Ryanair Framework Analysis for 355 Sam Global Business

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Strength: Ryanair’s advantages over other competitors can be studied by considering several factors, such as low price and cost, customers’ satisfaction, and aircraft equipment. Ryanair is a well-known European budget airline, which means that customers will desiring low fares will give priority to it in the selection. Ryanair did provide the choice of extra services at extra cost in the hope of satisfying customers. For example, customers can only check-in online but the option of printing the boarding pass is not available on their site (At the case states). This regulation, helps Ryanair save on cost, such as personnel management in the airport. On the other hand, Ryanair’s extra charges for luggage transportation and for cooperation with secondary airports reduce the instance of luggage loss (At the case states). In light of the passenger flow volume at secondary airports, Ryanair has received positive customer comments with respect to their punctuality (At the case states). Ryanair’s current aircrafts are mostly Boeing 737-800, which have only been use for a few years since they were purchased (Ryanair 2015). In comparison with other competitors, Ryanair’s younger aircrafts are more reassuring to customers.

Weakness: Although Ryanair’s additional revenue promotes its total revenue, the number of complaints continues to rise. In fact, Ryanair has been received more service-related complaints in recent years than, due to customer dissatisfaction with the limited services available and the requirement to pay for additional services (At the case states). The cooperation Ryanair has with secondary airports also limits its appeal compared to other airlines. For example, a consumer may choose not to fly London-Paris with Ryanair as the secondary airport is a considerable distance from the target location (Ryanair 2015). Although Ryanair is able to reduce costs by this method they are also losing customers. This situation includes certain hidden dangers that threaten the future expansion of the business. Ryanair’s low-cost strategy is affected by a number of factors. For example, the current rise in the fuel prices will place extra financial pressure on Ryanair. As Ryanair is not a state-owned enterprise, it cannot receive energy support from the Government (At the case states). In fact, Ryanair’s low-cost strategy could easily conflict with Government’s certain laws and regulations, also some organisations’ condition. For example, if the air traffic control make flight cancellation, the airline is required to pay compensation to passengers under EU 261 regulations (At the case states).

Opportunities: Both the expansion of the market and the rise in value of the market share show certain periodicity. It can be seen from the decreasing exchange rate of the Euro that the European economy is currently in a depression (Jolly 2015). However, the European aircraft industry still has space for further improvement. For economic reasons, customers show an increasing inclination to favor budget airlines. As a pioneer of both the budget airline industry and of short-distance low-cost airlines in Europe, Ryanair enjoys certain advantages compared to their competition in the current market. In fact, Ryanair is currently planning to increase their aircraft orders. Ryanair has signed contracts with the Boeing company and a Chinese company, claiming that the new aircraft will allow the airline to grow and carry over 110 million passengers from 2014 to 2019 (Ryanair 2015).

Threat: At present, Ryanair is under significant pressure from customers, suppliers, competitors and the Government. As customers have become more informed about the extra charges enforced by Ryanair, they have become increasingly aware of the final compared to the advertised price. The number of complaints received by Ryanair regarding legal regulations with respect to these extra charges has been on the rise (Ryanair 2015). Moreover, the rise in fuel cost and other unavoidable expenses has increased Ryanair’s outputs, which means Ryanair has lost some of its competitive advantages. During the fiscal 2014, Ryanair suffered a €128m increase in their fuel bill, which accounts for 46% of their total operating costs ((Ryanair 2015)). Meanwhile, their competitors are imitating Ryanair’s low price and low cost model to narrow the gap between them and Ryanair. Legislation enforced by the Irish Department of Transportation requires airlines to pay compensation to passengers in the event of cancellation, severe delays and other special events (At the case states). In addition, the Government has increased taxation of the aircraft industry. This means that Ryanair’s costs are continuously rising ((Ryanair 2015)).

Conclusion

The Ryanair is one of the predominant ultra-low cost air carrier in Europe; embracing a ‘no-frills’, low-cost strategy. Although Ryanair supplies consumers with low-fares, this is coupled with poor service. Extra services require the customer’s to pay ancillary fees. Over the past few decades, this company has shown potential to become the leading low-cost carrier in Europe. However, it is under pressure suffers from increasing costs, customer dissatisfaction, rivals and the Government. This report has critically assessed Ryanair through the use of Five Forces and SWOT of Global Business models. The Five Force framework identified the effect on Ryanair of five competitive forces: the threat of new entry, suppliers, buyers, substitutes and competitive rivalry. By contrast, SWOT provides an overall view of the effect of Ryanair’s strengths, weaknesses, opportunities and threats on strategy development.

List of Reference

Annual Report from Ryanair. (2014) [online] available from http://corporate.ryanair.com/docs/corp/investor/2014/final_annual_report_2014.pdf

Jolly, D. (2015) ‘Delight or Dread as Euro Falls’ [online] available from http://www.nytimes.com/2015/03/12/business/international/delight-or-dread-as-euro-falls.html

Johnson, G. (2009) Fundamentals of Strategy. Great Britain. Ashford Colour Press

Ryanair (2015) ‘Welcome to Ryanair’ [online] available from http://www.ryanair.com/en/about/

Ryanair (2015) ‘History of Ryanair’ [online] available from http://corporate.ryanair.com/about-us/history-of-ryanair/