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Case Studies of Strong Strategies

Companies

Ryanair Business Strategy – Fly for Free!
What is the Ryanair Business Strategy?

The Ryanair Business Strategy is one of operational excellence. It is an Irish company headquartered in Dublin and has about 1000 routes, 40 bases and about 200 aircraft. Their business model is based (i.e. copied – a strategy in itself) on Southwest airlines in the USA. Founded in 1985 Ryanair is now the largest airline in Europe.


Their strategy is a low cost, no frills airline. Their vision is to have people fly for free. It really addresses the market for flyers who looked for a cheap basic and efficient service rather than luxury.


It does not try to complete in all market segments and so is focused. It could be said their strategy is ‘cost focused’. After about 5 years of operation they were making a loss but under the direction of their now CEO Michael O’Leary they rejigged their strategy to one of low cost.


It operates on a highly efficient basis too with high aircraft utilisation, minimum staffing, and maximising their use of the Internet to keep booking costs down. The turnaround time on the ground again is minimised. The Ryanair strategy attempts to keep costs low by gaining discounts and concessions from plane suppliers (Boeing) and Airports.


They operate only one type of aircraft to keep maintenance simple and cost effective with bulk buying of a single set of spares. The flying crew are interchangeable as they only have one aircraft type and consequently their training is reduced and simplified. They outsource where they can to keep their productivity high and have their computer systems well integrated.


Summary

In summary, the Ryanair business strategy is one of fanatical cost reduction and efficiency so they can offer a basic low cost reliable and dependable service which is in high demand.


Entrepreneurs

One of the great entrepreneurs of the 21st Century is Elon Musk.
He tends to do things his own particular way:


Elon Musk 2006

Background: My day job is running a space transportation company called SpaceX, but on the side I am the chairman of Tesla Motors and help formulate the business and product strategy with Martin and the rest of the team. I have also been Tesla Motor’s primary funding source from when the company was just three people and a business plan.


As you know, the initial product of Tesla Motors is a high-performance electric sports car called the Tesla Roadster. However, some readers may not be aware of the fact that our long-term plan is to build a wide range of models, including affordably priced family cars. This is because the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.


Critical to making that happen is an electric car without compromises, which is why the Tesla Roadster is designed to beat a gasoline sports car like a Porsche or Ferrari in a head to head showdown. Then, over and above that fact, it has twice the energy efficiency of a Prius. Even so, some may question whether this actually does any good for the world. Are we really in need of another high-performance sports car? Will it actually make a difference to global carbon emissions?


Well, the answers are no and not much. However, that misses the point, unless you understand the secret master plan alluded to above. Almost any new technology initially has high unit cost before it can be optimized, and this is no less true for electric cars. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.


So, in short, the master plan is:


1. Build a sports car
2. Use that money to build an affordable car
3. Use that money to build an even more affordable car
4. While doing above, also provide zero emission electric power generation options


…. Don’t tell anyone …

In 2016, Elon Musk wrote his second strategy

So, in short, Master Plan, Part Deux is:


1. Create stunning solar roofs with seamlessly integrated battery storage.
2. Expand the electric vehicle product line to address all major segments.
3. Develop a self-driving capability that is 10X safer than manual via massive fleet learning.
4. Enable your car to make money for you when you aren’t using it