Ryanair Case Study

Mayur Parvani(Roll no 07)

Manuara Chisty(Roll no 08)

Farah Deeba(Roll no 09)

2

Agenda Background Industry Key Success Factors Ryanair Strategy Deconstruction Competitive Advantages Value Chain Analysis Growth Possibilities Airline Competitor Responses Future Strategy Conclusion

3

Background Founded in 1985:

2 Aircrafts Carried 82,000 Passengers

1991: Michael O’Leary Appointed Transformed to Low Cost Airline 1997: Floated on Dublin SE and Nasdaq Rapid Expansion (2005 Figures):

12 Bases 220 Routes 95 Destinations, Across 19 European Countries 27 Million Passenger Annually

4

VMOST

Vision: To be Europe’s Leading Low Fares Airline

Objectives: Number 1 For Customer Service

Strategies / Tactics: No Frills, Low Cost Approach Point-to-point Short Haul Flights Regional and Secondary Airports

5

Industry Key Success Factors

Low Ticket Prices Frequent Departures Possibility of Advanced Reservations Reliable Baggage Handling Consistent On-time Services

6

External Analysis:Porter’s Five Forces

Threat of New Entrants

MEDIUM

Threat of Substitute Products

MEDIUM

Buyers’ Bargaining Power

LOW

Suppliers’ Bargaining Power

LOW

Industry Competitors

Rivalry Among Existing Firms

HIGH

Source: Adapted from Porter, M. (1998)

7

External Analysis:Porter’s Five Forces

Threat of New Entrants Limited, but has happened

recently: BMIBaby.com Easy jet MyTravelLite.com Monarch.com FlyBe.com

Compete on Limited Routes Capital Intensive

Industry Competitors Increased Competition:

50 Budget Airlines Flag Carriers:

Low Cost Affiliates Alliances Air France / KLM Merger

Threat of Substitute Products United Kingdom:

None The Rest of Europe

Driving holidays High-speed trains

8

•Increased Trade-union Pressure•Pilot Trade Union

•EU Expansion•EU Abolishment of Duty-free Sales•Allegations of Misleading Advertising

•“Climate Protection Charge”

•Fuel Price Increases•Depreciation of US dollars•EU Commission Rulings:

• Illegal Subsidies from Airports• Overbooked Passenger Compensation• Cancelled Flight Compensation• Reimbursement of Delayed Passengers

Political – legal Economic

Sociocultural Technological

•Europe: Cars & High-speed Trains•Increasing travelling lifestyles•Increasing business travelling

•Wireless Technology Expansion•Internet sales/gambling•Satellite television

• Increased internet competition

External Analysis:PEST Analysis

9

Internal Analysis:Porter’s Value Chain

InboundLogistics

Operations OutboundLogistics

Marketing& Sales

Service

Firm Infrastructure

Technology Development

Human Resource Management

Procurement

Primary Activities

SupportActivities

Margin

Mar

gin

Source: Porter, 1985

10

Ryanair: Value ChainM

argin

Mar

gin

Minimum Corporate HQ

Low Cost Training

Internet

Boeing Discount

Quality Training

Low Cost Suppliers

Airport Agreements

No Frills

Low Cost*

Quick Turnaround

Reliable Service

Low Cost Promotions

Free Publicity

Controversial

Internet Sales

Yield Management

Limited Resources

Basic/Low Cost

High Productivity

Inbound

Logistics

Operations Outbound

Logistics

Marketing

& Sales

Service

HRM

Infrastr.

Tech. Dev.

Proc.

Limited Crew

Internet Information

Alliances

Management Control

Integrated Systems

Outsourced

In-houseLow Tech Marketing

Internet Sales

Private

Performance Contracts

n/a

Low Cost

11

* Low CostCompetitive Advantages

Online Bookings One Class Travel Ticketless Boarding Unallocated Seats Flying to Secondary Airports Point-to-Point Flying In-house Marketing No Frills Reduced Turnaround Times No Refund Policy Corporate Partnerships

No Cargo Service Bargaining Power New Aircrafts Owns Own Fleet Operations Denominated in

Euro Hedge Fuel Risk Highly Successful Ancillary

Service Offering Outsourcing of Services at

International Airports

12

* Low CostCompetitive Advantages (Cont.)

Limited Airport Transportation Advertising on Airplanes Yield Management Uniform Fleet High Productivity High Service Levels General Cost Reductions

Eliminating seatback pockets No blankets or pillows Airsickness bags distributed on request Charges larger penalties for overweight luggage

13

Ryanair: SW

Strengths WeaknessesLow Cost LeaderInnovative Cost ReductionsFirst-mover AdvantageEstablished Market ShareSubstantial GrowthHigh Load FactorStrong Public ImageEstablished Routes/NetworkRange of Ancillary Services

Poor Employee RelationsVolatile Customer RelationsAntagonistic Relationship with

CompetitorsUncharacteristic Management

ExpansionDependence on Michael O’Leary

14

Ryanair: OTOpportunities Threats

Further GrowthAdvanced Cost ReductionOffering Free FlightsEU ExpansionExpansion of ELFAA

Increased Competition:New EntrantsAlliances/Mergers Between

Competitors Industry CriticismAntagonistic Attitude of EU

CommissionersNon Expansion Into New EU StatesTrade UnionismSubstitute Transportation:

Cars,Trains

15

Key Success Factors

The Ryanair Business Model EU Deregulation Boeing Discounts EU Expansion Low Acquisition Cost of Buzz The Southwest Effect Effective Publicity Michael O’Leary

16

How Ryan Air can survive in future?

Market Characteristics: 7% Penetration (European Market) Ample Growth Opportunity EU Expansion Further Evolution of the Industry

Ryanair Potential: Bargaining Power Competitive Resources

Consolidate: Slower, Calculated Growth

The ten commandments

1)Increase the frequency of existing routes

2)Open new routes in Europe

3)Devlop its small continental bases

4)Expand in Europe

5)Expand in North Africa

6)Agressively seek market share from charter Market

7)Customer Service haul

8)Continue to find ways to reduce costs

17

9)Change online image 10)Improve employee relations

18

19

Ryanair Case Study

Questions?

20

Thank you for your attention!