STRATEGIC MANAGEMENT (CASE STUDY)

Strategic management (case study)

Strategic management (case study)

STRENGTHS: Low fares super brand

1. Stack 'em high, deal 'em cheap. Ryan air has expanded its location as the premier emblem for decreased fares in Europe all through the present downturn. The carrier now likens itself to budget-conscious purchaser emblems like IKEA, Alde and McDonald's - other than airlines. These emblems organise well in alarming economic times.

Mr O'Leary's enduring deduction is, "low cost customarily wins". The numbers from the newest financial year (ended 31-Mar-2009) converse for themselves:

Operating earnings from expanding methods expanded 8.5% to EUR2.94 billion;

Passenger numbers expanded 15% to 58.5 million;

18 snare new airplane (year-end fleet of 181 B737-800 aircraft);

Six new bases at Alghero, Birmingham, Bologna, Bournemouth, Cagliari, and Edinburgh;

223 new routes, for a total of "800+" routes with "1,200+ every day departures" (the airline has manifestly lost count).

Ryan air tourist number development and problem constituent growth: FY06 to FY09

Source: Centre for Asia Pacific Aviation & Ryan air

 

But Mr O'Leary's argument is to double-check Ryan air can continue to manage well like IKEA, Alde and McDonald's when the investments does turn up (see below).

2. Ultra decreased allegations, high ancillaries. The carrier's non-fuel charges fallen 3% last financial year, mirroring its unswerving objective on cost control. Another 5% decline in non-fuel unit costs is directed at in FY2009/2010. Ancillary earnings expanded by 23% to EUR598 million, aiding Ryan air complete its aim of 20% of earnings (18% last year) one year before schedule. There is still considerable scope for development in ancillary parts and the carrier will organise well to continue its objective in this locality as inherent fares drop in the months ahead. (Zellner, 1997)

 

WEAKNESSES: Addicted to...Growth

1. Growth at all costs. The foremost origin Ryan air can posted letters declines in unit allegations is rising more and more sectors. All cost lines are increasing, but as long as Ryan air expands to add more routes, it doesn't matter.

Here is a abstract of Ryanair's cost lines (remembering organised tourist earnings expanded 5% and tourist numbers expanded 15%):

Staff costs: Excluding one off accusations, workers allegations amplified by 11%, mirroring a 21% increase in signify employee headcount to 6,369;

Depreciation and amortisation: +24% to EUR204.5 million. This reflects, snare of disposals, an supplemented 10 airplane supplemented to the fleet, or a 16% increase in the weighted signify number of lesser cost "owned" airplane in the fleet;

Fuel costs: +59% to EUR1,257.1 million, due to the higher cost of fuel in the time span and a 13% increase in the number of hours flown;

Maintenance costs: +18% to EUR66.8 million, due to a 23% increase in the number of leased airplane from 35 to 43 and amplified allegations originating from amplified line maintenance undertaking at new bases;

Marketing and distribution: -26% to EUR12.8 million, due to taut order on expenditure and the amplified objective on internet based promotions;

Aircraft rentals: +8% to EUR78.2 million, which is lesser than the 23% increase in the number of leased airplane from 35 to 43 in evaluation to the year accomplished March 31, 2008, ...