Activity Analysis Business Strategy for Ryanair Essay Example

reduction air hose, Ryanair Holdings offers low-fare, no-frills air transit via its chief subordinate, Ryanair. The bearer flies to about 150 finishs, including more than two twelve in Ireland and the UK ; overall, it serves more than 25 states throughout Europe, plus Morocco. Ryanair specializes in short-haul paths between secondary and regional airdromes. It operates from more than 35 bases, including airdromes in Belgium, France, Germany, Italy, Spain, and Sweden, every bit good as in Ireland and the UK.

The bearer has around 200 Boeing 737-800s in their fleet. In the years 2008 and early 2009, Ryanair made several unsuccessful efforts to purchase Aer Lingus, a competing Irish airline.

History

Ryanair, the biggest low-cost carrier in Europe, has achieved success in the industry for numerous years. To comprehend Ryanair's effective strategy of positioning itself, we will examine its history and significant expenses. Although preceded by Laker Airways as well as a few low-cost airlines in the United States, Ryanair stands as Europe's initial and largest low-cost airline.The airline Ryanair was established in 1985 by Tony Ryan, an Irish businessman. It rapidly grew after starting with a route between Waterford and London in July. From 1987 to 1989, Ryanair expanded by introducing many new routes connecting Ireland and the UK. Unfortunately, the company faced significant losses amounting to 20 million, which led to a major restructuring. In 1991, Michael O'Leary took over as CEO and was given the responsibility of returning profitability to the airline.

After traveling to the United States and discovering Southwest Airlines' budget-friendly and minimalistic approach, Ryanair's founder introduced a similar model to his own airline. From 1991 to 1997, Ryanair grew its fleet from six

to 21 planes and expanded its routes from Ireland to the United Kingdom. The year 1997 was particularly significant for Ryanair, as it coincided with the European Union's completion of deregulating the air industry in Europe.

Airlines from EU member states can now operate and compete on scheduled services within the EU. Ryanair capitalized on this opportunity by launching its first routes to Scandinavian and Norwegian cities. In May 1997, Ryanair became a publicly traded company with a successful listing on both the Dublin Stock Exchange and the NASDAQ Stock Exchange. Over the following years, Ryanair expanded its network in Europe and achieved increasing success. In 2000, Ryanair introduced its website, which quickly became the most popular travel website in Europe by 2001.

Ryanair launched several Continental European bases, including Brussels and Frankfurt, starting in 2001. In 2002, the company was awarded as the number one for client service in Europe. In 2003, Ryanair acquired its rival BUZZ from KLM and remained the most searched travel website in Europe. The expansion of the European Union on May 1st, 2004, allowed Ryanair to open up new routes throughout the EU. The rapid growth of Ryanair continued until 2007, with passenger numbers expected to increase from 35 million in 2006 to 70 million in 2012.

Apg 177 Concept at ryanair: Frequent point to indicate flights on short draw paths: by entirely offering direct and non halt paths, ryanair has no complex luggage transportation and there is no hazard of lost connexion flights. To avoid cost for adjustment, the crew should non pass the dark at a foreign airdrome. Secondary airdromes: chooses its paths and finishs with respect to secondary

airports with convenient transit to major population Centres. These airports are frequently less engorged. The aircraft use can be maximised.

The use of a single aircraft type helps to reduce costs in the development and maintenance of forces, as well as expenses related to the purchase and storage of trim parts. Passengers are responsible for paying for any food on board and the seats are not adjustable. However, the screens are easily cleaned, making maintenance faster and easier. The high seating density allows for a larger number of passengers and leads to economies of scale. While there is no entertainment provided, passengers have the option to rent a DVD for free if desired.

In order to increase revenue, lottery tickets as well as train tickets are sold on board. Secondary airports offer lower landing and gate fees than major airports, resulting in lower costs. Ryanair reduces its airport charges by using outdoor boarding steps. Late night departures are avoided. Third-party contractors are used for airport bookings over the internet. Fastcheck-in staff on land are necessary.

Mintzberg

According to Mintzberg's strategy, it is a frequent or recurring program that integrates the main goals and policies of an organization, while also establishing a coherent sequence of actions to be taken.

Una estrategia bien formulada ayuda a organizar y asignar los recursos de una organizacion, teniendo en cuenta sus fortalezas y debilidades internas, con el objetivo de lograr una situacion viable y unica, asi como anticipar posibles cambios en el entorno y acciones imprevistas de competidores. Minzberg sostiene que pensar estrategicamente implica como los gerentes, directores y otros miembros de una organizacion utilizan el lenguaje, las ideas y los conceptos al tratar

de comprender e interpretar el campo de metas y circunstancias que rodean a la empresa. El pensamiento estrategico requiere el desarrollo de una actitud gerencial proactiva, anticipandose a los eventos en lugar de reaccionar ante situaciones pasadas. Durante la ultima decada, la direccion estrategica se ha establecido como un campo legitimo de investigacion en la practica directiva.

En la investigacion de estrategias, ha surgido una variedad de paradigmas y enfoques sobre como interpretar y actuar estrategicamente en una organizacion. Mintzberg propuso una clasificacion de nueve escuelas de pensamiento estrategico, que se agrupan en dos grandes categorias: escuelas prescriptivas y escuelas descriptivas. Mintzberg describe una estrategia como un esquema que integra los objetivos principales y politicas de una organizacion y establece una secuencia coherente de acciones a realizar. Una estrategia bien formulada ayuda a crear orden y asignar recursos de una organizacion, teniendo en cuenta sus caracteristicas y debilidades internas, para lograr resultados factibles y originales, anticipando posibles cambios en el entorno y acciones inesperadas de competidores.

According to Minzberg, strategic thinking refers to how individuals in an organization, such as directors, managers, and other members, use language, ideas, and concepts to understand and interpret the goals and circumstances of the company. Strategic thinking involves adopting a proactive approach by anticipating events rather than a reactive approach of trying to respond to past events. In the past decade, strategic thinking has become a recognized field of research and practice in policy. Various paradigms and approaches have emerged in strategy research to interpret and act strategically in an organization.

According to Minztberg, there are nine schools of strategic thought. These schools can be categorized into descriptive prescriptive schools and colleges.

Ryanair also has a "low cost" culture, which they strive to implement not only externally, but also internally within the company.

However, the imperativeness has criticized Ryanair for its emphasis on low cost. Ryanair's culture is built around their main focus - low cost. As the company constantly aims to reduce costs, this approach permeates through the entire organization and is known as the low cost culture everywhere. Whittington proposes four perspectives for defining strategy, which can be seen in the graph below. The classical perspective assumes that the top executives have full control over allocating internal and external resources to achieve their objectives. The evolutionary perspective emphasizes the importance of competition and growth in the market. The processual perspective highlights the significance of the relationship between individuals and the environment in improving the company's profits. Finally, the systemic perspective recognizes the influence of social and cultural contexts on the company's historical events, particularly its procedures.

BASF is demonstrating a system for longevity in the chemical industry through strategic decisions focused on diversification, development, and innovation. This allows them to be open to changes in the marketplace.

GLOBAL STRATEGIC DECISION

Ryanair Strategy overview

Ryanair's current strategy is centered around reducing costs in order to offer the lowest prices in the industry and maintain profitability. They are following a cost-leadership strategy according to Porter's generic strategies. This involves eliminating certain amenities for customers, such as assigned seating, additional staff on flights, meals and drinks during the flights, and free luggage allowances. Instead, they aim to provide value to customers through punctual service and frequent departures.

The approach used by the company includes the following:
- Effectiveness in logistics and

operations: They are efficient in their operations, spending less time on the ground which results in lower costs. They also prioritize on-time departures.
- Direct sales through their website: This reduces costs because they do not need additional staff or pay commissions to agencies.
- Landing in secondary airports: This allows for lower landing charges and less air traffic.
- Having a modern fleet: This leads to lower maintenance costs and fewer repair expenses.
- Outsourcing: They reduce costs by outsourcing non-core activities such as catering, airport transportation, vacation packages, and hotels. This allows them to focus on their core business and saves them time and money in managing these additional services. They also outsource managing services such as food, health, security, and cleaning which further saves costs and time.
- Point-to-point service: They do not need to spend money on connection concerns.
- Having only two types of aircraft: This saves money on staff training as there are only two types of planes.A great method to analyze them is by utilizing Porter's 5 forces model.

According to M.E Porter's 1985 analysis of Porter's 5 forces, this industry is considered attractive for those already in the market. However, it is important to have a competitive advantage to differentiate from direct competitors or find a way to expand the market and establish the brand as the customers' first choice when traveling.

When examining the industry, it is not enough to describe the 5 forces. It is also relevant to identify the current competitors and determine how they are affecting the company's performance. Ryanair faces two types of rivals:

• Indirect rivals: These competitors are in the same industry
  

but have a different business model. Examples include Air France, Lufthansa, Iberia, British Airways, and KML.

The main competitor of Ryanair is Easyjet.

Value Networks and Business Partners

Ryanair collaborates with its business partners to create a Value Network where value is added. It is crucial to mention Ryanair’s business partners, including suppliers of raw materials, airports and hotels, as well as car and coach companies.

Suppliers have a significant role in the Value Network as they initiate the entire process. Ryanair cannot operate without raw materials. However, raw materials do not have value to customers on their own. Ryanair adds value to customers by transforming these materials into a usable service.

Basically, Ryanair uses airplanes and fuel, among other things, and hires qualified employees. They provide multiple route options and utilize their expertise to offer cost-effective transportation services to various destinations. According to their Code of Business Conduct & Ethical Standards (2009), Ryanair emphasizes the importance of maintaining a good relationship with suppliers through open and honest communication to obtain the best value.

[two]

Airports also play a critical role in Ryanair's Value Network. The airline partners with secondary airports to enhance the value of their service. This partnership helps reduce costs, allowing Ryanair to offer more affordable prices to customers.

Hotels, cabs, and coachs companies contribute to the Value Network of Ryanair by offering their services to clients. Through its relationship with these companies, Ryanair adds value to its clients by not only providing low-cost flights but also the convenience of booking the entire package. This saves clients time and enhances their overall experience. Currently,

Ryanair has 37 bases and more than 950 low-cost routes across 26 countries, connecting 150 destinations. Their fleet consists of 210 new Boeing 737-800 aircraft, with additional orders for 102 more planes to be delivered in the next 2.5 years.

Human resource management

The average number of employees at Ryanair has increased by 21% to 6,369. Among these figures, 1,526 individuals were promoted.

Ryanair offers various benefits to its employees, including discounted mortgages and in-house mortgage services, as well as additional perks. Employees also enjoy a stable roster with guaranteed days off and no scheduled overnights. There are vacancies available across the European base network, with rosters planned one month in advance. In most bases, employees have a fixed schedule of five consecutive days on and four days off.

Legal disputes have arisen over Ryanair's refusal to recognize labor unions and allegations of providing poor working conditions to its staff. In terms of technological development, Ryanair stands out as one of the pioneers in online bookings. This innovation has allowed the company to reduce costs by eliminating the need for third-party ticket sellers, resulting in more affordable prices for customers. The introduction of self-check-in cuts down on staffing costs. Moreover, Ryanair has implemented environmentally-friendly technology, resulting in a 45% reduction in fuel burn and CO2 emissions over the past decade [eight]. These efforts contribute to the company's positive reputation among stakeholders.

Procurement
Ryanair outsources and trades for non-core activities such as catering, airport transportation, vacation bundles, and hotels. This helps them save costs and eliminates the need to worry about the logistics of these additional services they offer.
Main Activities
Inbound logistics
They outsource management services for food, health, security,

and cleaning, saving costs and time for the company.
Operations
They perform all operations with extensive safety training and protocols to inspect all planes and equipment before departure. [ nine ] This helps add value to the service because customers know they are flying safely at a low cost.
Selling and sales
Ryanair does not spend a lot of money on marketing. However, they rely on word of mouth as their main marketing strategy. Their advertisements are known to be controversial, which sparks conversations among people.

They generated their revenue through their website. This type of controversial marketing can create buzz about the brand, but it doesn't necessarily mean that their sales are increasing because of it. Ryanair could enhance the value of their service by emphasizing their strengths in their communication strategies. By conducting sales online, they eliminate the need for intermediaries and can offer better prices.

Service

Statistics on Ryanair's website indicate that customer service is performing well in terms of timeliness, luggage complaints, and response time to complaints.

See appendix 1. However, the client service provided by Ryanair in terms of how the staff treats clients or how attention is provided to clients during the flight is not known as being the best. It is important for Ryanair to make an effort to improve the service they provide in these areas.

CHALLENGES IN THE GLOBAL MARKET

PEST Analysis

There are several environmental factors that can impact the performance of the company.

To enhance the analysis of the external state of affairs, I will utilize the PESTEL model. For each aspect of PESTEL, there are multiple factors to consider. However, I will explain the main ones below to ensure a

comprehensive analysis of the environment and aid in making the best strategic decision for the company.

POLITICAL: EU Regulations and Landing Charges:
The airline industry is heavily regulated by government authorities. It is crucial for the airline industry to comply with all EU regulations specifically designed for this sector.

The authorities play a crucial role in determining whether a company can enter the market, and they implement regulations to protect the local airline industry. This is exemplified by the landing charges mentioned in the case study. One economic factor that affects the airline industry is rising fuel prices. As fuel costs increase, airlines are forced to raise their prices, which poses a significant risk for a company renowned for its low cost, like Ryanair. Consequently, Ryanair would have to decrease expenses in other areas of the company in order to maintain their low prices.

This decrease in budget could result in a reduction in workforce or a decrease in employee benefits, which has a negative impact on the company.

During times of recession, there is a recognition of financial crisis, leading to companies cutting jobs. As a result, there may be a decrease in the demand for air tickets since people have less disposable income for vacations. However, this can benefit low-cost airlines like Ryanair as customers will seek cheaper alternatives.

One ongoing concern for the airline industry is terrorism, which has been a social and cultural issue for many years.

Terrorist attacks continue to heavily affect the airline industry, deterring people from visiting certain locations and causing a decline in airline sales in those areas. Consequently, this has had a negative impact on the industry as a whole. On the

other hand, traveling for leisure has become a common practice, making tourism an increasingly appealing industry.

Europe is well-known for being a popular tourist destination with a rich history and many attractions. This type of travel lifestyle has had a positive impact on airlines. However, there was a global decline in international tourist arrivals of 8% between January and April 2009. Specifically in Europe, there was a 10% decrease compared to 2008, which greatly affected the airline industry.

Health issues can also have an impact on the performance of the airline industry. In the past year, the outbreak of the swine flu led to a decrease in international tourist arrivals from 269 million to 247 million between 2008 and 2009, according to the World Tourism Organization. People were concerned about the virus, which decreased their desire to travel to certain destinations and thus affected airline companies' sales.

Technological advancements in aircraft are crucial for the airline industry. It is one of the most important aspects for them.

Throughout history, aircraft have been continuously improving in terms of fuel efficiency and flight capacity. These advancements provide great opportunities for airline companies to save money and increase efficiency. However, the use of new technology in airports may lead to higher landing charges for these companies. -Internet: Nowadays, the internet is vital for all industries, especially the airline industry. Internet advancements have made life easier for customers in terms of saving both money and time. An excellent example of this is online check-in, which eliminates long queues and benefits both the customers and the airline by reducing time spent on ground and subsequently lowering landing charges.

ENVIRONMENTAL Green Issues and CO2 emanation –

Most states' authorities are very concerned about environmental issues and are implementing legislation to protect the environment. In particular, airline companies must comply with these new laws in order to reduce CO2 emissions, minimize harm to the environment, and reduce noise pollution. This has a significant impact on the airline industry as it requires them to upgrade their existing aircraft to environmentally-friendly technology, which comes at an additional cost.

Eco Friends – In addition, companies face immense pressure from environmental organizations and failing to comply with their campaigns and laws can damage the company's reputation among shareholders and stakeholders.

LEGAL EU Laws for the Airline Industry – The airline industry is heavily regulated, with governments in almost all countries overseeing and controlling the industry through various types of legislation.

Despite being independent companies, their activities and decision-making are influenced by various governmental regulations. The laws of the European Union specifically focus on protecting the rights of both customers and employees. Consequently, companies must exercise caution in their dealings with both parties. Failure to do so could result in legal action or other legal complications arising from dissatisfied customers or employees, which can harm the company's reputation and potentially incur significant costs in legal fees. Ryanair, for example, has faced and continues to face legal challenges for such reasons.