Case Study Ryanair

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Ryanair-The Low Fares Airline Case Analysis
Issues
In 1985, the Ryan family founded Ryanair to provide airline services between Ireland and the United Kingdom. Ryanair’s strategy is based on providing a no-frills service with low fares to stimulate demand. Ryanair’s business level strategy is cost leadership. Although the firm faces weaknesses and threats, their strategy has created a competitive advantage. Ryanair’s competitive advantage will weaken over time due to vulnerability to fuel prices, ancillary charges, low employee satisfaction and their negative brand image.
Analysis
Porter’s Five Forces analysis is a tool to analyze the external environment in which an industry operates. In the European airline industry, the threat of new entrants is low. Entrants will need high capital investments to compete with existing firms. The substitutes in the airline industry are the railway networks, rental cars and sea transports. Rental cars and sea transports are more expensive than the airlines therefore they don’t pose a threat to the industry. It takes longer to reach a destination by train than a plane, which causes the threat of railways be low. Existing firms pose a threat to the industry because there are 35 firms operating in the European airline industry, which creates intense price rivalry among firms. Customers are price sensitive and customer can easily switch to another airline causing the threat of buyers to be high. Suppliers can charge a high price for their

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