6. What is a strategy ?
Corporate strategy is the set of explicit or
implicit decision rules that determines what
business(es) a firm will be in and not be in.
Business strategy is how a firm develops and
sustains a competitive advantage within an industry.
Functional strategy is the set of decisions made
in marketing, operations, finance, research and
development, and human resources that supports
the business strategy.
(Faculty, Darden, 2012)
8. PESTEL-Analysis
Political
Strong Political Environment
Open Sky Agreement.
Social
Economic environment
customerUnemployment in
January 2012 was 14.2%,
Consumer travel lifestyle and
demographics
Environmental
Controlling noise pollution
Carbon footprint & Global
warming concerns
.
Economical
Uncertainty of fuel cost.
Economical Recession in favor of
Ryanair
.
Technological
Internet adaptation/Check-in
Energy efficient engines will
increase
Use of Trains
Legal
Corporate lawsuits
Misleading advertisements
11. Objectives of Ryanair’ Strategy
Establish itself as Europe’s leading low-fares scheduled passenger
airline
Through continued improvements and expanded offerings of its
low-fares service.
Ryanair aims to offer low fares that generate increased passenger
traffic
Through maintaining a continuous focus on cost-containment and
operating efficiencies.
12. The Key Elements
Low cost
-Core of business modelStimulates demand, particularly from fareconscious leisure and business travelers
who might otherwise have used substitutes
of Transportation
Ryanair sets fares on the basis of the
demand for particular flights
How ?
Maintain focus on cost-containment
Maximise ancillary revenue
13. The Key Elements
Low Operating Costs
Ryanair strives to reduce or control four of
their primary expenses:
Aircraft equipment/Fuel
Personnel productivity
Customer service costs
Airport access and handling costs
NO FRILLS STRATEGY
14. Graphical Analysis of Ryanair costs
EUR million
Fuel
Airport & Handling Charges
Route Charges
Employee
Depreciation
Materials, repairs
Aircraft Rentals
Other
Total Expenses
2013
1,886
612
487
436
330
121
98
198
4,166
Change vs FY2012
18,3%
10,4%
5,7%
5,0%
6,6%
16,1%
8,3%
9,9%
12,4%
% of 2013 total
45%
15%
12%
10%
8%
3%
2%
5%
100%
(Source: https://www.ryanair.com/doc/investor/present/Half_Year_Results_2012.pdf)
15. The Key Elements
Customer Service
Deliver the best customer service
performance in the low-budget airline
Industry
Ryanair has achieved better
punctuality, fewer lost bags and fewer
cancellations than all of the rest of its
peer grouping in Europe.
How?
Ryanair achieves this by focusing
strongly on the execution of these
services and by operating from
uncongested airports
16. The Key Elements
Frequent Point-to-Point Flights
on Short-Haul Routes
Frequent point-to-point service on
short-haul routes to secondary and
regional airports
Short flights + Frequent service
eliminating the necessity to provide
“frill” services
Non-stop routes and avoid the costs
of connecting passengers, baggage
transfer, transit passenger etc.
17. The Key Elements
Focused Criteria for Growth.
Additional routes from the U.K. or
Ireland to other locations in continental
Europe/USA
Increasing the frequency of service on
its existing routes
Starting new domestic routes within
EU countries; establishing more new bases
in continental Europe.
18. The Key Elements
Taking Advantage of the Internet
January 2000, Ryanair launched new
reservation system: Flightspeed
Make and pay for confirmed reservations
in real time through Ryanair’s
Ryanair.com website.
Ryanair has heavily promoted its website
through newspaper, radio and television
advertising. (96% of all reservations
online)
21. MARKETING STRATETGY
“We want to offer the
lowest fares while
keeping advertising
costs to a minimum”
Michael O’ Leary
22. Ryanair Revenue Model
“Any fool can sell low airfares and
lose money! The difficult bit is to
sell the lowest airfares and make
profits.” Michael O’Leary
0%
Subsidies
20%
Core revenues
58%
Ancillary
revenues
22%
25. Boston Matrix-model
High
Stars
Question Marks
New Destinations such as
USA, Croatia,etc.
Market
Growth
Cash Cows
Unknown
airports/destinations
Unfrequently used.
Morocco.
Poor Dogs
Top Destinations –
London, Madrid, Brussels
,etc.
Really unfrequently used
destinations.
Low
High
Market Share
Low
26. Concrete Recommendations
Increase Flight Frequency of Routes
Open New Routes in EU
Strategic Alliance
Seek to protect themselves from oil
prices
Investigate Load Factors
Exploit tourism Trends
To establish how Ryanair is doing we must examine and understand their external and environmental forces. To do this we will use PEST analysis. This is taking into account the influences politics, economy, social and technology have on Ryanair’s business. Each of these external forces plays a huge impact on the strategic direction of Ryanair.
The Open Skies Agreement is another form of deregulation that could affect Ryanair’s position in the airline business in the future. Open skies is the name of the agreement between the EU and US that will allow EU-based airlines to fly from any city in the EU to any city in the US and vice versa.
Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies. The key elements of Ryanair’s strategy are:
Ryanair strives to reduce or control fourof the primary expenses involved in running a major scheduled airline: (i) aircraft equipmentcosts; (ii) personnel productivity; (iii) customer service costs; and (iv) airport access and handlingCosts (reduce as much costs as possible, none or few services provided.
Looking at cost we immediately see that Fuel is a major cost, equaling 45% of total operating costs. This not only illustrates that fuel is a major point of attention (as for any airline), but also illustrates how Ryanair managed to keep its other costs at an unseen level.Employeecosts for example or one of the lowest in Europe.Looking at CASK and RASK (baseline 2009) weseethat CASK ex fuel isstilldecreasing but at a lower pace, but fuel costsmakethat total CASK increases. For the moment Ryanairwas able to pass on fuel costs to itscustomerswith a little more on top. So RASK stilloutpaces CASK.
Digital Marketing Strategynewspaper, radio and television advertising