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Market strategy of Uk Airways and Ryanair

British Airways is the most significant airline in the U K predicated on fleet size, international plane tickets and international vacation spots. Its main hubs are London Heathrow and London Gatwick.

BA was produced from two large London-based airlines BOAC and BEA and two much smaller regional airlines Cambrian Airways Cardiff and Northeast Airlines Newcastle. All companies were dissolved on 31 March 1974 to form United kingdom Airways (BA).

Ryanair is an Irish low cost airline, with head office at Dublin Air-port and London Stansted Air-port. Ryanair functions 186 plane on 729 routes across European countries and North Africa from its 32 bases. The flight is the third largest air travel in Europe in conditions of passenger statistics and the world's major in terms of international traveler numbers.

Both BA and Ryanair tried to get competitive edge by implementing different strategies. These strategies can be reviewed more tightly using Porters universal strategies model. The three strategies porter discussed are:

cost leadership (no frills)

differentiation (creating uniquely desirable products and services)

focus (supplying a special service in a distinct segment market)

Porters Universal Strategies

Competitive Advantage

Low Cost Higher Cost

Scope

Narrow Broad

Cost Leadership

Differentiation

Cost Focus

Differentiation Focus

Cost Focus

Companies employ this strategy by focusing on the areas in market where there is the least amount of competition. Organisations can use the emphasis strategy by concentrating on a specific area of interest on the market and offering specialised products for this niche. Achieving emphasis means a company models out to be the best in a segment or group of segments.

Cost Leadership

This requires increasing earnings by lowering costs while still retaining average prices and increasing market show through charging lower prices, while still making a reasonable income on each sale because of reduced costs.

To gain competitive advantage Ryanair's overall strategy was cost Control, concentrating its activities on learning to be a cheap "no-frills" flight. To do this they:

In 2000 opened its online scheduling system quickly obtaining 75% of bookings online, a considerable cost keeping over traditional methods.

Targeted clients who wished an operating service, not luxury.

Used secondary airports with cheap landing fees, typically $1. 50 per passenger.

Pioneered fast turnarounds at airports meaning planes made nine journeys each day.

New planes without pouches in back of seats meaning faster cleaning resulting in more turnaround.

Few employees per airplane because of no hot food

Snacks were sold to people, turning cost into revenue.

Deals with hotels and car seek the services of firms earned earnings.

No numbered chairs accelerating check in times.

Planes indistinguishable, easier training for staff and maintenance.

Although Ryanair's overall strategy has all the elements of a Cost management strategy, the case study refers to Michael O'Leary, personally taking responsibility and travelling the cost concentration strategy forward. In doing this he purchased planes without back pouches in the seats, resulting in faster cleaning times, more turnaround and by firmly taking an individual interest, left fewer tiers of management and wide spans of control.

Looking as of this more strongly we can see these actions were not part of a cost targeted strategy but based on cost authority because they were focused on increasing profits and reducing costs credited to faster cleaning times leading to the planes being in the air much longer. Also having less management tiers would be seen as cost trimming exercises which cause greater savings resulting in bigger revenue.

Even previously the research study mentions Ryanair's cost concentration worked because it targeted a category of flyer who sought a functional service, not luxury. They used secondary international airports often outside major places, but travellers did not mind so long as the airfare was cheap.

This affirmation could be observed to be true. Ryanair were providing low priced flights, concentrating on a distinct segment market (leisure tourists), unlike their rivals Easyjet, who targeted business vacationers as well as leisure travellers. Ryanair's travellers did not brain that the international airports were outside major places so long as the airfare was cheap.

Looking again at this, the purpose of Ryanair might have entirely been on using extra airports as an expense saving methodology, to increase earnings.

Differentation

Unlike Ryanair, BA implemented a differentiation strategy. Differentiation requires making your products different from your competition. They concentrated their activities on:

Being the world's most liked air travel with huge traveler numbers with a sizable list of spots.

Offers a wider range of travel classes, overall economy, first class, business school and club category.

Flies to all major airports, typically $20 per passenger.

Only 6 excursions per day.

Ethos on traveling everywhere somewhat than revenue.

Bigger planes.

Hot food and buffet services.

The main distinctions between the two were clear to see.

Ryanair centered on budget travel, while BA offered a wider more luxurious course of travel.

The cost between international airports was typically $1. 50 per traveler for Ryanair compared to BA's $20 per traveler, indicating higher costs.

Fast journey turnaround leading to more customers.

Ryanair has fewer employees per planes.

BA offers hot food within flight package so this means greater costs.

Ryanair sold goodies which earned revenue.

BA has a more complex check in service.

BA has a larger more mixed fleet of planes which means more training, parts and personnel.

Ryanair has become more competitive than BA. Their success is the consequence of the strategies they carried out and the way they carried out their business. The main points to spotlight in displaying the success of Ryanair are:

Managers know the strategy and the goals of the company, whilst the staff had straight forward careers because cost lowering had reduced tasks to a smallest amount.

The use of supplementary airports

It focused its businesses on cost clipping and being a no frills budget flight.

Ryanair moved more customers because of faster turnaround.

Fewer employees, less overheads.

Created earnings by reselling food on flights, car work with and hotels.

Did not compete with major providers to main airports.

The final result was Ryanair has a bigger net revenue (27%) compared to British airways (3%).

General Electric strategy grid

Also known as the GE/McKinsey Matrix is a developed version of the BCG Matrix.

This tool compares the inner and external business / industry factors alongside market size and share. The 'matrix' comprises 9 squares in a grid format with the 'Y' axis measuring industry attractiveness up against the 'X' axis which actions business strengths.

BUSINESS UNIT STRENGTH

HIGH

MEDIUM

LOW

INDUSTRY ATTRACTIVENESS

HIGH

MEDIUM

British

Airways

LOW

Industry Attractiveness

This depends upon the factors such as

Market growth rate

Market size

Demand variability

Industry profitability

Industry rivalry

Global opportunities Macro environmental factors (Infestations)

Business product strength

This is determined by the next factors

Market share

Growth in market share

Brand equity

Distribution channel access

Production capacity

Profit margins relative to competitor

Grid layout

Top left portion: Here the business enterprise is very strong and the marketplace very attractive. If the business enterprise comes in this area, the business should concentrate its resources here.

Middle three squares: Here the business enterprise and the marketplace attractiveness are neither too strong nor too weakened. Discussion is required to decide whether renewed investment should be injected to improve business, moving the business into an improved section of the grid, or resources should be withdrawn and reinvested in other more profitable areas.

Bottom right portion: Here business and market attractiveness are both poor. In this situation, the business should make an effort to reposition its business quickly or withdraw resources to reinvest elsewhere.

British Airways

In considering a future strategy for English Airways, we look at the GE Matrix and analyse their business strength and market attractiveness. English airways will be put in middle appeal and middle power. They have the potential to be the marketplace innovator as they fly to more international airports than its rivals, presenting it the advantage of a potential bigger customer foundation. Plans need to be discussed concerning where cash injections are needed to boost business. This can be achieved by examining its rivals and deciding how to use advantage of their advantages and weaknesses.

Future Strategy

In creating a future strategy for BA, we first need to have a look at their market position and factors impacting the company. To get this done a SWOT evaluation could be used to examine the opportunities BA could take good thing about and the threats to look out for. Also they have to look at then develop their talents and look at and enhance the weak regions of the business enterprise.

Once the SWOT research has been completed, a technique can be developed for the business utilizing a model called the Ansoff matrix. The Ansoff Development matrix is a tool that helps an enterprise make a decision their product and market expansion strategy.

Ansoff's matrix shows that a business's development will depend on whether it trading markets new or existing products in new or existing market segments.

The end result from the Ansoff matrix is recommended expansion strategies that establish the path for the business strategy. These are:

Market penetration

Maintain or boost the market show of current products - this can be attained by competitive pricing strategies, advertising, sales advertising and perhaps more resources focused on personal selling

Secure dominance of development markets

Restructure mature marketplaces by driving a vehicle out competitors; this might require a a lot more aggressive promotional plan, reinforced by a rates strategy designed to make the marketplace unattractive for competitors

Increase utilization by existing customers - for example by presenting loyalty plans.

The business is focusing on marketplaces and products it understands well. It is likely to own good information on rivals and on customer needs. It really is unlikely, therefore, that strategy will require much investment in new market research.

Market development

Market development is the name given to a growth strategy where in fact the business seeks to market its existing products into new markets.

There a wide range of possible ways of approaching this strategy, including:

New geographical market segments; exporting the product to a new country

New product dimensions or packaging:

New syndication channels

Different pricing guidelines to appeal to different customers or create new market segments

Product development

Product development is the name directed at a growth strategy where a business aims to introduce services into existing market segments. This strategy may necessitate the development of new competencies and requires the business enterprise to develop modified products which can appeal to existing marketplaces.

Diversification

Diversification is the name given to the development strategy where a business markets new products in new market segments.

This can be an inherently more risk strategy because the business enterprise is getting into markets where it has little if any experience.

For a business to adopt a diversification strategy, therefore, it will need to have a specific idea about what it expects to gain from the strategy and an honest assessment of the potential risks.

A suggested strategy to be developed would be market penetration. This strategy would concentrate on new pricing guidelines, more advertising and bigger promotional campaigns. This plan can be used because BA already has a huge customer bottom part, which is allocated over many countries, flying to all or any the major airports. They are a favorite brand with a good reputation for providing a high quality service. In addition they work in a market in which they are really well established and have good knowledge of the competition. This strategy would not require much investment as they curently have tons of knowledge on its prospects and its rivals. This implies money can be spent on improving other areas of the business.

On improving other areas of the business, they need to take a look at ways to reduce costs and create new revenue streams. An example of this is actually the ways in which Ryanair clean their planes more quickly, using less personnel, generating more traveling time.

If BA used such approaches, this may mean minimizing costs to allow them to concentrate on providing higher criteria of traveling at a lower price. This could lead to appealing to customers away from its competitors, who be willing to pay a bit more for a airline flight for a much improved class of soaring.

To generate extra revenue, customers could be targeted with a wider selection of in airfare products, not only up to speed planes, but in departure and entrance lounges. Products could include special discounts on further plane tickets; hotel and car retain the services of discounts and discounts on full package deal holidays.

Resourses

Resources required for the new strategy would be:

Re-design planes internally - focusing on space, ease and comfort of gain access to and cleaning.

Designate and integrate a wider range of jobs for staff.

Revamp image of company, focusing on the tournaments customers.

Negotiate cheaper getting fees with international airports.

Reduce the amount of classes of seating to two. This may be flying class and business school.

Constraints

Staff participation - in lowering costs, the staff need to take part in the new manner in which the company will continue to work. Would they be inclined to get this done?

Could bargains be struck for lower landing fees with the major airports?

Would re-designing planes be very costly?

Would BA's hierarchical composition deal with the changes?

Evaluation

The above proposed strategy will have many implications at a lower management level. They'll be required to have an optimistic input into the new strategy, in like manner benefit staff and employees who deal directly with the clients. Morale will be of great importance amidst employees as low morale will indicate in customer care, so influencing sales.

Formative evaluations will be completed periodically, so progress can be viewed as. An estimated analysis period will be every 3 months over an 18 month period. This permits the re-design of planes, changes in workforce structure, promotions and advertising to use impact and budget constraints to be integrated.

Finally a Summative analysis will be carried out close to the end of the job to provide proof successes and success.

http://www. coursework4you. co. uk/generic. htm

http://www. quickmba. com/strategy/generic. shtml

http://www. marketingteacher. com/Lessons/lesson_generic_strategies. htm

http://www. 12manage. com/methods_porter_competitive_advantage. html

http://www. lmcuk. com/management-tool/general-electric-multi-factoral-analysis-matrix

http://teacher2u. net/business/strategy/ansoff_matrix. htm

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