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The current economic uncertainty around the world makes very difficult to predict the future of businesses. We can see by this research how this particular company is managing to beat the competition in Europe as Low-cost airline and stay sustainable even in times of recession. The purpose of this report is to evaluate the key for success of Ryanair corporate strategy, using both theories and live case studies. The research paper starts with a brief history of Ryanair and their competitive advantage, and then goes through the main academic models used in the report such as: Porter’s five forces, Environmental PESTEL analysis and Porter’s generic strategies. The last section of the report is summary of the findings with recommendations.
2. Company Background
Nowadays Ryanair is placed as the biggest low cost airline in Europe. The company was founded in 1985, by Ryanair’s family as a small company operating only between Ireland and London with as little as 5 000 passengers a year (ryanair.com, 2011). Since 1994 when Michael O’Leary took over, the company started rapidly expansion reaching today 272 aircrafts and caring more than 73m passengers a year to 160 European destinations, all around the continent. (Ryanair, 2010). The annual passenger traffic grew by 8% in 2010, and the profits rose by 26% to over 401m despite the global recession. (Ryanair, 2010)
For the past seventeen years, the company has built respectable brand name and image, for providing high quality products and services. The company’s future vision goes beyond number one airline in Europe, but to be the biggest airline in the world: “Ryanair could become one of the biggest airlines in the world if chief executive Michael O’Leary’s plans to increase passenger numbers to between 120m and 130m over the next decade come to fruition” (McAteer, O., 2011)
3. Competitive Advantage
Competitive advantage can be defined as a factor allowing one organization to serve better its customers than others. In other words the process is consisted of creation of better understanding the customer values, and gaining exceptional output. (Hao Ma, 1999) Stewart (1997) argues that exist assets which can boost the organization’s performance and build stronger competitive advantage. Researchers like Porter (1999) argue that the key condition for the company’s success in a rival environment is finding and attracting unique resources which can bring great value to the firm. But if we take that businesses manage to find competitive advantage and increase the level of performance, usually the rivals compete by adjusting or even enhancing the successful strategy as their own initiative, and the consequence of that is loss of competitive advantage. (Zook and Allen, 2001; Ghemawat, 1986; Reed and DeFillippi)
4. Porter’s five Forces
The Porter’s five Forces concept, was developed by...