Case Brief 3 Download and read the case study for Tesla, Amazon, or Netflix from the 12 Most Popular Cases supplement. Click the three lines (contents) in the top, left-hand corner to view all of the

Case Brief 3 Download and read the case study for Tesla, Amazon, or Netflix from the 12 Most Popular Cases supplement. Click the three lines (contents) in the top, left-hand corner to view all of the
Student Name MGT 400 Case Analysis: Ryanair Due 2/27/19 Analysis: Ryanair has continuously worked to become the premier budget airline in Europe but is facing increasing cost, competitive, and consumer pressures that threaten its growth as well as its bottom line. From a cost standpoint, the biggest variable that has the most significant impact on Ryanair’s profits are its fuel costs. Ryanair has done well for itself in hedging/controlling future fuel costs through futures contracts; however, there is no mention of whether Ryanair anticipates fuel costs to continue to rise as they did from 2013 to 2014 or if they may fall. Ryanair needs to be mindful of European energy initiatives and policies regarding fuel production. In an outer-industry competition report it is mentioned that the EU is placing an increased focus on rail and public transit travel between cities as opposed to air travel. With this commitment in place, Ryanair must pay close attention to the availability of European fossil fuels and closely monitor the EU to determine if they intend to Kowtow to OPEC or to hold their ground and increase localized production of oil to lower the control that OPEC has over world oil prices. If it seems that the EU will allow OPEC to steamroll them in terms of fuel production and price control, then Ryanair may need to hedge even more so than they already do. In terms of competition, Ryanair faces its biggest competitor in the Lufthansa Group. Lufthansa is similar to one of the big four American airliners that operate at high margins, high revenues, and high costs, to provide “the best” flying experience for their customers in the European Airline market. British Airways has monopolized the British airline market with a market share of 52%. Britain is their primary market and thus receives the majority of its investment. If British Airways continues to grow this will choke profits for other airlines within the British airline market. Easyjet is perhaps Ryanair’s closest competitor in the European Budget Airline market. Easyjet is primarily offered in Britain however they offer 32 international flights. Lastly, consumer trends put the most pressure on Ryanair as world economies are well into recovery from the economic disaster of the 08-09 financial crisis. This means that with more disposable income, price point will not be the primary or singular factor that influences an airline customer’s decision to fly Ryanair. Recommendations: Ryanair must accurately gauge the political atmosphere regarding energy regulations within the EU and Britain to determine the effects that such legal and regulatory decisions will have on gas prices. Ryanair must hedge more than 55% of its fuel consumption going into 2015 to ensure pricing which will allow for more consistent cost projections which in turn can be used to adjust pricing to minimize losses. Another recommendation to curb the effect of its competitors on profit margins and market share is to look into making an acquisition. The European Commission shut down Ryanair’s attempt to acquire Aer Lingus in 2013 because it would have created too much of a monopoly on the Irish airline industry. That being said, Ryanair should again pursue to acquire a smaller airline but perhaps one in a market that they do not have a strong enough foothold in to avoid monopolization accusations that could shut down such a deal. A potential target for acquisition would be Wizz Air Group. Wizz Air Group is still a private company that has over 200 travel routes that are completely independent of Ryanair. Wizz Air Group is also a highly profitable operation with a similar business model to Ryanair. A final recommendation for Ryanair is to make a strategic commitment in its customer service and interpersonal interactions with its customers. With steady investment into its internet and online marketing/operation, Ryanair must shift its focus to physical customer interaction. It can start by offering better employee compensation, with an increased focus on employee retention. It is hard to shape an organizational culture when a large portion of your employees are privately contracted independently from the company. With better employee compensation, it should follow that the employees will buy into the company culture more, have better moral, and thus present a more positive image of the company to every customer of the company all while tearing down the notion that a budget airline will automatically come with budget service. Justifications: If Ryanair decides to hedge stronger into the upcoming years, they will ultimately have more control over the most uncontrollable aspect of their expenses. Fuel is the most vital resource necessary for Ryanair’s operation, so effective price calculations are critical for effective budgeting to ensure that Ryanair will be able to afford and have on-hand, enough fuel to operate at a nearly fixed cost. I think that Ryanair should look at a targeted acquisition of Wizz Air Group. Doing so would be extremely beneficial for a number of reasons. Wizz Air Group is extremely profitable and has lowered their debt liabilities by 45% in the last two years. This means that upon acquisition Ryanair would have significantly lower expenses as well as fewer liabilities to manage under its new Wizz Air division. Aside from the balance sheet perks of acquiring Wizz Air group, Ryanair would be able to expand its global and international market by a significant amount, allowing it to capitalize on Wizz Air’s current market share in previously untouched markets. This acquisition would also enable Ryanair to begin to offer hundreds of more routes from all of its main travel bases, which in turn would result in a substantial increase in revenue and ultimately profits. Lastly. Ryanair needs to look into its employee management and human resources department to research and determine the best way to go about increasing employee compensation as well as retention to maximize Ryanair’s return on investment into these employees. While contract work is cost-effective, it doesn’t do much to increase employee satisfaction or loyalty which in turn casts a negative perception of the company culture of Ryanair. If employees feel more valued, they will perform better resulting in increased customer satisfaction which will then allow Ryanair to ease up prices to cover the cost of the investments into its employees, which will turn it into a zero-sum scenario with the only result being increased consumer selection of Ryanair for air travel. This will lead to both increased revenues, as well as increased profits.