Swot Ryanair
Miriam Mennen
An Analysis of Ryanair’s Corporate Strategy
Essay
Document Nr. V145623 http://www.grin.com/ ISBN 978-3-640-56879-6
9 783640 568796
Global Corporate Strategy – A Case Study on Ryan Air
An Analysis of Ryanair’s Corporate Strategy
Executive Summary Ryanair was founded in 1985 as a family business that originally provided full service conventional scheduled airline services between Ireland and the UK. The airline started to compete within the confines of the existing industry by trying to steal customers from their rivals, especially the state monopoly carrier Air Lingus, outlined by Chan Kim and Renée Mauborgne (2004) as “Bloody or Red Ocean Strategy”. Ryanair seemed to follow a “me-too strategy”; according to Osborne, K. (2005), they “tried to be all things to all people”. Even they started restructuring; their strategy was not enough differentiated and their cost advantage was too low to be profitable. In 1986, they got “stuck in the middle”, outlined by Porter (1985) as they had a limited cost advantage and no service advantage. 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) 2) Supplying their superior value-adding activities in an effective and efficient manner (which jointly form the “Value Chain”) 3) Possessing over the resource base required to perform the value-adding activities, (inside perspective) According to Porter (1987), “corporate strategy is what makes the corporate whole add up to more than the sum of its business unit parts.” It is seen to be concerned with the overall purpose and scope of the organisation and to meet the expectations of major stakeholders. All aspects of Ryanair’s value chain are important to the company and their shareholders as Ryanair’s decisions add value to both. The following report outlines the three perspectives of shaping Ryanair’s business system. The value
An Analysis of Ryanair’s Corporate Strategy
Essay
Document Nr. V145623 http://www.grin.com/ ISBN 978-3-640-56879-6
9 783640 568796
Global Corporate Strategy – A Case Study on Ryan Air
An Analysis of Ryanair’s Corporate Strategy
Executive Summary Ryanair was founded in 1985 as a family business that originally provided full service conventional scheduled airline services between Ireland and the UK. The airline started to compete within the confines of the existing industry by trying to steal customers from their rivals, especially the state monopoly carrier Air Lingus, outlined by Chan Kim and Renée Mauborgne (2004) as “Bloody or Red Ocean Strategy”. Ryanair seemed to follow a “me-too strategy”; according to Osborne, K. (2005), they “tried to be all things to all people”. Even they started restructuring; their strategy was not enough differentiated and their cost advantage was too low to be profitable. In 1986, they got “stuck in the middle”, outlined by Porter (1985) as they had a limited cost advantage and no service advantage. 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) 2) Supplying their superior value-adding activities in an effective and efficient manner (which jointly form the “Value Chain”) 3) Possessing over the resource base required to perform the value-adding activities, (inside perspective) According to Porter (1987), “corporate strategy is what makes the corporate whole add up to more than the sum of its business unit parts.” It is seen to be concerned with the overall purpose and scope of the organisation and to meet the expectations of major stakeholders. All aspects of Ryanair’s value chain are important to the company and their shareholders as Ryanair’s decisions add value to both. The following report outlines the three perspectives of shaping Ryanair’s business system. The value