Ryanair, Competitive Advantage
Identify whether your company has a competitive advantage or disadvantage in its primary industry. What is the basis of its competitive advantage or lack of?
Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Achieving competitive advantage strengthens and positions a business better within the business environment.
Ryanair operates in a very competitive market with in Europe. Considering the current economic climate this market has become increasingly more competitive with a far greater emphasis on value for money.
It is evident from Ryanairs records that they hold a competitive advantage in their area of business. This is proven from the profitability percentage which is close to 15% considering the average figure is 3%. This is achieved by Ryanairs low cost business module.
CEO Michael O’Leary transformed Ryanair into a low cost airline; this has been instrumental to Ryanairs continued success throughout the years.
The practices that have allowed Ryanair to achieve and maintain this competitive advantage include
A single passenger class: Ryanair only operate one class, economy, this allows them to target the majority of customers whether they be price conscious business travelers, students, or families. It also allows them to keep costs down as it eliminates the need for higher standards.
A single type of aircraft: Ryanair mostly use Boeing 737-800, this allows everything to operate uniformly keeping maintenance costs very low.
Contracting Out: Other than in Dublin Airport, because it is their main hub, they would normally contract out services such as aircraft handling, ticketing, and baggage handling to third parties. Ryanair is able to obtain competitive rates and multi-year contracts at fixed prices, limiting exposure to cost increases.
Staff Costs and Productivity: In order to control employee compensation costs, the firm implements a performance related pay
Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Achieving competitive advantage strengthens and positions a business better within the business environment.
Ryanair operates in a very competitive market with in Europe. Considering the current economic climate this market has become increasingly more competitive with a far greater emphasis on value for money.
It is evident from Ryanairs records that they hold a competitive advantage in their area of business. This is proven from the profitability percentage which is close to 15% considering the average figure is 3%. This is achieved by Ryanairs low cost business module.
CEO Michael O’Leary transformed Ryanair into a low cost airline; this has been instrumental to Ryanairs continued success throughout the years.
The practices that have allowed Ryanair to achieve and maintain this competitive advantage include
A single passenger class: Ryanair only operate one class, economy, this allows them to target the majority of customers whether they be price conscious business travelers, students, or families. It also allows them to keep costs down as it eliminates the need for higher standards.
A single type of aircraft: Ryanair mostly use Boeing 737-800, this allows everything to operate uniformly keeping maintenance costs very low.
Contracting Out: Other than in Dublin Airport, because it is their main hub, they would normally contract out services such as aircraft handling, ticketing, and baggage handling to third parties. Ryanair is able to obtain competitive rates and multi-year contracts at fixed prices, limiting exposure to cost increases.
Staff Costs and Productivity: In order to control employee compensation costs, the firm implements a performance related pay