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scope of the markets that the company would serve and how the company would compete in the selected markets. Competitive strategies focus on ways in which a company can achieve the most advantageous position that it possibly can in its industry (Pearson, 1999). Companies can achieve competitive advantages essentially by differentiating their products and services from those of competitors and through low costs. Firms can target their products by a broad target, thereby covering most of the marketplace, or they can focus on a narrow target in the market (Lynch, 2003) (Figure 1). According to Porter, there are three generic strategies that a company can undertake to attain competitive advantage: cost leadership, differentiation, and focus. Cost leadership The companies that attempt to become the lowest-cost producers in an industry can be referred to as those following a cost leadership strategy. The company with the lowest costs would earn the highest profits in the event when the competing products are essentially undifferentiated, and selling at a standard market price. Companies following this strategy place emphasis on cost reduction in every activity in the value chain. It is important to note that a company might be a cost leader but that does not necessarily imply that the company’s products would have a low price. In certain instances, the company can for instance charge an average price while following the low cost leadership strategy and reinvest the extra profits into the business (Lynch, 2003). Examples of companies following a cost leadership strategy include Ryanair, and easyJet, in airlines.
Differentiation When a company differentiates its products, it is often able to charge a premium price for its products or services in the market. Some general examples of differentiation include better service levels to customers, better product performance etc. in comparison with the existing competitors. Porter (1980) has argued that for a company employing a differentiation strategy, there would be extra costs that the company would have to incur. Such extra costs may include high advertising spending to promote a differentiated brand image for the product, which in fact can be considered as a cost and an investment. McDonalds , for example, is differentiated by its very brand name and brand images of Big Mac and Ronald McDonald. Focus
Porter initially presented focus as one of the three generic strategies, but later identified focus as a moderator of the two strategies. Companies employ this strategy by focusing on the areas in a market where there is the least amount of competition (Pearson, 1999). Organisations can make use of the focus strategy by focusing on a specific niche in the market and offering specialised products for that niche. This is why the focus strategy is also sometimes referred to as the niche strategy (Lynch, 2003). Therefore, competitive advantage can be achieved only in the company’s target segments by employing the focus strategy. The company can make use of the cost leadership or differentiation approach with regard to the focus strategy. In that, a company using the cost focus approach would aim for a cost advantage in its target segment only. If a company is using the differentiation focus approach, it would aim for differentiation in its target segment only, and not the overall market. This strategy provides the company the possibility to charge a premium price for superior quality (differentiation focus) or by offering a low price product to a small and specialised group of buyers (cost focus). Introduction In recent years, the entry of low-cost carriers has totally revolutionised the air passenger transport industry. The low-cost business model was introduced by Southwest in the US at the beginning of the 1970s. However, it was only in the 1990s that the phenomenon spread worldwide. Ryanair was one of the ﬁrst airlines in Europe to adopt the low-cost model in 1992. Easyjet, Ryanair’s main low-cost competitor, was founded in 1995. Although the phenomenon is relatively recent, the stunning results obtained by low-cost carriers urge academics to study the reasons for their.
EasyJet is Europe's leading low-cost airline. The airline was founded by Stelios Haji-Ioannou, and the family remains the major shareholder. He controls other separate EasyGroup companies such as EasyInternetCafe, easyCar.com, EasyMoney, and EasyValue.There are no "cross-shareholdings" between EasyJet and these other EasyGroup companies. EasyJet operates independently from the other companies, although some "crossmarketing" agreements do exist. EasyJet is a low cost airline officially known as EasyJet Airline Company PLC. The company is based at London Luton Airport. It operates frequent scheduled services for leisure and business passengers and serves more than 200 routes between more than 60 European airports. The company listed on the London Stock Exchange and easyGroup owns only a minority stake. EasyJet and its Republic of Ireland based rival Ryanair are by far the largest low cost airlines in Europe, and the rivalry between them is intense and sometimes vituperative (especially on Ryanair's side from its high profile chief executive Michael O'Leary). The two companies have slightly different strategies. EasyJet flies mainly to leading airports while Ryanair uses far more secondary airports to reduce costs. EasyJet places more focus on attracting business travellers as well as leisure travellers, although all its aircraft have single-class cabins. Ryanair makes much of the fact that EasyJet's average fares are higher and its average punctuality is consistently lower. This is mainly due to the different range of airports used and Ryanair routinely scheduling flights to take thirty minutes longer than required. As of September 2005, Ryanair flies more passengers, but EasyJet has a higher turnover, leading both of them to claim to be "Europe's number one low cost airline". EasyJet's vision of the future is built on developing its strength as the largest low cost airline in Europe. Total revenue in 2002 was more than £500 million, an increase over the...
Services In The Airlines Industry
Summary The airline industry is emerging due to the new competitors in the travel sector. competition. In the past it was protected
through government controls until the early 1980's. However due to deregulation, the industry opened to free As a result, collaborations and alliances were formed and low budget airlines like Ryanair and easyjet were able to enter the market.
The purpose of my report is to present the current competitor analysis of the European Airline Industry, the positioning criteria used by both British Airways and Ryanair and how each airline has developed their brand. I chose to look at Ryanair as a low budget airline and British Airways as a leader on the airline industry. My report was based on several information found in financial newspapers (The Economist, Financial Times etc.), from the internet (www.ryanair.com, www.britishairways.com and infotrac…) and independent analyst reports.
introduction "An important aspect of developing a market position is the development of a brand image which concisely states and reinforces the adopted market position" Adrian Palmer (2001),
Ryanair was founded in 1985 by the Ryan family to provide scheduled passenger airline services between Ireland and the UK, as an alternative to the then state monopoly carrier, Aer Lingus. It started out a full service conventional airline, with two classes of seating and leasing three different types of aircraft. However despite growth in the passenger volumes financial problems were of a growing concern. In its fight to survive the airline went through a dramatic restyle to become Europe's first low fares, no frills carrier, built on the model of Southwest Airlines.
When I began my research into Ryanair I thought it best to start at the core of the company. I searched for a mission statement to provide me with an insight into the thinking behind the name Ryanair. However it was hard to find an actual mission statement but what was crystal clear was the company's main objective. Ryanair's objective is to maintain its position as Europe's leading low fares airline, operating frequent point-to-point flights on short-haul flights, mainly out of regional and secondary airports.
The heart of Ryanair's strategy is based on providing a no frills service with low fares designed to stimulate demand, particularly from budget conscious leisure and business travellers who might otherwise have used alternative forms of transportation or who might not travelled at all. Following on from this I looked at the external environment that affects Ryanair, to get a brief idea of the possible opportunities and threats. In order for me to identify opportunities and threats within Ryanair's competitive environment I am looking at Porters Five Forces. His model focuses on five forces that shape competition within an industry: (1) the risk of entry by potential competitors, (2) the intensity of rivalry among established companies within an industry, (3) the bargaining power of buyers, (4) the bargaining power of suppliers, and (5) the closeness of substitutes to an industry's...
. Background I have decided to write a report about the Easy Jet brand. This is because the low cost air companies are the new contrast to the major scheduled air companies, and their alliances. The airline was founded by Stelios Haji-Ioannou in 1995, and the family remains the major shareholder. He controls other separate easyGroup companies such as easyInternetCafe, easyCar.com, easyMoney, and easyValue.
A low-cost/no-frill airline can be described as a company that eliminate unnecessary cost and frills which characterise 'traditional' airlines. EasyJet keeps costs low by eliminating the unnecessary costs and ‘frills' in different ways like: Use of the Internet to reduce distribution costs: approximately 95 % of all seats are sold over the Internet, making easyJet one of Europe's biggest Internet retailers. Maximise the utilisation of the substantial assets Maximising utilisation of each aircraft significantly reduces the unit cost. Ticket less travel: This helps to reduce significantly the cost of issuing, distributing, processing and reconciling millions of tickets each year. No free lunch. Efficient use of airports: Using regional airports instead of the major hubs. Paperless operations. Fleet uniformity. The main competitor to Easyjet is Ryanair. But the main competitors to the low cost airlines is the scheduled and charter airlines. A survey done by Mintel International Group Limited shows us what 1,971 adults (UK) had flown on during the previous two years (2002 –2004) STRATEGIC CASE ANALYSIS: RYANAIR The key stakeholders in the firm include all staff members responsible for carrying out strategic objectives, the communities in which Ryanair thrives, as well as the customers who frequent Ryanair as their low-cost carrier of choice. Satisfying the stakeholder appears to be the firm’s long-term mission in Europe in lieu of having no established, formalised mission or vision statement.
Comparing Competive Strategies Of EasyJet And Ryanair
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