Unit-2 Case Study Analysis Assignment Help
Unit-2 Case Study Analysis Assignment Help have made their presence in their respective industries by being cost leader as Ryanair provides its services to the customers at lowest price and Zara provides its products to customers at lower price than the other designer garments manufacturers. Both the companies obtain lower return from each customer but the number of customers that they attract to use their service and products are able to generate enough profit to make the companies profitable and competitive in the market. The main reason for existence of the cost leaders in the market is the volume of the sales that they generate due to their lower price (Chandler, 1962). This is what these two organizations have been able to manage successfully.
Both the organizations are successfully able to reduce their operational costs in order to provide low price service and products to the customers. The operational cost reduction is done through removal of intermediate parties from the supply chain as Ryanair books the tickets for its customers directly and Zara sells its garments directly from its own showrooms. The companies are also similar in strategy of improving the process efficiency involved in their operations. Ryanair on one hand cuts down the fixed costs of providing frill benefits to passengers and higher usage of its fleet, Zara on the other hand makes use of IT to contact the supply chain members to make it more efficient and responsive.
The strategies of both the companies have also certain features which differentiate them from each other. Ryanair has focused its strategy on being completely a cost leader where the player in the market chooses to provide lowest price service but without being seen as providing some differentiated service which can demand premium. Thus Ryanair also avoids any other service to passengers except the air travel for its ticket fair.
Zara on the other hand is catering to a focused market. The strategy of Zara is thus blend of cost leadership and focused differentiation. The consumers of the company are those people who want latest design garments and clothes which are in the latest fashion. Zara doesn’t cater to all type of garment buyers but only few customers who look for latest designer wears but at lower price than the existing designer wear providers. Thus Zara also earns premium on its products but lower than its rivals.
The other important difference between the two organizations is that Zara is managing a vertically integrated organizational structure where more than one function of supply chain is done by one organization alone. In case of Zara, it designs clothes, manufactures them and then sells them at its own retail showrooms. This vertical integration not only gives the company a brand value but also reduces its operational fixed costs as the production and retail both are in-house functions (Tregoe and John, 2007). Ryanair doesn’t follow the vertical integration but manages its single role of providing air travel to the consumers with very high operational efficiency. The airliner doesn’t go for vertical integration but such a strategy involves a huge amount of fixed cost which the airliner is unable to afford due to nature of its strategy of sheer cost-leadership.
Recommendations for Ryanair (Case-1)
The company must constantly look after reducing the operational costs as much as it can. This is because if any new player emerges in the market which can manage to keep the operational costs both fixed and variable lower than Ryanair then it will be able to provide the service to the customers at lower price than Ryanair offers. In such a case, it will be difficult condition for Ryanair as it can’t afford to lower its prices lower than its existing prices because of the tight margin, on which its business runs. Without reducing the costs, it can’t take decisions to reduce its prices (Beckhard, 1989). Thus it is important that Ryanair must relentlessly search for any opportunity on which the operational costs can be reduced. Otherwise in case of above mentioned scenario the customers will not hesitate to shift to the rival lower price airliner as its strategy doesn’t allow the airlines to build customer loyalty.
Unit-2 Case Study Analysis Assignment Help
The company must also think of increasing its revenues, for example by charging premium on the complementary services provided in flight by the airliner. This is important because being a cost leader in the market, the airliner cant increase its ticket fair which is the price paid by the customer only for air travel and no frills. The company can however charge higher price for the complementary services like the food or LCD screens than it charges currently because those who are willing to pay will not hesitate to pay higher price for the complementary services.
The company also must try to build some customer loyalty as the huge current customer base which the airliner has is only due to the lower price it charges and there is not much value that the customers attach to Ryanair against Lufthansa or British Airways. Thus it is important that in order to keep its customer base intact it must take some marketing measures so that the customers don’t see Ryanair as low quality service provider which has no brand value (Steiner, 1979). Thus it is important that the company changes its attitude of “You get what you pay for”. This philosophy is not going to make Ryanair a popular name for the people who will be willing to shift to premium airliners in event to hike in price by the company
Recommendations for Zara (case-2)
Zara must constantly look out for providing the latest fashion garments to its customers. Thus it is important that Zara always studies the market trend and customer’s interest. It is important because the strategy of Zara is to provide differentiated products to the focused market of people who search for fashionable clothes at low price. In event of Zara missing the trends in the market, it will neither be able to compete in designer clothes segments market because its clothes are no latest designs and nor will it be able to compete with low price cloth providers because its clothes are costlier than their clothes (Porter, 1986). This makes it necessary that Zara keeps track of the latest trend and provide these clothes in the market at the earliest. For this purpose Zara can utilize its huge customer base and involve them more by asking them suggestions and their choices. It is very important that Zara engages customers in greater deal in designing its clothes.
The company must make use of its buyer power against its raw material suppliers. The company is very big in terms of the raw materials it orders to fulfill its customers demand because of it huge customer base against its rivals like Gucci, etc. The company can procure the material at far lower price than at present if it uses the economy of scale it has in its operations. This is important because vertically integrating the organization and use of IT can only provide lower operational cost to a certain extent, beyond that the company has to also find ways to reduce it further.
The company must make is process more efficient by further streamlining its supply chain. So far the company has done very goods with the help of IT where the different partners of supply chain can be contacted effectively and quickly. But this tool will some time also be incorporated by its rivals in their operations. Then the advantages and benefits of IT will disappear. Thus it is important that company looks out for opportunities where it can make its business processes more efficient (Mintzberg, 2004). So that the competitive edge of faster supply chain remains for longer period for the company even after the proliferation of IT in its rivals operations. Order Now
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