Topic: Strategic Management (Case Study Sample)

Strategic Management Author’s Name Course Number and Name Instructor’s Name Date of Submission Author Note Strategic Management The aviation industry is one of the most competitive and challenging business environments for various aviation companies across the world. Founded in 1985, Ryanair has experienced multiple challenges, particularly in customer satisfaction and the changing business conditions (O'Higgins, 2020). Its positioning as a low-cost carrier has helped it propel itself to one of the largest aviation companies. However, challenges have forced it to change its strategy to ensure it remains competitive in the fast-changing industry. Therefore, the paper will use strategic frameworks and theories such as PESTLE Analysis, SWOT analysis, and Porter's five forces model to analyse Ryanair's strategy's sustainability and competitive position. Sustainability of Ryanair's Strategy Ryanair has always had a negative attitude towards customers. In fact, it is believed that customers are always wrong, and that the only time they are heard from is when they complain to bend the rules. The poor attitude towards customers led to multiple customer complaints and being voted the worst of 100 biggest brands by customer magazine readers (O'Higgins, 2020). As a result, the company devised the Always Getting Better (AGB) three-year plan in 2014 to improve its customer relations and reputation (O'Higgins, 2020). The sustainability of this strategy based on the current changes can be analysed based on PESTLE analysis and SWOT analysis. PESTLE Analysis Political Environment Ryanair is faced with trade union pressure in different countries where it operates. Furthermore, the company is also required to adapt to the diverse aviation, customs, and travel rules imposed by each country it operates. Recently, Ryanair has had to adhere to the travel restrictions adopted by different governments to adapt to the coronavirus pandemic (Sun et al., 2021). The company is further impacted by the risks related share ownership by non-EU citizens, regulations on carbon emissions trading, and different countries' tax regimes (O'Higgins, 2020). Economic Environment Fuel constitutes a critical input, and wide fluctuations in availability and price have been a major cause of concern for Ryanair since they are factors beyond its control. The company has resorted to hedging as the answer to the volatile circumstances, but it could be costly if the costs reduce suddenly (O'Higgins, 2020). Another economic challenge that Ryanair is facing is the volatile exchange rate. The company uses the Euro, and any adverse change in the currency could lead the increased cost of products purchased using non-EU currencies (O'Higgins, 2020). Socio-Cultural Environment The aviation industry is witnessing changes in demographics and consumer preferences. Customers are increasingly prioritising safety, planning and booking flights longer in advance, transparency, and comfort, among others (O'Higgins, 2020). In response, Ryanair is focusing on providing new aircrafts with more legroom, low airport check-in fees, flight cancellation option, among others (O'Higgins, 2020). Technological Environment Ryanair is constantly innovating and focused on developing a personalised website with customer-tailored offers and promotional emails. The company has also adopted mobile apps to facilitate a customer registration system (O'Higgins, 2020). Notably, the internet has been an essential resource for Ryanair in achieving its cost-savings strategy. The firm has developed an technology where customers can book their flights through the internet, thus reducing costs and eliminating travel agent commissions (O'Higgins, 2020). Environmental Factors Carbon emission has been a significant concern to different countries due to its adverse effects on the environment. Ryanair is required to adhere to EU regulations on carbon emission trading and develop initiatives to reduce its carbon footprint (O'Higgins, 2020). Additionally, Ryanair is continuously acquiring fuel-efficient aircrafts to reduce its emissions and adhere to environmental regulations. Legal Factors Ryanair has faced numerous legal issues that have cost millions of euros in pay-outs. The aviation company has been in court over the receipt of state aid in some airports (O'Higgins, 2020). Besides, the firm further filed a complaint with the EU Commission against Air France for blocking competition. The low-cost carrier has also been involved in labour disputes with its pilots and other staff. SWOT Analysis SWOT Analysis is a strategic management tool that explores the strengths, weaknesses, opportunities, and threats an organisation faces (Vlados, 2019). Strengths Low cost. Ryanair boasts of the lowest unit costs by any European airline. Whether the costs are measured by cost per seat, cost per available seat kilometre, or the cost per passenger, the company’s traffic costs and capacity production are lower than its competitors. Ryanair is also focused on low operating costs. The firm has ensured low-cost operations in aircraft fleet, airport costs, staff costs, and passenger service (O'Higgins, 2020). Size. Ryanair's size has increased immensely over the last two decades. As of 2015, Ryanair offered over 1600 flights per day from 72 bases and 190 airports across Europe (O'Higgins, 2020). The company further had a fleet of 315 Boeing 737-800 aircrafts and other additional leased aircrafts to cater for the increased demand over the summer (O'Higgins, 2020). Low fares. Ryanair is the cheapest airline company for customers, and this remains one of its most significant strengths. Compared to its customers, the firm’s fares are averagely low. The low fares saw customers continue flying Ryanair despite its poor customer relations (O'Higgins, 2020). Innovation. Ryanair has been engaged in research and development that embraced digital technologies. It launched a simpler and new website and an app to personalise its offers, communicate, and improve the sale of its ancillary products such as reserved seats and car hire (O'Higgins, 2020). Ancillary revenue. Besides its core operations, Ryanair provides ancillary services that include console entertainment sales, food and merchandise, accommodation, car park services, car rental, and travel insurance through its website (O'Higgins, 2020). Offering these services through the internet has increased sales and revenues for the firm. Weaknesses Seasonality of Earnings. As for the industry in general, the company's earnings are seasonal. During the winter months, Ryanair has to ground some of its aircrafts due to low demand and reduce operational costs (O'Higgins, 2020). Brand Perception. For many years, Ryanair's success has been attributed to providing what customers want, low fare air travel. However, the company has been associated with customer-unfriendly practices ranging from inflexible baggage policies to punitive charges for printing boarding passes. Opportunities New routes and flight frequencies. Ryanair can follow a growth path in the future that involves flying to new destination and increasing the frequency of their flights to new countries within and outside the EU (O'Higgins, 2020). Inorganic growth. The company has mainly grown organically. In the future, it can focus on acquiring some small aviation companies to reduce competition and expand its services (O'Higgins, 2020). Improved customer service. The AGB programme rolled out in 2014 offers an opportunity for Ryanair to strengthen its relationship with customers through enhanced digital and travel experience and more choice (O'Higgins, 2020). Threats Unforeseen events. Ryanair is faced with the threat of accidents and safety-related issues such as terrorist attacks, hijackings, an outbreak of contagious diseases, and natural phenomena (O'Higgins, 2020). These incidents may lead to substantial financial losses in the form of compensation and the company's eventual collapse. Labour issues. The firm has been under criticism for refusing union recognition and offering poor services. In 2006, a court in Ireland found that Ryanair had unfairly handled pilots in accepting new contracts and ordered it to pay a significant amount of money in legal costs (O'Higgins, 2020). Summary Based on the analysis, Ryanair's strategy of offering the lowest fares while focusing on improving customer experience is moderately sustainable. The company's innovation, where it has integrated greater technology in its operations, focused on route expansion and destinations, and improved customer service, will ensure the success of its strategy. However, challenges such as its history of labour issues are a major stumbling block in implementing the plan. Customers' preferences are also constantly changing, but with the AGB programme being implemented in phases, it will be able to adjust to meet the needs. Ryanair's external environment is quite volatile, mainly because it deals with various policies and regulations of different regimes. Thereby, the company will have to adapt to its changes in the environment while developing new strategies to mitigate any adverse impacts from the operating environment. Competitive Position of Ryanair in the UK Ryanair's competitive position can best be analysed using Porter's Five Forces Analysis. It is a simple framework used to evaluate and assess the competitive position and strength of an organisation. The model is based on the concept that five forces determine an industry's attractiveness and competitive intensity (Perera, 2020). The business's strengths can be identified by this model as well as weaknesses. Among the five forces that the model focuses on are suppliers' bargaining power, buyers' bargaining power, threat of new entrants, rivalry among existing firms, and the threat of substitute products (Perera, 2020). Bargaining Power of Suppliers Ryanair's suppliers are mostly ai...