Case Study on Ryanair: Business Strategy Evaluation

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Ryanair

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Of Case Study on Ryanair: Business Strategy Evaluation
Submitted by Anthony K. Augustine

to
Rachel Sumner
for
MBA
Module Tutor: Business Strategy

at
Rayat London College

on
01-05-08

Word count 4,150

Title: “Live the high life!” Ryan Air is Europe’s original low fare airline and is still Europe’s largest. However, their story has not been entirely successful. Evaluate Ryan Air’s business strategy over the last decade.

“Despite a growth in passenger volumes, by the end of 1990, the company had flown through a great deal of turbulence, disposing of five chief executives, and accumulating losses of IR20m. Its fight to survive in the early 1990s saw the airline restyle itself to become Europe’s first low fares, no frills carrier…The new formula effected a turnaround in the fortunes of the company, and by 1997, the company was floated in an IPO on the Dublin Stock Exchange and on Nasdaq…In 2002, the company was admitted to the Nasdaq-100”

(Johnson et al., 2005, p.834).

1.0 Introduction

When you hear the name Ryan Air two things come to mind: the no-frills airline and its flamboyant CEO, Michael O’Leary. The story of rise and glory of Ryan Air is also the story of rise and glory of its CEO.

How did Michael O’Leary transform Ryan Air, a loss-making airline to a profitable and Europe’s largest low fare airline? This report will try to answer this question. More importantly it will also analyse in detail what strategy Michael O’Leary applied to achieve this great feat. Critical evaluation of the strategy Ryan Air applied will highlight the strategy paradigm it followed based on the strategic models of Porter’s five forces. It also aims to investigate the internal environment (strengths and weaknesses) and external environment (opportunities and threats) of Ryanair in the 21st century.

This report will also take us through the challenges aviation as a whole faces in the 21st century and Ryan Air in particular as it learns from the challenges it faced and success it had through it’s competitive advantages. This report concludes with some observations on strategies Ryan Air developed and applied, and the future course of action it will probably follow to maintain its winning ways. Ryan Air will hereafter be referred to in one word ‘Ryanair’ as it is the more common usage in the public domain.

1.1 Airline Industry: Two Major Trends

A ‘full-service’ airline like British Airways (BA) or Aer Lingus is designed to serve passengers from almost any place, that is, point A to any destination, that is, point B. They employ a ‘hub-and-spoke’ system centred on major strategically positioned airports and/or countries to reach many as well as distant destinations and serve passengers with connecting flights. They attract passengers who desire more comfort by serving them with first-class or business-class service. They treat such passengers with a wide variety of facilities at air-ports and on onboard to ensure their comfort and interests. At air-ports they accommodate them in luxury lounges and onboard they treat them with in-flight entertainments. They also assist their passengers with flight connections and baggage transfer facilities.

Full-service airlines serve in-flight meals to their passengers as most of these flights involve long distance travel covering many hours. Passengers who travel in First-class and Business-class pay high amount for their tickets in comparison to those travelling in other classes. These passengers are often called as Economy-class passengers. They, however, get services mentioned above but of a lesser degree/choice and comfort. Full-service airlines have routes and destinations that are long as well as short and sometimes with multiple points in a single journey known as stop-over. British Airways, for example may fly to Beijing with a stop-over in Mumbai or Hong Kong.

No-frills airlines, in...
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