Free Case Study On Key Challenges Facing The Firm That Need Resolution
Ryan air faced the challenges of fierce competition from older, larger and well established airlines-BA and Aer Lingus. Despite increasing customer volume, the company had suffered from a great deal of turbulence and managerial crisis in early 1990s. The five chief executives were changed and losses accumulated to £20 million. In order to damage competition and survive in fiercely competitive business environment the airline revamped itself to become Europe’s first low-fares and no-frills carrier airline and established its business on the model of Southwest Airlines which has been a Texas based successful operator in the airline industry.
External analysis base on the five forces framework
The porter’s five force analysis is employed to evaluate Ryan air’s competitive position and power in the main markets where it offers its services. It draws upon hierarchical and financial aspects to determine five powers that focus on the manner and degree of appeal in an Industry (Magretta 2012). Appeal in this setting indicates to the general business productivity. Firstly, the barriers to entry in the airline market were high. Other well established, large scale airlines like the BA already dominate the market. Also, the competitor’s distributors could differentiate their services by providing many kinds of value-added services. These services required significant amount of capital, technology and governmental backing which Ryanair didn’t have initially as it was a small scale project. Chartered flights also had lower fares, which contradicted Ryan air’s aim of providing low fares to attract customers. Secondly, suppliers such as BA and many American Airlines were largely dominating the market. Threat of American dominance in air travel was an aftermath of WWII. If free market economy would be implemented, America would surely have become the monopoly in the aviation field (Diaconu Maxim 2012). Thirdly, buyers’ power is also relatively high as they had many options, ranging from well established, posh, large scale fancy airlines to the few cheaper ones and also chartered airlines. The price of ferry’s’ and railway travel also decreased, giving consumers an even cheaper option. Lastly, competition was high, which does add some unpleasantness to the industry (Magretta 2012). A couple of firms accounted for a large share of the industry’s revenue, had control on major air routes and had a large market share (Porter 2008).
Ryan air’s target was to keep up its position as Europe's leading low-cost/fare airline, operating nonstop point-to-point flights and short-pull flights. This could give Ryan air an advantage over other players operating in the same industry but lacked in offering services on routes where Ryan air was operating (Barrett 2004). The basic aim was to provide cheaper travelling for low admissions intended to make loyal customers, especially from plan cognizant relaxation and business voyagers, who may somehow or another have utilized option manifestations of transportation, or who may not have travelled at all. From the beginning, as a financial plan carrier, Ryanair was ambitious and endured a lot in hopes to achieve their aim. This included launching extra-long courses and routes from Dublin and London to different areas in mainland Europe and intra flights in United Kingdom and Ireland, which were all served by high-taken a toll, high-passage transporters (David 2005). The organization's objective was to be productive on new courses from their commencement, by pitching their admissions to be sufficiently low to pull in new clients however sufficiently high to give an agreeable working edge. Ryanair also intended to increase the frequency of services on existing routes. They provided superior quality customer care and strived to ensure that all customers left happily and satisfied with the service.
Low Operating Costs: Administration accepts that Ryanair's working expenses are among the most minimal of any European planned traveler air transport. Ryanair strives to decrease or control four of the essential costs included in running a major planned carrier: flying machine gear costs, work force benefit; client administration costs; and air terminal get to and taking care of costs (Yilmaz 2007). Centered Criteria for Growth proved to be an advantage when it came to expanding on its achievement in the markets of Europe with particular emphasis on UK and more specifically Ireland and its development of administration to mainland Europe, Ryanair implemented a reasonable development arrangement focusing on particular markets. This opened doors for proceeded with development by launching extra routes from the U.K. on the other hand Ireland to different areas in mainland Europe that are right now served by higher-cost, higher-passage transporters, expanding the recurrence of administration on its current courses and beginning new local courses inside EU nations (Maxim 2012).
Two mutually exclusive alternatives that solve the problem
One solution would be to provide better quality customer care, which is what Ryanair opted to do to a certain extent. If a customer is satisfied with the services, he is more likely to experience services again and again. Then consideration like popularity of the airline of whether it is small or large scale, don’t matter. Ryanair should have gone a step ahead and started over-the-phone booking, home delivery of tickets, and increase the comfort level in the plane. The cherry over the ice cream would be the fact that the air fares charged by Ryanair were relatively low (Magretta). Second solution could be that Ryanair should have looked for investment and then upgraded the planes by replacing them with larger, better and advanced planes. The company could modify its planes on customised basis from leading aircraft manufacturers such as Boeing and Airbus to establish its core and brand equity in the market. Bringing something innovative and differentiated would also have given competitive edge to Ryan over its rivals. Being curious is a very important part of human nature therefore, by modifying its existing services; the company would have attracted more number of customers. Modifications could have included luxury planes, special VIP lounges in planes etc. Ryanair should have thought of being different and that would have helped it solve the problem and attract a lot of customers.
Justification for the alternative chosen
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