State whether you consider EA is on course to become "the biggest and best entertainment company in the world", giving your reasons for and against this claim.

Fortunately, thanks to the growing market of the budget airline market in the EU, successful Ryanair website as well as the money concerned of flights from customers, hopefully, Ryanair could still be the leader in the market if it conquered all the setbacks from the outside environment.

Industry Life-cycle

Passenger traffic on low-cost airlines is expected to continue to grow by at least 30 percent next two years.

The Budget airlines in the EU continued to capture a growing share of the aviation market. However, the price war is going on for volume in this shakeout stage.

Strategic Business Unit

A SBU is a part of an organization for which there is a distinct external market for goods or services that is different from another SBU. (Johnson, Scholes & Whittington, 2005)

SBU in Ryanair— Providing a no-frills service with low fares designed to stimulate demand, particularly from budget conscious leisure and business travellers. Who might otherwise have used alternative forms of transportations, or who might not have travelled at all.

Competitive Environment— The Five Forces Framework

The Five Forces Framework helps identify the sources of competition in an industry or sector.(Johnson, Scholes & Whittington, 2005)

The Five Forces framework for Budget airline sector in the EU

Overall, it seems that the Competitive Environment for the Budget Airline sector in the EU is good. For the Ryanair, as the threat of entry and buying power level is high, it would stop some potential competitors entering the market and the most important is Ryanair could gain more bargaining price on the aircraft procurement.

However, the big players have entered the market; it makes the existing fierce competition even worse. Ryanair wants to keep its leader position is much more difficult. Besides that, the substitutions are another problem for Ryanair to gain more potential customers.

Key Drivers of Change

Key drivers of change for the Budget airline sector in the EU

• After September 11, the Budget airline were the only operators to make a profit in the aviation market, so many new entrants and traditional European carriers have restructured their operations to compete for the no-frills market share.

• The pattern of competition in the low cost segment shows that a winner-takes-all dynamic favours early entrants which have established themselves.

• Customers demand ‘Value for money’ which means not only the price, but also the quality they are concerned.

• In the Market Shakeout stage of the Budget airline market, price war is the major strategy, who can offer the lower price, who wins.

• The Regulations on Environmental and Airports charges in the EU would increase a lot operation cost for the Budget airlines.

• The increasing fuel price is a serious problem for the whole airline market.

• People pay more attention on price when it comes to flight, move from business class to no frill service.

The Growth Share (or BCG) Matrix

Market Share

High                                                                                                  Low

                     

                High

                 Low                              

(Johnson, Scholes & Whittington, 2005:315)

For Ryanair, it’s ‘no frills’ business, it is from ‘Star’ to ‘Question mark’. Under the growing EU Budget airline market, at the beginning, all the competitors were trying to gain market share, in the help of experience(the pattern of competition in the low cost segment shows that a winner-takes-all dynamic favours early entrants), Ryanair dominated the market in the fierce competition.

However, recently, the big players in the airline market like BA, and Lufthansa also enter the low fare market, they have good brand image, substantial financial reserves and diversified roots, and it is easy for them to imitate the strategies from Ryanair to gain the market share soon. In the other hand, the existing competitors are closing the gaps between themselves and the Ryanair, it would be probably that Ryanair’s businesses run into the ‘Question mark’, in that case, the Ryanair needs to set lower price or spend high amount on advertising in order to beat competition and gain share with the low margins.

Ryanair’s Strategic Position

• The TOWS Matrix

                                                                                   Internal factors

             

               

              Opportunities

                       (O)

External

Factors

                   Threats

                        (T)

                       

The TOWS Matrix helps Ryanair to generate the Strategic options

Strategy Development Directions for Ryanair

                                             Products

                                                            Existing                                   New

                      Existing

Market

   

                          New

Ryanair protects and strengthen its position in the current EU Budget airline market through acquired BUZZ, and appointed two deputies, however, in the fierce competition; Ryanair should seek to some other new markets or new products.

Enter the long-haul flight market with the existing cheap, no-frills flights or launch the business class in flight for the business travellers are both the good future directions for Ryanair, because these options are more or less relate to the current business which Ryanair is doing, it is easier for sharing the resources and controlling.

Diversification into long-haul market with business class flights, seems not a wisdom choice for Ryanair, since choose to do something is not linking to Ryanair’s current business at all; it would make Ryanair into a very risky situation.