Through analysis of firm and industry, we noticed some threats to the sustainability of their successful operations. Furthermore, such competitors are not extremely differentiated in matter of market influence, size and product offering. In twelvemonth 2003, the company is characterised by rapid enlargement and the start the twelvemonth by denoting that the company has ordered an extra 100 new Boeing 737-800 series aircraft to ease the rapid European growing programs , 2002. Fuel efficiency should also take presentence in operating objectives. Keep watching Aer Lingus development also should be considered.
They charged a simple, single fare for a tic%et with no restrict ions. It is thus apparent that the basis of many of these advantages, are applications which conform to the minimal cost philosophy. From a resource based view, incentive payment systems which Ryanair has pioneered increase productivity. This is because for example, large start up costs and initial losses are threatening to new firms. As a matter of fact Ryanair is currently the largest low-cost company on the market with 12 European bases, a fleet of over 250 aircrafts and more than 2700 employees. However with the deliver of the new aircrafts, Ryanair's figure will enhance. Resultantly, although Ryanair has been successful in increasing overall Operating Revenues, this has been largely supported by the increase in ancillary revenues.
A It is noted that low-priced companies concentrate on this first critical success factor by seeking to offer the lowest prices. The average airport charge applied to Ryanair was less than 7. These include the lowest airfares in the industry; effective brand identity; focus on specific market segments; efficiency strategy and fast turnaround times. More detailed information can be found in the appendices on pages 25-27. But Ryanair can allow itself to change suppliers because of its healthy cash flow and because it has already tried to purchase Airbus aircrafts after the purchase of 200 jets from Boeing got cancelled. The company targets the low tier market which travels frequently and wants affordable rate. It helped airline offset the additional cost incurred by lifting the charges.
However, the company continued to amend its cost leadership strategy by becoming nice to the people, which mean it made a mix of good customer service and low prices. National carriers use a high percentage of these, as do established firms with high traffic consistency like Ryanair themselves. For the future, there is a threat that the rate of ancillary income will decline. Aer Lingus and British Airways had two different choices to react: maintaining their current level of prices, or start a price war with Ryanair. Table of Contents 1 Table of Figures 2 Table of Tables 3 Introduction 4 Ryanair Competitive Analysis 4. The economics downturn in 2009 has shown that Ryanair as the leading budget airline can offer the cheapest flights attracting customers and still generate returns. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself.
To conclude, Ryanair should not continue trying to take over the Aer Lingus airline. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. The company has opened Frankfurt-Hahn in 2002 as their 2nd Continental European base and denote a long term partnership with Boeing which will see the company geting up to 150 new Boeing 737-800 series aircraft over an eight twelvemonth period from 2002-2010. Landing into secondary airports for Ryanair is an obvious weakness because it may not be able to target some passengers that prefer to travel to closer airports as well as generating opportunity for competitors. However, Ryanair holds a stake of 29. These forces are used to measure competition intensity and profitability of an industry and market. The Threat of Substitutes Substitutes, such as, sea transport, railroad networks, busses and rent-a-car companies are the services that generate relative value for customers same as airline industry.
Moreover, it also helps to the extent to which change is useful for the company and also guide the direction for the change. To cater these market need, the company practice the cost-leadership strategy by offering the lowest rate tickets, and charged for every single facility used by the customer in the plane even the use of toilet. Although Ryanair has eliminated extras such as in-flight meals, advanced seat assignment, free drinks and other services, it still prioritises features which remain important to its target market. In 2003 over 30% 639 in total of employees took part in the stock option program - the average pay per employee was about 53. Resultantly this essay asserts some remedies to insure they sustain and develop competitive advantages. This positioning strategy helped the company to make a flexible business strategy.
Begin slowly - underline the details and sketch out the business case study description map. Ryanair must therefore be able to provide customers with lower fares than their competitors. Also exchange rates should be observed as they might lead to supply chain disruptions. Ryanair is never short of ideas to reduce costs which apply to every aspect of business model; in this case their main priority is being cost effective rather than building customer relationships. Moreover, in lifting the additional charges the airline played on economies of scale which reduced the operational cost by producing volume. They had lesser attention span and looked for instant gratification, and were lesser inclined to play with toys involving physical activity.
These, for example, encompass on-board sales of food, drinks or merchandise as well as the sale of products and services of strategic partners including public transport, car rental, accommodation and insurance. Opportunities- Further growth by potentially expanding into central and eastern Europe, providing more tourist destinations, and by advanced cost reduction Threats- Travelers are beginning to seek greater value proposition, rather than Just low fares anymore. It is clear that on many levels other than ticket price, the firm is successful in avoiding operational contact with closest rivals, by using these alternative strategies. Figure A2 illustrates all the key points as a summary see: Appendix. Management move by Lego: After Lego realized that it had to correct its declining profits, it decided to venture into new markets and imitate the success of Disney which had created a brand value for its customers through theme parks, accessories media and video games.
One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. So instead of providing recommendations for overall company you need to specify the marketing objectives of that particular brand. Cost Reduction Strategy To achieve its goal of having a competitive position in the airline market, Ryanair uses a cost reduction strategy. Ryanair also has strong marketing prospective as they advertise on television, radio and newspaper which promote the company extremely. This innovation means customers in various locations can be served effectively without additional problems of labour mobility. Should Ryanair launch another bid for Aer Lingus or any other carrier? A In add-on, Ryanair offer minimal criterions of service and really low monetary values for point-to-point, short draw flights. The company has also jump onto the internet with the launch of their new online booking site and in just 3 months the site is taking over 50,000 bookings a week.
Furthermore, the firm benefits from other competitive advantages, for instance, being the industry driver and holding a solid brand image. All aircrafts are of a single type. However, if there are many suppliers alternative, suppliers have low bargaining power and company do not have to face high switching cost. Social Social environmental factors are mainly influenced by demographic trends, specially the ageing population and by changing consumer preferences, which are very difficult to measure and predict as it is much linked to the price of the service. Lego created an amusement park called LegoLand Windsor, came up with video.