Internal analysis of Ryanair
- Urinary currently employs 2000 people from 25 nations.
- The pay is performance related and among the highest in the airline industry. Travel concessions and participation in the share option program is granted to all employees. In 2003 over 30% of employees took part In the stock option program – the average pay per employee was about 3.0.
- CEO Michael O’Leary has significantly shaped Urinary.
- Urinary operates 72 aircrafts.
All aircrafts are of a single type. Urinary has ordered 225 brand new Boeing 737-800 aircrafts. The average aircraft age was about 10 years vs. Easy Jet’s was 5.
1 years. However with the deliver of the new aircrafts, Ryan’s figure will enhance. The average age of the fleet is important, as maintenance costs depends on this.
- Facilities: Dublin Airport facilities, but no major other ones.
- Urinary will stay mostly unhinged in 2005.
- With a quick ratio of 2.
7 Urinary has enough cash even if all liabilities have to be paid at once. Urinary has also shown good profitability.
- Urinary is listed on a stock exchange, obtaining capital in form of equity capital. In total, Urinary has 1.5 billion in shareholder funds.
The stock was very attractive to investors, outperforming its benchmark index.
- Randal NAS access to meal sleaze alerts wanly prove canapé slot licenses average airport charge applied to Urinary was less than 7.0
- Urinary has an option to get 200 additional brand new Boeing 737-800 from Boeing.
- Internet as major distribution platform with very huge attraction Ryan’s most important assets are aircrafts and access to secondary airports.
But this alone doesn’t make this airline successful: the real assets are the employees and particularly the CEO Michael O’Leary. Urinary has a solid financial statement and a good profit track which is currently negatively influenced by the ongoing price war.
Threshold and core competences and resources
- Availability of aircrafts and access to airports
- Internet as sales and marketing device
2) Threshold Competences:
- If a sudden oil price shock occurs or the exchange rate develops unfavorable this may have negative effects on net income. The ability to hedge exchange rate risks and oil prices is therefore a core threshold competence.
- Customers expect to get cheap ticket prices, punctuality and highest safety standards from Urinary.
Urinary must therefore be able to provide customers with lower fares than their competitors.
The ability to generate income from ancillary services. Threshold capabilities of Urinary are: the ability to keep flying from A to B on a low cost basis and sustaining competitive ticket prices. Core capabilities/competences: Efficient low cost base Urinary always searches for possibilities to cut costs. Low operating costs within the complete value chain, subcontracting and economics of scale. Leadership style of Michel O’Leary CEO Michael O’Leary and Ryan’s management.
The management of Urinary received several awards and Michael O’Leary was named one of “25 European business starts by the Financial Times”. High market power Urinary has a high market share, and the possibility to act as a price leader.
Effective employment handling:
Every 7th employee was promoted internally, keeping people who already know the company which in turn reduces costs and enhances motivation. Employees have also the interest to bring the company forward because over 30% already are shareholders. Sustainable competitive advantage according to Lynch of Urinary is: the low cost basis, offering of the cheapest ticket prices and the abilities of the management and the CEO leadership of Urinary.
In addition to that first mover experience may also have benefited the company.
Ryan’s dynamic capabilities
Dynamic capabilities provide a constant flow of opportunities, from which Urinary could take advantage in order to sustain the competitive advantage:
- Urinary immediately responds to opportunities and threats in order to cut costs and sustain the low cost basis or to increase profits
- Constantly shaping the internet as the main communication device to its customer.
- Urinary wants to provide the lowest fares. Therefore the company must be very flexible and always at least react competitors in terms of the price.
Ryan’s alma Is to enlarge. I Nils means to AAA constantly more routes Ana Dost AT frequencies on rotes with high demand.
As it can be seen, Ryan’s dynamic capabilities are flexibility and the ability of rapid adoption to changing conditions. Hence the competitive advantage is not static. This is what Brown and Eisenhower define as “continual revolution”.
Strength and weaknesses of Urinary
By referring to the above said, it’s possible to identify the following strength and weaknesses.
- Efficient and low operating costs
- Immediate reaction of the management to use opportunities
- Excellent career opportunities and effective employment handling
- Because of their obtained size they have to some extend pricing power
- The financial statement is sound
- High load factor
- Strong performing CEO and management
- First mover experience
- Good safety record Hedging policy
- Urinary added too much capacity in a short time frame
- Urinary doesn’t consider people without internet
- The behavior of the CEO towards government officials As it can be seen, Urinary fulfils all key success factors.
The cost leadership approach is certainly Ryan’s major strength and provides competitive advantage.
However there were some weaknesses identified: for now, the company should at least rethink its hedging policy. The classification of factors into strength and weaknesses can be misleading.
For example, the enlargement of the fleet can lead to economics of scope. But at the same time, there is the risk of creating overcapacity. Hence some issues may be both, a possible strength and weakness.
The same is true for opportunities and threats. This is a limitation of the SOOT analyses.