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Ryanair the low-fares airlines. Strategy and leadership case study.

Extracts from this document...

Introduction

Ryanair - the low-fares airlines Case Study By Sid Hegde Table of Contents Q1. Why has Ryanair been successful thus far? 3 Q2. Is Ryanair's strategy sustainable? 4 Q3. Would you recommend any changes to Ryanair's approach? 5 Q4. Should Ryanair continue to pursue the Aer Lingus bid? 6 Q5. Evaluate the strategic leadership of Michael O'Leary. 7 Conclusion 8 References 9 Bibliography 9 Appendix 10 A1. PESTEL Analysis 10 A2. 5-Forces Analysis 11 A3. Ryanair SWOT Analysis 12 A4. TOWS Matrix 13 A5. Strategic Capability and Competitive Advantage 13 A6. Stakeholder analysis on Ryanair's bid for Aer Lingus 14 A7. Ansoff Matrix - Strategic Direction for Ryanair 14 A8. Growth/Share Matrix (BCG Matrix) 15 A9. Strategy Clock - competitive strategy options 16 A10. VRIO Analysis 17 A11. Evaluating Ryanair's Business Strategy 17 A12. Cultural Web 18 A13. Exercise of Effective Strategic Leadership [2] 19 A14. Risk Analysis 20 A15. Individual Assignment Submission Form 21 Q1. Why has Ryanair been successful thus far? Ryanair's success can be attributed to quite a few factors * Successful adaptation of Southwest's low cost model Michael O'Leary studied the low cost model of Southwest and successfully adapted the strategy to suit Ryanair - Flying to secondary cities and airports This is one of the founding cornerstone's of Ryanair's strategy. By flying to secondary airports, Ryanair avoids huge gate and landing charges charged by the major airports. It also avoids the congestion at the major airports helping it improve the turn-around time for the planes as well as setting the benchmark in on-time arrivals and take-off's - Point-to-Point flights Flying point-to-point helps Ryanair eliminate a lot of additional operations like baggage transfers etc. helping it to turn-around the planes quite quickly - Single type aircraft Ryanair's decision to fly only a single type of aircraft has helped it lower it's maintenance cost. This has also contributed to Ryanair improving it's organizational memory of it's maintenance engineers, contributing to innovations by the engineers to improve the efficiency of the planes. ...read more.

Middle

This probably was suitable in the earlier days, but it's probably time for him to tone down his approach. Bottom line The success of Michael O'Leary's strategic leadership can be summed by looking at Ryanair's bottom line. They are the leading carrier in Europe with ever increasing profits. Conclusion Ryanair has built a low cost culture and it's entire organization has bought into this philosophy. The leadership at Ryanair practices what it preaches and it helps further reinforce the low cost message throughout the organization. But Ryanair needs to pay close attention to the risks highlighted in the Risk dashboard (A14) as it continues to grow. Ryanair need to start planning for life after Michael O'Leary. A low price strategy is a sustainable strategy as we can see from other and similar organizations like Ikea, Southwest, Aldi etc. Ryanair's low price strategy is a perfect fit for them and the future looks very rosy for Ryanair. References 1. Evaluating Business Strategy, November 28, 1993 - Richard P. Rumelt 2. Strategic Management, 6th Edition - Hitt, Ireland and Hoskisson 3. A Theory of Human Motivation, Psychological Review 1943 - A.H. Maslow 4. The Core Competence of the Corporation, HBR, May-June 1990 - C.K. Prahalad and Gary Hamel Bibliography 1. Exploring Corporate Strategy, 8th Edition - Gerry Johnson, Kevan Scholes and Richard Whittington 2. How Competitive Forces Shape Strategy, HBR, March-April 1979 - Michael E. Porter 3. What is Strategy, HBR, November-December 1996, Michael E. Porter 4. Crafting Strategy, HBR, 2001 - Henry Mintzberg 5. How Successful Leaders Think, HBR, June 2007 - Roger Martin Appendix A1. PESTEL Analysis Environmental influences on Ryanair Political Most of Ryanair's routes are in Europe where the political environment is quite stable. Ryanair's only concern could be the local governments support for there own national carriers. Economic Ryanair has been cautious in it's outlook for 2007. Few things that could hurt Ryanair (along with the entire Airline industry) ...read more.

Conclusion

Strategy Clock - competitive strategy options Ryanair is a textbook example of a 'No Frills' competitive strategy A10. VRIO Analysis Ryanair's VRIO Framework Value Rarity Inimitability Organization Competitive Implications No frills strategy Yes No No Yes Temporary Competitive Advantage New Fleet Yes No No Yes Temporary Competitive Advantage Low cost culture Yes No Yes Yes Competitive Advantage Leadership Yes Yes Yes Yes Sustained Competitive Advantage War Chest Yes Yes Yes Yes Sustained Competitive Advantage A11. Evaluating Ryanair's Business Strategy Strategy Test Conclusion Low Price Consistency Pass: This is consistent with Ryanair's procedures and policies of low costs with an aim of providing the customer with low prices Consonance Pass: When Ryanair embarked on providing customers with a low fare option to fly point-to-point, it was a breakthrough offer in the air transport environment Advantage Pass: The Low price strategy enabled Ryanair to take advantage of a gap in the air transport industry and capture a significant portion of the cost conscious customer base Feasibility Pass: A low cost culture was created at Ryanair that the management and employees bought into Conclusion: The Low price strategy at Ryanair does not have any critical flaws A12. Cultural Web * Stories - Stories are told in the organization about Michael O'Leary's thriftiness and this helps promote the low cost culture within the organization * Symbols - The Ryanair brand symbolizes low cost * Power Structures - Michael O'Leary is the boss and there is no doubt about it in the organization * Organizational structures - It's a top down structure, but employees are encouraged and empowered to take their own initiatives to reduce cost * Control - All control derives from Michael O'Leary * Rituals and Routines - Routine is get everything done fast The paradigm: A low cost culture has permeated throughout Ryanair through it's history and culture and it has become a self enforcing and self sustaining culture. A13. Exercise of Effective Strategic Leadership [2] A14. Risk Analysis Risk Matrix Risk Dashboard ?? ?? ?? ?? Ryanair - the low-fares airline 2/20 ...read more.

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