Internal analysis of Ryanair Essay

1. Internal audit of tangible, monetary and intangible resourcesTangible Resources1. Human Resources* Ryanair currently employs 2000 people (2003) from 25 nations.* The represent is murder think and among the highest in the airway pains (Annual Report 2004, p. 5). Travel concessions and participation in the sh argon option program is give to all told employees. In 2003 everywhere 30% (639 in total) of employees took part in the neckcloth option program the just pay per employee was about 53.000 (Annual Report 2004, p. 21).* chief operating off chalkr Michael OLeary has significantly shaped Ryanair.2. Physical resources* Ryanair operates 72 aircrafts (Annual Report 2004, p. 3). All aircrafts are of a single type. Ryanair has battle arrayed 225 brand freshfound Boeing 737-800 aircrafts. The average aircraft age was about 10 years vs. easy Jets was 5.1 years (2003). However with the deliver of the late aircrafts, Ryanairs figure will enhance. The average age of the fleet is important, as living exists depends on this.* Facilities Dublin aerodrome facilities, but no major new(prenominal) ones.Financial Resources* Ryanair will stay loosely unhedged in 2005 (Annual Report 2004, p. 12).* With a officious ratio of 2.7 Ryanair has enough cash yet if all liabilities switch to be nonrecreational at once (Brealey et al., 2001). Ryanair has also shown high- expenditured serviceability.* Ryanair is listed on a stock substitute, obtaining crownwork in form of equity capital. In total, Ryanair has 1.5 billion in shareholder bullion (Annual Report 2004, p. 12). The stock was very entrancing to investors, outperforming its benchmark index.Intangible Resources* Ryanair has advance to moderate sized airports which provide cheap expansion slot licences. The average airport charge apply to Ryanair was less than 7 .* Ryanair has an option to yield 200 workitional brand new Boeing 737-800 from Boeing.* Internet as major scattering platform with ve ry huge attr travelorRyanairs most important assets are aircrafts and access to secondary airports. But this only if doesnt make this airline productive the real assets are the employees and particularly the chief operating officer Michael OLeary. Ryanair has a solid fiscal statement and a good profit track which is currently negatively influenced by the ongoing price war.2 doorsill and core competences and resources1) Threshold Resources* Availability of aircrafts and access to ( upset approach) airports* Internet as sales and trade twisting2) Threshold Competences* If a sudden oil price shock occurs or the exchange rate developsunfavour equal to(p) this whitethorn have negative effects on net income. The ability to hedge exchange rate risks and oil prices is at that placefore a core threshold competence.* Customers expect to flummox cheap just the slating prices, punctuality and highest sanctuary standards from Ryanair. Ryanair must thitherfore be able to provide custo mers with misfortunateer fares than their competitors.* The ability to have income from adjuvant services (in order to pay the last-place ticket prices).Threshold capabilities of Ryanair are the ability to keep flying from A to B on a low cost basis and sustaining combative ticket prices.Core capabilities/competences efficacious low cost baseRyanair always searches for possibilities to cut costs. execrable operating costs within the utter(a) value chain, subcontracting and economics of scale (performance related pay, efficient aircrafts, use of secondary airports, mesh as marketing and sales art) make it possible to provide the cheapest ticket prices available.Sound financial statement really sound financial statement (e.g. liquid ratio, shareholder funds).Leadership movement of Michel OLearyCEO Michael OLeary (Effective, magnetic attractership) and Ryanairs focal point. The management of Ryanair received some(prenominal) awards and Michael OLeary was named one of 25 European business starts by the Financial generation.High market violenceRyanair has a high market share, and the possibility to act as a price leader (sound financial figures making it possible to start up and sustain a price war) business policyEffective employment use Every 7th employee (191 in total) was promoted internally (Annual Report 2004, p. 5), keeping people who already know the company which in round reduces costs (introduction) and enhances motivation. Employees have also the interest to bring the company forward because over 30% already are shareholders.sustainable competitive favour according to kill (2003) of Ryanair is the low cost basis (key advantage reckon), offering of the cheapest ticket prices (in order to brand price sensitive customers) and the abilities of the management and the CEO (leaders) of Ryanair. In addition to that first proposer experience (experience from competing against BA and Aer Lingus at the beginning) whitethorn also have benef ited the company.3 Ryanairs dynamic capabilitiesDynamic capabilities provide a constant flow of opportunities (Lynch, 2003), from which Ryanair could take advantage in order to sustain the competitive advantage* Ryanair immediately responds to opportunities and threats in order to cut costs and sustain the low cost basis (e.g. abandonment of ice blockings) or to increase profits (e.g. ancillary services)* Constantly shaping the net as the main communication device to its customer (marketing and sales, booking).* Ryanair wants to provide the lowest fares. Therefore the company must bevery flexible and always at least react (or outperform) competitors in foothold of the price.* Ryanairs aim is to enlarge. This means to add constantly more routes and boost of frequencies on rotes with high demand.As it can be seen, Ryanairs dynamic capabilities are tractableness and the ability of rapid adoption to ever-changing conditions. Hence the competitive advantage is not static (e.g. low co st basis). This is what chocolate-brown and Eisenhardt (1998) define as continual renewing (Lynch, 2003 p. 130).4 Strength and weaknesses of RyanairBy referring to the supra said, its possible to identify the pursuit strength and weaknesses.Strength/Weakness* Efficient and low operating costs (e.g. airport charges, same(p) type of aircraft, economics of scales, cost cutting where possible)* Immediate response of the management to use opportunities (e.g. when ice cube werent fee of charge anymore, Ryanair stop ordering them)* Excellent career opportunities and telling employment handling (e.g. no conjunction exists so far, good integration of employees in the company via the stock options program)* Because of their obtained size they have to some extend pricing power* The financial statement is sound (e.g. for sustaining the price war)* High dispatch factor (about 85%, which is one of the best in the industry)* square performing CEO and management (e.g. some(prenominal) awar ds)* First mover experience (Ryanair and its management shaped the whole European airline industry)* Good safety record* hedgerow policy (Ryanair remains unhedged although PESTEL analysis conclude an instable environment)* Ryanair added too much capacity in a short time set up (overcapacity may lead to deteriorating load factor and danger of high fixed costs)* Ryanair doesnt consider people without internet (more rider may be attracted if Ryanair wouldnt scarcely use the internet)* The behaviour of the CEO towards governing body officialsAs it can be seen, Ryanair fulfils all key success factors. The cost leadership approach is certainly Ryanairs major strength and provides competitive advantage. However there were some weaknesses identified for now, the company should at least rethink its hedging policy.The categorization of factors into strength and weaknesses can be misleading. For example, the refinement of the fleet can lead to economics of scope. But at the same time, t here is the risk of creating overcapacity (and thereby deteriorating performance indicators, e.g. load factor). Hence some issues may be both, a possible strength and weakness. The same is true for opportunities and threats. This is a limitation of the swot analyses.