STRATEGIC PRICING PRACTICES: RYANAIR EXAMPLE

This paper aims to evaluate the profitability of Ryanair, a leading low-cost carrier in the European airline industry, while analyzing its value-based strategic pricing approaches. Ryanair, a “no-frills” airline company that was established in Ireland in 1984, still operates as one of the most important market players in Europe. Ryanair’s “lowest fare/lowest cost” model attracted a high number of customers in years. However, Ryanair’s success to achieve the profitability goal lays beneath linking price with value, by charging passengers in accordance with the value they receive. Besides, unbundling the passenger air travel elements and charging those separately increased Ryanair’s profits tremendously and the company gained a substantial market share. So, the success of Ryanair in the highly competitive airline industry is correlated with the effective implementation and control of value-based strategic pricing. Thus, Ryanair’s strategic pricing attempts that boosted the profits and expanded its market share would be dealt through the paper. Ryanair’s value communication with the customers will be explained. A brief comparison with Ryanair’s competitors will be provided and the profitability in the low-cost airline industry would be discussed in light of recent data

The value of switching costs

We study the consequences of heterogeneity of switching costs in a dynamic model with free entry and an incumbent monopolist. We identify the equilibrium strategies of the incumbent and of the entrants and show that the strategic interactions are more complex and more interesting than either in static models or in models where all consumers have the same switching costs. In particular, we prove that even low switching cost customers have value for the incumbent: when there are more of them its profits increase. Indeed, their presence hinders entrants who find it more costly to attract high switching cost customers. This leads to different comparative statics: for instance, an increase in the switching costs of all consumers can lead to a decrease in the profits of the incumbent.

Cost Quality Management

Within the contemporary economic conditions, enterprises might achieve a competitive advantage if only they sell goods and services with high quality and lower prices. Customers, usually, prefer quality goods with acceptable prices, while such goods create reputation with the particular brand. The perfect control system is necessary to achieve a high quality product, which the cost quality management is considered to be an indispensable part in. The cost quality is nevertheless created to ensure that customers’ requirements are being appropriately attained. The most important objective of quality costs controlling is to assist the management in enhancing the product’s value permanently. The superior cost quality control system helps the management to achieve other strategic objectives, such as: producing goods with acceptable costs and deliver the products to their customers in time.enterprise, goods, clients, prices, brands, quality, cost quality control, management

The Value of “Bespoke”: Demand Learning, Preference Learning, and Customer Behavior

“Bespoke,” or mass customization strategy, combines demand learning and preference learning. We develop an analytical framework to study the economic value of bespoke systems and investigate the interaction between demand learning and preference learning. We find that it is possible for demand learning and preference learning to be either complements or substitutes, depending on the customization cost and the demand uncertainty profile. They are generally complements when the personalization cost is low and the probability of having high demand is large. Contrary to usual belief, we show that higher demand uncertainty does not necessarily yield more complementarity benefits. Our numerical study shows that the complementarity benefit becomes weaker when customers are more strategic. Interestingly, the substitute loss can occur when the personalization cost is small and the probability of having high demand is large, when customers are strategic.postprin

Inventory management strategy for the supply chain of a medical device company

Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2012.Cataloged from PDF version of thesis.Includes bibliographical references (p. 97-98).In the medical device industry, many companies rely on a high inventory strategy in order to meet their customers' urgent requirements, sometimes leading to excessive inventory. This problem is compounded when it involves a long supply chain with several stages of activities and with long delivery and processing lead times. It is further exacerbated when high inventory leads to the frequent expiry of items with short shelf lives, which is typical of surgical items that have to be sterilized. Good supply chain strategies can potentially lead to a significant reduction of the supply chain cost. Through the use of relevant mathematical formulae and Strategic Inventory Placement optimization method, this paper examines the extent of the usefulness of a few possible strategies, such as kitting architecture change and continuous review system, for a family of medical emergency surgical kits across the whole supply chain for a medical device company. The result shows that reducing production lead time and review period, as well as adopting certain kitting architecture changes can reduce inventory value by more than 60% and operating cost by more than 20%. In addition, the paper shows that the Strategic Inventory Placement method can further reduce the total inventory value and operating cost by increasing the inventory of finished products and reducing the inventory of components in the supply chain.by Poi Chung Tjhin and Rachita Pandey.M.Eng.in Logistic

The Role of Process Improvement in Attaining Strategic Goals and Providing Financial Value

Customers are demanding increasing value for the money they spend on high technology products. Moreover, competition in the high tech industry is increasing -nationally as well as internationally. As a result, satisfying the customer and providing increased customer value are becoming primary objectives for high technology executives and managers.Many firms that once considered themselves hardware companies are now finding that they are developing a significant amount of software. This software is becoming increasingly sophisticated and costly. Moreover, software projects are increasingly on the critical path . Software developers can put in more effort and work harder. However, it isthe process used to develop the software which coordinates developer efforts and tools. This process can make or break the ability of the firm to deliver. From a strategic standpoint for many high tech firms, improving the software development processes is becoming critically important. However, it is difficult to determine which processes to improve. Studies have shown that firms are finding it difficult to quantitatively justify the resources required to successfully improve their software development processes [5]. Still, many firms are involved in software process improvement efforts.This paper provides summarized results from several companies who have been involved in process improvement activities to show the potential which can be achieved. We then discuss a framework for viewing process changes along strategic lines -with the goal of improving customer value. Once a set of potential process changes has been identified, these changes need to be evaluated. We discuss an approach which can be used to evaluate and tradeoff among proposed alternatives. This approach predicts the performance of process alternatives quantitatively in terms of development cost, product quality, and project schedule. In addition, financial measures such as return on investment (ROI) and net present value (NPV) can be obtaine

Designing Scalable Business Models

Digital business models are often designed for rapid growth, and some relatively young companies have indeed achieved global scale. However despite the visibility and importance of this phenomenon, analysis of scale and scalability remains underdeveloped in management literature. When it is addressed, analysis of this phenomenon is often over-influenced by arguments about economies of scale in production and distribution. To redress this omission, this paper draws on economic, organization and technology management literature to provide a detailed examination of the sources of scaling in digital businesses. We propose three mechanisms by which digital business models attempt to gain scale: engaging both non- paying users and paying customers; organizing customer engagement to allow self- customization; and orchestrating networked value chains, such as platforms or multi-sided business models. Scaling conditions are discussed, and propositions developed and illustrated with examples of big data entrepreneurial firms

Customer value creation in financial services

Customer value creation is allegedly at the centre of relationships between service recipients and service providers (such as financial service organisations in general, and commercial banks in particular). This research considers the role of customer value creation in the strategic response of banks to external changes in their growth opportunities. The analysis established that there had been changes in the framework in which banks' pursued synergy since 1980 (or 1990 in Mexican and 1992 in Estonian interviews). As a response to external change banks have created new synergies in the pursuit of greater growth and interviewees expected that changes in synergy creation should be reflected in banks' diversification and market positioning moves. New synergies required new capabilities and participants from all countries agreed that the current wave of change in synergy creation had carried through greater emphasis on customer profitability. All countries recorded a shift from a supply-oriented strategic stance to the development of skills to retain customers and even becoming a one-stop financial service institution for their customers. However, greater emphasis on customer profitability was seldom followed by recognition of the key capabilities required for high customer value creation. This as most interviewees failed to provide an articulated account of how to achieve that profitability

Global strategies to overcome the spiral of decline in universal bank markets

Although there has been an increase in the overall financial services market, the profitability of banks world-wide has decreased from the early 1980s to the 1990s. This has been attributed to several factors: the decline of traditional banking activities (deposit taking and lending); poorly performing debts (arising from poor lending decisions); and, for domestic banks, depressed property prices and important local industrial sectors performing badly. However, the analyses of bank performance tend to be short-term and narrow in their outlook, and seldom attempt to explain the underlying trends and processes of change. In this paper it is argued that the broad competitive forces of information technology, globalisation and deregulation are destabilising the banking industry leading to irrevocable changes which allow new entrants, disintermediation, innovation and customer changes on a much greater scale than has occurred in the past. These concepts are illustrated using a range of different bank markets as examples. To compete in these new markets different approaches are needed, and a series of possible strategies for addressing new bank markets are outlined with reference to size and type of bank. The long-term outlook for banking is discussed with particular attention being focussed on the changing role of universal banks