They continued with this “ low-cost, low-fare strategy,” usingSouthwest Airlinesas a dude and within a year they returned to profitability. In 1993, a year after Urinary reached profitability the European Union gave airlines the freedom to set fares. It was this airline liberalizing measure that brought increased competition to the low- cost, low-fare airline industry. Using the five forces model, we can analyze Ryan’s competitive market.
The Industry rivalry was high due to the deregulation of the airline Industry.
Competitors such as Asset, British Airways’ Go (which was created in an effort to gain market eminence, weed out competition, and eliminate the budget airline industry altogether), Virgin Air’s Virgin Express, and Debonair were all wing for market share in the budget sector of the industry. Because of such high rivalry, the buyers had high bargaining power and the sellers had low bargaining power. The threat of substitutes was low because apart from trains and buses, there were no alternative modes of transportation. The risk of entry Into the Industry was high because of the deregulation efforts by the European union.
Ergo, it is easily discernible that Urinary as up against tough competition. As defined by Porter in the article “ What is Strategy? ” operational effectiveness is performing the same activities as rivals, only better. He defined strategic positioning as performing different activities from rivals or performing the same activities In a different manner. Operational effectiveness Is difficult to use as a competitive strategy because of the rapid diffusion of best practices. It Is very easy to Imitate operational strategies.
Also, operational effectiveness is inefficient in terms of taming ahead of competition because at a certain point during rivalry, strategies converge and companies begin barreling down the same path, making it impossible for anyone to win.
L Strategy, however, Is dependent on unique activities or unique methods of performing similar actively. Porter describes three distinct sources of strategic positioning: variety-based positioning, needs-based positioning, and access-based positioning. Variety-based focuses on the choice of product or service varieties rather than customer segments.
Needs-based targets a segment of customers, and access-based is segmenting customers who are accessible in different ways. 2 Urinary Is operationally effective In terms of offering low prices to customers, however, It Is not a strategy that differentiates them from competitors nor does It give teen a strongest on ten market. I nee nave no strategic position In ten Lorene industry which makes the arrival of competitors an absolute threat to their future profitability.
Alternative Strategies: (a) Urinary can realign their efforts using variety-based positioning to try to create staying power for themselves in the budget airline sector. ) Urinary can diversify their efforts by branching out into the luxury sector of the airline industry. (c) Urinary can merge with Asset, the other leader in the low-cost, low-fare sector, to create market dominance in this segment of the airline industry. Recommendation/ Implementation: Combining strategies (a) and (c) would be Ryan’s most profitable alternative. If Urinary and Asset were to collaborate their efforts using variety-based positioning strategies they would, no doubt, create market dominance in the budget sector of the airline industry.