The reduction in oil prices, and the expectation that the prices will remain low should cut the cost of travel and bolster the passenger volume, which should in turn have a positive impact on the financial performance of both EasyJet and Ryanair. Ryanair flies over 1500 different routes and carried more than 79 million passengers in 2012. Ryanair has continued to maintain its position in airline industry as the world’s most profitable airline, this it has achieved via various practices thus giving it a competitive advantage over others. Ryanair competitive advantage would be analysed using two models namely; Ryanair operations identifies with cost leadership competitive advantage strategy which provides airline transport services at low cost and operates a broad scope as it carries over 42 million passengers out of 18 European countries at the cheapest rate, however due to its short haul point to point routes and taking Europe as its major market its strategy can also be viewed as a Cost focus strategy. These differences in achieving operational efficiency have different implications for airports, which include bargaining power and risk exposure. This in turn increased passenger number. After this, we will discuss the, Ryanair's Competitive Advantage Ryanair was founded in 1985 with only two aircrafts and a single Dublin-London route . Ryanair’s scheduled passengers grew from a already huge 90.6 million to 106.4 million in 2016, this was a 18% increase for Ryanair … Competition is constant for Ryanair as it has other short- haul service provider airlines to contend with such as easyjet and Air Berlin as well as long haul airlines such as Aer lingus. 3. Is Ryanair's strategy sustainable? Internal environment adds value in business, in order to put some efforts in opportunities and argue against threats. From the Porter Value Chain above it is clear to see that Ryanair have been very competitive and it has worked to their advantage. All four strategic choices indicated in the Ansoff matrix model can be said to be applicable to Ryanairs present services. In 17th February 2005 the EU made new regulations to reduce inconvenience caused on air passengers by compensation on cancelations, delays and boarding refusals, this added an estimated 200 million sector-wide bill for Ryanair but however gave Ryanair a credible image in the eyes of the public (Johnson et al, 2008). This gives the aircraft manufacture more power as it can increase prices of aircraft and maintenance cost, another supplier power can be noticed in the fuel suppliers who can set any price standard as Ryan air has little or no control over these prices (Johnson et al, 2008). Competitive advantage can be defined as strategies, skills, knowledge, resources and competencies that differentiate a business, Issues Ryanair is now Europe’s largest airline with more than 90 million passengers per year and shows record profits of 875 million euros [1]. Ryanair is one of the cheapest airlines around, very few other airlines even come close. Ryanair fleet has grown to 294 Boeing 737-800s with an extra 25 air new 737-800s craft expected later this year according to Ryanair. It has continued to develop and has cemented its place as Europe's most profitable. This involves Ryanairs ability to break into new markets with already existing products. 2006). It is evident from Ryanairs records that they hold a competitive advantage in their area of business. Ryanair Holdings: Sustainable Disadvantage And Competitive Advantages Ryanair Business Level Strategy. Ryanair’s business level strategy is cost leadership. Furthermore, tactics and implantation are discussed, and how Ryanair can achieve its objectives through its marketing mix. Executive Summary Yes, Ryanair’s strategy is sustainable because it’s core competencies of ‘Low Price’, ‘Cost conscious culture’ and ‘R&D on aircraft design’ (A5) gives it competitive advantage. Ryanair is a concentrated low cost airline who offers a no frills service to customers. Free academic research on Ryanair, Competitive Advantage to help you with essays, term papers, research papers, thesis and dissertations. The organisation has attained success in the. 3/20 Ryanair – the low-fares airline Q2. The three methods for creating a sustainable competitive advantage are through: cost leadership, differentiation, focus. It is important for Ryanair Holdings plc to base its competitive advantage on activities in which it has access to the rare or scare resources. However, because it could not protect this strategic approach from duplication by other airline companies, it lost a significant market share to other companies, such as Easyjet. Competitive advantage. The idea of ​​the concept of competitive advantage is … The first advantage is of course the price. How does Ryanair maintain competitive advantage? We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. The expansion in airline passenger numbers is already evident. The internet ticket sales … Ryanair has these resources for its sustainable competitive advantages… All work is written to order. There are following factors in VRIO framework, that impact on Ryanair's competitive advantages analysis. Ryanair at the moment is the biggest low cost carrier I will analyse how the have come to be in this position and I will compare it to Easyjet. This essay aims at analysing the competitive positioning and competitive advantage of Ryanair, a short haul point to point airliner located in Europe using academic models and applying ansoff matrix model to the current and future business model of Ryan air. * The pay is performance related and among the highest in the airline industry (Annual Report 2004, p. 5). By making use of the VRIO model to Ryanair resources (Appendix 1) establishes whether it is using the resources and capacities to maintain competitive advantage in the industry. Ryanair faces legal issues ranging from governments to consumer’s, operating in different countries meant adjusting to the different legal implications that abound in those countries, an example of this is employment contract laws which had dissimilarities between countries, this meant that the airline could not transfer contracted workers from one country to work in another country, this caused issues for Ryanair with the French government who did not want the airline to bring workers with British contract to work in France, Ryan air have also been affected legally by the European law placed on airlines to compensate cancelled and delayed passengers as well as provide accommodation for them, this law has increased the airlines working capital (Johnson et al, 2008). VAT Registration No: 842417633. Also already established airline are often granted right to use a slot if it has already made use of it at the same time during the preceding season (Gröteke and Kerber, 2004), this is beneficial to Ryanair. In fact, the only airline that can match Ryanair for price is Wizzair, but other than that, all other airlines are more expensive. Delphi Technique 8 Statistics shows that aviation represents 2.6% of carbon emissions in the Europe and this affects Ryanair negatively as the EU has asked airlines to pay environmental tax for their contribution towards global warming, however Ryanair has made progress positively against environmental degradation due to investing in modern fleet of aircrafts which make more than 50% less emissions and 45% less noise pollution (Johnson et al, 2008). Managerial Judgement 7 Ryanair aims to offer air travel services at low rates and this attracted many passengers while at the same time it maintains a continuous focus on cost reduction, operating efficiencies and continuous improvements. Ryanair flies over 1500 different routes and carried more than 79 million passengers in 2012. Ryanair strategic advantage over competitors can also be classified under two systems which are the Hybrid and the Low Price Low Added Value systems. Porter’s five forces are used to analyse Ryanair’s competitive environment while there is a brief explanation of the segmentation theory and its process. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Ryan air developed its product in terms of updating its fleet of aircrafts by acquiring over 100 new Boeing 737-800 aircrafts. Ryanair will be always known as a revolutionist of the Airline industry in Europe. All in all, Ryanair Holdings is not a sustainable competitive advantage in the long run since the company is not fully satisfied the above four criteria. Ryanair's Competitive Advantage Ryanair will be always known as a revolutionist of the Airline industry in Europe. (Porter’s 5 Competitive Forces) 10, 2011 1. Ryanair is one of the cheapest airlines around, very few other airlines even come close. Ryanair has potential market in already existing airports in which it does not fly to but has to compete with the various airlines already operating in such airports, but however its low fare is a very competitive strategy in order to break into new markets. Ryanair reduced the rivalry among its competitors by undergoing major economies of scale which resulted them the gain of 20% EU market. In conclusion this sort of method is not suitable for Ryanair as it does not guarantee an increased market share. Free resources to assist you with your university studies! Founded in 1985: 2 Aircrafts Carried 82,000 Passengers 1991: Michael OLeary Appointed Transformed to Low Cost Airline 1997: Floated on Dublin SE and Nasdaq Rapid Expansion (2008 Figures): 169 Aircrafts 794 Routes 148 Destinations, Across 26 European Countries 58 Million Passenger Annually Source: European Low … Such are as:- Value – Along with this, resources are very valuable for the organisation, they helps in increasing customer value. Ryanair diversifies its services by providing ancillary services. Inbound Logistics. In October 2006 Ryanair was voted the world least favourite airline by a pool of 4,000 travellers conducted by Trip Advisor but however in the same year Ryan air was reported as the world’s most profitable airline by Air Transport world magazine (Johnson et al, 2008) and also The airline increased from 4 million passengers in 1998 to 24 million in 2004 (Gröteke &Kerber,2004). Supplier power is high; Ryanair operates only Boeing 737-800s, and as of June 30, 2008, the company’s operating fleet was composed of 166 Boeing 737-800 aircraft (WW3), the airline chose to maintain the use of Boeing aircrafts in order to reduce cost of training and maintenance cost. This hinders Ryanair from expanding its market share at present and in the future (Johnson et al, 2008). Ryanair is situated in a market environment were competition is a major factor due to the amount of airlines that run short haul point to point flights within Europe. Ryanair competitive positioning in relation to its internal and external environments. Ryanair goes at length to lower their costs and prices and pride themselves on being the lowest fare/lowest cost carrier in Europe. Table of Contents Looking for a flexible role? Competitive Advantage of EasyJet and Ryanair. Ryanair benefits from this as the airline updated its fleet of airplanes thus having a 2% reduction in fleet fuel consumption; however the airline had to make major investment to effect this change which cost more money (Johnson et al, 2008). Another strength of the company has a strong brand which means it’s widely recognised. Ryanair now has 127 routes that cover 84 destinations across 16 countries. In this report, we will start presenting the history of Ryanair airline. A PESTEL analysis is the impact of Political, Economical, Social, Technological, Environmental and Legal factors on an organisation. Our academic experts are ready and waiting to assist with any writing project you may have. However, low fares (based on low costs) will remain its key competitive advantage. This implies an analysis of the effects on competition rivalry, threats of substitutes, threat of entrants, buyer and supplier power on Ryanair. To provide a background information of organisational structure, their vision, mission and strategic goals. *You can also browse our support articles here >. By clicking “Yes, I agree”, you agree to Ryanair using cookies to improve your browsing experience, to personalise content, to provide social media features and to analyse our traffic. Ryanair already had a huge clientele base although it seems 2016 it grew even bigger. Global Macro Environment (PEST) 9 Low Price Ryanair’s strategy is … Ryanair protested in the UK and in DUBLIN due to the British Airport Authority (BAA) and Dublin Airport Authority’s (DAA) airport monopoly which affected it negatively from poor security, passenger and flight delay at Stanstead airport, also it was affected negatively by DAA which approved a 750 million new terminal therefore proposing a 60% increase in charges at the Dublin airport. No plagiarism, guaranteed! Ryanair is situated in an existing market offering an existing product therefore diversification in this industry is limited as it has limited supplemented services which it can run alongside its transportation of passengers ranging from cargo transport, internet bookings and advertisements, hotel and transport services to and from airports, this however does not eliminate the possibility of diversifying into other support services. Published: 1st Jan 2015 in * Ryanair currently employs 2000 people (2003) from 25 nations. Human resources: Ryanair employees some 2,700 people who all have multiple skills. Such are as:- Value – Along with this, resources are very valuable for the organisation, they helps in increasing customer value. It achieved this by adopting various practices that gives it a competitive advantage over rivals. Internal environment adds value in business, in order to put some efforts in opportunities and argue against threats. Due to a uniform fleet, Ryanair have benefitted from low training costs of crew and pilots. The major strength of Ryanair is in its ability to provide air travel services at low rates; it also provide higher rates of on-time departures and faster turnaround times due to its operations from less congested airports. However the financial crisis also forced Ryanair into creating alternative sources of revenue which includes hotel travel insurance, excess baggage services as a means of sustained profit. Ryanair boasts having the best customer service in the industry: with 92% of flights leaving on time, the fewest number of flights canceled, and the least number of bags lost in the industry. Advantages: Their cost leadership strategy is really a huge advantage for them in Europe. The threat of entry is moderate, this is so due to the size of the airline industry which is very large due to number of airports in Europe thereby creating enough space for new comers, however due to economies of scale it is also difficult for new comers to break into the industry or compete with Ryanair low fares. Competitive advantage can be defined as strategies, skills, knowledge, resources and competencies that differentiate a business from its competitors (Wang, 2009). You just have to look at their FY19 half year results to see this. Due to the different barriers that exist in detracting Ryanair from expanding its market share, the future of the airline may lie in uncertainty but due to the expanding size of the airline industry and the possibility of providing its services in totally new countries the future looks bright for Ryanair. In the UK there exists a culture of travelling on holidays to other European countries as well as outside Europe, this in turn is good for the Airline industry to which Ryanair belongs, therefore in the long run Ryanair stands to gain from this life style, however the recent epidemic of swine flu first discovered in the Middle East and the Asia-Pacific region (WW1) has definitely changed the rate of travel as people are scared to travel and this in turn will definitely affect the profit of Ryanair as there will be passengers reduction. This section classifies the application of Ansoff’s product / market growth matrix on Ryanair business model. In 2016, Ryanair reported revenue of more than 6 billion Euros. Ryanair established in the European market share. However there is future for Ryanair in finding a place in such industries because airline passenger services cannot exist on its own and needs other external services to ensure its smooth run, thus it can venture into businesses that supports its own air transport services without actually breaking into mainstream hotel or insurance. Flying to cheaper, less congested secondary airports: This allows Ryanair to charge lower fares for their passengers making them a far more attractive option for the average consumer. The airline also develops its services by the provision of ancillary services such as hotel services, travel insurance, excess baggage changes, flight changes fees, car rental services, in- flight sales etc. Other airlines may have better services but Ryanairs main catch which is low air fare which keeps the passengers returning even with they have complaints about services on board.
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