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Strategic Management Case Study

Strategic Management Case Study. By: Thomas Elias, Alison Tardie , Loren Plourde, and Brandon Plourde. Overview. Company Overview A Brief history of Ryanair Existing Strategy, Mission, and Vision Existing Objectives and Strategies New Mission and Vision External Assessment

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Strategic Management Case Study

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  1. Strategic Management Case Study By: Thomas Elias, Alison Tardie, Loren Plourde, and Brandon Plourde April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  2. Overview Company Overview • A Brief history of Ryanair • Existing Strategy, Mission, and Vision • Existing Objectives and Strategies New Mission and Vision External Assessment • Industry analysis • Opportunities and Threats • EFE Matrix • CPM Matrix Internal Assessment • Organizational Structure • Financial Condition • Strengths and Weaknesses • IFE Matrix Strategy Formulation • SWOT Matrix • Space Matrix • Grand Strategy Matrix • Matrix Analysis • QSPM Matrix Strategic Plan for the Future • Objectives • Strategies Strategic Implementation • Management Issues • EPS/EBIT • Projected Financials Strategic Evaluation Balanced Score Card Ryanair Update April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  3. Ryanair History 2004: Most Popular Online Booking 1985: The Beginning • 25 Employees • 15 Seat Aircraft • 5’2” Standard • Most Popular online, 2003 • 98% online booking 1997: We go Public First “Fare War” 1986: First Fiscal Year 1995: Low Fares Win! 1987: First Jet • Overtakes Aer Lingus, British Airways • Largest Irish airline, Dublin • 10th Birthday • 3 BAC 1-11 Aircrafts • Opened New Destinations 1990: Rapid Growth And The Upset • Accumulates £20M Losses • 20m invested • Copying the Southwest Model • Michael O’ Leary, Restructured April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  4. Ryanair History Cont’d… 8,438 employees 75,814,551 Passengers 294 Boeing 737-800 151 employees 82,000 Passengers 3 Prop Aircrafts April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  5. Existing Strategy, Vision, and Mission Vision Firmly Establish itself as Europe’s leading scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. Mission Ryanair seeks to offer low fares that generate increased passenger traffic while maintaining a continues focus on cost-containment and operating efficiencies. Strategy: Cost Leadership; Low Cost April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  6. New Vision To be the most efficient low-cost carrier in Europe. April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  7. New Mission New Mission: Ryanair’s mission is to become the (2) largest scheduled passenger airline in (3) Europe for (1) international and domestic travelers. (6)We believe by offering the cheapest fares and utilizing (4) modern technological services, (7)Ryanair will provide the best no frills airline service. Ryanair meets shareholders’ and employees’ needs through (5) sustainable profits while also providing a (9) safe and productive working environment. Furthermore, Ryanair protects the (8) community with our efficient, environmentally friendly fleet. 1.Customers 2.Products or services 3. Markets 4. Technology 5. Concerns for survival, growth, and profitability 6. Philosophy 7. Self-concept 8.Concern for public image 9. Concern for employees April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  8. External Audit April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  9. IndustryAnalysis Source: Centre for Asia Pacific Aviation and IATA April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  10. Cost Comparison April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  11. Opportunities 1. Success in Ancillary services ( leads to new open markets for joint ventures). 2. Open up their aviation repair service and flight training programs to operations outside the company. 3. Customer base is expected to grow up to 85 million passengers. 4. Pursue web-based advertising and new Reservation system. 5. Start flying into 10 to 12 primary airports (European airports have shown interest). 6. Popularity increasing in Eastern Europe and Asia for tourism and business gatherings. 7. Corporations pursuing appearance and expansion into African Operations. 8. Expand clientele during hard financial times by gaining customers who do not desire premium flights. 9. More political and governmental influence/charges in primary airports increases attractiveness in secondary airports (11 tax on European departures). April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  12. Threats 1. New IAA Rules on flying hours and aircraft regulations could increase future expenses. 2. Unpredictable and uncontrollability of rising fuel costs; €350 million in 2012 regardless of hedging. 3. Greek debt crisis and unstable European economy negatively affecting future operations. 4. Last year 14,000 Ryanair flights were cancelled due to volcanic ash disruptions, airport snow closures and repeated ATC strikes. 5. The majority of Ryanair’s profits are subject to Irish Corporation Tax at a rate of 12.5% and a raise may adversely impact Ryanairs' cash flows, finances, and operations. 6. Already paid 88 million in claims last year due to the EU 261 regulations where the airline has to cover accommodations and compensation. April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  13. Threats Cont’d… 7. In the future legislation will require airlines to pay about €1.4 billion for emissions of carbon dioxide which will rise to €7 billion by 2020. 8. Too much growth too fast; Expansion into Eastern Europe means competing with already existing players in the market and operating on even tighter margins. 9. Increased competition from alternative forms of travel. April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  14. External Factor Evaluation (EFE) April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  15. Competitive Profile Matrix April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  16. Internal Audit April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  17. Organizational Structure April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  18. Income Statement April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  19. Balance Sheet April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  20. Ratio Analysis April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  21. Net Worth Analysis April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  22. Strengths Modern/Low Cost Fleet single aircraft type; average plane age 2.94 and no plane older than 8 years on fleet. Profits increased by 25.6% from 2010-2011. Traffic grew 8% to 72 million in 2011. Ancillary revenues grew by 21% to €802 million for fiscal year 2011. Dividend of €500 million paid to shareholders in 2011 equaling €846 million returned in the past 3 years. At March 31, 2010, the company had hedged approximately 90% of its estimated fuel exposure for the year ending March 31, 2011. Number one on-time airline in Europe. Added 328 new routes to their already existing routes which gives them a total of more than 1300 routes. Revenue passenger miles (rpm) grew 14.4% between 2009 and 2010. April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  23. Weaknesses Bad Public Image; Has had several complaints filed against them by Advertising Standards Board (ASA) Complex Fee System leading to customer dissatisfaction; charges fees where others do not 52% of average final cost is in extras and fees. Only arrive at secondary airports; no option for arrival at Primary Airports. Ryanair incurred a €2.2 million loss on its AerLingus shareholdings due to a decline in the AerLingus share price from €0.73 to €0.72. They do not offer round trips. Fuel costs rose 37% from ‘10-’11. Employee moral is poor with cabin crew. Debt to equity ratio is 1.91 compared to .79 of the industry average. Earnings per share is only 25 euro cents compared to main competitor Easy Jet at 52 Euro cents. April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  24. Internal Factor Evaluation (IFE) April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  25. Strategy Formulation April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  26. SWOT Matrix • S-O Strategies: • Additional routes to further increase number of passengers and total overall traffic. (O3, O6, S3, S8, S9, S7) • Expand and diversify Ancillary Services both offline and online. (O1, S4, O4) • Teach aviation/engineering courses through a university that utilizes their assets to start new business ventures. (S2, S1, O2) • Start business in primary airports. (O1, O3, O5, S3, S7, S8) W-O Strategies: • Start flying into primary European airports. (W3, O8, O5) • Upgrade web advertising and services that are not as publicly controversial. (W1,O4) • Begin offering round trips at competitive prices. (W7, O8) • Offer package deals on ancillary fees to increase attractiveness. (O1, O8, O3, W2) • Hire corporate travel agents to syndicate traveling process for consumers in need.(W2, W3, W5, W7, O1, O3, O8) • Incorporate marketing and HR executives to better promote company. (W1, W2, W5, O3, O4) April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  27. SWOT Matrix Cont’d… • S-T Strategies: • Have a set percentage of fuel costs hedged per year in continuing to hedge fuel costs.(S6, T2) • Discover new cabin layouts to seat more customers per flight. (T1, T2, T8, S2, S3, S9) • Start offering flights outside of Europe. (T3, T4, T6, S3, S8, S9) • Convert older planes and start new business in delivering freight & cargo. (T4, T6, T8, T9, S1, S7) • Offer incentive programs (frequent flyer miles etc.) (S3, S4, S8, T3, T9) T-W Strategies: • Start new ethical, socially responsible, and positive attitude advertising campaigns. (T4, T8, W1, W2) • Diversify current asset investments. (T3, W4) • Ad marketing and HR Officers/ Segments to ensure all business aspects are more accurately analyzed and coordinated. (W5, W1, W2, T1, T8) • Raise prices. (W6, W9, T2, T4, T6, T7) • Incorporate incentive programs to consumers that fly using Ryanair both ways. (W7, W3, T3, T8, T9) April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  28. Space Matrix April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  29. Space Matrix Cont’d… Possible Strategies: Backwards, Forward, or Horizontal Integration Market Penetration Market Development Product Development April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  30. Grand Strategy Matrix Possible Strategies: Backwards, Forwards, or Horizontal Integration Market Penetration Market Development Product Development Diversification (Related) April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  31. Matrix Analysis April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  32. Possible Strategies • Market Penetration • Additional routes to further increase number of passengers and total overall traffic. (O3, O6, S3, S8, S9, S7) • Expand and diversify Ancillary Services both offline and online. (O1, S4, O4) • Start business in primary airports. (O1, O3, O5, S3, S7, S8) • Upgrade web advertising and services that are not as publicly controversial. (W1,O4) • Begin offering round trips at competitive prices. (W7, O8) • Offer package deals on ancillary fees to increase attractiveness. (O1, O8, O3, W2 • Incorporate marketing and HR executives to better promote company. (W1, W2, W5, O3, O4) • Discover new cabin layouts to seat more customers per flight. (T1, T2, T8, S2, S3, S9) • Offer incentive programs (frequent flyer miles etc.) (S3, S4, S8, T3, T9) • Start new ethical, socially responsible, and positive attitude advertising campaigns. (T4, T8, W1, W2) • Market Development • Teach aviation/engineering courses through a university that utilizes their assets to start new business ventures. (S2, S1, O2) • Start offering flights outside of Europe. (T3, T4, T6, S3, S8, S9) • Product Development • Convert older planes and start new business in delivering freight & cargo. (T4, T6, T8, T9, S1, S7) • Hire corporate travel agents to syndicate traveling process for consumers in need.(W2, W3, W5, W7, O1, O3, O8) April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  33. Quantitative Strategic Planning Matrix (QSPM) April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  34. Quantitative Strategic Planning Matrix Cont’d… April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  35. Strategic Objective • Market Penetration: • Addition of Human Resources & Marketing Divisions • Increase Funds for Marketing/Advertising April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  36. New Organizational Structure April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  37. Investment Figures 2 New Sectors Increased Marketing 60% increase in Marketing Expense from last year(2011) 154.6 254.6 €100M increase • Increasing from 8 to 10 • Each sector costs €47M in Staff Costs (376.1/8) • €94M rough costs • Estimated €110 for Projections Total Investment Costs: €210M *All Investment Costs will be funded from Cash Account April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  38. 3 Year Goals • 2012 • Organize and Implement new Organization Structure • Increase revenues from 2011 by 20% €4,355 • 2013 • Increase revenues from 2012 by 25%€5,444 • 2014 • Increased revenues from 2013 by 25% €6,805 • 88% increase in revenues from 2011 April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  39. Strategic Implementation April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  40. Management Issues April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  41. Projected Income Statement April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  42. Projected Balance Sheet April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  43. Projected Ratios April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  44. Strategic Evaluation April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  45. Ryanair Update April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  46. Stock Performance 49% Increase in Stock Price April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  47. Ryanair Update • Ryanair named Europe's Greenest and Most Efficient Airline • #1 In European Airline Traffic 79M • 93% on time Arrival Rates; Closest competitor Lufthansa at 85% • Expanded from 44 bases to 57 bases; 1,500+ routes from 1,200 April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  48. Questions April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

  49. References • Ryanair. Securities Exchange Commision, (2011). Form 20f (0 - 29304). Retrieved from Ryanair website: http://www.ryanair.com/doc/investor/2011/20F_2011.pdf • Ryanair. (2011). Annual report. Retrieved from Ryanair website: http://www.ryanair.com/doc/investor/2011/Annual_Report_2011_Final.pdf • CAPA. (June, 2009 03). Ryanair swot analysis: Addicted to growth, a great model for bad times. Retrieved from http://centreforaviation.com/analysis/ryanair-swot-analysis-addicted-to-growth-a-great-model-for-bad-times-7633 • Major opportunities remain in europe-ryanair route director. (November, 2010 11). Retrieved from http://www.routesonline.com/news/29/breaking-news/97447/amajor-opportunities-remain-in-europea-a-ryanair-route-director/  • CAPA (June, 2008 08). Delta now world’s largest carrier; ryanair stays top international airline. Retrieved from http://centreforaviation.com/analysis/delta-now-worlds-largest-carrier-ryanair-stays-top-international-airline-53030 • David, F. (2013). Strategic management: Ryanair holdings case. (14th ed., pp. 111-122). Upper Saddle River, New Jersey: Prentice Hall. April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK

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