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Business strategy for RyanAir

INTRODUCCION

But it ought to be clear that the strategy is another thing, not only something that has conceived, is something that occurs, continually emerge in companies, to the extent that people respond to and reinterpret their sense of individuality and reason for the organization. It really is firmly argued that something must start with an idea and then be sufficiently flexible to improve as you go and apply, allowing evolve in response to environmental changes. In this respect, business strategy gives you to set business aims and core training of action according to the characteristics of the environment competitive and specific conditions and potential clients of the company, so ensure that the second option is placed in the socioeconomic environment to which it belongs. Without strategy there is no set course to follow, no map to check with, no coherent course of action to create desired results and version company to the changing environment, in simple fact, becomes the path deliberate change towards a competitive advantages in the business. Lately, the strategic course has been established as a legitimate field of research management practice. Within the advancement of research in strategy have surfaced a number of paradigms and methods about how to interpret and act strategically in an organization A institution is a range of thoughts of several researchers and have crystallized a number of proposals and ideas on proper direction. A school can be an institutionalized paradigm. The field of proper management is fragmented and there is a widespread practice of certain devices that recognition due to its convenience and fashion publications. Mintzberg suggested a classification of nine universities of proper thinking. These nine classes fulfilled in two groups: colleges prescriptive and descriptive schools

COMPANY OVERVIEW

A pioneering Western european discount airline, Ryanair Holdings offers low-fare, no-frills air travel via its main subsidiary, Ryanair. The carrier flies to about 150 places, including more than two dozen in Ireland and the UK; overall, it acts more than 25 countries throughout Europe, plus Morocco. Ryanair focuses primarily on short-haul routes between extra and regional airports. It operates from more than 35 bases, including airports in Belgium, France, Germany, Italy, Spain, and Sweden, as well as in Ireland and the united kingdom. The carrier maintains a fleet around 200 Boeing 737-800s. Throughout 2008 and early 2009, Ryanair launched several unsuccessful bids to obtain rival Irish airline Aer Lingus.

HISTORY

Ryanair europe's most significant low fares carrier, has been successful in the market for many years. To get to know and understand the setting strategy of ryanair, which includes brought such success, we will review the annals and relevant costa. Although preceded y laker Airways and a couple of US low cost airlines, ryanair europe's first and major low fares flight. It had been founded in 1985 by tony ryan, an irish business man. In july the first route was opened etween Waterford and London with daily flights. From 1987- 89 ryanair extended rapidly, beginning many new routes between irland and the united kingdom, but the air travel ran up deficits totalling 20 million and therefore was in need for a substantial restructuring. In 1991 ryanair emerged under new management and Michael O'learly, now CEO of ryanair, was given the task to make te air travel profitable again. He visited usa, studied the low fares- no frills style of the American southwest airlanes and lastly adopted it. From 91- 97 the airline increased its fleet from six to 21 plane and also its routes from irealnd to the united kingdom. 1997 marked a milestone for ryanair. The European union finally completed the deregulation of the air industry in Europe. Airlines from eu country are actually ale to use and compete on plan services between other european union states. Ryanair got full benefit of this opportunity by beginning its first routes to continental European countries, to sctocolh and oslo. May 1997 it became a general public limited company with the successful flotation on the Dublin stock exchange and the nasdaq stock exchanges. In the next years ryanair continuing to start new routes in Europe and became more a more sucesfull. In 2000 ryanair launched its website which became europe's most used travel website by 2001. From 2001 launched several continental Western bases, for occasion Brussels, Frankfurt. In 2002 ryanair earned an prize as number one for customer support in Europe. In 2003 purchased its competitor Excitement from KLM and persisted t be the most searched travel website in Europe. The enlargement of europe on 1st may 2004 made it possible to start new routes throughout the european union. Until 2007 the quick expansion of ryanair continued and passger nmber were expected to increase from 35 in 2006 to 70 million in 2012. Apg 177 Concept at ryanair Recurrent indicate point flights on brief haul routes: by entirely offering direct and non stop routes ryanair does not have any complex baggage transfer and there is no risk of neglected connection flights. To avoid cost for accommodation, the staff should not spend the night at a foreign airport. Secondary airports: chooses its routes and locations in regards to to secondary airportswith convenient travel to major people centres. These airportsare often less congested. teh plane utilisation can be maximised. Single aircraft type: by purchasing airplane of a single type, it is able tolimit the expenses associated with employees training, maintence expences and the purchase and storage area of free parts. Basic service up to speed: passenger have to pay for any food on borad. Furthermore, seats aren't adjustable, the ranges are washables, subsequently, cleaning and maintenance is faster and easier. There is a high seating density up to speed which results in a higher traveler capacity and a growing economies of size. There is no enterteiment however in case you wish you can lease a dvd for a free. In order to generate additional money, lottery seat tickets as well as transfer solution for trains can be purchased on board. Low cost: secondary airports offer lower landing and gate fees tha major airports. Ryanair reduces its aiprot charges by using outdoor boarding stairs. Late night departures are avoid. Uses alternative party contractors airports Scheduling over the internet Fastcheck in earth staff are necessary.

1. 1 Mintzberg

Una estrategia segun Mintzberg es el patron o plan que integra las principales metas y politicas de una organizacion y a la vez, establece la secuencia coherente de las acciones a realizar. Una estrategia adecuadamente formulada ayuda a poner orden y a asignar, con platform tanto en sus atributos como en sus deficiencias internas, los recursos de una organizacin, con el fin de lograr una situacin practical y original, asi como anticipar los posibles cambios en el entorno y las acciones imprevistas de los competidores. Minzberg afirma que pensar estratgicamente significa la forma en que los gerentes, directores y dems miembros de una organizacin usan el idioma, las ideas y los conceptos cuando tratan de entender e interpretar el campo de objetivos y circunstancias que giran entorno a la empresa. El pensamiento estratgico exige el desarrollo de una actitud gerencial para actuar en forma preactiva, adelantndose a los acontecimientos, en vez de reactiva, tratando de dar respuestas a los hechos pasados. Over the last 10 years, la direccin estratgica se ha establecido como un legitimo campo de investigacin de la practica directiva. En la evolucin de la investigacin de estrategias ha emergido una gran variedad de paradigmas y enfoques sobre la forma de interpretar y actuar estratgicamente en una organizacin. Minztberg propuso una clasificacin de nueve escuelas de pensamiento estratgico. Estas se renen en dos grandes grupos: escuelas prescriptivas y escuelas descriptivas. Mintzberg is a technique according to the design or plan that integrates the key goals and procedures of a business and subsequently, establishes a coherent sequence of actions to be performed. An adequately formulated strategy really helps to bring order and assign, predicated on both their features and in their inside weaknesses, the sources of an organization to achieve a viable and original, to be able to foresee possible changes in the surroundings and unforeseen activities of challengers. Minzberg states to think strategically means just how that professionals, directors and other people of a business use the terminology, ideas and concepts when trying to understand and interpret the field goals and circumstances that revolve around the company. Strategic thinking requires the development of a management attitude to act proactively, anticipating situations, rather than reactive, striving to give answers to earlier events. During the last ten years that the proper route has been set up as a legitimate field of research insurance policy practice. Within the development of strategy research has emerged a variety of paradigms and techniques how to interpret and respond strategically within an organization. Minztberg proposed a classification of nine schools of proper thinking. They gather in two organizations: descriptive prescriptive academic institutions and universities.

The Planning school

The entrepreneurial school

The Culture school

Ryanair have a "low priced" culture as well. They try to apply the "low -cost" not only outside the company but inside as well. However, it has been criticized by the press. "Ryanairs culture is based on their main phase which is "low cost". As Ryanair is definitely trying to lessen cost this has been tranfered to the culture of the company and known as been the reduced cost culture everywere,

The Placement School

Whittintong- University of Strategies

Whittington suggests as well four perspectives for the strategy classification as it is possible to see in graph below.

Source: Whittington R. 2001

Classical perspective: presumes that the principle executives had a complete manage about assigning inner and external resources with the aim of achieve its aims Evolutionary Perspective: Establishes the importance of behaviour between different companies, its competitive method of grow and endure on the market. Processual Point of view: Highlight the importance of the partnership between people and environment to increase the company's earnings. Systemic Perspective: Social and culture framework effect in the historical company occurrences, specifically in their methods. BASF have been displaying an evolutionary system to endure in the chemical substance industry through managerial decisions focus in diversification, develop and innovation, allowing them being available to changes getting market position.

GLOBAL STRATEGIC DECISION

2. 1 Ryanair Strategy overview

Ryanair strategy presently concentrates in driving down the expenses to become able to provide lowest prices in the industry and remain profitable at the same time. They are focusing in the cost-leadership strategy of the Porter's general strategies. Although they eliminate aspects that are valuable for the clients such as advance seat project, more personnel in the air travel to care for the customers' needs, dishes and drinks during the flights and free baggage allowance. They are trying to give customers value by giving them on-time service and consistent departures. Just how they are repeating this: a) Effectiveness in logistics and operations: Being successful and effective they spend less time in the ground and this means less cost. Aswell as concentrating in on-time departures. b) Direct sales through their web page: this implies less cost because they don't need additional personnel and they won't need to pay commissions to organizations. c) Landing in extra airports: lower landing charges and less air traffic. d) Having a modern fleet: lower cost in maintenance and less repair expenses. e)Freelancing :They reduce cost using outsourcing and bargains for activities that aren't related to their primary business such as: catering, airport transfers, holiday packages and hotels, doing this they safe costs and they don't have to worry much about the logistics that are needed for this additional services they provide. They use outsourcing of managing services such as: food, health, security and cleaning services saving cost and time for the company. f) Point to point service: They don't really need to invest money in relationships concerns. e) Having only two types of aircrafts: Company spend less in personnel training as there are just two types of planes.

Porter's Five Force

Porters 5 Makes For examining the industry is vital to have into a count the different stars and the roles they play within the industry. One of the best ways to investigate them is by using Porter's 5 causes model. Source: from M. E Porter 1985 Analyzing the Porters 5 pushes I consider that is an attractive industry for the ones that are already on the market. . However, is important to discover a competitive advantage to differentiate from its most immediate competitor or to find a way of expanding the marketplace in the industry and position the brand in the customers brain as their first choice when touring. 2. 2. 2 Challengers To be able to execute a detail examination of the industry is not sufficient to spell it out the 5 forces of the industry, it is relevant to describe who are the current competitors and exactly how are they influencing the business's performance. Ryanair has 2 types of rivals: -Indirect competitors: They are indirect competition because although they are in the same industry, the business model differs. This flag carriers are long-haul airlines that take a flight intercontinental routes. These are some examples amongst others: 1. Air France 2. Lufthansa 3. Iberia 4. British Airways 5. KML -Direct Opponents: They are direct competition because they may have the same low-cost, no frills model. The largest direct competition is Easyjet. 2. 3 Value Systems and Business Companions Ryanair uses its romance with its business companions making them part of any Value Network where the procedure for adding value takes place. To begin with is vital to name Ryanairs business companions. They can be suppliers of raw materials, airports and hotels, cars and buses companies. Suppliers: They play an essential role in the Value Network as they are the ones that start all the process. Without raw materials Ryanair will never be able to operate. However, raw materials by themselves haven't any value to customers. Just how Ryanair add value to the clients is by converting these raw materials into something that customers may use. Quite simply they use airplanes and fuel(among others) and they add licensed employees, several routes options to travel, the "understand how" of the business enterprise and convert this in a good service to move customers to several destinations at a low cost. Just how Ryanair keep its good romantic relationship with its suppliers is emphasizing in this affirmation they have on the code of ethics: "For our suppliers, Ryanair is committed to obtaining the best value on the basis of open up and truthful communication. " Ryanair Code of Business Conduct & Ethics 2009. International airports: Airports play another essential role in the worthiness Network. Ryanair uses collaboration with secondary airports in order to add value to the service. This means that by their romance with these types of airports they can be cutting down their costs to become able to offer a more affordable price to customers. Hotels, cabs and buses companies: Just how they donate to the worthiness Network is the fact that by Ryanair's romance with this companies they are simply giving value to the client offering them not just a low cost airline flight but also the probability of booking the complete package without having to get it done separately. This will save lots of time to customers and provides value to them.

Strategic Group map

Generic Value Chain for Ryanair

SUPPORT ACTIVITIES

Firm infrastructure

Ryanair has 37 bases and 950+ low fare routes across 26 countries, joining 150 destinations. Ryanair works a fleet of 210 new Boeing 737-800 plane with firm purchases for an additional 102 new aeroplanes, which will be delivered over the next 2. 5 years.

Human learning resource management

-The average job amounts in Ryanair surge by 21% to 6, 369. Within that number 1 1, 526 people were advertised. -Ryanair has benefits for their employees such as: *discount on the home loan as well as in-house home loan services and extra benefits *Stable Roster - guaranteed days off and no prepared overnights. *Vacancies across Western base network. *Roster planned 1 month beforehand with a set 5 times on and 4 days off in most bases. -Legal cases regarding Ryanairs refusal to identify unions and accusations of providing poor working conditions to the personnel

Technological development

Ryanair was main companies that innovate with online bookings and therefore was able to reduce their costs because they don't really have to pay companies a commission to market their tickets and this also makes a more affordable price to customers. Which add value to them. They unveiled a self-check in which reduce cost for the company in staff. They may have technology to be more environmental friendly reducing fuel burn up and CO2 emissions by 45% within the last 10 years, which helps them to create a good image amongst their stakeholders.

Procurement

Ryanair uses outsourcing and deals for activities that are not related with their central business such as: catering, air port transfers, vacation packages and hotels, carrying out this they safe costs plus they need not worry much about the logistics that are necessary for this additional services they provide.

MAIN ACTIVITIES

Inbound logistics

They use outsourcing of handling services such as: food, health, security and cleaning services keeping cost and time for the business.

Operations

They do all the procedures with extensive safety training and protocols to check on all the planes and equipment before leaving. This help adding value to the service because customers know they may be flying safe at an inexpensive.

Marketing and sales

Ryanair will not spend much profit marketing. However, they use person to person as their primary marketing strategy. Their adverts are regarded as controversial which makes people speak about them. They made their sales though their website. This kind of controversial marketing can make people talk about the brand; nonetheless it doesn't mean they are really increasing their sales for using this type of marketing. Ryanair could add more value to the service by standing up out their strengths in their communication strategies. By generating sales online they don't need intermediaries so they will offer better prices.

Service

Figures on Ryanair's website show us that customer support does well in terms of punctuality, baggage problems and time frame complaints are replied. See appendix 1. However its customer service in conditions of how the staff treats customers or how attention is provided to customers during the flight is as yet not known as being the best. Is important for Ryanair to try to add value to the service they provide in these conditions.

Strategy Clock

CHALLENGES WITHIN THE GLOBAL MARKET

3. 1 PEST ANALYSIS

There are several environmental factors that can affect the performance of the company. To make an improved analysis of the external situation I will use the PESTEL model. For every of the PESTEL aspects there are several factors to use into a matter. However, the key ones are going to be explained below. It is important to adopt them under consideration for analyzing the surroundings and therefore be able to select the best strategic decision for the business. 2. 1. 1. POLITICAL -European union Regulations and landing charges: The airline industry is regulated very often by the countries federal. For the flight industry is very important to follow all the EU regulations created for the flight industry. We're able to say that the federal government basically determine if a corporation can penetrate the marketplace or not plus they create restriction regulations for overseas airlines in order to protect the neighborhood airline market. A good example of these regulations may be the landing charges they named in the event research. 2. 1. 2. ECONOMICAL -Gasoline Prices: Fuel prices are increasing which is affecting the flight industry because if indeed they need to pay more for the fuel, this means they need to increase their prices which is very risky for a corporation known because of their low cost. A firm such as Ryanair must reduce budget on other areas of the company in order to maintain their low prices. This reduction of budget can be traduced on chop of workers or reduced amount of benefits to employees which is very negative for the company. -Recession: Nowadays with the credit crunch problems and companies chopping off jobs there may be a decrease of demand of air tickets because people have less disposable income than before for vacations. This could be a benefit to low priced airlines as Ryanair because customers will be looking for cheaper options to visit. 2. 1. 3 Communal AND Ethnical -Terrorism: Terrorism has been a concern for the flight industry throughout the years. It really is still a big issue that impacts tremendously this industry. People are afraid of going to certain places because of terrorist disorders and as a result, airlines are lowering their sales on these specific places. So that it is a negative impact on the air travel industry. -Lifestyle: Nowadays, folks have the habit of going somewhere to spend their vacations, and tourism is definitely a very attractive industry. Europe is actually a very touristic continent, with a lot of history and touristic sights, where almost everyone want to go. This kind of going lifestyle has a very positive impact for airlines. However, worldwide between January and April of 2009 international tourist arrivals declined by 8 %. And specifically in European countries it reduced 10% compared to 2008 having this as a very negative impact in the airline industry. -Health: Medical issues can also impact the airline industry performance. On the past season with the swin flu corresponding to World tourism group associated the loss of international travelers arrivals from 269 million to 247 million from 2008 to 2009 credited to concerns about the outbreak of the Influenza A(H1N1) virus. These types of situations decrease people flying intentions to some areas affecting air travel companies' sales. 2. 1. 4. TECHNOLOGICAL -New aeroplanes technology: For the airline industry technology is one of the most important aspects. Through the entire years aircrafts are being made much more effective in terms of fuel ingestion and traveling capacity. This advancements made to the aircrafts symbolizes a very good opportunity for airline companies to save money and also to be more efficient. Alternatively, new technology found in the airports may increase getting charges to different companies. -Internet: Nowadays, the utilization of internet is vital for any industry, especially in the air travel industry. Advancements in internet are making customers life easier in conditions of saving cash and time. Among this is the fact nowadays customers possess the chance to check-in online which avoids quite a while queuing and at exactly the same time its benefits the air travel because the fewer time they spend on land the fewer the getting charges are going to be. 2. 1. 5. ENVIRONMENTAL -Green Issues and CO2 emission Most countries governments are extremely concerned about the environmental issues and are coming up with legislations towards preserving the environment. Especially flight companies have to adopt these new laws to decrease carbon dioxide emissions, make the industry less bad for the environment and decrease noise pollution. It has a huge impact in the airline industry because it means they will have to update their existing aircrafts to a friendly environmental technology aircrafts. That will represent an extra cost for these people. -Eco Friends Additionally companies are experiencing big pressures from ECO friends and disregarding this campaign and laws can harm the business image of their shareholders and stakeholders. 2. 1. 6 LEGAL -European union laws for airline Industry The airline industry is seriously regulated and most of the time in almost all countries the government is supervising and controlling the industry through different kinds of regulations. Although they are self-employed companies, their activities and some decisions be based upon all these exiting polices. -EU laws and regulations for customers Also, laws are safeguarding more and more the customers' privileges and employees' protection under the law. So companies have to be very careful incidentally they offer with both of these. They can be in big risk of being demand or have any legal issue from a non-satisfied customer or worker and this will lead to a bad reputation of the firm and maybe a lot of money in lawyers. For instance Ryanair faced and is also facing legal cases for these reasons

3. 2 SWOT

In order to comprehend the existing Ryanair's basic situation is very helpful to work with the SWOT research that will assist us to judge the firms situation by taking into a matter both internal and exterior aspects. SWOT analisis

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