Final exam Ryanair case study

Course: Contemporary Management

DR: Reham Adel

Name: Ossama Mohamed Rabie Nasser Mohamed Khalifa

ID:21227461
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Q1. Analyze the external and internal environment?

External Environment Analysis:

1- Using PESTEL Analysis:
Political Factors: Brexit. (T)
Economics Factors: Oil prices and Ukraine and Russia war. (T)
Socio-Culture Factors: Expansion of the route network and Increase number of fleets. (O)
Technological Factors: Replace and using new fleets of Boeing 737s, simplified the fare
structure and the similar website such as www.skyscanner.com or www.Kayak.com. (T)
Environmental Factors: Corona Virus. (T)
Legal Factors: Regulatory and laws will be held due to Brexit and Strict laws that any
airline must respect. (T)

2- Using 5 Forces Analysis:

Threat of Substitutes: Many airline competitors also passengers can use alternative
means of transport like trains, boats, cars and buses. (T). Higher price of competitors (O)
Threat of Entry: New entrants in (LCCs) like Norwegian Air Shuttle ASA and WOW Air
hf but also due to the capital-intensive nature of the airline business few firms can enter. (T)
Bargaining Power of Supplier: Boeing and Airbus a monopoly on airplane industry and
Ryanair only use of a single type of boing aircraft. (T)
Bargaining Power of Customer: Customers in general are price sensitive, 70 million
passengers were flying point-to-point on short-haul routes, but not with Ryanair(O)
Intensity of Rivalry: (LCCs) opened air travel to customers who otherwise might not have
travelled by air or at all, lower costs per passenger and expanding to the new routes. (O)
*(T) Threat *(O) Opportunity

Internal Environment Analysis:

Strength:
- Lowest fares, highest frequency, lowest costs, and highest productivity.
- Expansion of the route network.
- Use of a single type of aircraft.
- Point-to-point flights.
- Low-cost inputs
- Website, online booking and direct bookings.
- Huge Number of Fleet
- Qualified stuff.

Weakness:
- A high proportion of fixed costs.
- Cumbersome process of booking a flight through website.
- Customer experience and bad reputation.
- Usage of secondary airport.
- Minimal product differentiation.
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Q2. What is Ryanair competitive advantage and positioning strategies? Do you think it was successful?

Ryanair competitive advantage using Porters Generic Strategy would be cost leadership
competitive advantage strategy which provides airline transport services at low cost also due to
its short haul point to point flights and taking Europe as its main market its strategy could be
also a Cost focus strategy.
Ryanair has a clear positioning in the market, based on lowest fares lowest costs It was
unambiguously positioned as the lowest cost of the low-cost airlines and highest productivity,
they are not focusing on their reputation but trying to improve with some loyalty programs, fix
the things the customers did not like, improve the travel experience, improve the digital
experience, develop the offer and improve the marketing and brand.
so, Ryanair are Leader in price, Acceptable in quality, Minimal in support, basic in features and
Functional in reputation.
I think it was successful because by 2013, Ryanair was Europe's most profitable airline, flying
almost 80 million passengers per annum and beating every other airline on price on every route.
Traffic was growing, new routes were being served, new bases opened, and new aircraft
delivered. Ryanair was excelling across the board: it had the highest punctuality rate (93%), lost
the fewest bags (less than I bag per every 3,000 passengers carried), and received the fewest
complaints (less than I per 2,000 passengers). Between 2013 and 2018, Ryanair successfully
architected and delivered a strategic turnaround enshrining its position as Europe's largest,
cheapest, and most profitable airline.

Q3. Examine leadership approach of Ryanair CEO "O'Leary" Do you think it was effective?

Michael O’Leary is an Autocratic leadership.

whose style is focused on getting the job done, capitalizing on market opportunities, delivering
efficiencies.
We can find a lot of things O'Leary did showing his task oriented behavior like: Replacing the
fleet with a single fleet of Boeing 737s, simplified the fare structure, added new routes, focused
on secondary airports to minimize airport charges and facilitate, combine low fares with improved
customer service, opened new bases in secondary airports throughout Europe, Traffic was
growing, new routes were being served, new bases opened, new aircraft delivered, Point-to-point
flights, Low-cost inputs.
On the other side he did a lot of things showing his disinterest of people-oriented behavior like:
making all the decisions on his own. There is no scope for any sort of interference or influence of
other employees when it comes to making decisions for the company, High turnover of
inexperienced staff to keep costs low, Lack of employee benefits or trust: Low pay, no meals,
drinks, zero hours contracts means that employees see their roles at Ryanair as jobs and no more,
Low Psychological safety.

I don’t think his style in leadership was effective because of Many of problems appear because of
the autocratic leadership style for Michael O’Leary, the shareholders may be satisfied with the
short term, high profits, low-cost approach to business, but can the Autocratic leadership style
sustain Ryanair for the future.
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Q4. Discuss the strategic change initiated by Ryanair - Do you think these strategies can help
Ryanair reach its target of flying 200 million passengers by 2024?

Change is usually a challenge. It comes because of many factors. Managers should always be on
the lookout because the change may bring a negative growth to the company if not well managed.
When Ryanair management find that 70 million passengers were flying point-to-point on short-
haul routes, but not with Ryanair and recognizing it was losing customers willing to pay higher
fares for better service because customer suffered from the cumbersome process of booking a
flight on Ryanair website which could involve up to 17 clicks and the multitude of extra charges
they faced.
Ryanair response and announced a strategic change that would combine low fares with improved
customer service by program called "ALWAYS GETTING BETTER" (AGB)
(AGB) introduced a lot of changes:
Innovation change: by launching much the new website easier to use with new features including
fully allocated seating and improve the digital experience not only sell seats but also serve as a single
source for customers' travel needs, including travel insurance, hotels, and car hire.
Efficiency change: improve the travel experience, save time while booking through website.
Responsiveness to customers: introducing a 24-hour grace period to amend minor booking
errors, allowing customers a second, small carry-on bag for free, and reducing charges for
boarding cards and baggage, maintain the things customers didn’t like and acquisition to retention
of customers, increase customer retention.
Quality: improve the marketing and brand, improve the likability of Ryanair as a functional
service.

I think this strategi can’t achieve its target of flying 200 million passengers by 2024 as Ryanair
announced its first-quarter results for FY 2019, it faced unprecedented challenges. Profits had
decreased by 200% compared to the same period the previous year. It was also facing further
strikes and industrial action. In what some viewed as a signal of pessimism, O'Leary sold 2 million
shares in June 2018 (at €16.49 each), leaving him with a 3.8% stake in the airline and also due to
worldwide economic situation changed to worse, Brexit may change the low and regulation, look
down like what happened due to corona virus, change in oil prices, energy crises due to Ukrainian
war, inflation, and world shipping and supplies crises.

IN my opinion Managers must be always on the lookout and follow-up their plans and have to
make alternative plans and strategic plans in case of any external threats could happened.