At the very heart of this strategy is the intent to keep its fares as low as is conceivably possible and thereby live up to its name as “The Low Fares Airline”. Experts say Southwest Airlines was among the first aviation companies to exploit the opportunities that existed in the low-cost airline market segment (Dobruszkes 2006; Kew & Stredwick 2005). professional specifically for you? IvyPanda, 27 May 2020, ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. Today, the airline still reaps the benefit of being among the first airline companies, in Europe, to adopt the low-cost airline strategy. Even they started restructuring; their strategy was not enough differentiated and their cost advantage was too low to be profitable. There are many low-cost airlines in the world. Sull, D. 1999, ‘Case Study: easyJet’s $500 Million Gamble’, European Management Journal, vol. IvyPanda. Ryanair can cut some cost, so it can set competitive price to passengers. Further, the linkages in the airline’s value chain and their resource base will be analysed, considering Hamel and Prahalad’s (1990) core competency model (inside-out approach). We utilize security vendors that protect and According to Mr O’ Leary (2005), new planes will enable him to drive down average fares by 5% a year causing a “bloodbath”. Ryanair’s strategy is based on providing a no-frills service with low fares to stimulate demand from budget-conscious travelers. Competing with new entrants of competitors (and differentiators), Ryanair was able to launch an “all out war”, lowering prices and remaining profitable whilst increasing the frequency of flights and establishing new routes (Case Study). The differentiation focus variant focuses on generic Strategy focuses on the unique demands of the market to maximize the efforts. By flying to primary airports, the latter has had an edge above its competition because its customers can get to their destinations faster than Ryanair’s customers who have to board a taxi, or train, to get to major cities. Ryanair is one of the most cost effective airline service providers in Europe. In later sections of the study, this paper shows the operational areas where the organisational strategies of both organisations converge and diverge. 3226 Words 13 Pages. These strategic factors made the airline more profitable than other flag carriers did. be recovered from the customer through the high pricing. 2006). IvyPanda. - High royalties for the sales The two airlines are also the most popular low-cost airlines in Europe. 3 = hybrid strategy. d) verification of total cost ownership. In this regard, both companies have gained the reputation of being the biggest low-cost airlines in Europe (Wallach 2015). If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Your privacy is extremely important to us. Ryanair has evolved from a family owned business into one of the most successful regional brands in the market. Pizza Hut provides another successful Value Chain Analysis Example where organisation outpaced competitors by re-configuring value chain activities to ensure quick delivery. Ryanair’s market strategy has focused on cost leadership because it strives to become the best company in the low-cost market segment (Mayer 2008; Thomson & Baden-Fuller 2010). It also flies to more than 180 destinations in Europe (Mayer 2008). Ryanair already faced losses and therefore, the CEO adopts the American Southwest airlines policy. They have concentrated and adopted the cost leadership business strategy to gain competitive advantage. Differentiation through price outlines the superseding of Porter’s generic strategies by the resource/competence-based strategy frameworks. ensure the integrity of our platform while keeping your private information safe. In fact the Ryanair’ strategy follows the same general principles as proposed by Porter (1985, pp.29-39) for 3 generic strategies; a) differentiation, b) cost leadership, c) focus. The company conveys these advantages to its customers by operating in secondary airports where long queues and complicated security rules rarely inconvenience customers (O’Connell & Williams 2012). Comparatively, customers who fly with major airlines have to contend with these inconveniences, thereby making them less efficient and punctual compared to short-haul flight carriers. Thompson, J. Through its no-frills strategy, Ryanair discovered that it could be profitable by working 24 hours a day and keeping its aeroplanes in the air often (Dobruszkes 2006). You are free to use it for research and reference purposes in order to write your own paper; however, you must. In Nigeria, buyers are also attracted by low price and unique strategies. The low fare strategy intertwines with the low-cost strategy because through lower costs, the company is able to offer low fares to its customers. This fact shows that this market has limitations that would ordinarily curtail the growth of companies that do not adopt an elaborate strategy. Ryanair has seen large success over the recent years due to its low-cost business model and has become the world's largest airline in terms of international passenger numbers. Ryanair then created a competitive advantage through the alignment of the three components of business systems; 1) Creating superior value for their customers (outside perspective) Ryanair vs. Easyjet: Corporate and Competitive Strategy Analysis. It created a huge demand for the airline’s services because it attracted price-conscious customers who would have chosen alternative modes of travel, or failed to travel at all, because of the high costs of air tickets. Both airlines also have similar performance indicators in the aviation sector. 4 = differentiation. Similar to other low-cost carriers, the airline also had no in-flight meals and a rapid turnaround. 2. Customers have appreciated this strategy by increasing ticket sales (Kew & Stredwick 2005). References. Show More. The two airlines are also the most popular low-cost airlines in Europe. This strategy emerged after learning that many flag carriers use large airports, such as Heathrow, thereby limiting its competitiveness on this platform. 2014, Ryanair: Strategy Report. Ryanair cuts one in three winter flights and warns of more job losses. However, choosing the right competitive strategy (cost leadership, differentiation or focus) requires knowledge of own and rivals’ cost structure. Differentiation strategy appears to be less advantageous as it’s easy for the competitors to imitate and then attract the customers towards their side. This implies high volumes or some other way in which costs can be kept low despite the inherent costs of differentiation. To expand its customer base, the company tried to please all their customers by trying to meet the customer needs of every type of market in the industry (Malighetti et al. Lastly, in Europe, too much competition in the low-cost airline sector offers minimal profit margins for existing players in the industry. Ryanair seemed to follow a “me-too strategy”; according to Osborne, K. (2005), they “tried to be all things to all people”. - Completely free - with ISBN However, a direct copy of the model not always guarantees a success. In 1986, inspired from the story of the company go after the big guys for a slice of the action and end up smashing the or British Airways high fare cartel on the Dublin-London route. B. Pastine International Airport, which is far away from the main business district. May 27, 2020. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. Jet2, Ryanair, and Easyjet are other dominant airline companies in this category. To do so, the company uses a simplified airline network. They have succeeded to maintain their cost-leadership for many years through continues cost cutting. The company chose this strategy because it did not believe that these services contributed to customer satisfaction (Kew & Stredwick 2005). The company can find different ways to develop differentiation leadership, such as- by focusing on the reliability, durability, benefits and distinctive features of products, by developing strong brand recognition and by increasing expenditure on marketing efforts like celebrity endorsements and sponsorships etc. Whether you’re a Ryanair on price or a Waitrose on quality or Rolex on luxury, when you have a clear differentiation in the market you do better.” Jacobs sums the Ryanair marketing strategy up in three sentences – to be like Aldi in the air, like Amazon on digital and to innovate faster than anyone else. IvyPanda. "Ryanair vs. Easyjet: Corporate and Competitive Strategy Analysis." In 1986, they got “stuck in the middle”, outlined by Porter (1985) as they had a limited cost advantage and no service advantage. Similarly, the company would have to pay commissions to reservation agents and pay associated operation costs to reservation computers if it used sales agents to make sales. In Nigeria, buyers are also attracted by low price and unique strategies. Global MBA Strategic Management Formative Assignment - Dec 2011 Z0928183 INTRODUCTION Ryanair was founded in 1985 with only two aircrafts and a single Dublin-London route . Jet2, Ryanair, and Easyjetare other dominant airline companies in this category. Abandoning the single-airline strategy. We are going to show up in your market and trash your yields.” (“Ryanair rolls out plans for European domination”, 2005). For example, both airlines fly to different types of airports. Published: 15 Oct 2020 . If Ryanair Holdings Plc decides to choose the price penetration strategy, it will have to set the lower price than competitors. Ryanair adopted most of the operational policies which made Southwest Airlines so successful. Ryanair invested resource to establish website for passengers. Ryanair is the largest airline in Europe as defined by passenger numbers and is the largest in the World for International passengers. The firm wanted to enhance its revenue through ancillary services offered in conjunction with its core airline services. Differentiation through price outlines the superseding of Porter’s generic strategies by the resource/competence-based strategy frameworks. Ryanair enjoys a dominant market share in the European low-cost airline market because it was among the first companies to adopt this strategy in the region (Malighetti et al. In 1990, Ryanair successfully applied their model in the European market, becoming a “no frills” airline, focussing on short haul destinations and keeping its planes in the air as frequently as possible in a 24 hour period. single fare for a ticket with no restrictions. However, the airlines employ the smallest number of people to meet the least regulatory requirement stipulated in the aviation sector (Malighetti et al. Easyjet also strives to become a market leader in the low-cost market segment. The dominant market share enjoyed by Ryanair also mirrors its high customer traffic because, compared to Easyjet, the company carries 4.5 million passengers, annually, while its rival carries 3,000,000 passengers annually (Dowling 2010). single fare for a ticket with no restrictions. Stelios’ baby is in good hands. The new low price market segment, which did not exist before in Europe, could be described as the development of a ‘blue ocean’, uncontested market space through the expansion of boundaries of the existing industry, outlined by Kim and Mauborgne (2004). However, ‘blue oceans’ are not easily protected and Ryanair has been facing competitors that try to copy their low cost approach. There are a few dimensions that are widely valued by buyers. However, Ryanair strategy in this case remained unclear. Ryanair: A low-cost business model in the european airline industry. One case describes Ryanair’s cost leadership strategy that offers their customer a low price for air travel. The third condition necessary for a successful differentiation strategy is simple: Companies must bring costs and benefits in line before implementing it. Achieves differentiation, but also keeps prices down. The successful differentiation strategy works if the company introduces a different product. Planning to turn into a “no-fares-airline” by offering flights for free (Case Study), Ryanair can be argued to follow price leadership as one of the six ways to differentiation outlined by Minzberg.