Question 1: What are the strategies adopt by Ryanair to capture market?

Explain on basis of generic building blocks.

Answer: Ryanair was set up in 1985 and is one of the oldest and most successful low-cost
airlines of Europe. In fact, Ryanair was one of the first independent airlines in Ireland. In 2001,
many believed that Ryanair was like the Wal-Mart and Southwest Airlines of Europe. Ryanair
transformed the Irish air services market where other airlines like Avair failed to compete with
the more powerful national carrier Aer Lingus.
Ryanair is known for its No-Frills model with the cheapest air fares. The tickets are cheap, but
for almost every other service you have to pay high surcharges.
Ryanair used the following strategies to capture market:
 Low ticket prices
 Frequent departures
 Fleet commonality
 Airport charges and route policies
 Managed staff costs
 Productivity
 Only one kind of plane (Boeing Planes)
 Contracting out services
 No use of travel agents – no agency commissions
 Use of secondary and regional airports encourages
The four generic building blocks of competitive advantage are efficiency, quality, innovation,
and responsiveness to customers. Superior efficiency enables a company to lower its costs;
superior quality allows it to charge a higher price and lower its costs; and superior customer
service lets it charge a higher price.
1. SUPERIOR EFFICIENCY (HIGH)
To determine how efficiently they are using organizational resources, managers must be able to
measure accurately how many units of inputs (raw materials, human resources, and so on) are
being used to produce a unit of output. They must also be able to measure the number of units of
outputs (goods and services) they produce.
As the competitive advantage of Ryanair reflects that the marketing strategy in respect of
efficiency is very good (i-e Maximum number of flights to maximum destinations in minimum
time interval).
2. SUPERIOR QUALITY (LOW):
Today, competition often revolves around increasing the quality of goods and services. In the car
industry, for example, with each price range, car competes against one another in terms of their
features, designs and reliability.
The policy of No Frills reflects the quality of customer services as Ryanair promise to offer
cheap flights but no extras on the top.
3. SUPERIOR INNOVATION (LOW):
Strategic can help to raise the level of innovations in an organization. Successful innovation
takes place when managers create an organizational setting in which employees feel empowered
to be creative and authority is decentralized to employees so that they feel free to experiment and
take risks.
Ryanair is not that much innovative towards customer attraction in respect of giving them good
& attractive holiday packages, hotel stay or different classes of travelling (i-e Business class).
4. SUPERIOR CUSTOMER RESPONSIVENESS (HIGH):
Finally, strategic managers can help to make their organizations more responsive to customers if
they develop a control system that allows them to evaluate how well employees with customer
contact and performing their jobs. Monitoring employees’ behaviour can help managers to find
the ways to increase employees’ performance level, perhaps by revealing areas in which skills
training can help employees or by finding new procedures that allow employees to perform their
job better
Customer responsiveness of Ryanair is always high according to current market recession, as
they offer cheapest flights to customer and this is the main key towards customer retention.

Question 2: Do you think Ryanair is maintaining the best strategy? If yes then
why? If no then what will be your suggestions to be effective more?
Answer: The strategy of Ryanair 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. Ryanair is an
airline what has its strategy totally focused on cost leadership. To be more sustainable they have
to increase their hedging to guarantee prices and costs.
I think they are maintaining a very good strategy and yes it’s one of the best. But there is also
room for improvements. A company can always be better in small yet significant ways. These
are described through the porter’s five forces below:
BARGAINING POWER OF SUPPLIER (LOW)
1. Boeing is RA’s main suppliers
2. Only 2 possible suppliers of planes – Boeing and Airbus which costs from one supplier to the
other is high because all mechanics and pilots would have to be retrained.
3. Price of aviation fuel is directly related to the cost of oil (Ryanair controls these through
hedging).
4. Regional Airports have little bargaining power as they are heavily dependent on one airline.
5. Bigger airports, where Ryanair’s competitors operate, have greater bargaining power.
Ryanair’s policy is to try and avoid these airports.

BUYER POWER (LOW):

1. Customers are price sensitive
2. Switching to another airline is relatively simple and is not related to high costs (Internet-all
airlines are online)
3. Customers know about the cost of supplying the service
4. No loyalty

THREATS OF NEW ENTRANTS (HIGH)

1. Some barriers to entry (restricted number of licenses for air carriers)
2. High capital investment
3. Restricted slot

THREAT OF SUBSTITUTES (HIGH)

1. Fast speed trains running on short hales.
2. New hybrid technology introduced in the new cars which save fuel of holidaymakers and thay
can enjoy nice breaks in different countries.
3. Other competitive new European airlines.

COMPETITIVE RIVALERY (MEDIUM)

1. Deregulations and increase in number of new routes will encourage other people carriers/
competitors to fill the gap which indicates the sign of increase in buyer power.
2. New mergers and alliances by big airlines such as British Airways and Iberia.
3. Other big competitors such as Air France and KLM etc. Will attract the customer by gathering
the data of frequent flyers and offering them special perks/ discounts to increase their customer
loyalty.
4. Various other airlines are thinking to provide comfort and extra services to their premium
business passengers.

Ryanair can certainly look at the following points to make their cost efficiency strategy
better:
MERGERS AND ACQUISITIONS
Most important corporate level strategy in current economical condition of the world is to use
mergers and acquisitions policy if necessary. As Ryanair continues growth will help the
company to think about to exquisite other companies.
STRATEGIC HUMAN RESOURCE MANAGEMENT
The human resources of the company are not seen as a potential source of competitive
advantage. The company do not seem to value its people. The belief is getting stronger that
company’s human resources strategy is the most important source of competitive advantage.
Company’s staff retention policy is the main objective of sustainable competitive advantage. In a
fast-changing environment where technological innovations and other strategies can be copied, it
is the human resources that bring a sustainable competitive advantage.