Strategic management is to planning, analysis, setting objective, evaluating strategies and monitoring to make sure that management rolls out the strategies across the organization (Rouse, 2014). Strategic management also can help the organization to turnaround their situation and let them to achieve the goals and objective of the organization.
Ryanair Airlines is a low-cost airline in Irish and their headquartered in Swords, Dublin, Ireland and the Ryanair CEO which is Michael O’Leary. Ryanair are founded in 1984 and they have operates more than 400 Boeing 737-800 aircraft. When the Ryanair start their business, they grown from the small airline and they only fly in short journey from the Waterford to London Gatwick. But nowadays, Ryanair was the largest airline in European and carried more international passages than others airline in European. Besides that, Ryanair have around 13,000 people working in their company.
After than that, Ryanair success of its low-cost business model and they have served around 216 destinations but some of the countries is seasonal destinations (RYANAIR, 2018). Besides that, Ryanair also serve around 37 countries and in the world which is in Europe, Africa and Middle East (RYANAIR, 2018).
Analysis of current situation, goals and objective
Every company have the vision and mission, Ryanair’s vision is “A world where passengers fly for free” (UKESSAYS, 2016). The mission of Ryanair is “to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost containment and efficiency operation” (Tran, Perkinson, Sinnenberg, Tarica, & S, 2015). A company must have a mission to achieve their vision to let the company success and gain more profit in the market.
Ryanair is a budget low-cost airline, it is because they use the “dynamic pricing”. Dynamic pricing that mean the price will tend to increase as the flight date approaches so that Ryanair aim to maximise its profit, but the travellers are prepared to bear higher costs as the date of flight approaches (Malighetti, Paleari, & Redondi, 2009).
The advantages that Ryanair using the low cost regional airport to provide low cost air ticket is a lot of customer likes to purchase the cheaper things and Ryanair provide the low-cost air ticket it will gain the customers preference and can be winning in the market share. But the disadvantages is in the advanced technology era, a lot of company change their technology and become better. At the same time, customers also want to travel around the world to see and improve their knowledge such as China bullet train. So Ryanair can change their objective and provide international airline, it will give the consumers more choices to choose which country they want to travel Asia or Europe.
Moreover, a company must have an objective and goals to run their business and direct their employees to achieve the goals to make the company success. “Ryanair’s objective is to firmly establish itself as Europe’s leading scheduled passenger airline, through continued improvements and expanded offerings of its low-fares service” (UKESSAYS, 2016). Ryanair can always provide low-cost air ticket because they using low cost regional airport to reduce the cost, they don’t want to use international airport (UKESSAYS, 2016).
External Environment Analysis
In the near future, Ryanair face a lot of environment factors such as threat. Threat mean negative issue that can cause a risk become loss and it may affect the company image and financial loss. First issue is Ryanair profit hit by the staff and fuel costs (Spero, 2018). In first quarter, Ryanair’s pre-tax profit fall 22% so that their chief executive Michael O’Leary says want to threaten striking workers with job loss. Ryanair pilot and cabin crew strike at Dublin airport and it affect the Ryanair cancel more than 2500 flight. In addition, it also affects 450,000 passengers and air fares.
Besides that, Ryanair is a largest budget airline in Europe. But nowadays Ryanair pre-tax profit drop it is because of the staff coats as Ryanair offered to increase the pilot and other staff salary (Spero, 2018). In addition, Ryanair shares also decrease 4.4 per cent but Daniel Roeska analyse that their trading will continued good in short term after the next six month (Spero, 2018).
In recent year, the jet fuel demand has been increase due to the global economy strength and the passenger increase (Kelly, 2018). But the jet fuel costs increase that affect the Ryanair’s fuel bill increase €430m in this year (Spero, 2018). In this situation Ryanair will face a lot of challenge when the fuel costs increase it is because Ryanair always provide low cost air ticket it will cause them loss the profit.
In addition, Ryanair Company not properly provides the rest place for their cabin crew members and they also not provide food and drink for them (Adams, 2018). Last month, their cabin crew member upload a photo which is they sleep on the floor at Malaga Airport. This can proof that the budget airline Ryanair not treat their employee well and this maybe will harm the Ryanair’s reputation.
New Strategic and Approaches are:
In this year, Ryanair face a lot of issue that affect the company financial loss and harm their company reputation. Here have some new strategic that can help the company turnover from the poorly performing situation. First new strategic is use the auto-pilot in airplane. Auto-pilot is a new concept that uses the existing multi-crew aircraft to insert new automation program (Aurora Flight Sciences, 2018). It can be reduce the on board crew and Ryanair can reduce the loss when their pilot strike. The auto-pilot would be increase efficiency of the flight operation and to reduce the individual workload and also lower the cost for training the pilot it can let the Ryanair to save their cost when they use the auto-pilot. (Aurora Flight Sciences, 2018)
• Nuclear Fuel
The jet fuel cost that increase cause the Ryanair’s monthly fuel bill increase in this year. So the second new strategic is change the jet fuel by using the nuclear fuel. Nuclear fuel that includes 95% of initial heavy metal and it can be burn and making electricity (Uhlik, 2017). The electricity can be synthesize to fuel for the transportation such as airplane and car. In addition, new fuel is recycling from the nuclear waste but the nuclear waste have the radioactive that need to store until it have no longer dangerous radiation (Touran, 2009). This recommendation maybe will decrease the airplane fuel cost but this recommendation need to improve until it have no the dangerous radiation.
• Proper Rest Room
Moreover, Ryanair no provide a proper rest room for their cabin crew. Third new strategic is Ryanair should provide a proper rest room for their cabin crew. It is because nowadays, social media is a very powerful source that can spread the negative or positive issue within few minutes. For the Ryanair issue it can be affect the Ryanair reputation when their cabin crews upload a negative photo in social media. So that, Ryanair should treat their cabin crew nicely such as provide them a proper rest room and prepare some food and drink in the rest room. Cabin crew members also is a part of assets of the Ryanair, if Ryanair treat their cabin crew members nicely the cabin crew also will treat the passengers nicely this will become a cycle.
• Add More Direct Flights
The last new strategic is Ryanair can focus on differentiation such as provide the direct international flight, not only flight in UK countries also can direct flight to Asia countries such as China, Singapore and Malaysia. This can let the customers more choices to choose the aircraft company. Ryanair is a biggest budget airline company because they always choose the low cost regional airport. But they can change their strategic to expand their business become direct international aircraft company. They can use the concept like small profits but quick turnover.
By using the robotic co-pilot in airplane, change the jet fuel by using the nuclear fuel and provide direct international flight it can be increase their future revenue. Ryanair future revenue can be gain around USD 5 billion when they use this three new strategic. It is because if Ryanair use this three new strategic together, Ryanair will become the first mover in airline market. First mover has a lot of advantage such as low competitor and gain huge profit margin.
Uncertainties, Incompleteness, Ambiguity
The new strategy always have some uncertainties but I haven find it how to solve the problem. If the airline company use Auto-pilot, consumers will scare to use the Ryanair aircraft. Besides that, if people didn’t no see the pilot they will not support it, it is because they don’t want put their life to the auto-pilot. They always feel that pilot will more safety then auto-pilot.
• Nuclear Fuel
In addition, some of the new strategic come out always have some uncertainties, it is because some of the new strategic that haven use before. The new strategic that change the jet fuel by using the nuclear fuel, this strategic need to do a lot of investigation. It is because nuclear waste has the radiation it will harm the people health and difficult to solve. So that, they need to do investigation and innovation before thee use for airplane.
• Add More Direct Flights
Add more direct flights is good for the Ryanair to increase their profit and market share but also have some ambiguity that will affect the Ryanair. If Ryanair want to add more international direct flights it will faces a lot of challenge, it is because different countries have different government regulation and law. Ryanair want to seek the permission from others country it will become very difficult.
Our Analysis Tools
When a company want to come out and use the new strategic, the company must research and analysis the market that you enter. So the company must use the tools of PEST analysis and SWOT analysis to analyse the country and company.
• Political Factors
Political factors is to analysis the country political issue with the company new strategic, that includes the government regulations, environmental regulation and tax policy. Ryanair have largest bases of airline in UK but they don’t know the future regulation with the UK. If the agreement between this both countries fail to ensure the restriction-free of flights, it will bring the negative impact to the Ryanair reduce their airline from Europe to UK.
• Economic Factors
Economic factors that include economic growth, inflation and currency exchange rate. This all will affect the cost of capital and purchasing power of a company. In Europe, the unstable fuel price will affect the airline company operating costs. If the fuel price increase that makes a lot of pressure on airline. The higher cost of jet fuel will strongly affect the Ryanair revenue, it is because Ryanair is a budget low-cost airline so they very sensitive about the fuel cost fluctuation.
• Social Factors
Social factor is that impact on the consumer needs and potential market for an organization’s goods and service such as demographics and population growth. A lot of the passengers always look for the safety airline and it is very important for airline industry. Ryanair very care about the safety and Ryanair also has a strong safety records. So it will increase the reputation of the airline and can increase the trust of the passengers. If passengers do not feel safe, they will avoid and boycott that airline company. In Europe, their citizens recently like to travel for a short holiday and this has become a trend. It is because nowadays a lot of airlines provide the budget low-cost air ticket such as Ryanair.
• Technology Factors
Technology factor is that can determine the barrier of entry and investment in innovation such as investment incentives and technological change. If Ryanair want to use the nuclear fuel it is possibility, but have a lot of technological want to change such as the engine of aircraft. Besides that, the traditional airplanes only put a small TV and play some movie. Ryanair can put the Xbox game in front of the seat such as ping pong and others game, it can attract the passenger when in flight and it can make the differentiation with their competitors.
Strength is microeconomic of the company. The strength of the Ryanair is they always provide budget low-cost airline for the consumers and they are the one of the lowest cost in Europe. Even the passengers add extra service such as seat reservation and bag fee, their price also lower than their competitors. Besides that, they always focus on doing what it does best and keep the price and fares low (CAPA, 2014).
Weakness also is microeconomic of the company. The weakness of the Ryanair is their reputation is affect by their poor customer service. In addition, poor working condition will affect the loyalty of employees. Their cabin crew upload a photo to social media that show the Ryanair Company not properly provides the rest place for their cabin crew members and they also not provide food and drink for them. Besides that, they use the secondary airport and it is very far from the city. A lot of their competitors gain the advantages because they serve more convenient location than Ryanair (Easyjet Ryanair, 2014).
Opportunity is about the macroeconomic of the company. Ryanair can expand their business and airline from Europe market into Asia market. This can increase their passenger traffic, increase their profit and gain the market share. Moreover, Ryanair not only can expand their airline into Asia they also can add new country at Europe. This is an opportunity to expand their airline service. This also can give the advantage for the people with budget low-cost air ticket and they may find jobs across Europe.
Threat is about the macroeconomic of the company. In this year, Ryanair faces a lot of threat that will affect the reputation of the company. The passengers of the Ryanair a man and a woman have a dispute in the flight, a man radically abusing the woman on the flight. At the end Ryanair did not remove the man from the flight and quickly moving the woman from the seat. Ryanair also not comment anything after this issue. In this case it will affect the Ryanair reputation and it will boycott by the consumers. Besides that, Ryanair very care about the safety and Ryanair also has a strong safety records. But the social media always spread negative things such as they use the low-cost approach that mean they not concern on safety. This will affect the reputation of Ryanair.