Ryanair Case Study Analysis

3171 Words Feb 20th, 2012 13 Pages
International Strategic Management
Coursework 2011/12

Case study analysis: Ryanair – the low fares airline: wither now?

Executive Summary
The purpose of this paper is to use analysis of the airline industry and of Ryanair to highlight the firms’ successes thus far. It also considers the sustainability of the current strategy by viewing the future of the firm and its competitors.
Using Porter’s five forces, the VRIO framework and the SWOT analysis it gains intimate information on the factors impacting the firm and industry.
Its success is primarily down to its low cost operations. Price is the distinguishing element in this industry. Ryanair has a great market influence, pricing out new entrants. The ability to use its resources and
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On the other hand though, high entry barriers, low industry growth rate and expensive exit costs, pose considerable obstacles to new market entrants. This is because for example, large start up costs and initial losses are threatening to new firms. In that, immediate price wars are apparent due to the inherent low cost characteristic of the industry. To make matters more difficult, there is scarcity of landing slots. National carriers use a high percentage of these, as do established firms with high traffic consistency like Ryanair themselves. Thus the threat of new market entrants is at a moderate level.

Crucially, Ryanair have been able to differentiate their market position from the ones of competitors, both in terms of price and the product’s added value. In fact, the Irish firm operates via secondary airports. Such a strategy has meant they avoid firstly, expensive taxes charged by primary airports and secondly, engagement in direct competition with network airlines. Nonetheless, Ryanair is in direct competition with another low cost ticket provider, easyJet. Resultantly, these two largest low cost carriers (LCC’s) within the industry implement different strategies. Fundamentally, easyJet flies from primary airports and offers relatively better services. For instance, there are no weight limits for luggage brought on board. This differentiation is vital to the company. It is clear that on many levels other than ticket price,

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