Ryanair Case Study Solution
Q-1 what position in the market has Ryanair primarily occupied? In other words, what is Ryanair’s generic strategy? (Be sure to discuss the type of advantages it is seeking and its competitive scope)
Rynair airline is the low-cost airline, which started its operation s from London, Dublin. The airline started its operations as the local airline, taking the flights of within the country. In initial year the airline targeted the price conscious target market with less discretionary income. The company targets the low tier market which travels frequently and wants affordable rate.
To cater these market need, the company practice the cost-leadership strategy by offering the lowest rate tickets, and charged for every single facility used by the customer in the plane even the use of toilet. However, the company continued to amend its cost leadership strategy by becoming nice to the people, which mean it made a mix of good customer service and low prices. This approach proved as the competency of the airline, as it helped the airline to achieve big sales margin by catering the cost-conscious customer base.
The advantages of being the cost leader benefit the airline in maintaining its competitive advantage. The company maintained its competency by lowering its operational cost. In doing so, the company took a firm control on the prices of fuel, which got lower in current time. Moreover, in maintaining the advantage, the airline continuously amend is offering in lowest possible price. One move was offering a good customer service and lifting of cost on some facilities(cost on carrying hand carry luggage).furthermore, in maintaining the cost lowest compared to the other airlines, the airlines focused on economies of scale, which made airline to take maximum numbers of trips in a certain day. The approach reduced the overall operating cost and enhanced the profits and even the brand image of being most efficient.
The company started by positioning itself as a low-tier product/service., which is cheap and convenient. This positioning strategy helped the company to make a flexible business strategy. However, it is hard and complicated for other airlines to pursue the same cost-leadership strategy or replicate the strategy as it would cost them the initial brad positioning to get disturbed and will create ambiguity. Moreover, for big airlines, luxury is the key component, if these airlines also start work on cost leadership, they will lose the brand value and also the brand identify, causing airlines to lose the profits. So it is hard for other airlines’ replicate the stagy of Rynairs, making it the sustainable competitive advantage of the organization.
Q-2 Do the recent action taken by the Ryaniar represents a change in strategy or simply an evolution of its initial strategy in the face of competitive condition? In other words has Ryanair switched from one quadrant of Porter Generic strategies to another or has it simply moved within the quadrant it initially occupied?
The matrix above depicts four types of strategies that are used by the organization in order to set strategy that best integrates the business strategy with the buying behaviors and market segmentation strategy of the organization.
The airline Rynaire enhanced its current offering by lifting the charges from some of its activities like hand carry luggage, and emphasized on better customer service, in order to gain the value u of the service. In doing so, the airline augmented its current cost leadership strategy with a mix of Differentiation focus. The question is how? The airline initiated to enhance its value of service by focusing on customer service which created differentiation among other cheap fare airlines. It started offering the extra-edge customer service, because it analyzed the rising trend in the industry which demanded service in the low price which is also termed as “value for money”, so it jumped to differentiation focus, as it curtailed its business and cooperate strategy according to the rising trend in the customer base, however, it did not shift completely from the basic strategy of cost leadership, but used a mix of two quadrants i-e cost leadership and differentiation focus.
The strategy helped the airline to flexibly adjust according to the market forces while remaining constant with the business strategy. The mix of strategic approach helped the airline strengthen its competitive advantage which is a party of it cooperate strategy. Adding value in the processes helped Airline offer beyond the lie and helped in sustaining the market even in the changing paradigm of the markets.
Further, in pursuing the differentiation strategy the airline innovated itself in terms of operations and functions which added value for the consumer. Moreover, in lifting the additional charges the airline played on economies of scale which reduced the operational cost by producing volume. It helped airline offset the additional cost incurred by lifting the charges.
Ryanair Harvard Case Solution & Analysis
Hence, it can be concluded, from the above discussion , that it not a standardized rule to use only one generic strategy to develop and frame the business strategy of the company, but a mix of one of two strategies can be used in order to create value and distinction in the market. Putting Rynair in the light, the airline followed a mix of two strategies, which were cost leadership and differentiation focus. It made the best use of the strategy by initially targeting the same customer base with initial offering and then customizing it according to the demand of that particular customer base which is known as Differentiation Focus............
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