Ryanair Airline’s Low-Cost Operations Strategy

Operations strategy entails the process of developing long-term plans that aim at utilizing the key resources of any organization. These efforts focus on linking the organization’s long-term corporate strategies with the key resources. Operations strategy addresses ways on how to utilize major or key resources to achieve the required or desired corporate goals and objectives. The organization’s operations strategy lays a framework for determining how the organization utilizes its resources to gain a competitive power and advantage in the market. There are many external factors that affect the operations strategy. They include globalization of business that leads to more competition in the market as every product or service has to meet the demands and tests of customers (Nigel 2009, p.34).

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Every organization has to meet the needs and preferences of its customers in order to maintain a good share in the market. These efforts aim towards beating the competition and meeting goals and targets the organization may have laid down. Another thing to put into consideration is the advent of technology. New technology means better ways of goods production and the better the quality of goods produced the greater the power in convening and winning customers. Every technology adopted has cost implications that the operations strategy and other efforts have to put into considerations. Therefore, the operations strategy aims at keeping the organization in a better position to meet market demands while making profits (Slack & Lewis 2011, p.25).

Basing on the needs and aims of Ryanair management, there exist strategies that an organization has laid in place to achieve its objectives and maintaining low costs. To do this well, Ryanair does it by focusing on various key strategies. To begin with, the airline provides frequent point-to-point services that are mainly short-haul routes. These short-haul routes join or mainly target secondary airport and other regional airports in major population centers where there are many people. This move guarantee’s the airline low operation cost in terms of revenue for using the secondary and regional airports. This is simply because secondary airports’ location is usually away from the busy central business district of many cities that Ryanair majors its operations. To cut unnecessary costs, Ryanair focuses its operations on short-haul routes allowing it to offer frequent travel services and eliminating certain services like frill services that are usually offered on long-haul travel (Waters 2006, p.19).

Short-haul or point-to-point services that Ryanair majors in helps the airline to offer direct services. The direct services are associated with non-stop routes which to Ryanair, greatly helps it to cut or avoid many costs like through service for connecting passengers which includes; transit passenger assistance costs and baggage transfer costs. This effect gets translated to its costs for ticketing as there are no loss selling tickets at a low price and the cost of maintaining the airports and the aircraft is catered for, at the end of the day Ryanair keeps maintaining low costs at all times. With all these, things put together, Ryanair achieves low costs ticketing and service delivery while focusing on making profits. Thus, the operation strategy of achieving low costs has no hindrance whatsoever (Waters 2006, p.22).

Moreover, Ryanair aims at maintaining its cost-effectiveness strategy while focusing on the operations strategy by considering aircraft equipment costs. From its initial strategy, Ryanair controlled aircraft acquisition costs by purchasing used aircraft of one type. This idea helped Ryanair in those days to cut costs ultimately and maintain its low-cost strategy. In the late nineties, Ryanair experienced a shortage in the supply of used aircraft in the market. This phenomenon forced Ryanair to recalculate its strategy to keep its operations at low costs. To this end, Ryanair focused on buying a new fleet of new generation Boeing 737-800 aircraft of a single type from one manufacturer. This strategy aims at limiting costs associated with; personnel training, maintenance, and the purchase and storage of spare parts. This advantage does not stop at that as they’re an easy and flexible crew and equipment scheduling program. All the advantages and cost cuts in the strategy aim at keeping the aircraft’s costing plans low. This eventually translated into the mode of ticketing and the prices offered at Ryanair. All this reflect on Ryanair’s overall low travel costs that keep it the best low-cost airline in the whole of Europe (Waters 2006, p.33).

The other thing that Ryanair focuses on maintaining its low costs is the way of handling personnel productivity. Ryanair maintains its initial labor force by looking for ways of improving its production capability. This has translated to improved production per employee thus boosting the overall sales at minimal costs. Another thing that helps Ryanair so much is the mode of compensation for employees. Every employee gets compensated basing on productivity-pay incentives that majorly include; commissions for onboard sales of products basically for flight attendants. Another effort by the airline to cut costs bases on paying pilots and cabin crew personnel depending on the number of hours and the sector they flow in. This setup goes in line with the industries’ standards for fixing maximum hours for working thus no exploitation and inhibition posed by this move by Ryanair in trying to control costs. Overly, Ryanair has managed to cut costs using this strategy and thus maintaining its low costs over the whole of Europe and beating the competition at the same time (Waters 2006, p.41).

Another thing for consideration is the agreements that Ryanair has made with third-party contractors to handle; ticketing, aircraft, and passengers at selected airports. This move became cost-effective when the management opted to negotiate long-term contracts that mostly have fixed costs that are subject to revision or periodic increases only under inflation situations. This way the airline cuts more costs and at the end of the day comes up with low costs for its air travel tickets. This goes in line with the elimination of travel agency strategies that were costly to run and maintain. This has come with the introduction of the airline’s own internet booking facility and reservation center. This has had an impact on the sales of the airline as direct sales revenues increased significantly owing to the new way of booking through the internet. On the other hand, Ryanair maintains its low-cost strategy by controlling airport access and service charges associated with it. The airline’s record of delivering a high constant volume of the customer of passenger traffic growth at most of the airports it majors its services has helped the airline to negotiate good and favorable contracts (Waters 2006, p.27).

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Ryanair has other various ways of maintaining its high performance while focusing on reducing costs through the provision of ancillary services, core air passenger services, and scheduled services that are usually non-flight services, these are; food, merchandise, and internet-related services and beverages. The other thing is the provision or rather distribution of accommodation services, travel insurance, and car rental through the websites of the airline, which reduces costs while boosting sales. This strengthens the operations strategy of the airline in achieving its corporate goals and aims (Waters 2006, p.38).

What would you describe as the market qualifiers and order winners in the low-cost airline market?

To begin with, we look at the difference between the market or order qualifiers and order winners. To start with, order qualifiers are the minimum characteristics or elements that an organization or its products must-have for their consideration and potential to satisfy the suppliers as their source. Order qualifiers make an organization be in a better place of overcoming competition. On the other hand, order winners are such characteristics as high customization or an outstanding service delivered to customers in a unique way. When this order winner becomes the trend of many other organizations as a way of attracting and satisfying potential customers, then it becomes automatically a market qualifier or order qualifier. This is a minimum acceptable level for operation in any given line of industry such as the airline industry (Waters 2006, p26).

For low-cost Ryanair, there are market qualifiers and order winners that have helped the airline to cope with competition and attract more customers in the market. To begin with, we look generally at both the qualifiers and market winners at the same time. Ryanair has introduced the mode of ticketing and direct calling services that has enabled the airline to handle customers faster and deliver services at the expected time. This achievement is through the establishment of the website ticketing system. This ticketing system has ultimately increased the mode of sale as customers spend much less time confirming and reserving their flight seats that include paying capability on spot. All this is enhanced by having a different contractor handling the whole process for Ryanair. The separation of services from Ryanair helps the management have a good follow-up plan and increases the speed of service delivery as the whole process has a different set of management under the contractor whose main job is to provide that service without mix up (Waters 2006, p.29).

The other thing that has attracted customers so much and acted as an order winner for the past few years bases itself on the quality of services offered. This starts with the way of handling customers using the new ticketing strategy that has won the trust of customers as they rely on the company for its daily travel needs. The quality of service ranges from quality of aircraft used as the organization decided to buy aircraft from one company thus increasing the level of performance to boost the quality of services offered by Ryanair. The other thing that assures quality is the level of maintenance that the company offers to its customers, at this time Ryanair offers contracts to the best airline maintainers across Europe to guarantee the quality of service through safety. This explains why for more than twenty years of service, Ryanair has not had any injury or records of accidents thus it becomes the order winner for the airline due to quality and most importantly safety for its passengers.

This has been moving between order winner and order qualifier depending on the type of customer handled by the organization. Ryanair as the pioneer of the low-cost airline had so many things that it put in place to ensure cost-effectiveness, this starts with, the choice of using secondary airports that allows the airline to charge its customers lowly. The other thing is with used aircraft that guarantee the management of the airline to maintain a low-cost ticketing strategy. Ryanair also maintains its existing staff while improving their performance thus improving both quality and increasing sales as customer handling techniques get improved every time. The improvement of staff performance reduces the cost of recruiting and training new personnel, thus this reduced cost of production translates to the low-cost ticket strategy, which wins more and more customers (Waters 2006, p20).

How does Flextronics’s operation strategy help the company satisfy customers?

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Operations strategy entails the process of developing long-term plans that aim at utilizing the key resources of any organization. These efforts focus on linking the organizations’ long-term corporate strategies with the key resources. Operations strategy addresses ways on how to utilize major or key resources to achieve the required or desired corporate goals and objectives altogether. The organizations’ operations strategy lays a framework for determining how the organization utilizes its resources to gain a competitive power and advantage in the market. There are many external factors that affect operations strategy, these include; globalization of business that leads to more competition in the market as every product or service has to meet the demands and tests of customers (Slack & Lewis 2011, 23).

Every organization has to meet the needs and preferences of its customers in order to maintain a good share in the market. These efforts aim towards beating the competition and meeting goals and targets the organization may have laid down. Another thing to put into consideration is the advent of technology. New technology means better ways of goods production and the better the quality of goods produced the greater the power in convening and winning customers. Every technology adopted has cost implications that the operations strategy and other efforts have to put into considerations. Therefore, the operations strategy aims at keeping the organization in a better position to meet market demands while making profits (Nigel 2009, p.32).

To begin with, Flextronics Company satisfies its customers through various ways as per the operation strategy. The first thing to look at is; reduction of variability, waste, and cost by the incremental improvement of existing processes, products, and systems. By focusing so much on how to improve the production both in quality and speed, Flextronics management aims at using the best available techniques to venture into the production market and come up with better ways to utilize that technique to meet the required standards of the market. These techniques need to eliminate wastes while improving the quality of production. These innovative ways have resulted in two goals; new products and new processes. These new products have over and again helped the company meet market demands and therefore satisfy customers as these new products are produced based on the needs and requirements of the market. With these new processes at Flextronics disposal, everything that entails producing products efficiently and at affordable costs translates to the company’s low product costs at high quality thus customer satisfaction guaranteed (Pan & Polishuk 2008, p.30).

Discuss the progression of operation contribution and identify the level of the contribution made in Flextronics

The operation strategy of Flextronics Company has contributed to many things in the market. To begin with, the company’s strategic supply chain management has progressively contributed to the organization through cost reduction that is of importance and advantage to the customers. This goes on in continued level of supply and the improvement of time-to-market. The cost reduction process always bases on current market pricing. The strategy also focuses on helping customers with the utilization procedure of Flex services. Through the operations strategy, the company monitors and analyses the market trends together with monitoring customer material supply agreements to ensure adherence. The operations strategy helps the company in coordinating new product forecasting of new products, demand shifts, and technical requirements for developing good products meeting the market requirement. This has raised the level of operation in that the company competes favorably with other multinational companies (Foscht 2007, p.25).

Operation strategy

Operation strategy of Ryanair and how it helps it to maintain low costs

To begin our discussion, Ryanair’s operations strategy focuses on maintaining low costs while increasing customer traffic, to attain this, Ryanair puts more focus on containment and operation efficiency. Every aspect of operation regarding customers and the whole business is given total concentration. Cost containment comes in every new strategy that the management of Ryanair lays down. First and foremost, the airline purposed to reduce costs through the adoption of new ways of ticket selling. To this end, the costs that were incurred during the time of the airline’s agency ticket selling were eliminated as the ticket access was made easier through the airline’s website. Customers or passengers book their travel reservations online; this led to increased sales as the customers paid promptly on the request on seat reservation. There are no charges for maintaining offices in various destinations to handle customer requirements (Kahawatte 2010, p.35).

Eliminating the agency charges and the associated commissions mean that the airline can still offer low-cost tickets without incurring any losses as the inhibiting factors get more and more reduced with improvised operation strategies. The strategy by Ryanair management to set fares according to the demand of particular flights and the remaining time for departure, keeps the customers contented as they themselves determine the number of fares they will pay depending on the time they reserve their seats ensures that the airlines keep fares low (Kahawatte 2010, p.40).

The other important factor about Ryanair’s operations strategy that helps them to maintain low costs is the decision by the management to improve the performance of the existing workforce other than recruiting and training new workers. The management has focused itself on ensuring that the services delivered by all employees at all levels meet and exceed the usual customer handling procedures. In doing so, the management has cut down on costs of recruiting and training new personnel and at the same time, the move helps the company increase its sales as more and more customers get satisfied by the services delivered by the employees and the whole airline at all levels. Pilots and cabin crews get their pay on a commission basis and based on the route operated. This way, the salary is not fixed which ensures that minimal finances are wasted. With these cost cuts, the airline can offer low costs for its services without any impediments for a long time (Kahawatte 2010, p.42).

Definition and a list of six market qualifiers and six order winners

Order-winners are things with direct influence to winning business. These are the key things that customers consider before purchasing a product or service. Market qualifiers are aspects of competitiveness, which determines the operations performance at certain levels that customers regard as the best for the product for business consideration. Below the qualifying levels makes the customers neglect the products of that company as of low quality required. The list of order winners and market qualifiers is given below. Order winners are; price, range, flexibility, quality, specialization, and speed, and for qualifiers they are; quality, customization, cost, speed, quality, dependability, and mode of servicing (Roh 2009, p.15).

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Critical analysis of Flextronics operations strategy

The operation strategy of Flextronics aims at making the company the world’s number one consumer choice by focusing on procurement, material management, and quality procedures that keep on being refined every time to meet and exceed the customers’ expectations. This, not only ensures good profits but it also focuses on its grip in the market and winning off its competitors by far to gain a good market share that would ensure the firms’ stability. The firm’s operations strategy highly focuses on employee teamwork that helps the company to realize its continual improvement in both customer handling and quality production processes that results in good products and services that keep improving every time. This teamwork aims at meeting challenges presented to the company by customers. By doing this, the company improves its customer focus initiative that keeps better as time goes by this is one of the things about the operations strategy that keeps the competitors of Flextronics at bay (Simchi-Levi 2010, p.23).

Critical evaluation of stages in Hayes and Wheel right’s model of operation related to Flextronics

In any organization, a good operations strategy results in good production as well as good customer handling, the two are key factors that may ensure good market share ownership by the company practicing these two important factors. Looking at Hayes and Wheelwright’s model of operation strategy, it is clear that the model operations strategy focuses on building a good foundation in terms of production processes that will help any particular company to meet the market demands and satisfy customers beyond their expectations. This, not only improves product performance and profit-making but it also increases the company’s power in the market. This helps a company to overcome competition (Russell & Taylor, 2005).

The model of operation strategy in Hayes focuses on employing the best there is of technology and processes that would give the best quality of products and minimizes costs or damages. This leads to customer satisfaction just like Flextronics who has grown from nothing to the world’s leading contracting firm in manufacturing. Flextronics’ quality of production at minimal costs has been the winning point for the company on a world full of competition and changing market trends in terms of customer tests and preferences. The mode of supply chain should be focused on expanding the acquisition of good suppliers and increase the customers just as Flextronics’ power in finding the best suppliers, Hayes model has applied this to keep operations high in the market. The other thing that Hayes model strategy has handled excellently just like Flextronics is the mode of introducing new products, the model operations strategy of Hayes allows it to introduce new products basing on market trends and also basing on customer needs.

List of References

Focht, I 2007, Reverse psychology marketing: the death of traditional marketing and the rise of the new “pull” game, Palgrave Macmillan, Chicago.

Kahawatte, U 2010, Ryanair’s strategy from a perspective of core competencies, GRIN Verlag, London.

Nigel, S 2009, Operations strategy, Pearson Education, London.

Pan, H & Polishuk, P 2008, Photonics components & subsystems, Information Gatekeepers Inc., Washington.

Roh, J 2009, From responsiveness strategy to market responsiveness: A pursuit of responsive supply chains, ProQuest, Chicago.

Russell, R & Taylor, B 2005, Operations management: quality and competitiveness in a global environment, John Wiley, Washington.

Simchi-Levi, D 2010, Delivering customer value through flexible operations, MIT Press, Michigan.

Slack, N & Lewis, M 2011, Operations strategy, Pearson, New York.

Waters, D 2006, Operations strategy, Cengage Learning EMEA, New York.

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