Ryan Air case analysis VRINE model

7 July 2016

I am going to analyze this article using VRINE model but first I will explain briefly what VRINE model is. The first letter V stands for valuable and it means a resource or capability is valuable if it allows a firm to take advantage of opportunities or to fend off threats in its environment, for an example Union Pacific Railroad’s rail system is a tangible resource that allows UP to compete with other carriers in the long-haul transportation of a variety of goods.

The second letter R stands for rarity and it means a useful resource or capability that is scarce relative to demand, for an example when McDonald’s signs an agreement to build a restaurant inside a Wal-Mart store, it has an intangible advantage over Burger King that is valuable and rare. The third letter I stands for inimitability and it means a resource or capability is inimitable if competitors cannot acquire the valuable and rare resource quickly, or face a disadvantage in doing so, for an example Barnes & Noble’s large store network gave it access to customers and purchasing power that was inimitable.

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The fourth letter N stands for non-substitutability and it means if a competitor cannot achieve the same benefit using different combinations of resources and capabilities then it is non-substituable, for instance using the previous Barnes & Noble’s large store network as an example because it was inimitable so people found Amazon. com as a substitute with better deals.

Lastly the fifth letter E stands for exploitability and it means a resource of capability that the organization has the capability to exploit or capability to generate value from, for an example Xerox invented the laser print, Ethernet, graphical-interface software and computer mouse but could not capitalize on these. Now I am going to analyze the article using VRINE model by starting with value, Ryanair’s valuable resource is intangible and the resource it possessed is the brand itself.

Ryanair brands itself as Europe’s only ultra-low-cost-airline and it is also Europe’s biggest airline carrying 79. 6 million people last year as well. The business model Ryanair has is another intangible valuable asset because it minimizes the cost and maximizes revenue and also provide cheaper flights for customers by flying into secondary airports on the outskirts of the advertised destinations as well. For rarity I would say there is not much to say about it in this article as there are so many low cost airlines in Europe and most of them have similar

goals and business models. However Ryanair has a unique business model that give out cheaper prices for business class seats other companies don’t. For inimitability, I believe there is a little of inimitability Ryanair possessed in their current business model. From reading the article it stated that Ryanair was willing to risk and splash out on business class seats in the current economic climate while other companies didn’t want to take the risk.

Another reason that made Ryanair inimitable is the full-service carriers on short route flights which forced Europe’s older airlines to reevaluate their business models. For non-substitutability, as I have stated in the previous paragraph that Ryanair is inimitable but relating to the information from the article it stated that “Europe’s other low-cost carriers are experimenting with new ways of attracting business passengers”. This statement shows that there are many substitutes for low cost airlines in Europe so Ryanair must stay alert and focus on the competition on the market.

Lastly exploitability, I would say that Ryanair was able to turn its resources (airplane seat tickets) to revenue very well with their current business models as they were selling business seat tickets cheaper than other airlines in the market and providing full service in short route flights making the company number 1 low cost airline in Europe. However the competition is fierce as Easy Jet also offer many wonderful deals such as priority boarding, a free baggage allowance and so on. Ryanair must find innovative ways to attract more customers to use their services to remain as number 1 low cost airline in Europe.

References

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Rothaermel, Frank T. Strategic management. New York, NY: McGraw-Hill, 2015.

Njoya, Eric Tchouamou, and Hans-Martin Niemeier. “Do dedicated low-cost passenger terminals create competitive advantages for airports?.” Research in Transportation Business & Management 1.1 (2011): 55-61.

Walder, Johannes. “A strategic analysis of Ryanair.” (2012).

Chen, Long, and Hubert Pawlikowski. The expansion of low cost carriers into the long-haul market: a strategic analysis of Norwegian Air Shuttle ASA. MS thesis. 2015.

Bryne, Fredrik Arne, and Ole Marius Hobbelstad. “Valuation of Norwegian Air Shuttle ASA.” (2014): 189.

Siren, Jukka, et al. “Air Cargo Market Development & Business Actions Work Package 5.” (2013).

Walder, Johannes. “A strategic analysis of Scandinavian airlines (SAS).” (2012).

Hosen, Gøran, and Matias Berg Bollingmo. “Valuation of Norwegian Air Shuttle ASA.” (2013): 156.

Kramer, Tommy. “Human Resource Industry Audit-Reflection Paper.”

Ferrell, R. Garth. “Cultural Values And Personal Ethics Paper.”

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