This however is not a sustainableadvantage as the industry demandremains cyclical.Figure 3: Ryanair’s Competitive Advantage FrameworkFigure 4: Major Competitors Performance
14Ryanair’s network of routes and destinations statistically sets it as market leader (ACCA, 2016),enabling a significantly high imitation cost. Through point-to-point service, Ryanair avoids directcompetition offering differing destinations and a high load factor (Economist, 2013). 3.2 Unit-Cost EfficiencyDistinctive capabilities are necessary forRyanairtoestablishsustainablecompetitive advantages (Kay, 1993). HowRyanair adds inimitable customer value iscritical in ensuring business modelsustainability, as the low-cost structureremains its main competitive advantage ingaining market share (Richard, 2016). Unitcostefficiencyisanimportantcompetitiveness measure within the LCCsegment. Ryanair’s cost structure relies onmultiple strategic resources and highdegree of cost control, translating to lowerfares. Ryanair possess several competitivesources contributing to their cost advantagebusiness strategy ranging from logistically to branding below. The consolidation of these factorsincreases operational efficiency that enables Ryanair to initiate and undercut competition. Barclays(2016) reported that since the dramatic improvements of Ryanair’s logistics and operationalperformance, it has achieved number 1 in operating cost efficiency (Figure 5) in the Europe andcrowned the European the top 3 financial performance airline in the world in terms of ROCE, NOPATmargin and RASK-CASK (Figures 6). 3.3 Service QualityRyanair’s customer service is minimalistic reinforcing the “no frills” strategy position (Bowman &Faulkner, 1996). Companies with low perceived quality can consequently have poor financialcondition (Fegeda et al., 2011). Despite the lack of service contributing to operational efficiency andreduced cost structure, Ryanair was fined €550,000 for its poor customer service for the premium ratecustomer service phone line. Complaints arose regarding the difficulty and complexity of flight bookingFigure 5: Operating Cost (Barclays, 2016)Figure 6: Airlines Financial Performance (Barclays, 2016)
14and sourcing flight information online (Kim, 2015). The ‘Always Getting Better’ (AGB) programmestrives to improve customer service tailored to cost-conscious customers’ needs (Ryanair, 2016b).If the AGB programme is individually considered such as luggage handling fees, the competitiveadvantage is not sustainable, imitated much more easily. However, coupled with the clear brandposition and message, and the amalgamation of factors towards cost leadership strategy results in asustainable competitive advantage.3.4 Talent Management & Digital TransformationA key source of sustainable competitiveadvantage is driven through Ryanair’s intellectualcapital of Kenny Jacobs, Chief Marketing Officer whodrove the transformation and rebranding of Ryanairfrom ‘Cost-centric’ to ‘Customer-centric’ through theinitiatives of the AGB programme. The CEO was also
You've reached the end of your free preview.
Want to read all 20 pages?
- Fall '13
- Business, Management, Low-cost carrier, Ryanair