Topic2.StrategyRevisited

Europe basiqair air berlin city shuttle 2004 ryanair

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Unformatted text preview: nia duo Bexx Ryanair Hapag Lloyd Express Thomson Fly Air Berlin City Shuttle Duo bmi baby Basiqair Germanwings Air Polonia easyJet Flying Finn Virgin FlyBe Express Germania Smartwings Snowflake Express Sky Europe Thomson Fly Wizz Germania Express VolareWeb VolareWeb Plus bexx Wizz Air Smartwings Luxor light 58 UPF - International Strategic Management 2012 LCC in Europe 1998 Ryanair Easyjet Virgin Express 2002 Ryanair Easyjet Virgin Express Bmi Baby Flybe Germanwings Hapag Lloyd Express Sky Europe Basiqair Air Berlin City Shuttle 2004 Ryanair Easyjet Virgin Express Bmi Baby Flybe Germanwings Hapag Lloyd Express Sky Europe Basiqair Air Berlin City Shuttle Air Luxor Light Air Polonia Bexx Duo Flying Finn Snowflake Thomson Fly Germania Express Volareweb Plus Wizz Smartwings 2008 More than 50 players 29 28/04/12 59 UPF - International Strategic Management 2012 Ryanair in UK Ryanair BA Ryanair Position Passengers Carried 2.56 M 1.93 M 1 Passenger Growth 20% 0.01% 1 Load Factor 80% 65.9% 1 Source: Ryanair.com UPF - International Strategic Management 2012 60 Routes from London Stansted… Source: Ryanair.com 30 28/04/12 . 61 UPF - International Strategic Management 2012 Comparison Of Different Low-Cost Carrier Models Ryanair Easy Jet Virgin Express Southwest jetBlue Seat Pitch 29-31 29 31 32 32 Leather N N N Y Y TV N N N N Y Frequent Flyer N N Y Y Y High Fare Variation Y Y Y N N Connections N N Y Y Y Customer Focus N N Y/N Y Y Low Price Y Y/N Y/N Y Y Past Growth 38% 36% -18.6% 1.2% 172% Revenue E 624.1 E 580.6 E 212.1 E 5 488 E 326.9 Profit Margin 24.1% 10.6% 0.1% 9.2% 9.8% Founded 1986 1996 1996 1971 2000 Source: A.T. Kearney analysis UPF - International Strategic Management 2012 62 Another industry: The Cola-Wars Market Evolution USA: 1950-2000 31 28/04/12 UPF - International Strategic Management 2012 63 5. Threat of Rivalry – higher when: •  Large number of competing firms (especially if they are about the same size) •  E.g. Laptop personal computer industry •  Over 120 entrants •  Decline in prices •  Drop in profit margins •  Slow industry growth •  Luxury segment of the automobile industry: •  Rivalry among established firms •  Rivalry between incumbents & new entrants UPF - International Strategic Management 2012 64 5. Threat of rivalry – higher when (cont’d): •  Lack of product differentiation •  E.g. Cost cutting by airliners •  Productive capacity added in large increments •  Periods of oversupply after new capacity comes on line > price-cutting •  E.g. Airbus entering commercial jet industry 32 28/04/12 UPF - International Strategic Management 2012 65 Strategic Implications of the Five Forces Framework •  Competitive environment is ideal when: •  Rivalry is only moderate •  Entry barriers are relatively high •  There are no good substitutes •  Suppliers and buyers are in a weak bargaining position ✔The weaker the competition is, the greater the profits are!! UPF - International Strategic Management 2012 66 Note: “New” Sixth Force Competitor: When custom...
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This note was uploaded on 10/18/2012 for the course BUSI 102 taught by Professor X during the Spring '12 term at Universitat Pompeu Fabra.

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