Professional Documents
Culture Documents
1. Strategy of Ryanair
Overview of the Company
Ryanair started in year 1985 with only 57 staff members and with
one 15 seater turboprop plane from the south of east of Ireland to LondonGatwick which carried 5000 passengers on one route (Harrison, 2002). In
1986, inspired from the story of David and Goliath the company go after
the big guys for a slice of the action and end up smashing the Aer Lingus
or British Airways high fare cartel on the Dublin-London route. The staff
increased from mere 57 to 120 staff members and the plane carried for
about 82,000 passengers on two routes. In 1989, the company employed
350 staff and their average maximum passengers increased to 600,000. In
1990-1991, the company has 700,000 passengers.
However, despite of the increase of passengers, the company is not
so good in managing cost that the company has lose its money. A new
management team is brought in to sort it out and re-launch as a low fares
or no frills airline, closely modelling the Southwest Airlines model in the
U.S. And in 1994, Ryanair bought its first Boeing 737 aircraft which carried
over 1.5 million passengers. In 1995, Ryanair is the biggest passenger
carrier on Dublin-London route, the largest Irish airline on every route
being operate and carried 2.25 million passengers in the year (Harrison,
2002).
In 1997, the EU air transport deregulation allowed the airline for the
first time to open up new routes to Continental Europe with over 3 million
passengers on 18 routes carried. Ryanair launched services to Stockholm,
Oslo, Paris and Brussels and took time out to float Ryanair plc on Dublin
and NASDAQ Stock exchanges. The company was awarded as Airline of
the Year in 1999 by the Irish Air Transport Users Committee.
judicious choice of dealing with secondary and regional airports, where the
traffic is not jammed and fees incomparably lower. Since Ryanair, is a true
windfall for such airports, the airline company has a bargaining power
which enables it getting favourableaccess fees. In addition, Ryanair
provides only a point-to-point service, thus, it has no cost concerning
connecting passengers. Moreover, the company pays special focus to ontime departures because it means maximising aircraft utilisation.
Managing staff costs and productivity is another factor used for
reducing the cost for Ryanair. In this manner, the company pays its staff
on modest salary but has set up a performance related pay structure
which urges employees to maximise the number of sectors flown daily.
This way, Ryanair both controls productivity and keeps staff costs down.
Lastly, managing marketing costs is another factor that makes the
company reduces it costs. Ryanair advertises mainly on it website with its
logo Ryanair.com, the Low-Fare Airline. In addition, it is also advertised
in national and regional Irish and UK newspaper, on radio and on
television.
Porters Generic Strategy
Aside from it cost-reduction strategy, Ryan has also been able to
use Porters generic strategies to position itself in the
marketplace. Accordingly, a company positions itself by leveraging its
strengths. Today, more and more people and organization are striving to
be recognized in the business arena. With this objective, these
organizations had been able to competently and effectively adapt to the
situation in the market place by using generic strategies that enhanced
their competitiveness. There are five different generic strategies that a
business can choose.
These include cost leadership, differentiation, focused cost
leadership and integrated cost leadership/differentiation. Each generic
strategy helps the company to establish and exploit a competitive
advantage within a particular competitive scope (Hitt, Ireland &Hoskisson
2003). By applying these strengths, three generic strategies are resulted:
cost leadership, differentiation and focus (Johnson & Scholes 1997). The
strategies used by the company include cost leadership, differentiation
strategy and focused differentiation.
Strategic Options
The case study has provided the problems and issues encountered
by the Ryanair, in spite of its strategies. One of the problems is in terms of
handling customers or target market. In addition, another problem is
assuring quality service. In this manner, the strategic option that can be
used by the company for satisfying both internal and external customers
and marketing environment is the use of total quality management. The
industrial competitions in airline industry worldwide are at brisk, making
companies in this field across the globe search for extensive strategic
management procedures that would keep them in on the business world.
The tasks of crafting, implementing, and executing company strategies are
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