Use Porter's Five Forces to evaluate the attractiveness of the Low Cost Carrier (LCC) industry in Europe. o
Threat of new entrants: There are barriers to entry in this industry; it isn't the easiest of industries to enter, you must have sufficient capital and assets to get into the airline industry. However, in 2003, there were an increasing number of new entrants. o
Threat of rivalry: There is high rivalry in this industry and slow growth. Most carriers do not succeed in this industry-only a few of them do, and they are all competing for market share. There is also high fixed costs and low product differentiation. o
Threat of Substitutes: There aren't many substitutes for long trips. Customers may take trains or travel by car, but neither of them are comparable to flying. o
Threat of Suppliers: There are a small number of firms in the supplier's industry, therefore the threat is high; and there aren't too many different suppliers of airplanes (Boeing and Airbus seem to be the only two.) o
Threat of Buyers: Consumers can switch to other LCC's if Ryannair doesn't cater to their needs/wants.
What are the resources and capabilities of Ryanair that allows it to be a leading LCC? Ryannair replaced their original planes with economical ones and eliminated in-flight meals, which resulted in only needing three flight attendants for each flight instead of the normal five. They outsourced ground services and minimized aircraft turnaround time. It selected only secondary airports to fly into that weren't congested.
What strategic choices has Ryanair made to exploit these resources and capabilities? They reduced their agents' commission from 9% to 7.5% and moved towards direct channels by building its own call centre and launching online bookings. This cut their distribution costs to nearly zero.
Based on your analysis above, how would you advise Ryanair regarding trans-Atlantic service between the United States and Europe?
Based on my...
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