Bowman's Strategy Clock&Strategy Suitability: Ryanair
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Bowman's Strategy Clock&Strategy Suitability: Ryanair Ryanair is an airline services company and was founded in the 1985 to provide hauls between Ireland and UK as alternative to the monopoly of Aer Lingus. Ryanair started to become the first European low fares in the 1995; this restyle of the company was built on the model of the Southwest Airlines, the highly successful Texas based operator. Nowadays, Ryanair's objective is to maintain the leadership of low fares airline in Europe, basing its strategy on providing "no-frills" service. 1) Identify the strategy pursued by Ryanair based on the Bowman's strategy clock. M. Porter in his book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors", reduced competition down to three classic strategies: Cost leadership, Differentiation and Market segmentation (or Focus). Looking at Porter's strategies in a different way, Cliff Bowman and David Faulkner developed Bowman's Strategy Clock. This model is well represented in the following figure: D. Faulkner and C. Bowman, The essence of competitive strategy, Prentice Hall, 1995 Each position briefly describes different competitive strategy options; also, focusing on perceived product/service benefits and price, the model represents different positions a firm can assume in the market.
All these cost reductions allow Ryanair to have low fares and so, target customers that are price-sensitive. In the article "Ryanair" by Eleanor R.E. O'Higgins we can read that the term "Ryanair generation" was coined to describe the younger educated Irish emigrant population in the UK. Furthermore, in the article it is possible to notice, in the Exhibit 4a, that Ryanair's customers care more about the product price than the value of the services that the company has. 2) Is Ryanair's strategy sustainable? In order to have a sustainable competitive advantage, a company should develop a sustainable position in the long run, so it is possible achieve a performance above average in the industry. The framework I am going to use is the Barney and Hesterley's VRIO framework: in order to lead to a sustainable competitive advantage a resource or capability should be Valuable, Rare, Inimitable and Organized. Valuable: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?" The fact that Ryanair is a low cost fares airlines constitutes the introduction of a new business model (cost leadership) in a different context (airplane transport industry).
This profitability was seen to be unique among airlines worldwide because many other airline companies struggled with financial losses. 3) Would you recommend any changes to Ryanair's approach? In the case study it is possible read that Ryanair would introduce a number of cut-costing new features on its flights; for example the Ryanair fleet would be devoid of reclining seats, windows blinds, headrests, seat pockets and other non-essential. This kind of no-frills strategy might be supported by creating a favorable perception about the safety of their airplanes and the value of the Ryanair's brand. This could be developed starting with the improvement of the cleanliness of the toilets and the interior of the airplanes. Another changes might be to increment the catering and to introduce ancillary services such as television and internet services on flights implementing strategic alliance. Ryanair should establish new hauls in the est-European countries because of the entrance in the EU of new nations and focus more in main airports. Ryanair should allow other company to advertise its airplane cabins. This should offer to the other external company to advertise customers during all the flights long for a fee. The advertisement might be a sticker stick on the folding board in front of the passenger.
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