CASE STUDY SCENARIO

Expansion in Foreign Markets

Introduction1

Overview of the Market1

Idea of Low Cost Airlines1

Assessment of External and Internal Factors3

Market liberalisation3

Low Cost Airlines Competition in Selected Region4

UAE and Kuwait Markets5

Market Entry Strategies5

Short Term Options6

Southwest Effect6

Long Term Options7

Licensing7

Franchising7

Joint Venture7

Functional Strategies8

Positioning8

Pricing8

Distribution9

Promotion9

Achieving Collaborations9

Strategic Audit9

Bargaining Power of Suppliers9

Bargaining Power of Customers10

Threat of New Entrants10

Threat of Substitutes10

Rivalry11

Better Choice11

Organisational Structure12

Implication for Management12

Strategy, Control and Structure13

Conclusion15

References17

Appendix20

Expansion in Foreign Markets

Introduction

Ryanair Ltd. is an Irish airline. They have their headquarters on the airports of Dublin airport in Swords. Cathal Ryan, Declan Ryan, father Tony Ryan and Liam Lonergan are the founders of the airline (www.ryanair.com). At the time of deregulation, the Irish government repudiated the idea in order to guard Aer Lingus, although Thatcher's pro-free market stance granted the services (Adler, 2001). They operate primarily in London Stansted airports (www.ryanair.com). They have more than 300 Boeing 737-800 aeroplanes. Ryanair has experienced swift development due the factor of deregulating aviation industry in Europe, 1997. It was the time when low-cost business model came into the market. By 2007, they were operating in rendering their services to 516 routes in to 26 destinations from 26 bases.

The aim of this report is to assess the external and internal factors that influence the aviation industry in UAE and Kuwait. It also explores best international expansion opportunities for Ryanair. The Ryanair started in 1985. On start-up, it had only 57 members in its staff. It emerged as the first airline of Europe and kept gaining the success with time. The company is known for its competitive advantage by offering first low-fares, no-frills services. The company has earned profits in times of economic instability. Ryanair considers the provision of good services to its customers as its social responsibility (Wall & Rees 2010). This paper explains the market entry strategies that Ryanair should follow in order to enter selected international market. It also discusses the functional strategies as well as structural demands of the foreign markets. China and India are the most suitable countries in which low cost air travel can be expanded. The growth potential in these countries is huge (Keegan 2002). Countries in the Middle East: Syria, Jordan, Asian portion of Turkey, Lebanon, Iraq, Israel, Iran, Egypt, Saudia Arabia, Oman, Kuwait, Yemen, UAE, Bahrain, Qatar, Oman (Aaker, 2011; Baker, 2004).

Overview of the Market

Idea of Low Cost Airlines

The concept of low cost air services has grabbed major part of market share of the aviation industry in lesser time. In Europe, the number of low cost airlines operating is 40. They cater to 38% of passengers of air traffic. They also account for 23% of IFR operations which are defined as total instrumental flight rules. It is necessary to understand the services of low cost airlines. The service idea initiated from United States and then spread in Europe and the rest of the regions (Mellahi, Frynas & Finlay, 2011). They offer lower prices for air transport. They manage to cover the costs by eliminating different services provided in traditional ...