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BSS008S-3 Applied E-Business
ASSIGNMENT 1 (10 December 2010)
This report presents the e-business company RYANAIR. Throughout it we are going to find what type of competitive advantage the company pursues, what factors help it creating a superior customer value, what impacts this kind of company has on the whole industry and finally what are the controversial issues about RYANAIR. Mainly, RYANAIR is a low-cost airline company which sells its tickets only on its website www.ryanair.com, its competitive advantage is its offer: very cheap tickets to travel all over the Europe. However this kind of low-cost company has both positive and negative repercussions on the airline sector. And what tarnishes the most the company’s image is its CEO Michael O’Leary an outspoken person who is not afraid to say and make what he thinks to cut the prices of its plane tickets. To answer these questions I found my sources in the database Business Source Premier.
2. The importance of e-business for RYANAIR5
a) RYANAIR: an e-business company…5
b) With a major competitive advantage…5
c) Which allows offer a high customer value.6
3. Impact of low-cost companies (like RYANAIR) on European airline industry7 a) Positive impacts7
b) Negative impacts7
4. Critical and controversial issues9
5. Conclusion: Is the strategy of RYANAIR sustainable?10
6. Suggestions for future research10
Nowadays the air transport is a way of transporting which seems safer according to the statistics. It has a growth, from the 60s, which the rhythm is superior to the world economy ones. From 1990 till 2003, the traffic increased on average by 2, 7 % a year in number of passengers and by 2,8 % a year in number of flights. We can underline that this growth is sharply more important within the European Union than in the United States. The passenger number increased on average by 5,5 % a year within the European Union, against 1,8 % in the United States. In 2003, this market transported 1,7 billion passengers in the world, which about 100 million passengers on French companies. This growth of the air traffic should continue: 2,5 billion passengers are expected for 2015. The passengers are more and more numerous to use air transport because of the offers which are very interesting in terms of price. It is the emergence of the low-cost companies like RYANAIR which make the offers more attractive for the consumers. Let’s focus on RYANAIR which is an e-business company due to the only use of the internet to sell its tickets. Which type of competitive advantage does it pursue? What factors help this company create superior customer value? Is its strategy sustainable?
2. The importance of e-business for RYANAIR
a) RYANAIR: an e-business company…
RYANAIR is the one of the favorite airline company in Europe, indeed the company offers over 1200 short-haul flights per day (to 145 destinations within Europe) with a fleet of 196 Boeing737-800 aircrafts. The characteristic of this company is that it operates exclusively online on www.ryanair.com , is that we call an e-business company and more particularly a Business-to-Consumer organization. “They have no physical presence on the high streets and seek to minimize customer service and support through enabling web self-service”(Chaffey,D 2009 E-business and E-commerce Management: Strategy, Implementation and Practice, Prentice Hall, p13). Selling their tickets only online is the key success of low-cost companies like RYANAIR. This allows them to significantly reduce their cost, that’s one of the reasons why they can offer low prices. b) With a major competitive advantage…
Mainly RYANAIR pursue a competitive advantage based on the price. Indeed it is the company, in Europe at least, which offers the lowest prices for short-haul flights (SWOT analysis...