Ryanair is one of the most favorite airlines on earth operating from more than 44 bases with 1400 amounts of flights running per day connecting 160 areas. The deregulation which occurred in the aviation industry in Europe in the entire year 1997 can be accounted as the key factor behind its successful and rapid international expansion. Additionally, the company's low cost business model in addition has complimented the above factors and helped in the company's development (Ryanaire, n. d. ). The effect was the evolution of the company as the greatest low priced international carriers. The company has shown swift and consistent progress from enough time it was launched.
The project aims to place forth the proper interest in growing procedures in the Chinese language market. In this regard, it analyses the overall strategic environment in which the company operates. It has been elaborately presented with the help of PESTEL examination and Porter's Five Makes Model. Based on the examination, the strategy has been made for the company. It has been done using the Ansoff Matrix and the Nine Strategic Home windows. Finally, the overall evaluation of the strategy has been given according to the company's aims.
Company Objective and Vision
The company will not present or post a formal mission or vision affirmation. However, as per, Michael O'Leary's public statements the company seeks to simply continue being "the largest Low Cost Head in the Western air travel industry" (Field & Byus, 2005, p. 3). This vision is maintained and mirrored through all its business strategies which remains dedicated towards low priced performance in every components of its value string, quick gate turnarounds, non union procedures, performance established incentive compensation ideas, standardization of the aircrafts and soaring to the supplementary international airports which gain significant cost savings for the company (Field & Byus, 2005, p. 3).
External Strategic Environment
China has been slowly transforming itself into market economy. The state of hawaii has also been effective to make the transition. In fact, it has economic links with lots of the cities in the United Kingdom and gets the participation of the relevant Chambers of Business in this regard. The overall political condition is the one which promotes access of industries into the market. The sectoral delegations are given and prepared by the "Department of Trade and Industry" (Chinese Marketing and Marketing communications, n. d. ). The China Council is known as to be the most important "clearing house for trade and investment opportunities in China" (Chinese Marketing and Marketing communications, n. d. ). It provides information comprehensively for the advertising of trade and investment activities.
China's economical condition also looks favorable for the airlines industry. This is because the current economic climate has undergone restructuring which includes resulted in efficiency gains which has added to the GDP growth substantially. The current economic climate has remained in the road of an instant growth trajectory because the start of 2011. According to the 12th Five 12 months plan, China emphasizes on the expansion of its home use and makes the current economic climate less reliant on exports. The united states especially promotes overseas investment in strategic emerging sectors (Central Intelligence Company, 2011). The business would have to handle the gas expanses which were growing across all corners of the world. The company has recently undergone major losses as well as offset of its revenue growth arising from high cost of petrol. The fuel growing expenses of fuel Ryanair since 2005 has been proven in the next figure.
Figure 1: Ryanair fuel expenses as some of total operating expenditures: 1Q05 to 2Q09
(Source: Centre for Asia Pacific Aviation, 2008)
The Administration has taken energetic efforts in minimizing corruption in the united states. The country's financial insurance policies have led the overall economy towards technological progress. There has been large scale migration of populace from the rural to the urban areas. The nation has also witnessed significant development of the metropolitan based social security system. The overall socio-cultural picture appears conducive for building new operations in the country (Peng, 2007).
China has been demonstrating speedy growth in technology as well. It has also been importing technology from foreign firms. There has been modernization in the domains of technology and communication. The "China Aviation Industry Corporation (AVIC)" (NakaJie, 2011) is an business which is owned by their state and is responsible for managing various items out of which aviation is an important one. It is applicable the most advanced technology for assisting the industry. It is regarded as one of the leading companies in neuro-scientific technology and technology. It creates intensive investment in research through 33 research institutes. The technology lent to the aviation companies in China are primarily conducted by a large team of experts and academicians. This is one of the causes of the creation of the most advanced technology in China on which many of the aviation companies thrive (NakaJie, 2011).
Porters Five Forces
The activity confronting the managers of the business would be to review the competitive environment of the business. This is done using Porter's Five Causes Model. This examination really helps to identify the relevant opportunities and threats confronting the company. As provided by porter, the five causes that shapes your competition faced by a business are
The threat of entry of opponents,
The depth of rivalry existing between the established firms in the industry,
Bargaining electricity of suppliers,
Bargaining power of purchasers, and
Closeness of substitutes to the company's products (Hill & Jones, 2009, p. 43).
The following figure depicts the Porter's Five Causes Model.
Figure 2: Porter's Five Pushes Model
(Source: Hill & Jones, 2009, p. 43)
Some of the major airlines functioning in China are Air China, China Eastern Airlines, and China Southern Airlines etc. Thus, it is evident that Ryanair would need to fight against the potential competition existing in the region. Since 2003, the nation has proven a remarkable improvement in the amount of airlines functions. It shows that the industry has been flourishing lately. Some of the other opponents that the company would need to face are Changan Airlines, Yunnan Airlines, Sicchuan Airlines, Shanxi Airlines, Shanghai Airlines and Hainan Airlines (Bounova, et al, 2006). A number of the important international companies that would give challenging competition to Ryanair are US Airways Group Inc. and Delta.
The existence of numerous airlines companies in the nation results in their heavy reliance on international suppliers. "China's Xian Plane Co. makes the some 737 vertical fins, and Japan's Mitsubishi Heavy Companies supplies the wing's inboard flaps" (mscbc. com, 2010). Most the companies are said to be importing various components from the united states ground. Thus, it is evident that the bargaining electricity of suppliers would also stay high.
The China airlines industry has shown tremendous growth in its traffic in the entire year 2010. The increased variety of airlines users therefore implies that the bargaining electricity of potential buyers would also continue to be high. That is especially relevant in conditions of the flight fairs. Intensive competition ends in the airlines keeping their airfares low. Thus, if Ryanair must survive it could have to do so amidst intensive competition and through low airfares. Airfares should be competitive enough to help the company maintain a competitive advantage in the market.
The variety of passenger flights between the United States and China are likely to increase significantly by 2012. This would set the stage for strong competition in the field. As per the reports produced by the Associated Press, the country has achieved marvelous success through the breakthrough agreements which has created the way for regular, affordable and convenient flight services between USA and China. Among some of the top rivals, Continental Airlines Inc. , UAL Corp's United Airlines and AMR Corp's American Airlines can be mentioned(China Features, 2007).
Generic strategy is usually to be chosen by RyanAir by first weighing the many options in front of the business and then the consequent selection of one option best suited because of its environment. The company has to create itself and endure one of the five competitive causes (Porter, 1980, p. 35). The Generic strategy that would be suitable for the business for establishing procedures in the Chinese market has been offered by making use of the Ansoff Matrix and The Nine Strategic Glass windows. Since, the business has not run in China; the universal market entrance strategy would be based on the business's present strengths. It would also need to choose a favorable industry segment. It is strongly recommended that the company avoids immediate competition as the marketplace has already been flooded with brutal opponents. Finally, it must choose a control system and composition which allows the global procedures strategy to successfully operate at the international level (Levi, 2007, p. 61).
As per the Ansoff' development and development strategy, Ryanair can carry out the marketplace development strategy, which would mean it would have to develop new markets for its present services. The next diagram would help understand the Ansoff's matrix.
Figure 3: The Ansoff's Matrix
(Source: Campbell & Craig, 2005, p. 105)
The market development strategy of Ryanair would be to place its existing services in the Chinese market. Market development consists of development of new markets for the current servicers made by the company. In cases like this, it would necessarily be considered a low fare strategy. The international airlines working in China have also been growing fast. That is demonstrated by the following diagram.
Figure 4: Chinese Airlines Development
(Source: Flight Network Information and Evaluation, 2011)
The target market should be the people belonging to the center income group. Previously, the air travel fares used to be extremely high and then the flight services could be availed only by the high income group in the populace. However, with the GDP growth, the general standard of living all across the earth has increased. With this more and more people can now spend the money for services. Moreover, trip fares have also shown a progressive decrease over the years. With a lot of the population falling in the middle income sets of the population, it is strongly recommended that Ryanair should target exactly like well. Thus, it would primarily suggest keeping the journey fares low and competitive target towards the people.
The Nine Strategic Windows
The generic strategy of the company has been elaborated using the nine strategic windows as provided by Solberg. The windowpane is primarily useful in deciding whether the company should opt to internationalize.
Figure 5: Nine Strategic Windows
(Source: Hollensen, 2009, p. 6)
In principle, the company cannot decide the amount to which it would internationalize. It is based on the marketing environment which exists in the international market. The tactical habit of the firm would depend on the competitive composition of the industry in the international market. In the event the degree of industry globalism is high, it is found that the interdependencies between different facets also continue to be high. Interdependencies are present between different markets, suppliers and customers and the market remains dominated by lots of large players (Hollensen, 2009, p. 6). In this case, the best players already functioning in the market are US Airways Group Inc. and Delta.
Preparedness for Internationalization
The condition of the company decides this dimension. The level to which Ryanair is prepared when planning on taking international strategies is primarily based on its abilities to follow those activities available on the market. A number of the personal functions and skills would be ethnical sensitivity, language etc. The money available or the business's experience in its international efforts would also play a major role. A firm which is ready and mature, is likely to dominate in the international market and consequently gain greater talk about of the market (Hollensen, 2009, p. 6). As per the health of the business, it is at a mature period to internationalize. Additionally it is able to strengthen the company's global position. Thus, it would fall season in the ninth quadrant of the grid depicting the company's abilities to enhance its market position. The major factors which can pose a risk to the business is the escalation in fuel costs over time, the level of competition that already existing in Britain and European countries and at times unfavorable attitudes from the regulatory systems in Ireland, Britain and europe. The following shape demonstrates the company's fleet expansion plan.
Figure 6: Ryanair- Fleet Growth Plan
(Source: Centre for Asia Pacific Aviation, 2008)
Ryanair's functions in China would be primarily targeted at the middle income group in culture. The predominant setting of campaign would be advertising through the electronic media, say the internet and the tv screen. Ryanair's must go for extensive press coverage emphasizing on its good deal of tickets. However, advertising shouldn't be predicated on making direct comparisons or attacking the competition. This is because it's been accused of doing so in prior phases. Advertisements shouldn't be misleading and should be focused on the claims that the company makes. Choosing the right destination should be considered a major aspect of the company's strategy. The routes should be chosen while guaranteeing the fact there are less number of flights operating for the reason that place. It would be crucial to make an analysis of the demand of the various places before choosing the vacation spot. The company must provide great emphasis on its customer support strategies. Catering to the customer's needs and requirements would be one of the ways of earning goodwill and reputation. Individuals using the plane tickets should be given the proper rules and information plus they must be be confident that their travel experience would be safe and free of hurdles. Ryanair should also connect with its customers through web forms and e-mails. Special attention should be given to enhance employee relations in the company. Employees must get the correct working conditions and remunerations. Work schedules should be fixed and based on shifts. Moreover, the business shouldn't allow unionism. Quite simply, the human source strategies should be so that it would enhance employee relations and output in the organisation.
It sometimes appears that Ryanair's key strength lies in its efforts to keep up a successful low priced strategy on the market. This might also account for the primary basis on which it would expand businesses in the Chinese market. The exterior macroeconomic environment also looks conducive for executing operations. The existence of a huge human population and large customer base would provide the substantial demand because of its services. However, it is found that we now have a large number of major players already existing in the market like US Airways Group Inc. and Delta. This might pose significant competition for the business. It is also to be observed that the fuel costs have been rising all over the globe and the problem is same in China. According to the Ansoff's Matrix, the business should undertake the market development strategy in which the services would stay the same as the market would have to be developed. For this strategy, it's advocated that the middle income band of the population must be targeted as this makes up about a large percentage of the populace. Finally, the nine tactical windows present the company's preparedness for internationalization. It is seen that with its present condition, the company could effectively setup operations to improve its global occurrence. This might be complimented by the huge demand for low fares plane tickets in China and the lifestyle of a substantial customer platform.
Developing measurable objectives account for one of the main actions that might be undertaken for making certain the programs or assignments are aligned to create results. The first lessen that was gained was to cater to the aims of the study. The entire task was undertaken keeping the objective in emphasis and it was also made certain that all activities undertaken with the objective was aligned to the same. The second most crucial lessons learnt from the process was providing to the instructional targets. According to the instructions for the analysis, the task required extensive research and data collection. The main quality aspect of the task revolved around the fact that instructions were attained and the data collected and analyzed was catered to the same. The task allowed hardly any room for diversion from the key trail as it provided tight guidelines for the process. Also, the guidelines were guaranteed by a fixed number of time during which it had to be completed. Thus, another learning outcome of the task was the delivery of the result predicated on time constraints and instructional recommendations. The job also helped to develop the application objectives. Since it is a tactical management project, focusing on the strategy of Ryannair to broaden functions in the Chinese market as a global strategy, it required intensive use of tools and ideas. It helped to realize the requirements of the tools and their request at the right place. It required understanding of the requirements of the project and the outcome that it aimed to bring about. This required request of the right tools at the right place and finally analyzing the results that was brought forth. Being a strategic management task, it offers helped to build up analytical skills form the study. Moreover, it has helped to get theoretical knowledge and understanding of the study. A study into the future prospects and strategies of Ryannaire has definitely been useful in boosting knowledge about the business enterprise and its ongoing businesses which would prove to be ideal for the further projects to come.
Improvement is necessary in prior planning of the goals. It's important to plan the project beforehand and arranged small objectives. The simplest way of doing the task is to create small targets and allocate time for each and every activity. It must be guaranteed that each activity is directed towards attainment of the job aims and aims. Moreover, the small activities should not be lagging behind and really should follow suggestions and instructions. In case one particular activity lags in back of, then the overall framework must be changed keeping the primary objective fixed. The primary objective must never be improved. Another learning final result was the involvement in the training opportunity. The task provided a learning platform which was beneficial for uplifting the existing knowledge in the topic. Subjective and domain knowledge has been enhanced through the participation in the study. They have provided the right possibility to learn, practice and explore with other colleagues.
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