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Ryan Air Focusing On Core Competencies (Cc) And Value Adding Elements , Pest Analysis And Five Forces Framework, Strategic Choices Available And Future Strategy And New Direction For Ra

2696 words - 11 pages

IntroductionRyanair (RA) was founded in 1985 as a small Irish-based competitor to Aer Lingus, the Irish national airline. In the beginning RA took on the same business models as that of their competitors but that particular strategy took RA absolutely nowhere. Then in 1990s, under the watchful eye of Michael O'Leary, RA transformed its prospects after it decided to recreate itself by imitating the Southwest Airlines (SWA) model in the British Isles, and then later extending it to Europe.Competitive advantage based on a privileged market position usually tends to be in the favor of the first-mover by giving advantages in market-specific investments, skills and infrastructure aircraft, location-routes, landing rights, etc. in the case of the airlines, which follower companies will find more expensive to replicate. For example, as other airlines now rush to follow RA into the same competitive space within the European airline industry, the CEO of RA gives them little hope for success. As Michael O'Leary sees it, there are huge barriers to entry now, and none of these new airlines is going to find a price point below RA.PEST ANALYSIS AND FIVE FORCES FRAMEWORKRA is seen as the biggest and most prosperous of Europe's low budget fare airlines targets in the first instance leisure travelers and the visiting friends and relatives segment of the market. Claiming itself as "lowest cost scheduled airline" means basing the airline's financial strategy on the average number of seats sold per flight, instead of on the revenue made per sold seat. Therefore every environmental issue which either affects basic costs of flights or affects the likeability of customers to book a flight is important for RA.In the recent year there have been many events which affected the flaws in flight security in the customer's eyes. Especially 11th of September and "Sars" have shown that global dangers heavily affect global air-travel. As an airline based in Europe and adapting an effective promotional strategy RA sales grew irrespective of this danger showing a profit from 4 percent to 28 percent surpassing the 20 percent target margin.Low price, value for money and efficiency are core values of RA. These core values should not change no matter what the environmental turbulences are present. This means that cost reduction and other profit sources other than travel fares are important for RA since it is a part of their strategy and thus they cannot accommodate it's expenditure by increasing the travel fares. Government regulations are especially important when it comes to low cost strategy prices of fuel and taxes. The airline deregulation not only helped RA but also increased competition and air traffic and so because of it more regulations by the European Union (EU) government in terms of safety and environment rules have come into place. This again increases operating costs within the EU. When RA wants to maintain its low fares it has either the possibility to cut costs...

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