The Strategic Management Of Ryan Air

The strategical steering Of Ryan stockA Jenoir solicitude consultant is providing consultant benefit for strategical instruction of the companies. Senior counseling aggroup of Ryan oxygenise details on the contracts signed with Jenoir gayagement consulting companionship for get the consulting service in strategic forethought of the Ryan strains future. As a result of this we carried surface a strategic psycho compend in conditions of the milieu, assiduity and to a fault regarding the inbred motion of Ryan melody.The aim of this composing is to provide consulting services to Ryan disperse for its strategic management in the future. This base result focus onThe strategic abstract of the Macro surroundings fetching into account the PESTEL reckons which testament draw out the opportunities and threats,Industry abridgment using the Porters cardinal Forces sham and a strategic Group present and inbred analysis drawing out the resources and capabilities an d the VRIO using the pry-Chain Model for Ryan form.Thereafter, recommendations impart be given as to how Ryan aura backside rectify which allow be continued in the second part of this report. Hence, this report forget show how Ryan phone statement toilette perform better in the gigantic run by identifying the key strategic issues.T fitting of Contentsexecutive SUMMARY 1Table of Contents 11.0 INTRODUCTION 32.0 CRITICAL ISSUES 42.1 Company Background 42.2 Core twainer 53.0 compend (MODELS / THEORY USED) 53.1 immaterial ANALYSIS 53.1.1 PESTEL ANALSIS 53.1.2 Porters infield Model of Ryan halo 63.2 persistence ANALYSIS 63.2.1PORTERS FIVE FORCES ANALYSIS OF RYAN AIR 63.2.2 Strategic Groups 73.3 essential ANALYSIS 83.3.1 VRIO/ VRINE of Ryan circularize 8Barneys Model for Ryan Air 93.3.3 Ryan carry Value Chain Analysis 94.0 EXTERNAL ENVIROMENTAL ANALYSIS 105.0 INTERNAL ENVIORNMENTAL ANALYSIS 115.1 picks and capabilities 117.0 ending 138.0 RECOMMEDATION 149.0 REFERENC ES 1510.0 APPENDIX 1610.1 extension 1 1610.2 extension 2 1710.3 Appendix 3 1810.4 Appendix 4 1910.5 Appendix 5 2010.6 Appendix 6 2110.7 Appendix 7 2210.8 Appendix 8 221.0 INTRODUCTIONThe present stock public is exceedingly complex, free-enterprise(a) and fast changing. Ryan air sense experienceted in yr 1985 with only 57 stave members and with one 15 seated turboprop plane from the south of eastside of Ireland to London Gatwick which carried 5000 passengers on one route. Ryan air was the first budget air dividing confines in europium and also more(prenominal) achieverful mooer-ranking greet airline in atomic number 63. Ryan goation hawkish favor is its ability to bring on and outperform others as it is europiums first low-down-f atomic number 18s, no-frills carrier and in animosity of economic mental unsoundness there has been a growth in loots. (Ryan air 2006)According to Viljoen and Dann (2003)strategic management is defined as the process of identifying , choosing and implementing activities that impart improve the long run performance of an organisation by presentting directions and by creating on going compatibility.Currently in 2006 European air line labor facing a backdrop and the burgeoning budget sector. In hunting lodge to analyse Ryan air strategic will be focus on External, informal environment and Industry.External environment will be analysing the factors in the macro environment which build on future industry growth and development, factors touch on current and future profitability, position of competitors and strategic groups inside the industry, to gain the impetuous forces of the industry, dynamics and fin entirelyy to understand international competitiveness.Further more this analysis focus on how Ryan air wants to create foster for guests, its node value and competitive advantage, its activity value chain, customer value the value suggest and determining the business sham to deliver the value positi on, short term and long term focus and sustainability and methodology of analysing business strategy.In final this analysis will focuses on Ryan airs current strategic management escorts and how it eject benefit by using strategic management theories and the agency by which the organisational efficiencies of Ryan air would be improved and recommend to management team up of Ryan air for improving strategy writ of execution.2.0 CRITICAL ISSUES2.1 Company BackgroundRyan air started in year 1985 with only 57 rung members and with one 15 seated turboprop plane from the south of east of Ireland to London Gatwick which carried 5000 passengers on one route. Ryan air was the first budget airline in Europe and also more successful low live airline in Europe. Ryan airs competitive advantage is its ability to grow and outperform others as it is Europes first low- father sexs, no-frills carrier and in spite of economic instability there has been a growth in clams.In identifying the curr ent business strategy we would be analysing the vision, mission and objectives of Ryan air. The mission of the Ryan air is to be happen Europe largely gainful low f are by rolling out proven low hail no frills in each(prenominal) markets in which we operate to the benefits of passengers, people and share holders. (Ryan air Report, 2007) Ryan airs social accountability is providing solid service to the passengers.The vision is to firmly establish itself as Europes charge low fares scheduled passenger airline through continued improvement and expanded offerings of its low fare service (Ryan air Report 2007). Ryan airs objectives are 40 percentage increase the market share at heart the low fare airline sector, in 2012 double the yearly passenger transportation to eighty million and to quadruple Ryan airs annual profit up to 1,230 billion.2.2 Core ProblemRyan air being one of the starring(p) budget air lines in Europe, which is shortly facing crisis. Though they were acting so und during the last few years, currently European air line industry facing a backdrop and the burgeoning budget sector. Therefore it is undeniable for Ryan air to consider the causes of the crisis and necessary action well on conviction. imputable to this reason Jenoir management consultants will be analysing the outer, internal and industry, whether Ryan air could over come this barrier.3.0 ANALYSIS (MODELS / THEORY USED)3.1 EXTERNAL ANALYSIS3.1.1 PESTEL ANALSISPestle analysis is grand for identify Ryan airs strategies through macro external factors. These factors are in the airline industry to understand Ryan airs future external threats and opportunities.(Refer Appendix 1)Political and LegalSecurity solution is the current spark of government about airline industry, which will increase the follow of service. regimens croup take an action if there will be any fray in business deals from Ryan air with Airport. The Ryan air must also adapt its strategies to suit the gover nment legislations and policies and must give more attention to the political of the country where they operate. Ryanair perk up been involved in various legal disputes with governments both in Ireland and the EU regarding their business deals with airports and airline regulating bodies.Economic Factors international Economic recession in 2001-2003 had adversely shineed many an(prenominal) countries and in had collapse the financial strategies of the company. Due to the recession the income direct of the people has come down due to that most people are postponing or basincelling their air travel.Socio cultural FactorsAfter the September 11th incident in ground forces air travel as become a spirited happen in business in air line industry. More warrantor mea trusteds are taken and the passengers are facing difficulties. This has become a colossal threat to air line industry.Technological- Ryan airs website is the largest travel website in Europe and this could help them to increase e-commerce and advertising revenue. Their in flight internet gambling, beam television and web-based conceal-in is an added advantage for Ryan air.Environmental Factor The notion that the world is becoming little and a move towards eco friendly environment by controlling noise levels and green-house carbon emissions.3.1.2 Porters Diamond Model of Ryan airPorters adamant model for Ryan air is stated in appendix 2 respectively.3.2 INDUSTRY ANALYSIS3.2.1PORTERS FIVE FORCES ANALYSIS OF RYAN AIRBargaining Power of supplierRyan airs main aircraft supplier is Boeing and other one is Airbus. Switching cost will be high when change the aircraft. Fuel prices will affect Ryan airs cost directly, so they are highly dependent the provoke prices and also it is truly big threat of their voicelessest side. Generally regional airports let little negotiate power if they are heavily dependant on one airline but daylight by day their bargain power increasing because of the contest between low cost airlines. also of those regional airports, bigger airports yield very huge bargaining power. (Refer Appendix 3)Bargaining Power of CustomersRyan air is the low cost airline for all Europe destinations and customers are peculiarly in recession times highly price sensitive. It is very prosperous to change their airline and it is In this customers cognition about the cost of service is high and there is no customer loyalty for Ryan air. Even though there is no customer loyalty, bargaining power of customers is low. Ryan air is the cheapest airline for all Europe destinations and customers are especially in recession times highly price sensitive. bane of freshly EntrantsThere are lots of barriers to entry and it is very risk to be new in airline industry. The capital that will invest in this sector is very high. It is also hard to take a name current competition and also hard to get word suitable airports for the flights. brat of SubstitutesThere is not any bran d loyalty of customers and Ryan air prefer customer relationship is not close relationship. If their customers find better centering to travel they will not feel any hesitation to chose it. So the threat of direct and indirect substitutes is very high and the most Copernican stoppage is there are no switching costs for the customers. belligerent RivalryThe market is highly competitive. Most of Ryan airs cost advantages can be imitative immediately. In Europe it seems like there is an bargain between Ryan air and Easy natural spring about not to grapple head to head. However if any company does decide to compete on the same basis as Ryan air it will be highly critical for Ryan air.3.2.2 Strategic GroupsStrategic Groups take away been defined by Finlay (2000) as groups of business that are likely to respond similarly to environment changes and be similarly advantaged or disadvantaged by such changes. Porter (cited in John et al, 1997), suggests that an industry can have only o ne strategic group if all firms followed essentially the same strategy. At the other essential each firm could be a distinguishable strategic group.Strategic Group Map analysis below of the European Airline industry will indicate that Ryan air has to compete with Aer Lingus and EasyJet very closely bandage British Airways and other national carriers are in the region. Other smaller budget airlines based across Europe such as FlyBE, German Wings and Hapag Lloyd Express also pose competition in routes which they normally compete (Little Masters, n.d.).This diagram also shows how the Mega carriers compete within their strategic groups as opposed to the Mid-Sized carriers.PrivateMega CarriersAmerican AirlinesBritish AirwaysMid-Sized CarriersFlyBEGerman WingsAer LingusEasyJetGovernment-Owned CarriersBritish AirwaysBulgaria AirGovernmentNo of Destinations high school menialOwnership3.3 INTERNAL ANALYSIS3.3.1 VRIO/ VRINE of Ryan airVRINE MODELThe top management should be able to identif y the resources on tap(predicate) in the organisation presently in recite to assess whether the resources forthcoming are sufficient ample to implement the strategies. So the outcome of the reconstruction depends on the resources available at that time.VRIO of Ryan air Value, Rarity, Imitability, broad medicationRyan air values its high service performance. The airline is known for its rigorous observance on punctuality, high rate of flight completion, and low luggage loss. It purchased modernized fleet which precedes to less expensive maintenance with uniform brands utilise while high aircraft utilization strengthens its business and financial sheet. The rarity of Ryan air is based primarily on its strategic positioning and management operations. Its implementation on low fares service and high level of customer service delivery made Ryan air beardown(prenominal) and competitive compared to other firms in the same field. Other firms in the same industry hardly find the ir ways in imitating the same operations and strategic planning. Ryan air produced good planning and management operations in which it leads others to imitate. Not all of the material and impalpable resources like bundle, fleet designs, infrastructure, organisational culture, and knowledge management can be imitated. Causal ambiguity, time compression diseconomies and path dependencies are factors which affect the difficulty of other firms to imitate in effect(p) plans of successful firms like Ryan air.Barneys Model for Ryan AirThe top management should be able to identify the resources available in the organisation presently in pitch to assess whether the resources available are sufficient enough to implement the strategies. So the outcome of the reconstruction depends on the resources available at that time.According to the Barneys model can analysis Easy Jet as Ryan airs competitor. Easy jet has enough recourse. For an example they have large number of air craft and their s kytrax star rate level is high, so easy jet is valuable. Easy jet is not rare because same strategy what easy jet currently using is other competitors also using. Easy jet can easy to imitate to another company because low fare and also they have enough substitutes (for an example Train, ship). Easy jet is competitive parity. (Refer Appendix 4)3.3.3 Ryan air Value Chain AnalysisRyan air strongly manages and forms relationships with different suppliers for an example. Boeing and food, beverages etc, to install sure goods are received of requirement standards and on time in roll to add value through out its value chain. In found to add substantial value for its service by providing low cost and directly monitors relationships with airports around Europe, so they provide subsidies to the airliner in order for them to provide low cost and seen as adding grater value for customers.In order to reduce the cost and provide low cost to customers Ryan air contracts staff for aircraft handl ing, fineing and baggage handling to third parties at competitive rates as well as engine repairs and heavy maintenances of its aircrafts. Therefore reduces direct photo to employee relationships and disputes reducing costs all through value chain.In order to add greater value for customer, the aircraft staff e.g. pilot, cabin crew, they holds close relationships, giving the right training making them to feel confident to answer on flight questions. The airliner has a commission placed for its aircraft crew linked with the gross sales of duty paid goods. Therefore close management with aircraft crew ensures good labors turnover reducing the threat of staff being absent for flights, thence seen as adding value for customers. (Refer Appendix 5)4.0 EXTERNAL ENVIROMENTAL ANALYSISThe external organizational environment includes all elements existing outside the boundary of the organization that have the authorisation to affect the organization (Daft, 1995). The environment includes c ompetitors, resources, technology and economic conditions that influence the organization. The external environment can be further conceptualized as having 2 layers generally and task environments.The general environment is the outer layer that is astray dispersed and affects organization indirectly. It includes social, demographic and economic factors that influence Ryan air. The most important part concerning in the task environment which is closer to the organizations its includes the sectors that conduct day to day transaction with the organization and directly influence their basic operations and performance suppliers, competition, customers and the labour market.(Refer Appendix 3, 6)5.0 INTERNAL ENVIORNMENTAL ANALYSISAll organizations have strength and weakness in its areas of business. No organization is equally strong or weak in all areas (David, 2005). The process of internal environment parallels that of the external analysis. Resources come in many forms form common fa ctor inputs to highly differentiated resources that are developed over a man years and are very difficult to replicate (Collins and Montgomery 1998). Internal environment analysis involves a study of culture, structure and resources including technology commensurate by the origination.5.1 Resources and capabilitiesRyan airs main actual resource is air craft. Their intangible resource includes things such as companys reputation (first budget airline and low fare airline), brand name (Ryan air), technical knowledge (100 percentage online ticket booking), patent and trademark. A competitive advantage is the set of factors and capabilities that allow firms to consistently outperform their rivals.(Refer Appendix 7)Tangible ResourcesAir craftTechnical feelerEquipementsCompetenciesPrice, Quality service, ReliabilityCompetitive advantage of Ryan airCapabilitiesLow cost, High profitIntangible ResourcesRyan airs ReputationBrand nameLow fareTechnical knowledgeFigure 1 Resources based view i f competitive advantage of Ryan air6.0 SWOT ANALYSISThis analysis is an effective way of identifying internal strengths and weaknesses of Ryan air and of investigative opportunities and threats of the external environment. (Refer Appendix 8)StrengthsRyan air is the largest and most successful of Europes low cost airline. This fact is strongest selling point for Ryan air. Result of this low cost strategy, which increases customers and airline, is expanding rapidly. Ryan airs website was the largest travel website in Europe. And the ordinal most recognized brand on Google. According to the Ryan air annual report 2006, Ryan airs ancillary revenues (include non flight schedule services) had climbed by 36 percentage.WeaknessesRyan air is the least favorite airline in the world. Passengers who travel in Ryan air lose their luggages very often. Ryan air staffs are considered to be very unfriendly and there is common issue that the process always delays. Ryan air was only mid range or belo w average in its P/E multiple relative to peers like easy jet, whose shares had arise by 46% during the year. Ryan air has been criticized for many aspects of its customer service.OpportunitiesThey have potential market share. Because low cost airline market share not reached the peak level. Ryan air has better opportunities to dominate and catch up with the competition in the European airline industry in terms of providing more quality service. The continuous initiatives of the company in diversification of its revenue resources also open new opportunities to make the business become stronger to outgrow all its competitor companies.ThreatsRyan air faced various challenges as it entered the second half(a) of fiscal 2007. The airline itself predicted that its extra capametropolis building would create doubtfulness about the success of new routes, locations and other difficulties. These were extra marketing and discounted fare costs incurred in launching new routes, as well as over capacity leading to price cutting by rivals.7.0 CONCLUSIONBy taking into consideration the above analysis, Jenoir management consultant believe Ryan air has gained competitive advantage since there is a greater opportunity and strengths regarding to the air line industry. Based on the External, Internal and Industry analysis, there are few major(ip) issues which were identified by Jenoir management Consultant analysis team in relation to Ryan air have weaknesses and threats. There are many areas which Ryan air should workout.Systematic, healthy and an organic organization contribute much to the success of Ryan air. An organization with clear objectives and capable to draw everyone to work with these objectives will lead to its success. For airlines, the future will hold many challenges. Successful airlines will be those that continue to tackle their costs and improve their products, thereby securing a strong presence in the key world aviation market.Therefore taking into considera tion these detrimental impacts to the entity Jenoir management Consultant analysis team develop certain recommendations for Ryan air to perform the task of a guideline in overcoming these weaknesses and threats, by systematically utilizing these recommendations. Ryan air will be able to transform its current weaknesses into opportunities and strengths in the future. However risk management in the strategic management must be given an important consideration in strategic management plan implementation process.8.0 RECOMMEDATIONBased on External, Internal and Industry analysis, Jenoir management consultants is recommended that Ryan air consider the move their business with low cost strategy in to international market, so Ryan air should has a detailed plan for this and be able to provide good customer service to the customers like by having discounted flights, promotion to keep the competitive advantage at a stable mode within its competitors and also will need to focus more on the c ore competition that will help Ryan air to practically designs suitable airline operation within their market.There are some other recommendations for Ryan air,Ryan air, being the market attracter in the budget airline industry is performing very well as of now. But it does need to take into account all the factors discussed above. Ryan air also has to make sure that even though Michael OLearys tactics work today, they may backfire tomorrow.Ryan air should slow down on the belligerency of its strategic planning and implementation so that it can avoid acquiring into trouble with the governments and end up paying millions.In order to bear on its employees, motivate them and also another means of cutting costs, Ryan air can adopt a similar strategy that of Jet Stars JEN (Jet star Employee Network). This intranet software is both the sophistication and the functionality necessary to gather, share and communicate key corporate, HR and time critical staffing information. Head of Corpor ate Relations, Simon West away says JEN delivers on-going savings of about $130,000 annually (Story, 2009, p.18).9.0 REFERENCESCollins, D.J., Montgomery, C.A. (1998), Competing on resources strategy in the 1990s(Volume 73), Harvard commerce ReviewDaft, Richard L. (1995). Organizational Theory Cases Applications. (4th edition.) West Publishing CompanyDavid, R.D.(2005). Strategic management concepts and cases. (10th edition) Prentice Hall of IndiaFind Article (2005). EasyJet to enter Irish Market for first time. Retrieved April 21, 2010, from http//findarticles.com/p/articles/mi_m0CWU/is_2004_Nov_23/ai_n7074328/?tag=contentcol 1Find Article (2009). Company Watch Ryanair. Retrieved April 22, 2010, from http//findarticles.com/p/articles/mi_6781/is_2009_August_24/ai_n42028112/?tag=rel.res1Hodgson, N. (2009, November 20). Ryanair set to overtake EasyJet in JLA ranks. Daily Post Liverpool. RetrievedApril 19, 2010, from http//findarticles.com/p/articles/mi_8008/is_20091120/ai_n42256727 /Hubbard, G. Rice, J. Beamish,P. (2005). Strategic management thinking analysis action. (3rd edition). Pearson education AustraliaLagadec, K. (2008). Airbus and Boeing face a dark and agonizing future. Post Carbon Institute. Retrieved April 20, 2010, fromhttp//www.postcarbon.org/article/40546-airbus-and-boeing-face-a-dark/13913-energyThe Airline Industry. (n.d.). retrieved April 21, 2010, from http//adg.stanford.edu/aa241/intro/airlineindustry.htmlViljoen, J., Dann, S. (3rd Ed.). (2003). Strategic Management Planning and implementing successful corporate strategies. NSW, Australia Pearson Education Australia.10.0 APPENDIX10.1 Appendix 1PESTLE ANALYSIS OF RYANAIRPolitical EnvironmentNational airlines supported by certain countriesEurope union expansion with new routes and new competitors. freshly European Union rules and regulations.Due to the government stability tourism will be increase, which is good for Ryan air.New different tax policy for different countries.Economic Environ mentThreat of Ryan air is increasing raise price.Taxes and following ratesDecrease of US dollarsIncreasing business class locomotionThe threat of the substitutesRise of airport handling chargesSOCIAL FACTORSIncreasing color in market, which is the trade of a commodity through distribution channels, which while legal, are unofficial, unauthorized, or unintended by the original manufacturer.Populations growth does an ageing macrocosm affect them i.e. baby boomers, lots of people in that life period have more disposable income to spendSafety solutionsTrend proficient FACTORSInternet sales and Increased internet competitionsHigh speed trainsOnline check inLow fuel useLEGAL FACTORSPrivatizing of airline industryIllegal subsidies from airportsCompetition laws in aviation industryAllegations of false advertisementRules and regulations about Carbon emission levelENVIRONMENTAL FACTORSNoise level controls ,Global warming ,2.6% of Carbon emission in the EU, so this gasoline will effect Green house10.2 Appendix 2Porters Diamond Model of Ryan airFactorConditionDemand Condition intemperately strategy structure and RivalryRelated supporting IndustriesChangeGovernmentFirm Strategy, Structure and RivalryEnvironmentally concerned.Entrants of other Low damage CarriersFactor conditionsTechnological advancement.Demand conditionsDemand is increasing for Low fares air travel.Related and supporting industriesCar hire, Hotels, Travel insurance, Baggage tracing, Free city guides, Ticketing, Aircraft handling ,Airport coach and other services10.3 Appendix 3Porters Five Forces modelBargaining power of SupplierBargaining power of BuyersThreat of New EntrantsThreat of SubstitutesCompetitiveRivalry10.4 Appendix 4(Source VRIO model / Barneys modelhttp//www.web-books.com/eLibrary/ON/B0/B58/033MB58.html)Competitive Implications from Recourses ( Easy jet as Ryan airs competitor)ValuableRareDifficult to ImitateWithout substitutesCompetitive ImplicationYesNoNoNoCompetitive parity10.5 Ap pendix 5Value Chain Analysis of Ryan AirFirm Infrastructure(Head Quarters)Technology growing(Internet, Integrate system, Low tech marketing , Internet sales) humane Resource Management( In house, Low cost training, Management control, trammel crew, performance contracts)Procurement(Boeing discount, Alliances, Low cost, out sources private)Inbound Logistic(Quality training, Low cost supplier, Airport agreement)Operation(No frill, low cost )Outbound Logistic(Reliable service, fast-flying turn around)Marketing and Sales(Free publicity, Low cost, promotions, Internet sales)Services(High productivity, Limited resourses)10.6 Appendix 6Location of the organization general task and internal environmentsTechnologicalCUSTOMERRSTask EnvInternal EnvironmentSocio culturalLABOUR merchandiseEmployeesCultureInternationalCOMPETITORSManagementSUPPLIERSLegal/ PoliticalEconomicIt can be noted that SUPPLIERS forms an integral part of task environment and the social function of importance of suppli ers of components.10.7 Appendix 7ResourcesThere are two kinds of resources, tangible and intangible which can further be categorized into financial, human, physical and talented capital.Physical Resources which Ryan air possesses is 196 Boeing aircrafts. Huge amount of money was being fagged for the aircraft maintenance and they need to keep the resources proper and running to make sure that these will not harm their low cost structure. They also have the youngest fleet in the whole of Europe with a highly fuel efficient capacity.Financial Resources Ryan air is the highest profit making low cost structured airline. According to OHiggins (2007), Ryan airs profits have been increasing 8.5% on average per year. It also goes onto say that in its Annual General concussion in 2006 the airline had delivered 12% increase in net profits despite a 74% increase in fuel cost.Human Resources Initially Ryan air started with only 25 employees and had 3500 people by the year 2006 and all of t hem are entrenched with a cost cutting approach. Ryan air employees a very much dedicated as Ryan air pays its employees well. In its 2006 annual report it claimed to have the highest pay figures than any other major European airline. Also by tailoring rosters, the carrier maximized productivity and time off for crew members. The biggest HR advantage Ryanair has is Michael OLeary.Intellectual Capital The high