Economic Business Strategies of Ryanair

Economic Business Strategies of Ryanair Ryanair Introduction The economics of business vary, both depending upon the industry where they operate and the style and strategy adopted by the management. Within this paper it is intended to assess those economic factors as they relate to the â€Å"low-cost† airlines. To assist with this assessment Ryanair, one of the leading â€Å"low-cost† airline operators in Europe, will be used as an example. Existing Corporate Strategy Following the liberalisation of the airline industry, the consumer demand for air travel began to increase. However, when operators such as Ryanair, an Irish based company, was one of the â€Å"first-movers† (Faulkner and Campbell 2006). in adopting a â€Å"low-cost† strategy for Europe, similar to the model successfully introduced by Southwest Airlines (2007) in the US, the levels of demand increased dramatically. As can be seen from the numbers of passengers using UK airports (see table 1). Table 1 Airline passengers Year Passengers (m) 1980 50 1990 90 2000 180 The demand for airline seats is also forecast to more than treble by 2030 to around five hundred million UK passengers. Ryanair is an Irish airline operator that commenced business in the mid 1980’s with one 15-seater aircraft, has grown to a business that now has a fleet of over 150 aircraft and carrying over two million passengers (About Us 2007). Since the beginning of the century, the company’s growth rate has improved substantially, to a position where it is now supplying air travel to around forty million passengers (see figure 1), with an expectation of this rising to seventy million within the next few years (Ryanair 2007). The company has achieved this growth by supplying consumers with consistently low prices. It maintained these low fares by creating a â€Å"no frills† price advantage (Pettigrew et al 2002), which differentiated its service from the established airline competitors (Porter 2004, p.207 and Kotler et al 2004, p.407). In other words Ryanair offered cheap fares with lower levels of service. For example, free in-flight meals were eliminated. At one stage the no-frills policy included not providing ice for in-flight drinks (Creaton 2004, p.169), although this was reintroduced following complaints. However, to sustain this position, as Lynch (2006) and Faulkner and Campbell (2005), who submitted that to achieve and maintain low price in the market place, the business itself had to be structured in a way that provided a limited cost base. Ryanair has achieved this situation by taking a number of measures, which include: Maximising use of resources by using one aricraft type, increasing employee roles and reducing airpot turnaround times. Ticketless and direct selling via the Internet or phone, which served to reduce administrative costs. Use of secondary rather than main airports. This move enabled the business to negotiate lower airport fees. Single class travel, elimatiion of free inflight services and seat reservation helped reduce business costs. All of these measure have given Ryanair the flexibility to be able to maintain a flexibility of price, from 99p owards, and service and helped it to react effectively to industry changes. In terms of profit and the financial contribution that Ryanair’s strategy has achieved, as can be seen from the following financial data taken from the relevant company’s website, shows how successful Ryanairs appraach was in 2003, when compared with its main competitors (See table 2 below). Table 2Net profit percentages Company Percentage Ryanair 17.81% Easyjet 7.98% British Airways 7.28% Challenges There are significant future challenges facing the low-cost airline industry in general, and Ryanair in particular, which will need to be addressed. Amongst these are the following: Competition It increased regional and global harmonisation and development of air travel; Ryanair is bound to face increasing competition within the next five years. This could materialise from developing nations within Europe, where there is significant scope for new entrants (see figure 2) It could also result from the recently signed â€Å"open skies† agreement between the EU and US (Milmo and Gow 2007). Both of these actions could result in loss of market share to new entrants, which would impact adversely upon Ryanair’s current level of success and financial results. Similarly, Ryanair’s own growth predictions could reduce its profitability levels. Whilst growth brings economies of scale, it can increase management costs, which is counter-productive to efficiency (Creaton 2004, p.250). Taxation At present the airline industry is heavily subsidised. As identified with the Bized (2004) report, this benefits the industry players by around  £6 billion annually. These benefits include zero VAT, capped landing charges and fuel tax exemption. It is anticipated the removal of these benefits, by introducing the relevant takes could reduce passenger levels by over 22% as a result of the increase in prices. Whilst it is not expected that all these subsidies will be eliminated at once, there is little doubt that for political, treasury and environmental reasons some adjustments will be seen in these areas will be seen within the next five years. Environment The major challenge facing Ryanair relates to its impact on climate change. Following recent IPCC, the EU are becoming increasingly concerned with the airline industries contribution to this global issue. As a result, these organisations have developed industry targets that are expected to be met within the next 5 years and beyond (see table 3). Unless Ryanair adapts its corporate strategy to take into account these targets, the result addition costs, or reduction in service will impact severely upon its ability to remain cost efficient and to maintain its present levels of profitability. Future Strategy As has been advised by a number of researchers (Lynch (2006) and Faulkner and Campbell (2006)) every business needs to review its corporate strategy to address future challenges. There are two ways that Ryanair can address the challenges that have been outlined in the previous section of this paper In terms of reducing the impact of competition, and making it more difficult for new entrants, the business needs to continue to seek ways to sustain its cost reduction programme. This not only means that it has to ensure that the internal management structure efficiency of the business needs to be as efficient as it has been in the past, but also that the business needs to seek new measures of cost reductions. For example, expanding its automatic check-in processes through all its locations would greatly reduce the business human resource cost. It can also sustain its lower price policy by transferring the cost of flying from ticket cost to other aspects of the travel, for example luggage. This specific action could also offset any potential airport cost increases. However, the most effective strategy to adopt in order to address all of the challenges is to develop a plan that increases the supply to meet anticipated demand, whilst at the same time reducing the cost of that supply and the effects of increased taxations and meeting its environmental commitment. The most effective plan for this achievement is the conversion of the current fleet to higher passenger capacity aircraft. For example, the introduction of a significant number of Airbus models would double capacity on those flights. From an economic viewpoint it would also reduce costs. For example the maintenance and servicing costs would remain the same because aircraft numbers have not been increased, but will reduce as a percentage of the ticket cost. Similarly, airport costs and other taxes, such as fuel tax would also be reduced per passenger capita. Finally, because of the increased load, and higher efficiency of these aircraft, the emissions level per passenger km would also see a reduction, thus helping the business to meet its environmental targets. Conclusion As has been seen from this research, over the past two decades the business economic strategies that Ryanair has employed have been successful in helping it maintain competitive advantage, achieve passenger growth and fulfil its objective of increasing business value. However, with the future challenges facing the business from increased competition, rising taxation and environmental concerns, the business will need to adopt a that is flexible to change, whilst at the same time enabling it to continue to sustain and achieve the successes of the past. This will mean combining cost reduction with a production and supply system that reduces the impact of potential tax increases, whilst at the same time enabling Ryanair to meet the increasing demands of reducing its environmental impact. Bibliography Bized (2004). Low Flying Fares: An End to Cheap, No Frills? Retrieved 27 July 2007 from http://www.bized.co.uk/current/leisure/2003_4/010304.htm Brassington Frances and Pettitt, Stephen (2006). Principles of Marketing, 4th edition, Pearson Education Ltd. London, UK Channel 4 News (2007). If you care about the environment, you should fly Easyjet. Really? Retrieved 16 May 2007 from http://www.channel4.com/news/articles/society/environment/factcheck+how+green+is+easyjet/509642 Creaton, Siobhan (2004). Ryanair: How a Small Irish Airline Conquered Europe. Aurum Press Ltd. London, UK. Faulkner, David and Campbell, Andrew (2006). The Oxford Book of Strategy: A Strategy Overview and Competitive Strategy. New ed. Oxford University Press. Oxford, UK. De Groote, P.D (2005). The Success Story of European Low-Cost Carriers in a Changing Airworld. GaWC Research Bulletin 174. Retrieved 27 July 2007 from http://www.lboro.ac.uk/gawc/rb/rb174.html Kotler, Philip. Wong, Veronica., Saunders John A and Armstrong, Gary (2004). Principles of Marketing, 4th European edition, Pearson Education Ltd. London, UK. Lynch Richard (2006). Corporate Strategy. 4th edition. Financial Times Prentice Hall. Harlow, UK. Milmo Dan and Gow David (2007). EU Open skies deal. The Guardian. London, UK. Pettigrew, Andrew M. Thomas, Howard and Whittington, Richard (2002). The Handbook of Strategy and Management. Sage Publications Ltd. London, UK. Porter, Michael E (2004). Competitive Strategy: Techniques for Analysing Industries and Competitors. The Free Press. New ed. The Free Press. New York, US. Report (2007). The Environmental Effects of Civil Aircraft in Flight. Royal Commission of Environmental Pollution. Retrieved 29 July 2007 from http://www.rcep.org.uk/avreport.htm Ryanair (2007). About us. Retrieved 14 May 2007 from http://www.ryanair.com Southwest Airlines (2007). About SWA. Retrieved 28 July 2007 from http://www.southwest.com/about_swa/airborne.html

Comparison of American Education and Asian Eduction

Joshua R Coleman Mrs. Kumler English 10 4-26-12 Comparison of American Education and Asian Education For many years, the United States has prided itself in producing the most intelligent people in the world. Much of the U. S. ’s advances have been through the contributions of many brilliant scientists, doctors and other professionals. However, recent studies have shown that America is losing this advantage to many Asian countries including Japan and South Korea. American education has fallen short of the education found in the countries of Asia due to the lack of the competitive culture in America.To show the competitiveness of a nation one can look at a country’s population, average wages, and the amount of time spent in school. When compared to countries such as Japan and South Korea, the U. S. has a much higher population. However, it is not the total population that would make a nation competitive, but the amount of people living in a certain area. According to the National Census of 2011, there are over 300 million people in the United States living in the 3,537,422 sq. iles of the country (â€Å"Profile†). According to the U. S. Department of State, country of South Korea has a population of 48,754,657 people in its 38,023 sq. mi. To put the population of South Korea in comparison to the U. S. , imagine about one sixth of America’s population in side of the state of Indiana. The population of Japan consists of about 126,457,664 people living inside of its 145,902 sq. mi. The population density of Japan is about half of the United States’ population inside of the state of California.The population density shows how many people are competing with each other for jobs and college acceptance. Since America has such a large amount of territory, the people are not as threatened with each other, thus lowering its competition levels. Americans were once thought of having the richest population in the world. In 2010 National Wage Index, the average wage was $41,673. 83. This beats the average wage in South Korea, which is the equivalent of $33,000 U. S. dollars, yet loses to the citizens of Japan, who make the equivalent of $46,800 U.S. dollars (â€Å"2012 Average Salary Survey†). The wages help us determine whether the average man has a well paying job, for him to get a well paying job, he would probably need a good education. The amount of time spent in the classroom also may improve the superiority of the students it produces. The average American student goes to school for 6. 5 hours a day, 180 days a year (O’Mara). In South Korea, the required amount of time for children to attend school is 220 days (Pellissier). In Japan a total of 240 days is required.Students must also pass an entry exam to get into high school, thereby increasing the level of competition even higher (â€Å"Daily Life†). The longer school year and the entry exams force a student to become more focused and competi tive. South Korea, Japan, and the U. S. A. are part of the PISA (Programme for International Student Assessment), which â€Å"evaluate[s] education systems worldwide by testing the skills and knowledge of 15-year-old students in participating countries/economies (PISA). † After the 2009 test scores were published, the U.S. fell below the average in the math section but remained only slightly above average in the reading portion of the test. Japan placed fourth in the mathematics section, and fifth in the reading section. South Korea, however, was the country that had the highest scoring in both mathematics and reading, ranking at the top of the list. These tests are proof that America is not producing the level of high scoring students as Asian Countries. This is yet another example of how a competitive culture can effect and improve an education system.From what the information suggests, the educational systems in Asian countries far exceed that of America. The level of comp etition in these countries plays a major factor in their success and will continue to allow only the best and brightest students to be selected in universities and jobs. If America is to retain her status as the world’s leading producer of brilliant minds, then it must somehow improve its educational systems in order to match not just the competition within her own borders, but across the globe.

About the Marie Short House, a First For Glenn Murcutt

The Effects Of Social Media On Children - 1671 Words

Over the years more and more students have joined the Social Media phenomenon, making students the largest age group that use it. It is estimated that young people aged between 16 and 24 spend more than 27 hours a week on the internet (Anderson, 2015). Spending this amount of time on the internet exposes users to health issues such as anxiety, sleeping problems and depression. Students often find themselves in a pressurised state, as a result of the demand of immediate replies to posts and comments on Social Media accounts. While the need to follow trending topics and conversations lead to lack of sleep and later anxiety problems. The suggested average hours of sleep is 9hours per night to allow the body and brain time to function again,†¦show more content†¦Social Media is one of the fastest ways to spread news and ideas. The recent increase of radicalisation has seen extremists and terrorist organisations targeting young people to recruit. This has been done through Soci al Media sites (Home Office) which have helped them to reach out to followers and potential followers, and spread their ideas and beliefs across. Social Media sites enable people to connect and interact with people all over the world, in doing so it becomes hard to distinguish between meaningful friendship and friendship phantom through Social Media (Strogatz). Students confide with one another as they share things in common, from degrees to favourite TV shows. As these relationships form the line between reality and Social Media friendship starts to fade, as users start to confide in one another about serious personal matters beyond university or collage life. As Social Media expands privacy declines. Baruh Soysal, (2010) state that ‘private and public are rapidly away’, this means that our private and public/social lives are being infused together. The line is blurring out. People can assess other users private information by looking them up in social outlets, this causes a sense of paranoia as it is unknown as to who and how many people are surveying your account, and what they are doing with the existing infor mation. Furthermore, Social Media sites have made it easier forShow MoreRelatedThe Effects Of Social Media On Children850 Words   |  4 PagesNegative Effects of Social Networking Social networks claim to connect us; however, connections have not gotten any better and are instead turning into anti-social networks; in which you decide to take control or be controlled. Children are using more technology now than they have ever used in the past. All of the negative effects that social media and television is having on adults are far greater when it comes to the developing minds of children. 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