Case Study Description of Ryanair: Defying Gravity
Ryanair was the pioneer of low cost flying in Europe. As the result of a series of marketing innovations and stringent control of costs it enjoyed a decade of rapid and profitable growth. By 2004 it had become the most profitable airline in the world (in terms of percentage operating profit). However, it faced intense competition from a variety of traditional, charter and other low-cost carriers. In September 2004 its larger archrival, easyJet, announced that it was going to begin flying into Ryanair's home market. Michael O'Leary and his management team had to decide how to respond to this provocative move.
Swot Analysis of "Ryanair: Defying Gravity" written by Adrian Ryans, Atul Pahwa includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ryanair Flying facing as an external strategic factors. Some of the topics covered in Ryanair: Defying Gravity case study are - Strategic Management Strategies, Innovation, Marketing, Pricing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Ryanair: Defying Gravity casestudy better are - – technology disruption, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels,
increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, etc
Introduction to SWOT Analysis of Ryanair: Defying Gravity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ryanair: Defying Gravity case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ryanair Flying, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ryanair Flying operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Ryanair: Defying Gravity can be done for the following purposes –
1. Strategic planning using facts provided in Ryanair: Defying Gravity case study
2. Improving business portfolio management of Ryanair Flying
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ryanair Flying
Strengths Ryanair: Defying Gravity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ryanair Flying in Ryanair: Defying Gravity Harvard Business Review case study are -
Ability to lead change in Innovation & Entrepreneurship field
– Ryanair Flying is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Ryanair Flying in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Ryanair: Defying Gravity firm has clearly differentiated products in the market place. This has enabled Ryanair Flying to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Ryanair Flying to invest into research and development (R&D) and innovation.
Organizational Resilience of Ryanair Flying
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ryanair Flying does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Ryanair Flying in the sector have low bargaining power. Ryanair: Defying Gravity has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ryanair Flying to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Ryanair Flying has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Diverse revenue streams
– Ryanair Flying is present in almost all the verticals within the industry. This has provided firm in Ryanair: Defying Gravity case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Ryanair Flying in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Ryanair Flying is one of the leading recruiters in the industry. Managers in the Ryanair: Defying Gravity are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Ryanair Flying is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Adrian Ryans, Atul Pahwa can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Ryanair Flying is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Ryanair Flying is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ryanair: Defying Gravity Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Ryanair Flying has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ryanair: Defying Gravity Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Ryanair Flying has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Ryanair: Defying Gravity HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Ryanair: Defying Gravity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ryanair: Defying Gravity are -
Slow to strategic competitive environment developments
– As Ryanair: Defying Gravity HBR case study mentions - Ryanair Flying takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study Ryanair: Defying Gravity has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ryanair Flying 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Ryanair: Defying Gravity that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Ryanair: Defying Gravity can leverage the sales team experience to cultivate customer relationships as Ryanair Flying is planning to shift buying processes online.
Lack of clear differentiation of Ryanair Flying products
– To increase the profitability and margins on the products, Ryanair Flying needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Ryanair Flying has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Ryanair Flying has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Ryanair Flying supply chain. Even after few cautionary changes mentioned in the HBR case study - Ryanair: Defying Gravity, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ryanair Flying vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ryanair: Defying Gravity, in the dynamic environment Ryanair Flying has struggled to respond to the nimble upstart competition. Ryanair Flying has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Ryanair Flying has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Ryanair Flying has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Ryanair Flying even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ryanair: Defying Gravity, is just above the industry average. Ryanair Flying needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Ryanair: Defying Gravity | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Ryanair: Defying Gravity are -
Better consumer reach
– The expansion of the 5G network will help Ryanair Flying to increase its market reach. Ryanair Flying will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Ryanair Flying can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ryanair: Defying Gravity suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Ryanair Flying can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Ryanair Flying has opened avenues for new revenue streams for the organization in the industry. This can help Ryanair Flying to build a more holistic ecosystem as suggested in the Ryanair: Defying Gravity case study. Ryanair Flying can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ryanair Flying can use these opportunities to build new business models that can help the communities that Ryanair Flying operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Learning at scale
– Online learning technologies has now opened space for Ryanair Flying to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ryanair Flying is facing challenges because of the dominance of functional experts in the organization. Ryanair: Defying Gravity case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ryanair Flying can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ryanair Flying in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Loyalty marketing
– Ryanair Flying has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Ryanair Flying has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Ryanair: Defying Gravity - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ryanair Flying to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ryanair Flying can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Ryanair: Defying Gravity, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ryanair Flying can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Ryanair: Defying Gravity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ryanair: Defying Gravity are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Ryanair Flying high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ryanair: Defying Gravity, Ryanair Flying may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing wage structure of Ryanair Flying
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ryanair Flying.
Technology acceleration in Forth Industrial Revolution
– Ryanair Flying has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Ryanair Flying needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Ryanair Flying will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ryanair Flying.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ryanair Flying can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Ryanair: Defying Gravity .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ryanair Flying needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ryanair Flying can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Ryanair Flying is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ryanair Flying in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Ryanair Flying needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Ryanair Flying can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Weighted SWOT Analysis of Ryanair: Defying Gravity Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Ryanair: Defying Gravity needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Ryanair: Defying Gravity is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Ryanair: Defying Gravity is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Ryanair: Defying Gravity is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ryanair Flying needs to make to build a sustainable competitive advantage.