. What would you have done differently? From company’s strategy
I would have taken the following steps different from the company’s current strategies:

a. I would have started promoting tourism around Europe to attract more visitors
and ultimately more customers.
b. I would have improved the food service on the flight.
c. I would be seeking to protect company from oil prices through hedging.
d. I would have reduced the company’s cost by making its operations more efficient.

Case Questions

Issues and analysis of situation for practical alternate solutions of problems,

decisions required with implementation plan and likely outcomes

17. What are the key issues?

Flight Cancellation: Some of its flights got canceled without prior notice
which created a negative impact among customers.
Airport Capacity: One of the key issues the airport capacity in Europe which
caused disturbance in the air traffic control.
Terrorist Incidents: Europe has gone through some major tourism issues in recent
 years associated with UK. Ryanair makes around 25% of its profits from
tourists from UK which is now at stake.
Lack of Stand-by Crew: The Ryanair has very less stand-by crew for
accommodating airplane delays.

18. What is the market cycle of the case company?

The market cycle of Ryanair the case company depends on the functionality as per the
regional expectations since it is a global company. Its approach is to retain the dominance it
previously had over its local competitors which is constantly strengthening. Secondly, there
is strong Emerging Market concentration due to the enormous potential seen for the
emerging markets. Third, the company should ensure that the Emirates Airline becomes
successful in fulfilling the expectations requested by its manufacturers. And finally, it lacks
in advertising campaign therefore, it needs to launch campaigns for promoting Ryanair
Airline’s plan of Sustainable Living to its consumers

19. Exploration of various alternatives and effect in decision-making

a. Minimizing long term cost.

b. Expending existing bases.
c. Increased Bases.
d. Making facilities more efficient.
e. Different airlines have been closed which increases opportunities for others.
f. Geographic.
g. Demographics.
h. Strategic.

20. Choosing the best alternative and your recommendations for Preferred Outcome:
You can choose the following alternatives for getting positive outcome:

a. Analyze flight routes.

b. Analyze passenger volume.

c. Increase frequency on high traffic routes.

d. Launch new advertisement campaign for regaining confidence of public
and company’s image.
e. Offer morning flights.
f. Mobile app development. (easier to use than the website)
g. Improve quality of service and plane.
 h. Improve discounts on fares.
i. Eliminate routes with least profits.

21. It’s the basic question? How to do it – what to do when, or timing of Action/implementation
Plan
How are you going to take action?
Ryanair Airline's CEO Management has indicated extraordinary possibilities in settling on ideal
choices to accomplish the objective and to lead the organization towards its definitive object.
The board and his group has for the most part centered around impacting individuals through
advancements in business methodologies as they began perceiving individuals as people, rather
than customers. Ryanair Airline's CEO has likewise indicated extraordinary activities in a
concentrated correspondence mission to make individuals mindful about their new inventive
systems

Ryanair ought to procure new bases and enter new courses interfacing those bases and to
accomplish sensible interest for that Ryanair ought to put vigorously on promoting in
those regions which are new for Ryanair.