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CASE TEACHING NOTES
Ryanair – The Low-Fares Airline
Ryanair was the first budget airline in Europe, modelled after the successful US carrier, Southwest Airlines. The case offers students the opportunity to evaluate the strategy of Ryanair against the backdrop of the European airline industry and the burgeoning budget sector. Business students at all levels enjoy this case and relate to it, since air travel is an activity virtually everyone has experienced and we all have war stories to tell about the various airlines with which we have travelled. The Ryanair case has been used successfully with students from Ireland and other European countries, as well as with North American and Asian students. The case would suit all levels of business students, from a capstone undergraduate course on strategy, to post work experience MBA and executive education programme participants. It has been used effectively with all these types of groups. The case consists of:
• a description of the challenges besetting Ryanair in 2004; • a history of Ryanair and its principal characters;
• an outline of Ryanair’s robust performance in the period preceding the 2004 difficulties;
• Ryanair’s operations as a budget airline;
• a description of Ryanair’s battleground, the European airline industry, as the competitive landscape continues to change;
• a profile of Michael O’Leary, Ryanair’s ebullient CEO. 2. Position of the case
The case is a comprehensive one and would be well placed towards the end of a course on strategic management. At this stage, students will have learned something of the economic, organisational and human context of strategy. The case concentrates on how to analyse industry environments, and internal resources/capabilities of companies and Instructor’s Manual
© Pearson Education Limited 2005
their connection to the concept of sustainable competitive advantage. In sum, the Ryanair case illuminates how a strategy that is grounded in the best deployment of assets/resources/competences, and adding perceived value to customers, delivers sustainable strategic advantage. But the case also illustrates the difficulties and obstacles that stand in the way of achieving and retaining such advantage. Important strands in contemporary thinking about strategy are brought together – the ‘positioning’ approach of Michael Porter,1 and the ‘resource based’ view of Jay Barney.2 It delineates the issues of balancing cost containment, pricing and customer expectations. Those participants with work experience can engage more with the internal management aspects of the case, e.g. leadership, culture, the human resources issues. Suggestions are also given in this Teaching Note for using more advanced analytical techniques, such as scenario analysis.
The case can also be used for a continuous assessment assignment, either by group or individually, and for a case study examination. Previous versions have been used in these ways.
The case relates to all chapters of Exploring Corporate Strategy, but most specifically to Chapters 2, 3, 4, 5, 7, 10 and 11.
3. Learning objectives
The overarching teaching objective is a comprehensive strategic analysis and evaluation of a business enterprise which includes:
• an in-depth environmental analysis (Chapter 2);
• an all-inclusive integrated understanding of the functioning of a company – its human and technical operations, leadership, customer relationships, financial structure, etc. (Chapters 3, 4 and 9);
• the implications of the internal functioning to create viable strategic positioning (Chapters 3, 5, 7, 9 and 10);
• paradoxically, how the process of sustaining competitive advantage is a dynamic one, requiring constant adjustment, alongside external and internal monitoring (Chapter 11).
4. Teaching process
The case breaks down into two inter-related parts that can be organised into two...