Ryanair - Strategic Position

Topics: Strategic management, Airline, Low-cost carrier Pages: 23 (5377 words) Published: June 1, 2009
Table of Contents

Step 1: Identification of the main problem5
1.1 Summary5
1.2The strategic development of Ryanair6
1.3 The main problem and resulting questions8
Step 2: Gathering the facts9
2.1 Environment9
2.1.1. Macro environment9
2.1.2 Meso environment11
2.2 Strategic capabilities13
2.3 Competitive strategy14
2.3.1 Robustness14
2.3.2 Cost efficiency15
2.4 Economical information16
2.5 Expectations and purposes18
2.5.1 Stakeholders18
2.6 Overview derived facts: SWOT20
Step 3: Alternative courses of action21
Even though there is no official mission and long term goal stated by Ryanair, Michael O’Leary’s broad direction, communicated in public statements, is concerned with the continuity of being the largest no frills carrier in the European airline industry. Which strategic choices could be made to accomplish this mission and result in maintenance of the leadership is pointed out in three suggestions for courses of action based on the TOWS matrix. 22 3.1 Course of action 1: Market expansion and penetration in Eastern Europe22 3.2 Course of action 2: Aggressive competition22

3.3 Course of action3: E-business23
Step 4: The Decision and reasoning: 24
- Market expansion and penetration in Eastern Europe –24
Reference list26

Ryanair was Europe’s original low fares airline and is still Europe’s largest low fares carrier. In the current year Ryanair will carry over 35 million passengers on 346 low fare routes across 24 countries. These impressive figures are a result of the holistic implementation of a cost-oriented business approach and efficient operations. The following paper highlights Ryanair’s low fares business model, its strategy and operations and moreover identifies potential strategic choices maintaining the company’s success within the next 5 years. In order to get an insight into the subject the paper starts with a brief summary of Ryanair’s history and moreover focuses on the strategic developments accounting for the company’s success story. The second section determines the current strategic position of Ryanair. Models are applied to explain the airline’s operating environment, its strategic capabilities, the expectations and purposes it is confronted with as well as the economic situation. Gathering and analysing these facts provides a basis for alternative courses of action Ryanair might take to maintain its leading position within the industry. The most beneficial strategic choice to reach or respectively maintain this objective in the future is clarified in more detail under the fourth step of the paper. Its implementation is discussed and exemplified. The paper ends with a conclusion summarising the main findings and furthermore pointing out a strategic direction ensuring Ryanair’s position as leading low cost carrier within the next 5 years. Step 1: Identification of the main problem

1.1 Summary
Starting in 1985 as a full service conventional airline with one small turboprop plane and daily flights between Ireland and the United Kingdom, the company grew rapidly. Routes were expanded, airlines acquired and passengers’ volume increased. Nevertheless, profits were missing, instead enormous losses were recorded and the company feared to run out of business. With the appointment of Michael O’Leary as chief executive officer in 1990, a new leadership style and the new low-cost business model was introduced. Ryanair was restyled into Europe’s first no-frills airline, based on the Southwest Airline Model in the United States as the world’s first leader in the low-cost segment, with the objective to stimulate demand by offering lowest fares and no extra services to its customers. Such low fares were primarily rendered as a result of Ryanairs’ continuous concentration on cost-cutting strategy with the reorganisation of its fleet as well as changes in the pricing structure. Nowadays, the airline is...
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