Strategic Business Plan for Ryanair Research Proposal

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Bargaining power of suppliers

Price of aviation fuels is directly related to the cost of oil.

Regional airports have little bargaining power as they are heavily dependent on one airline.

4. Bargaining power of customers

Customer are price sensitive and switching to another airline is relatively simple

5. Threat of substitutes

a. UK -- none

b. Europe

c. Driving holidays

d. High- speed trains

e. No loyalty of customers (Ryanair, 2009)

B. Ryanair - Value chain analysis

Cost-containment is the focus of the low cost airline and includes the following:

Cost containment realized through spending as little money possible for advertising with all marketing identified as 'in-house' marketing to customers to increase turnover;

Cost containment realized through turning the costs of food and drinks on a flight into a revenue stream through making drinks and a selection of food available at a reasonable price;

Cost containment realized through creating additional revenue through such as car rental, travel insurance and travel reservation services;

Cost containment realized through exploiting the lack of provision of airport air bridges;

Cost containment realized through enforcing strict policy that is a 'no refunds' policy;

Cost containment realized through maintaining a homogenous fleet that results in maintenance efficiency and lowers pilot/employee training costs;

Cost containment realized through not selling tickets for connecting flights; and Cost containment realized through primarily flying to secondary airports offering lower landing and handling fees. (Ryanair, 2009)

C. Ryanair -- SWOT Analysis (Strengths, Weaknesses,

Opportunities & Threats)

This strategic plan addresses the following key strengths, weaknesses, threats and opportunities which apply to Ryanair Airlines now and in the foreseeable future:

1. Strengths

Low cost leader

Innovative cost reduction First- mover advantage

Established market share

Substantial growth

High load factor

Established image

Established routes / network

Major earning from innovative ancillary scheme

Single model of aircraft reducing training, maintenance and supervisory costs

High turnarounds resulting in maximum aircraft utilization

100% e-tailing eliminating intermediaries and distribution costs

Lowest labour costs due to non-unionized labour forces.

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(Ryanair, 2009)

2. Weaknesses

Poor employee relations

Volatile customer relations

Antagonistic relationship with competitors

Uncharacteristic management expansion

Dependence on Michael O'Leary

Negative press reports

Long distance of its airports from city centers

High sensitive to any taxes that may be imposed

Continued sustenance of cost-based business operations in a dynamic market. (Ryanair, 2009)

3. Opportunities

Further growth

Advanced cost reduction

Offering free flights

EU expansion

Expansion of ELFAA

Merger / acquisitions could be a way to stretch its operations to popular business routes and leisure destination

The U.S.-European "open skies" agreement could be source for increased routes and passenger traffic inwards

Plan to expanding operations into non-European markets in the near future (Ryanair, 2009)

4. Threats

Increased competition;

New entrants;

Alliances / mergers between competitors;

Industry criticism;

Antagonistic attitude of EU commissioners;

Non-expansion into new EU states;

Trade unionism;

Substitute transportation, cars trains; and Traditional airlines are also cutting fares and costs which could affect the market shares of Ryanair;

Limited or no slot availability at major airports could be a hurdle to expansion plans. Impending legislations for environment protection and customer compensations will increase service costs. Additional fleet may require new terminals and secondary airports which mean Ryanair would need to bear higher costs; and a low cost image that has become its brand name tag will be difficult to erase when it wishes to move up the value chain. (Ryanair, 2009).....

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