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Miriam Mennen An Analysis of Ryanairs incorporated dodge Essay Document Nr. V145623 http//www. grin. com/ ISBN 978-3-640-56879-6 9 783640 568796 world(a) Corporate strategy A casing count on Ryan Air An Analysis of Ryanairs Corporate Strategy Executive Summary Ryanair was founded in 1985 as a family business that originally provided safe answer conventional scheduled respiratory tract go mingled with Ireland and the UK.The airline started to repugn within the confines of the existing industry by trying to sneak customers from their rivals, especially the state monopoly carrier Air Lingus, sketch by Chan Kim and Renee Mauborgne (2004) as Bloody or Red Ocean Strategy. Ryanair seemed to fol pitiful a me-too system according to Osborne, K. (2005), they tried to be all things to all flock. make up they started restructuring their strategy was non enough differentiated and their speak to advantage was too grim to be inventing. In 1986, they got stuck in the middle, ou tlined by Porter (1985) as they had a limited damage advantage and no service advantage.Ryanair hence created a competitive advantage through the alignment of the three components of business systems 1) Creating superior value for their customers (outside perspective) 2) Supplying their superior value- appending activities in an strong and efficient bearing (which jointly form the Value Chain) 3) Possessing over the resource free-base required to discharge the value-adding activities, (inside perspective) According to Porter (1987), merged strategy is what makes the corporate only add up to more than than the sum of its business unit parts. It is seen to be concerned with the overall purpose and scope of the organisation and to meet the expectations of major stakeholders. every last(predicate) aspects of Ryanairs value chain be important to the friendship and their shareholders as Ryanairs decisions add value to two. The following report outlines the three perspectives of shaping Ryanairs business system. The value creation dimension of Ryanairs business baby-sit entrust be outlined, considering the theories of Porter and the more recent authors Kim and Mauborgne (2004).Further, the linkages in the airlines value chain and their resource base will be analysed, considering Hamel and Prahalads (1990) plaza competency model (inside-out approach). 1 global Corporate Strategy A Case Study on Ryan Air In section 2, the future challenges of the airline are considered. Ryanairs forcefulnesss and weaknesses will be analysed, internal value creating factors such as assets, skills or resources, to consider how the airline elicit create alignment to its opportunities and threats, external factors.An stronger outside in approach for Ryanairs future corporate strategy will be considered, applying Porters five forces model, placing the trade, the competition, and the customer at the starting point of the strategy process. I An evaluation of Ryanairs k ey strategic perspectives 1) Creating superior value for their customers The low cost mart constituent Ryanair has found a source of leveraging a competitive advantage the knowledge roughly the opportunities associated with implementing the low cost strategy, which was created by Southwest Airlines.The Texas airline found a unique approach to the securities industry through reconceptualisation of market segments. In 1990, Ryanair successfully employ their model in the European market, becoming a no frills airline, focussing on short haul destinations and keeping its planes in the air as a great deal as possible in a 24 hour period. The impertinently low price market segment, which did not exist before in Europe, could be described as the development of a blue ocean, uncontested market space through the expansion of boundaries of the existing industry, outlined by Kim and Mauborgne (2004).Ryanairs low fares created demand, particularly from fare-conscious leisure and business travellers who king an other(prenominal)wise run through used alternative forms of transportation or would not have travelled at all (Case Study, p. 3). The competition became less relevant and allowed Ryanair to develop and sustain high-pitched performance in an overcrowded industry. Up to now he airline gathers from the early profitable and rapid growth within the blue ocean and successfully executes the low cost business model, which became obvious when the airline announced that it has beaten its own downbeat forecasts to spirit a 29 % increase in pre-tax profits and 19 % passenger growth, having carried more than 27. 6 million passengers in the past financial twelvemonth (Jameson, A. , 2005). 2 Global Corporate Strategy A Case Study on Ryan Air Ryanairs position within the industry However, blue oceans are not easily protected and Ryanair has been facing competitors that try to copy their low cost approach.Further, Ryanair has al styles been competing within the red ocea n, by targeting a broad throw bump off of customers, e. g. the business segment and stealing customer from rivals. This outlines that Kim and Mauborgnes strategy approach laughingstocknot be seen as exclusive. Competing with new entrants of competitors (and differentiators), Ryanair was able to launch an all out struggle, lowering prices and remaining profitable whilst change magnitude the frequency of flights and establishing new routes (Case Study). According to Porter (1980, 1985), the relative competitive position within an industry lies at the amount of money of success or failure of blottos.He defined both basics types of competitive advantage cost leaders and differentiation (and focus). Ryanair set out to be outperform in the budget market segment, becoming the lowest cost airline in its industry (cost focus), e. g. no paper fines, no passenger meals, no pre-arranged seating, enable to cope and remain profitable, even up on low yields. The airline constantly striv es to bring down or control four of the primary expenses involved in tally a major scheduled airline their aircraft equipment costs, effect productivity, customer service costs, airport access and treatment costs.The airline deals successfully with competitive forces and is Europes leader in low fares by generating a superior return on investment (Osborne, 2005). This supports Mintzbergs argument of price leadership being more relevant to competitive advantage than cost leadership. Planning to turn into a no-fares-airline by offering flights for free (Case Study), Ryanair wad be argued to follow price leadership as one of the six ways to differentiation outlined by Minzberg.According to Mr O Leary (2005), new planes will enable him to drive down average fares by 5% a year cavictimization a bloodbath. We are going to show up in your market and trash your yields. (Ryanair rolls out plans for European domination, 2005). Differentiation through price outlines the superseding of Por ters generic wine strategies by the resource/competence-based strategy frameworks. In addition to low prices, Ryanairs branding emphasises on punctuality and efficiency, which is mainly achieved through operating from secondary airports.According to Ryanair, their success is not just due to their low fares precisely also a kind combination of our No. 1 on-time record, our friendly and efficient people and our new Boeing 737-800 series aircraft (Ryanair, 2005). It can therefore be argued that in a globalized competitive environment, even cost leaders need to differentiate 3 Global Corporate Strategy A Case Study on Ryan Air their message ( mark strategy), contradicting Porters original idea of fundamentally different routes to competitive advantage.International expansion Ryanair barely constantly created value for customers by following generic growth and world(prenominal)isation strategies they moved their operations into more and more countries, expanding the route system f rom its primarily Irish-UK emphasis to serve 86 destinations on 133 routes across 16 countries. According to Mr. O Leary (2005), they will deliver 34m passengers from 12 European bases and have identified a further 48 potential bases. The airline expanded latterly by placing an order for 70 more Boeing 737-800 aircraft to keep growing at 20% a year (Ryanair rolls out plans for European domination, 2005).Ryanair can compete on price, as the airline has besides its low cost product offering an practise system and resource base that match the price positioning, diametral to traditional airlines that seem to get stuck in the middle, as outlined by Porter, when undergoing severe cost cutting which affects their areas of differentiation, e. g. Aer Lingus. 2) Supplying superior value-adding activities in an effective and efficient manner The Value Chain As Ryanairs low cost/price pproach leads to overlapping value chains, the conjunction is a perfect practice session of linking its o pportunities, as outlined by Campbell and Goold (1998, in Meyer and de Witt, 2004). From a Value Based heed point of view, Porters Value Chain framework can be seen as one of two dimensions in maximizing corporate value creation, outlining how well a company performs relatively towards its competitors (Relative Competitive Position). Even Ryanair subscribes to a similar basic model compared to e. g. Easyjet, the airline has an entirely different value chain.Ryanairs low cost/price approach adds value to most of Ryanairs processes, e. g. clear corporate identity and brand image in addition to limited organisational complexity, increasing the differentiation towards their competitors. Ryanair maintains their efficient, high quality and low cost services through operating from secondary airports and by exploiting the advantages of outsourcing, a strategic management model, transferring the business processes of services to outside firms, e. g. passenger and aircraft handling, ticketin g. This allows the 4 Global Corporate Strategy A Case Study on Ryan Air ompany to achieve competitive rates at fixed prices and to baulk focused on its core competencies. Further, outsourcing can improve customer satisfaction (primary activity), mitigate risks, and add value to their reputation, accessed skills and technology, increased overall visibility of accounting and performance (controlled infrastructure), and avoided seat of government investments. Their strategy is to deliver the shell customer service performance in its peer group, having just six staff in their customer care department one for every two million passengers compared to British Airways which has 10 times the coverage (Ryanair, 2005).Porters Value Chain Firm Infrastructure Support Activities Human Resource Management scientific Development Procurement M g ar in Primary Activities The technology of the companys Internet booking system allowed to capture more value from its operations, to improve its conta ct with its customers (outbound logistics) and to increase control over the quality of their services. According to Mr OLeary (2005), Ryanair saves 15% on the price of every ticket by using direct booking through the internet.For the fiscal year terminate March 31, 2004, Ryanair generated virtually all of its scheduled passenger revenues through direct gross revenue (Ryanair, 2005). only value-creating activities that transform the inputs into the final service of Ryanair are kept extremely lean. Ryanair does not interlink its operations with competitors, avoiding costs of trough service and delays and their Human Resource Management is tailored to continually improving the productivity of its already highly-productive work force whilst controlling their labour costs. 5 M Logistics Logistics ar gi n InboundOperations outward-bound Marketing & Sales Service Global Corporate Strategy A Case Study on Ryan Air Ryanair focuses on centralised recruitment and training. In the year end ed March 31, 2004 productivity calculated on the basis of passengers booked per employee continued to improve by 21% on the year ended March 31, 2003 (Ryanair, 2005). Ryanair emphasizes on modest base salaries and productivity-based pay incentives, including commissions for on-board sales of products for flight attendants and payments based on the number of hours or sectors flown by pilots and cabin crew personnel.Employees can participate in Ryanairs stock option programs (worth up to 5% of the share of the company, Ryanair 2005). Ryanair even adds value to their low cost reputation through the refusal to love trade unions whilst having a competitive advantage over the heavily unionised nature of employment of the state owned Aer Lingus. (Ethical considerations, outlined in section 2). Ryanair has extremely low airport access fees by focusing on secondary and regional airport destinations that offer competitive cost terms, e. g. ess expensive outdoor embarkation stairs, and allow for higher rates of on-time departures, faster turnaround times, fewerer terminal delays, which maximises aircraft utilisation, eases restriction on slot requirements and on the number of allowed takeoffs and landings, adding value to customer satisfaction. Ryanair further added value to their infrastructure, procurement and reputation through negotiating favourable contracts with Boeing (inbound logistics) knowledge that is difficult to codify and replicate for competitors, as it is not only observable facts or info but complex and difficult to specify (core competence).Ryanair is said to be paying less than half the Boeings list price of $66m each (Money Telegraph, 2005). The procurement with Boeing 737-800s allows the airline to benefit from synergies through fleet commonality, limited costs associated with training (Human Resources), maintenance efficiency, and greater flexibility in the scheduling of crews and equipment (inbound logistics). Again, the new aircrafts provide t he newest technology blended winglets that reduce drag and drive down 2% of the fuel cost, driving down the average fares by 5% a year (O Leary, 2005).Ryanairs business model as a whole is distinct, having an entirely different configuration altogether, in relation to their competitors in the airline industry, increasing the barriers to imitation or substitution. According to Teece, Pisano and Shuen (1997, in Meyer and de Witt, 2004, p. 253), even if competitors are successful at identifying embedded competences and imitating them, the company with and initial lead can work at upgrading its competences in a race to stay ahead (Dynamic capabilities view).Ryanair seems to have outpaced their 6 Global Corporate Strategy A Case Study on Ryan Air competitors through upgrading its resources, activity system and product offering more rapidly, as outlined by Gilber and Strebel (1989). Ryanairs unique firm resource their knowledge of demand for the low cost airlines, made it possible to imp lement their strategy before others and to benefit from first mover advantage, outlined by Lieberman and Montgomery (1988). ) The resource base required to perform the value-adding activities Ryanairs resource heterogeneity In general, the airline industry is characterised by supply side similarity (Kay, 1993, in Meyer and de Wit, 2004), as only marginal differences between air carriers can be displayed, particularly in a deregulated environment. Ryanairs business model was designed to challenge the limitations of these constraints. The airline focuses on value-adding process or resources, which piss them a superior position relative to its competitors and which seems most appropriate to draw boundaries in the airline industry.Ryanairs internal characteristics are most relevant in achieving sustained competitive advantage, outlined by Barney (1986, 1991). In contrast to Porter, Barney assumes that firms within an industry or group may develop long-term superior resources that can b e protected in their mobility across firms by some form of isolating mechanism. According to the resource based view already outlined by Edith Penrose (1959, in Meyer and de Wit, 2004) and extended by Wernerfelt (1984, n Meyer and de Wit, 2004), Ryanair can be argued to have a sustained competitive advantage, as their competitors in the same segment are unable to duplicate the benefits of their strategy. The winner-takes-all dynamic (Case Study, p. 15) in the low cost segment, seems to have only worked in combination with this first mover advantage. Ryanairs assets, e. g. their capabilities and attributes, are not successfully implemented by any current or potential competitor, e. g. negotiation for airport deals, employee contracts and fleet prices.Budget airlines that attempted to enter Ryanairs market segment lost money or were taken over, e. g. Gos foray into Dublin (Case Study). Their main competitor easyJet has carefully differentiated by focussing on different geographical ma rkets and higher value through meliorate transfer situations of main airports, addressing the business segment. However, Ryanairs external environment, e. g. a saturated market and changing customer demands, can threaten Ryanairs future growth (outlined in section 2). 7 Global Corporate Strategy A Case Study on Ryan AirRyanairs Core Competence Approach Ryanair can be argued to follow the core competencies model of Hamel and Prahalad (1990), (inside-out perspective), as they build their strategy around their strength of distinctive competences, which offers an attractive base of competitive advantage, e. g. secondary airport approach. Ryanair competitiveness derives from an ability to build their competences at lower cost and more speedily than competitors. The historical sources of Ryanairs advantage are to be found in OLearys ability to consolidate corporate-wide skills into competencies.Ryanair has strong relationships with their suppliers and a strong corporate identity. The airline can be argued to follow a strategic stretch as they are overall resource led and create new opportunities, e. g. ancillary services. powerfully focussing on their core competences allowed for high strategic capability and potential access to a wide variety of markets, making a significant ploughshare to the perceived customer benefits of the end service and limiting the risk of imitation. The corporate centre tightly controls and co-ordinates by enunciating the strategic architecture that guides the competence acquisition process, e. . outsourcing. Ryanairs resources include all means at the disposal for the performance of value-adding activities, e. g. through the acquisition of Buzz in 2003 (Case Study, p. 5), the airline gained a range of resources, e. g. know how, outlined by Preece as learning. The airline benefited from increased infrastructure and value-chain activities (leaning), integrated operations (leveraging), closer co-ordination of their vertical activities (leaping), expanded market opportunities and reduced competitive pressure (locking out). Resources comprise of tangible assets, e. g.Ryanair owns all of its aircraft and holds net cash of 286 million euros (Money-telegraph, 2005), leading to the advantages that large firms have from large volumes enabling them to spread their costs (economies of scale), and intangible assets, e. g. the human capital skills, competences and capabilities. Ryanairs resource heterogeneity towards their competitors hinders other firms to conceive and implement the cost focus strategy, as outlined by Barney. Ryanair takes advantage of leveraging its resources, e. g. relationships and reputation, which are not readily transferable.They are inheritably attributed to OLeary and his team and are influenced by the airlines culture and governance. Ryanair possesses over a range of funny value-adding stories which defined their past, e. g. how Mr OLeary went to war, driving in a military jeep to his competitor (Case Study). Personal involvement in battles of OLeary against lobbying politicians, EU commissioners and competitors are part of the company culture and promote their aggressive 8 Global Corporate Strategy A Case Study on Ryan Air low cost image.Ryanairs reputation for commitment to Safety and Quality Maintenance, not having a single incident involving major injury to passengers or flight crew in its 20- year operating history (Case Study), is another value adding aspect. Ryanairs distinct activity system provides the base for competitive advantage and raises the barriers to imitation. In conclusion, Ryanair does not follow a linear inside out or outside in approach. On the one hand, the airline continual upgrades its unique resources on the other hand, it occupies specific market positions to emain competitive, creating superior value by closely fitting their services to customers needs and focussing on a relatively limited set of businesses and markets (narrow competitive sc ope). Ryanair more and more focuses on exploiting market opportunities in their business environment though, e. g. expansion and horizontal integration, leaving their original organic growth model and benefiting from all aspects of the framework of international strategic alliances, outlined by Preece. External forces, e. g. he industry deregulation in 1997 that allowed the airline to go Continental and the technological advancement of the internet, also potently influenced the airlines success story (external value adding activities). Ryanir can be argued to have a discrete organisation perspective, emphasising on competition over co-operation, having high talk terms power and a highly independent approach with distinct firm boundaries. The airline has an essentially logical structure, characterised by planning and control, prediction and forecasting.Especially in relation to the dynamic hostile environment, the airline has a relatively deliberate strategy that is based on ratio nal thinking. The limited complexity of the system is characterised by few organisational levels and centralisation. The airline benefits from the entrepreneurial spirit of O Leary who seemed to understand the activities that are likely to have a significant impact on Ryanair and that build expensive internal linkages within the boundaries of their business model (organisational leadership perspective). So far, he was highly successful in understanding the low cost attributes that made Ryanair unique. Global Corporate Strategy A Case Study on Ryan Air II An evaluation of the future strategic direction of the company The sustainability of a firms competitive advantage is said to be threatened by the development in the market. Customer needs and wants are in constant flux. The study analysis of Ryanair, a tool for analyzing the internal strengths and weaknesses and the external opportunities and threats (see Appendix), outlined the paradox for Ryanair of creating alignment either f rom the outside-in (market-driven strategy) or from the inside-out resource driven strategy). So far, Ryanair has been strongly focussing on their core competences. Considering their environment, opportunities and threats, as the starting point when determining their strategy (outside-in perspective), is crucial though to re-check the fit between their competitive advantage and the environment, as outlined by Rumelt, (1980). The model of environmental consonance seems of great importance to the airline, outlining the requirement of continual adaptation of the business system to the demands and new opportunities in the market place.As outlined by Leonar-Barton (1995), Ryanairs core competences seem to be simultaneously Ryanairs core rigidities, locking them out of new opportunities (in Meyer and de Wit, p. 253), e. g. Ryanairs Dublin saga, the compress over the desired second low cost terminal at Dublin airport instead of considering the creation of a new lucrative base in continent al Europe, threatening easyJets. Ryanair should consider market development, outlined by Ansoff, e. g. Greece and Turkey, which have a combined population of around 70 million people and offer extremely profitable market opportunities through year-round and holiday flights.The airline should further initiate additional routes from the U. K. or Ireland to other locations in continental Europe that are currently served by higher-cost, higher-fare carriers. Market opportunities of new domestic routes within EU countries, especially new member countries, and increased frequency of service on its existing routes will allow Ryanair to remain focussed on low cost/price and prolong its unprecedented and high levels of growth without jeopardising their core competences. Rivalry among existing players could be reduced by damaging the package tourism industry, e. . Thomas Cook, Lunn Polly and Neckerman (Porters 5 forces). Further acquisitions should be considered in the long-term. Ryanair seem s to have enough power to counter agreement the demands of buyers and suppliers, to outperform rival airlines in their market segment, and to discourage new firms from entering the business. Their main 10 Global Corporate Strategy A Case Study on Ryan Air challenge will be threatening easyJet in its home market, currently serving Athens, and to fend off the Value for money segment that threatens to substitute Ryanairs services (Porters 5 forces).The industry attractiveness for long-term profitability, outlined by Porter (1985), will have a strong influence on Ryanairs profitability. Porter had ignored the aspect that differentiation strategies can be used to increase sales volumes rather than to charge a premium price. With negative forecast for the low price market, with growth rates of no more than 20 to 25 % of the be market, market saturation is said to be not far off for budget airlines in Western Europe (Ottink, 2004). Instead of the lowest price, the optimal balance between service and price is seen to be the growth market of the future.Value market share will eventually hover around 60 % of the total market (Ottink, 2004). Regarding this threat, the main challenge will be to respond to changing demands and at the same time to ensure consistency, effectiveness and the coherence of Ryanairs low cost strategy. At this stage, Ryanair should not compete on service advantage by entering the value market, turning into a portfolio organisation. They should so far seek for other niches, than compromise their low cost approach by reactively adapting to the unpredictable development in the current market.Retrenchment involves cutting back to focus on your best lines, oftentimes referred to this as sticking to the knitting. Ryanair should consider the mistakes of their competitors entering new market segments, e. g. Lufthansa by offering deeply discounted flights to Mallorca and Nice, standing up to easyJet. Ryanair should therefore further enlist in market pe netration and strengthen their market development approach, rather than diversify their services, as outlined by Ansoff (Product Market Framework).However, Ryanair should be aware that its knowledge is a fluid mix of framed experience, values, contextual inorganization and expert insight that provides a framework for evaluating and incorporating new experiences and information, as outlined by Davenport and Prusack. Even the companys formula has been highly successful in the last decades Ryanair has to check whether their organisational routines are still valid in the new markets (double or tripleloop learning), e. g. the way Mr OLeary aggressively promotes the low cost strategy.Especially in the new EU member countries his practices, which are said to threaten industrial peace and put EU ministers at unease, need to be revised. 11 Global Corporate Strategy A Case Study on Ryan Air The self interest of Ryanair might be best served by developing attitudes to ethical issues before the y become acute, as the airline is especially vulnerable to hostile campaigns (Value Chain). Ryanair should consider ethical corporate behaviour and social responsibility, currently facing the paradox of profitability (shareholder value perspective) and responsibility (stakeholder value perspective), e. . policies regarding disabled passengers, employee rights and environmental standards. At the moment, the simplicity inside the company does not seem to match Ryanairs complex environment. Ryanair has to differentiate its message to fend off competitors, e. g. the airline should consider the co-operation with environmental organisations, offering passengers the possibility to pay the price of competitors in the value segment and paying the difference to the original Ryanair price to an organisation that invests in solar energy to reduce the world emissions.Ryanairs Boeings could be green and the message should be flying cheap and doing good. Customers that might otherwise have switche d to the value segment do not musical theme the voluntary environmental charge and are likely to accept more difficult transfer situations for the feeling of doing good. This differentiation aspect will add value to the companys reputation and public relations. Ryanair can become the first mover in an industry that will sooner or later need to address the issue of emissions. Creativity and radical innovation are a strategic orientation to sustained competitive advantage.Ryanair should further consider the involvement of employees in the search for unsatisfied customer demand, as outlined by Kim and Mauborgne (2004). relax exchange and flow of information will foster new seminal knowledge and help the airline to continually transform itself, e. g. the contact between flight attendants and management should be increased to foster a climate of receptivity and trust and to capture opportunities. The concept of organisational learning, as outlined by Senge (1990) and extended by Ped ler, Bourgoyne and Boydell (1991) and Wang and Ahmed (2003), is crucial to nurture new and expansive patterns of thinking. 2 Global Corporate Strategy A Case Study on Ryan Air References Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management. Vol. 17, No. 1, p. 99120 Oklahoma submit University. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. third ed. London Thomson Learning. Campbell and Goold (1998). Why Links Between telephone circuit Units Often Fail and How to Make Them Work. Capstone Publishing Ltd, Oxford. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context.An International Perspective. 3rd ed. London Thomson Learning. De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. Gilber, X. and Strebel, P. (1989). From Innovation to Outpacing. Business Quarterly. Summer pp. 19-22. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. Hamel, G. and Prahalad, C. K. (1990). The Core Competence of the Corporation. May-June 1990. Vol 68. Harvard Business School Publishing.In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. Jameson, A. (2005). Ryanair confident of European goal. Internet Times Online. Available from (http//business. timesonline. co. uk/article/0,,8209-1635966,00. html). 01/06/2005 Kay, J. (1993). invertebrate foot s of Corporate Success How Business Strategies add value. Oxford Oxford University Press. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning.Kim, W. C. and Mauborgne, R. (1999). Strategy, Value Innovation, and the Knowledge Economy. Sloan Management Review. 40 (3), pp. 41-54. In De Wit, B. and Meyer, R. (2004 ). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. Kim, C. and Mauborgne, R. (2005). Blue Ocean Strategy How to Create Uncontested Market Space and Make the Competition Irrelevant. Boston Harvard Business School Press. Liebermann, M. B. and Montgomery, D. B. (1988). First Mover Advantages. Strategic Management Journal. 9 (1), pp. 41-58. In De Wit, B. nd Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. Porter, M. E. (1980, 1988). Competitive Strategy Techniques for Analysing Industries and Competitors. The Free Press. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. 13 Global Corporate Strategy A Case Study on Ryan Air Marquardt, M. and Reynolds, A. (1994). The Global Learning Organization Gaining Competitive Advantage through Continuous Learning. New York. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. Money Telegraph (2005) Ryanair lands better result than forecast. Internet. Available from (http//money. telegraph. co. uk/money/main. jhtml? xml=/money/2005/02/25/cnryanair25. xml) 5 June 2005. Osborne, A. (2005). Ryanair rolls out plans for European domination. Internet. Business Telegraph Available from (http//www. telegraph. co. uk/money/main. jhtml? xml=/money/2005/02/25/cnryanair25. ml enuId=242=/ portal/2005/02/25/ixportal. html). 1 June 2005 Ottink, F. (2004). Winner in the wrong market. Internet. Yeald Available from (http//www. yeald. com/Yeald/a/29541/ryanair__winner_in_the_wrong_market. html) 5 June 2005 Rumelt, R. P. (1980). The Evaluation of Business Strategy. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. Ryanair (2005). Strategy. Internet. Available from (http//www. ryana ir. com/ web site/about/invest/docs/Strategy. pdf). 27 May 2005 Teece, D. J. , Pisano, G. , and Shuen, A. (1997). Dynamic Capabilities and Strategic Management. Strategic Management Journal. 18 (7). Pp. 509-533. In De Wit, B. and Meyer, R. (2004). Strategy Process, Content, Context. An International Perspective. 3rd ed. London Thomson Learning. 14 Global Corporate Strategy A Case Study on Ryan Air Appendix SWOT- Analysis Strength Quality processes and procedures features important to the clientele, e. g. punctuality, few cancellations, few lost bags, frequent departures, baggage handling and consistent on-time services. low cost low fares approach (differentiated service) Low aircraft equipment costs Lower maintenance costs and low depreciation costs due to ownership of aircrafts Fleet commonality Focus on low cost alternative airports low airport access and handling costs Low customer service costs Internet booking system avoiding costly systems, commissions and sales headc ount Low marketing costs tax enhancing and cost-cutting features, e. g. no seat pockets to allow faster turnaround times Relationships to suppliers strong bargaining position with respect to aircraft procurement, e. g. argain price of Buzz acquisition, airport deals and staff recruitment Concentration on core business through outsourcing Low labour cost through performance related pay structure high personnel productivity / staff efficiency ratio Overall high value and profitability Location of business focus on Europes largest airline market the UK, in particular the London Area Increased take-off and landing slots trough acquisition of Buzz, KLM subsidiary Increased number of seats per plane, enabling lower individual fares but higher per plane income Short turn-around times increasing the available operational hours per plane. Strong brand and low fare reputation -foreign exchange hedging in transactions involving the euro, UK sterling and the US$ Weaknesses falls in fare yields Transfer situations from Airports reputation no non-essential extras falling load factors due to continuing decline in unit costs Decreasing frequency of flights due to need for high load factors, reducing business travel climate protecting charge on aircraft taking off and landing in the EU, environmental fee might double no-frills operators fares, disproportionately greater effect on budget airlines Ethics and Corporate Social Responsibility 15Global Corporate Strategy A Case Study on Ryan Air Opportunities initiating additional routes from the U. K. or Ireland to other locations in continental Europe, currently served by higher-cost, higher-fare carriers Developing European market for budget sector with large population base / expansion into 10 new EU states New domestic routes within continental Europe. Strongly moving into intercontinental business using the principle of simplification and cherry picking increasing the frequency of service on its existin g routes considering possible acquisitions that may become available in the future, e. . Lufthansa connecting airports within its existing route network -Exploiting profitable destinations with both a tourist as well as business segment Conversion from low fares to a no-fares airline Fall in average ticket price and increased threat of entry for competitors loosening of regulations Decreasing competition Increased ancillary service revenues Increasing in-flight sales on longer flights employee fealty focus on environmental issues innovative marketing for differentiationThreats Limited market in the North of Europe resulting in low occupancy levels and efficiency of purpose of planes Tougher competition from the traditional and charter airlines which offer cheap hard to beat all-in holiday packages in continental Europe. New competitors in home market interlingual rendition of Ryanairs business model by competitors and innovative substitute services Incumbent airlin es selectively copying the tactics of Ryanairs on competition routes niggling potential markets high speed trains, subsidised by the state in GER and France, high speed rail plan in Benelux region -good highway connections in the major market around cities in the Middle and Southern Europe Scarcity of appropriate located, low cost airports around major cities / decreased bargaining power of airlines Price war increasing landing charges Dependency on world jet fuel prices war and terrorism epidemics EU commission decisions lobbying politicians formation of a trade union for pilots the weakness of sterling against the euro Mergers between competitors, e. g. Air France and