QUESTION
QUESTION
Ryanair is one of the most cost effective airline service providers in Europe. They have adopted the business model of Southwest airline of USA. The main theme of their business model is cost leadership. They have concentrated and adopted the cost leadership business strategy to gain competitive advantage. As per the demand and requirement of the customer, they came up with this kind of strategy to meet the customer’s need and requirement at a lowest cost fair. Their main slogan is “You get what you pay for”. It shows that they are very much focused towards their strategic considerations and they only provide the travelling service to the customers at the lowest fair and apart from that if any customer requires any kind of additional benefit or leverage then they need to pay for any particular service or the goods. It is really an effective strategy which is being adopted by the Ryanair in Europe and they are enjoying this strategy and giving a tough competition to the other revelry players in the market such as Lufthansa, British Airways and others.
SOLUTION
Although Ryanair is enjoying the cost leadership strategy and making a good customer base and market share in European market. But they need to take some more steps to move to the next level and increase their market share globally, such as
- Risk Plan & Crisis Management: They are still lacking in their risk planning and crisis management and at this low cost strategy they need to be very much conscious regarding any kind of unwanted risk or crisis that may occur at any point of time and at any situation. So it is very much required to keep some crisis management plan and risk planning and cost considerations according to that.
- Cost leadership not a long run strategy: Cost leadership strategy is not a long run strategy. They are enjoying this currently but as the more competitors will enter in the market then in that situation they will have lots of issues regarding the cost considerations. They are now running their flights at the lowest fair deal and they are enjoying this strategy in the market due to presence of the high profile airlines in the market. They have initiated this low cost fair airline in Europe based on the business model of South west airline of USA. But for the long term perspective it may not be a good or effective strategy for Ryanair.
- Better customer experience: It is very much obvious if the customers are getting a cheap airline service they cannot expect the high profile services. But although Ryanair customer are having a lot of issues with the kind of services they are experiencing with Ryanair. So they need to work upon this issue and they need to take some effective steps towards the customer satisfaction and customer loyalty.
- Giveaway Strategy: Giveaway is again a good strategy that is being adopted by Ryanair. They provide free seats to the passengers if there are no any bookings till the flight departure. This is really an effective strategy to earn customer loyalty but in other terms it may hinder their effectiveness and their brandings by saying that they are misusing their strategy and it is also creating a huge issue for the other airlines in Europe.
These are the various strategies which are somehow being followed by Ryanair and somehow still missing from the required parameter. So they need to work upon these aspects to make themselves more effective and strategic for the long run of business and to gain sustainability in the business.
Advantages and Disadvantages
There are various advantages and disadvantages mixed with their business strategy.
Advantages:
Their cost leadership strategy is really a huge advantage for them in Europe. They took an initiative and adopted the model from Southwest airlines. It worked for the Ryanair as a competitive advantage.
Add on earning by selling products and service to the airline passengers is again an advantage for Ryanair. They are earning around 14% of their revenue by this strategy.
They are working on the same model of low cost airfare to provide the customers a cheap and limited airline services.
Disadvantages:
There are various disadvantages incurred with their business model, such as
They are decreasing their customer loyalty.
Their customer’s experience is not really good and according to various surveys it is being found that their customer are experiencing lots of issues regarding the kind of services they are offering to their passengers.
Cost leadership strategy is not a long run strategy; they may face issues with this strategy as the various competitors come in the market.
Recommendation
Ryanair is doing good and have adopted a good and effective business model and they are also enjoying this in European market. But if we talk about their long run perspective then it will be a less effective part for their business. To make it more effective and sustainable they need to work upon their strategic consideration and need to enhance their strategic goals and perspectives. They should work upon the further reduction of the price and fair in other aspects like by offering various offers and quiz contests and various other audience extracurricular activities.
To sustain in the market for a long run, the market player must be more effective and proactive in taking steps to beat the competitors. Otherwise the competitors will not leave any chances of beating the existing market players.
They should keep on working towards the adoption of new and effective strategy for the better growth chances in the European market. Apart from this, they should also try to go to the other European countries and spread their business globally. Then it will be a kind of effective and sustainable business model for the Ryanair as the Southwest airline is doing.
Employee and staff satisfaction is very much required in any service industry and here in the case of Ryanair the same is missing. To make their strategy more effective they need to work upon the employee satisfaction and need to enhance the customer service aspects. Customer satisfaction is the end result that will lead to the customer loyalty and increase in market share.
We can conclude that the Ryanair is doing good and has adopted a good business model as per the need and requirement of the European customers. But they should not stop with the same strategy and they need to carry on with the further research and development of the new strategy that may add extra advantage to their services and may help in business growth and further support them in achieving competitive advantage and sustainable development for the long run of the business.
Reference List
The why and how of scenario planning’, in V. Ambrosini, G Johnson & K Scholes (Eds.), Exploring Techniques of Analysis and Evaluation in Strategic Analysis (Prentice Hall, 1998).
Barney, J.B. ‘Looking inside for competitive advantage’, Academy of Management Executive, 9, 1995, pp 49–61.
Porter, M.E. ‘What is strategy?’, Harvard Business Review. November–December, 1996, pp 61–78
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