A strategic analysis of Ryanair


Research Paper (undergraduate), 2012

9 Pages, Grade: 67%


Excerpt

I Content

II Figures:

III Abbreviations:

1. Introduction

2. Analysis of the internal and external factors (SWOT)
2.1 Strengths
2.2 Weaknesses
2.3 Opportunities
2.4 Threats

3. Strategic options for Ryanair
3.1 Merger
3.2 Premium strategy
3.3 Cost leadership

4. Implementation

5. Strategic analysis of Ryanair

6. Conclusion

References

II Figures:

1. Passenger number development in millions from 1995 to 2007

III Abbreviations:

illustration not visible in this excerpt

1. Introduction

Ryanair was founded in 1985 as a family business. In 1991 Michael O’Leary took over the position as new CEO and adapted the corporate strategy after the model of Southwest Airlines in the USA. Success proved him right: Ryanairs’ passenger numbers (figure 1) have increased steadily confirming his choice of strategy.

This paper will analyse the reason behind the decision for low cost leadership as corporate strategy. Furthermore the implementation of the strategy into their value chain is going to be described and finally it is going to be evaluated if the strategy was successful.

Figure 1: Passenger number development in millions from 1995 to 2007

illustration not visible in this excerpt

Source: http://www.ryanair.com/en/about, accessed on 04.11.2012

2. Analysis of the internal and external factors (SWOT)

The internal and external factors that led to Ryanairs’ strategic choice can be found in the SWOT analysis. A SWOT analysis provides a description of the external business environment in the form of opportunities and threats, and it presents the strategic capabilities of the organization in the form of strengths and weaknesses. This analysis can be used as a foundation for strategic options. However, a SWOT is best used in comparison with other companies to get a relative view of your situation (Johnson G. et all, 2008).

2.1 Strengths

Ryanair profits from their charismatic and polarizing leadership of their CEO Michael O’Leary. He brought the knowledge of the business model of Southwest Airlines and applied it consequently in the company. Without him the cost leadership strategy would not have been implemented. He also promotes Ryanair at every possible opportunity and creates a lot of media attention (Jonathan Hemus, 2012).

2.2 Weaknesses

Ryanair’s main weakness was their lack of efficiency. Slow turnarounds and high operating costs made them a small competitor compared to the Aer Lingus. This lack of efficiency manifests itself in the fact that they weren’t profitable.

2.3 Opportunities

The European deregulation posed as a huge opportunity for Ryanair since the market in Europe was easier to access for the company. Expansion and growth to other countries and airports was made less complicated.

2.4 Threats

The threats for Ryanair were mainly their competitors. Increasing competition also due to the deregulation posed a considerable threat to the rather small company.

3. Strategic options for Ryanair

When the new CEO Michael O’Leary took office he faced a company which wasn’t profitable and had no clear strategy. He had several options which will be outlined in the following by using the VRIO method. This method is used to evaluate a strategy based on the four factors, value, rarity, imitability and organization (Barney et al, 2005).

3.1 Merger

One strategy for Ryanair would have been to merge with another competitor such as Aer Lingus to gain additional market share, safe costs due to synergies and strengthen their capital base. This strategy would create value for the reasons mentioned above and would be rather rare since there aren’t many mergers in the airline industry. Furthermore, it would be difficult to imitate since a merger is very delicate. However, Ryanair didn’t have the financial resources to conduct this strategy in a benefitting way.

3.2 Premium strategy

Another option would have been to focus on the premium segment and therefore business customers. This strategy would create more value for the business since companies tend to let their employees fly the more expensive business class. Still, the strategy isn’t rare since there are lots of competitors in that market segment already for example British Airways. Ryanair also didn’t have the necessary financial resources to upgrade their fleet in terms of bigger planes, better equipment and more staff.

[...]

Excerpt out of 9 pages

Details

Title
A strategic analysis of Ryanair
College
University of Greenwich  (Business)
Course
Strategic Management
Grade
67%
Author
Year
2012
Pages
9
Catalog Number
V212378
ISBN (eBook)
9783656404828
ISBN (Book)
9783656405825
File size
498 KB
Language
English
Tags
ryanair
Quote paper
Johannes Walder (Author), 2012, A strategic analysis of Ryanair, Munich, GRIN Verlag, https://www.grin.com/document/212378

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