Description
This is a PPT explaining on ryanair strategy.
Ryanair Case Study
Agenda
? ? ? ?
?
? ? ? ?
Background Industry Key Success Factors Ryanair Strategy Deconstruction Competitive Advantages Value Chain Analysis Growth Possibilities Airline Competitor Responses Future Strategy Conclusion
2
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
3
VMOST
?
Vision:
?
To be Europe’s Leading Low Fares Airline
Number 1 For Customer Service No Frills, Low Cost Approach Point-to-point Short Haul Flights Regional and Secondary Airports
?
Objectives:
?
?
Strategies / Tactics:
? ?
?
4
Industry Key Success Factors
? ? ? ?
?
Low Ticket Prices Frequent Departures Possibility of Advanced Reservations Reliable Baggage Handling Consistent On-time Services
5
External Analysis: Porter’s Five Forces
Threat of New Entrants MEDIUM
Suppliers’ Bargaining Power LOW
Industry Competitors Rivalry Among Existing Firms HIGH
Buyers’ Bargaining Power LOW
Threat of Substitute Products MEDIUM Source: Adapted from Porter, M. (1998)
6
External Analysis: Porter’s Five Forces
?
Threat of New Entrants Limited, but has happened recently:
? ? ? ?
?
Industry Competitors Increased Competition:
?
50 Budget Airlines
Low Cost Affiliates Alliances Air France / KLM Merger
BMIBaby.com MyTravelLite.com Monarch.com FlyBe.com
?
Flag Carriers:
? ? ?
? ?
Compete on Limited Routes Capital Intensive
Threat of Substitute Products ? United Kingdom:
?
None Driving holidays High-speed trains
?
The Rest of Europe
? ?
7
External Analysis: PEST Analysis
•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 Sociocultural
•Grey Market Increase •Europe: Cars & High-speed Trains •Increasing travelling lifestyles •Increasing business travelling
Economic Technological
•Wireless Technology Expansion
•Internet sales/gambling •Satellite television
• Increased internet competition
8
Internal Analysis: Porter’s Value Chain
Firm Infrastructure
Support Activities
Human Resource Management Technology Development Procurement
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Primary Activities
Source: Porter, 1985
9
Ryanair: Value Chain
Infrastr.
HRM Tech. Dev. Proc.
Low Cost Training
Minimum Corporate HQ
Limited Crew
Management Control
Integrated Systems
In-house
Low Tech Marketing
Internet Sales
Performance Contracts
Internet
Boeing Discount
Internet Information
n/a Low Cost
Limited Resources Basic/Low Cost High Productivity
Alliances
No Frills Low Cost*
Outsourced
Private
Low Cost Promotions Free Publicity Controversial Internet Sales Yield Management
Quality Training Low Cost Suppliers Airport Agreements
Quick Turnaround Reliable Service
Inbound Operations Outbound Logistics Logistics
Marketing & Sales
Service
10
* Low Cost Competitive 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
11
* Low Cost Competitive 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
12
Ryanair: SW
Strengths
?Low
Weaknesses
Poor Employee Relations ? Volatile Customer Relations ? Antagonistic Relationship with Competitors ? Uncharacteristic Management Expansion ? Dependence on Michael O’Leary
?
Cost Leader ?Innovative Cost Reductions ?First-mover Advantage ?Established Market Share ?Substantial Growth ?High Load Factor ?Strong Public Image ?Established Routes/Network ?Range of Ancillary Services
13
Ryanair: OT
Opportunities
?Further
Threats
?
Growth ?Advanced Cost Reduction ?Offering Free Flights ?EU Expansion ?Expansion of ELFAA
Increased Competition:
? New
Entrants ? Alliances/Mergers Between Competitors
Industry Criticism ? Antagonistic Attitude of EU Commissioners ? Non Expansion Into New EU States ? Trade Unionism ? Substitute Transportation:
?
? Cars, ? Trains
14
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
15
Has Ryanair Reached Its Limits to Growth?
? ?
No Market Characteristics:
? ? ? ?
7% Penetration (European Market) Ample Growth Opportunity EU Expansion Further Evolution of the Industry Bargaining Power Competitive Resources
?
Ryanair Potential:
? ?
?
Consolidate: Slower, Calculated Growth
16
Full Service Airline Responses
?
Traditional:
? ? ?
Cut Fares on Short Haul Flights Scrap Conditions on Short Haul Flights Decreased Cost on Domestic Flights:
Larger Aircraft, 1 Passenger Class ? Reduced In-flight Service, Internet Booking
?
?
Low Fares Subsidiaries Mixed Model: Full Service vs. Low Cost
?
Largely Unsuccessful
?
17
Full Service Airline Responses
?
Short Haul Niche Markets
? ?
Business Travellers Differentiate the Service
Service Guarantees, In-flight Service ? Corporate Alliances
?
?
Secure The Long Haul Market
? ?
?
Lower Costs Capture & Sustain Market Share Ascend the Learning Curve
Low Budget Airlines Will Eventually Enter ? Build Competitive Advantage
?
18
Full Service Airline Responses
?
Alternatively
? ? ?
Restructure the Business Model Become Low Cost Airlines Reversed Mixed Model:
Bulk – Budget Traveller ? Limited Service – Business Traveller
?
? ? ?
Full Service Smaller Aircraft Charter Type Business
19
Ryanair: Future Plans
?
Publicised Cost Reductions:
? ? ? ?
No Window Blinds No Reclining Seats, Leather Seats Velcro Headrests Carry-on Luggage Satellite Television Internet On-board Rented In-flight entertainment
?
Revenue Enhancement:
? ? ?
?
Ultimate Goal: Free Flights
20
Future Recommendations
?
Pursue Free Flights
? ?
Third Parties Cover Costs Generate Revenue Through Other Means
?
3rd Parties to Cover Costs:
? ? ? ?
Sponsorships / Advertising Airports Tourist Boards, National Regions, Councils, etc. Holiday Providers (E.g. Euro Disney)
21
Future Recommendations
?
Revenue Generation:
?
Ancillary Services:
?
Car Rental, Travel Insurance, Accommodation, etc.
?
In-flight Services (Captive Audience):
On-line Shopping ? On-line Gambling ? Pay-per-View Television ? Food & Beverages ? Alliances
?
? ?
Sell Specific Flights to Companies Once Off Payment OR Commission as Sales %
22
Conclusion
? ?
Aggressive Growth & Development Redefined the European Aviation Industry
? ?
Unique Business Model Innovative Cost Reductions
? ?
Consolidate Growth & Expansion Enter the Next Phase of Evolution:
?
?
Free Flights Create Alternative Means of Revenue Generation
23
doc_646592133.ppt
This is a PPT explaining on ryanair strategy.
Ryanair Case Study
Agenda
? ? ? ?
?
? ? ? ?
Background Industry Key Success Factors Ryanair Strategy Deconstruction Competitive Advantages Value Chain Analysis Growth Possibilities Airline Competitor Responses Future Strategy Conclusion
2
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
3
VMOST
?
Vision:
?
To be Europe’s Leading Low Fares Airline
Number 1 For Customer Service No Frills, Low Cost Approach Point-to-point Short Haul Flights Regional and Secondary Airports
?
Objectives:
?
?
Strategies / Tactics:
? ?
?
4
Industry Key Success Factors
? ? ? ?
?
Low Ticket Prices Frequent Departures Possibility of Advanced Reservations Reliable Baggage Handling Consistent On-time Services
5
External Analysis: Porter’s Five Forces
Threat of New Entrants MEDIUM
Suppliers’ Bargaining Power LOW
Industry Competitors Rivalry Among Existing Firms HIGH
Buyers’ Bargaining Power LOW
Threat of Substitute Products MEDIUM Source: Adapted from Porter, M. (1998)
6
External Analysis: Porter’s Five Forces
?
Threat of New Entrants Limited, but has happened recently:
? ? ? ?
?
Industry Competitors Increased Competition:
?
50 Budget Airlines
Low Cost Affiliates Alliances Air France / KLM Merger
BMIBaby.com MyTravelLite.com Monarch.com FlyBe.com
?
Flag Carriers:
? ? ?
? ?
Compete on Limited Routes Capital Intensive
Threat of Substitute Products ? United Kingdom:
?
None Driving holidays High-speed trains
?
The Rest of Europe
? ?
7
External Analysis: PEST Analysis
•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 Sociocultural
•Grey Market Increase •Europe: Cars & High-speed Trains •Increasing travelling lifestyles •Increasing business travelling
Economic Technological
•Wireless Technology Expansion
•Internet sales/gambling •Satellite television
• Increased internet competition
8
Internal Analysis: Porter’s Value Chain
Firm Infrastructure
Support Activities
Human Resource Management Technology Development Procurement
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Primary Activities
Source: Porter, 1985
9
Ryanair: Value Chain
Infrastr.
HRM Tech. Dev. Proc.
Low Cost Training
Minimum Corporate HQ
Limited Crew
Management Control
Integrated Systems
In-house
Low Tech Marketing
Internet Sales
Performance Contracts
Internet
Boeing Discount
Internet Information
n/a Low Cost
Limited Resources Basic/Low Cost High Productivity
Alliances
No Frills Low Cost*
Outsourced
Private
Low Cost Promotions Free Publicity Controversial Internet Sales Yield Management
Quality Training Low Cost Suppliers Airport Agreements
Quick Turnaround Reliable Service
Inbound Operations Outbound Logistics Logistics
Marketing & Sales
Service
10
* Low Cost Competitive 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
11
* Low Cost Competitive 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
12
Ryanair: SW
Strengths
?Low
Weaknesses
Poor Employee Relations ? Volatile Customer Relations ? Antagonistic Relationship with Competitors ? Uncharacteristic Management Expansion ? Dependence on Michael O’Leary
?
Cost Leader ?Innovative Cost Reductions ?First-mover Advantage ?Established Market Share ?Substantial Growth ?High Load Factor ?Strong Public Image ?Established Routes/Network ?Range of Ancillary Services
13
Ryanair: OT
Opportunities
?Further
Threats
?
Growth ?Advanced Cost Reduction ?Offering Free Flights ?EU Expansion ?Expansion of ELFAA
Increased Competition:
? New
Entrants ? Alliances/Mergers Between Competitors
Industry Criticism ? Antagonistic Attitude of EU Commissioners ? Non Expansion Into New EU States ? Trade Unionism ? Substitute Transportation:
?
? Cars, ? Trains
14
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
15
Has Ryanair Reached Its Limits to Growth?
? ?
No Market Characteristics:
? ? ? ?
7% Penetration (European Market) Ample Growth Opportunity EU Expansion Further Evolution of the Industry Bargaining Power Competitive Resources
?
Ryanair Potential:
? ?
?
Consolidate: Slower, Calculated Growth
16
Full Service Airline Responses
?
Traditional:
? ? ?
Cut Fares on Short Haul Flights Scrap Conditions on Short Haul Flights Decreased Cost on Domestic Flights:
Larger Aircraft, 1 Passenger Class ? Reduced In-flight Service, Internet Booking
?
?
Low Fares Subsidiaries Mixed Model: Full Service vs. Low Cost
?
Largely Unsuccessful
?
17
Full Service Airline Responses
?
Short Haul Niche Markets
? ?
Business Travellers Differentiate the Service
Service Guarantees, In-flight Service ? Corporate Alliances
?
?
Secure The Long Haul Market
? ?
?
Lower Costs Capture & Sustain Market Share Ascend the Learning Curve
Low Budget Airlines Will Eventually Enter ? Build Competitive Advantage
?
18
Full Service Airline Responses
?
Alternatively
? ? ?
Restructure the Business Model Become Low Cost Airlines Reversed Mixed Model:
Bulk – Budget Traveller ? Limited Service – Business Traveller
?
? ? ?
Full Service Smaller Aircraft Charter Type Business
19
Ryanair: Future Plans
?
Publicised Cost Reductions:
? ? ? ?
No Window Blinds No Reclining Seats, Leather Seats Velcro Headrests Carry-on Luggage Satellite Television Internet On-board Rented In-flight entertainment
?
Revenue Enhancement:
? ? ?
?
Ultimate Goal: Free Flights
20
Future Recommendations
?
Pursue Free Flights
? ?
Third Parties Cover Costs Generate Revenue Through Other Means
?
3rd Parties to Cover Costs:
? ? ? ?
Sponsorships / Advertising Airports Tourist Boards, National Regions, Councils, etc. Holiday Providers (E.g. Euro Disney)
21
Future Recommendations
?
Revenue Generation:
?
Ancillary Services:
?
Car Rental, Travel Insurance, Accommodation, etc.
?
In-flight Services (Captive Audience):
On-line Shopping ? On-line Gambling ? Pay-per-View Television ? Food & Beverages ? Alliances
?
? ?
Sell Specific Flights to Companies Once Off Payment OR Commission as Sales %
22
Conclusion
? ?
Aggressive Growth & Development Redefined the European Aviation Industry
? ?
Unique Business Model Innovative Cost Reductions
? ?
Consolidate Growth & Expansion Enter the Next Phase of Evolution:
?
?
Free Flights Create Alternative Means of Revenue Generation
23
doc_646592133.ppt