Question

1. Ryanair had adopted a classic "cost leadership' strategy from 1990s. Use Porter's Five Forces

Framework to analyse the competitive environment confronting Ryanair in 2014 that lead to its change in strategy by implementing the "Always Getting Better" (AGB) programme.

Answer 1

Ryanair is an airline which has its base in Ireland.It was Europe's largest airline.The main reason for its success is its low cost airline.Portor's five forces anaysis of Ryanair are -Competitive rivalry is high as there are many low cost airline trying to compete as they work on the same route as Ryanair.On many routes Ryanair has been able to control competition as a result of its experience and large size of the fleet.But in many routes there is very much competition.

Secondly,Threat of new entrants is low as entry barriers are high.Ryanair has low operational cost because of experience and economies of scale.So threat of new entrants is low.

Thirdly, Bargaining power of buyers  is high because all low cost airlines work towards reduction of operational cost and provide greater facilities to the buyers .This increases the power of the buyers.

Fourthly,Bargaining power of suppliers is high because there are only two manufacturers of airlines, Boeing and Airbus. Ryanair purchases its planes from Boeing. Boeing charges less from Ryanair. The other suppliers are of jet fuel and world trade governs the prices .So Ryanair cannot bargain the prices and so bargaining power of suppliers is high.

Fifthly,Threat of substitutes is low for Ryanair because train fares are high and take longer time.So people feel  encouraged to use Ryanair airline.

The competiting environment confronting Ryanair has led to change in strategy and Ryanair implemented the 'Always getting better ' program which includes cheaper price,flights on time,2 free cabin baggage,greenest airline ie plastic free,rooms with travel credit,many choices of ground transport,'Try something new' in Ryanair .com.