This is a fairly elaborate one we had recently on EssayBay which looks like someone had a few stolen credit cards and wanted to try and get the money off them.

The main account was created by : laurab1234@hotmail.co.uk

The essay 'buyer' laurab1234@hotmail.co.uk topped up their account with a sizeable amount of money using several different cards and names, then created writer's accounts (stupidly using the same password and similar contact details to their stolen credit cards) and posted fake projects using the buyer's account which they then bid on using the writer's account. They charged back one of the paypal transactions and then tried to claim the writer's money anyway.

They provided us with the following information in the course of dealing with them:

Shopper's Name: mr rod brown Shopper's Address: 70 alpine grove west bolden Shopper's Telephone No.: Shopper's Postcode: we36 0nq Shopper's Country: United Kingdom Shopper's IP address: 172.213.51.125 Shopper's Email: laurab1234@hotmail.co.uk

Shopper's Name: leslie w wilkins Shopper's Address: nut tree cottage east burton road Shopper's Telephone No.: Shopper's Postcode: bh20 6he Shopper's Country: United Kingdom Shopper's IP address: 172.159.200.4 Shopper's Email: laurab1234@hotmail.co.uk

Shopper's Name: MR PAUL DENYS SELF Shopper's Address: 47 york villas spennymoor dl166lp Shopper's Telephone No.: Shopper's Postcode: dl166lp Shopper's Country: United Kingdom Shopper's IP address: 172.188.227.80 Shopper's Email: laurab1234@hotmail.co.uk

But the following details I think are genuine, because they asked me to transfer money into these bank accounts:

Bank details: Account number is 85503428, sort code is 602404 , bank name: natwest, and name : a ahmad.

Further account details: Abbas ahmadi, sort code: 110094 account number:00440297 bank name : halifax

Telephone numbers: 07931396420 and 07931872654 (neither work)

They managed to get one paper out of this but we actually still hold a chunk of their money because I mailed 'Laura' and told her I'd passed all this information to our local fraud department to deal with. The paper is below.

I hope this is useful to anyone who might have seen similar names and contact details come their way.

Jennifer

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Introduction

This paper will examine the practical value of Porter's Generic Strategies and link it to the airline industry. More specifically Ryanair will be used as a basis to emphasise the practical value of Porter's Generic Strategies. The product life cycle will also be analysed. Ryanair was initially known as Aer Lingus, which was the national airline of Ireland. Whilst trying to gain a stranglehold on British destinations, Ryanair adopted a differentiation strategy along the guidelines proposed by porter.

Product life cycle

There are four stages to the product life cycle: Introduction, growth, maturity and decline. The
practical value of the product life cycle cannot be underestimated. Ryanair used the product life
cycle to evaluate its position in the market and used it as a platform to create stability.

Research and development is the initial stage. This is where the business has its researchers to
look at new ideas and products for the market. This can indeed be very expensive but Ryanair
did not budge from this. They carried out research into new destinations and are now reaping
the rewards.

Introduction: At this point the product life cycle begins. The actual product or service is
introduced. Companies spend an awful lot of money. This has been no exception with Ryanair
who spent millions on lauching their services and it seems it was well worth the effort.

Growth: If the product or service is successfull that an inrease in sales is likely. The producer
still advertises at a high level to fight off competition. Product starts to move into profitability.
The cash flow starts to gain more revenue. A huge increase in sales followed for Ryanair in the
summer of 2007 when the floods hit the UK. Ryanair was successful hence their services were
in demand

Maturity: Sales growth begins to slow as market saturation is approached. Sales are kept going
by those who are late to adopt new products. This stage will last longer than the earlier stages.
This is where the most revenue is taken in for the longest period of time. This was a period of
intense scrutiny for Ryanair the late summer 2006 as autumn set in and no new services were on
the horizon.

Decline: Eventually the product will become less interesting for purchasers, and the decline of
the product will commence. The revenue will now slowly drop but there is a possibility that the
firm will not go into debt. Ryanair clearly took account of this element of the product life cycle.
When sales began to decline in 2003 Ryanair took evasive action by reinforcing their exisiting
destinations and creating new ones. For the future this will be handy. The will use the cycle to create a systematic and methodological approach.

Ryanair and porter's generic strategies

By early 1990, despite a growth in passenger volume, Ryanair had accumulated losses of more than £20 million, and decided that a new strategy was necessary. Under the management of the newly appointed team headed by Michael O'Leary, it turned to the low fare sector of the industry, which was under catered for at that time (Ruddock, 2007). Ryanair then changed its objectives and aimed to become Europe's "leading low-fares airline". According to Porter (1998), when a firm adopts a cost focus strategy, it "selects a segment or a group of segments in the industry and tailors its strategy to serving them". Ryanair wanted to target price conscious travellers. This strongly suggests that it adopted a cost focus strategy as proposed in Porter's Generic Strategies. According to Porter (1986), there are a number of ways an organisation can achieve a competitive advantage over its rivals. Competitive advantage is achieved either by having lower costs than competitors, or by differentiating the product. Differentiation is achieved by offering customers something, which they value and is not offered by competitors. Companies can choose from "generic" strategies: Cost leadership; cost focus; differentiation and differentiation focus.

Competitive advantage:


Competitive scope:


Strategy description:

Lower cost


Broad target


Cost leadership

Lower cost


Narrow target


Cost focus

Differentiation


Broad target


Differentiation

Differentiation


Narrow target


Differentiation focus

Generic Strategies
The European low-cost airline industry follows the overall cost leadership strategy. Cost leadership means achieving competitive advantage by being the lowest cost producer within the industry. Strict cost control is achieved partly by the elimination of "frills", which are offered to passengers travelling via the full-cost operators. These include the use of Internet, ticket-less operation, no free refreshments, less legroom on the aeroplane, refunds not permitted:
Minimising the maintenance costs by using only one aircraft type and this in turn reduces inventories.
Low-cost airlines operate a point-to-point system, where airlines fly passengers directly from one airport to another. If a passenger wishes to fly via a hub, two separate flights have to be booked. No baggage transfer is provided, so the passengers must collect their baggage and recheck it for the next flight. If they miss the flight the airline is under no obligation to offer another flight or a refund. The point-to point system enables airlines to maximise the number of flights per day. This generates more revenue and lower unit costs per flight. (Lawton, 2002, pg 51)
Doganis (2001) estimates that the low-cost airlines' cost per passenger is about one-third those of a conventional airline's. (Lawton, 2002, pg 119)
Although low operating costs and cheap ticket prices are key requirements for success, an airline's long-term competitiveness also depends on providing a safe and reliable product. (Lawton, 2002, pg 88) Thus, it is essential to be on time (departing and arriving), have low rates of flight cancellations, ensure baggage is not lost or damaged and have helpful customer service personnel. Cost reduction should not be achieved at the expense of a reliable product/service.

As a cost focuser, Ryanair was required to change its whole organisational culture to one which is much steeped in achieving the lowest cost possible, so as to provide a competitive advantage. It attempted to maximise productivity and lower cost in every aspect of its operations, from removing in-flight amenities to negotiating favourable rates for airport charges. Thus, Ryanair's strategy can be identified as cost focus. However, Porter's lack of definition of an "industry" while describing the generic strategies poses a few problems. It can be argued that although the low-cost sector constitutes to only 6.7% of the whole market, it can be considered an industry by itself. If this view is taken, then Ryanair's strategy can be identified as cost leadership. The characteristics of an organisation adopting a cost leadership strategy is very similar to a cost focus one; Porter (1998) claims that "a low-cost producer...typically sell a standard, or no-frills, product and place considerable emphasis on reaping scale or absolute cost advantages from all sources.".
Ryanair has been consistent in pursuing its cost focus strategy. Its attitude towards achieving the lowest costs possible seems to be almost fanatical. It has managed to drive costs down by addressing levels in its value chain, for example negotiating better rates from its suppliers (Boeing and airports) In addition to the cost-cutting measures mentioned above, Ryanair has also lessened its dependence on travel agents by allowing direct flight sales through phone and its website. Competing on costs need not mean only achieving low costs. Maximising productivity in an operation area also constitute to saved costs. For example, the wages that Ryanair pays its pilots may be above the industry average, but since performance-related pay is used the pilots are more motivated and higher productivity ensues. Services like aircraft handling, engine and heavy maintenance that are contracted out to third parties also protects Ryanair from any potential industrial unrest, which can be very costly.
The extent to which Ryanair has been successful in achieving true cost leadership under Michael O'Leary's management is tangible. From 2005 to 2006, the Passenger Load Factor decreased from 71% to 67%, and Break-even Load Factor decreased from 58% to 54%. However, the "available seat mile" (ASM) has increased by 35%. This is contributed by the relatively short distances on intra-European routes. Expenses created by an increase in ASM are passed on to the customer in higher fares, so the average passenger fare from 2005 to 2006 by around £12. This causes some concern, as Ryanair has emphasised that one of the main reasons for removing all the "frills" from its services was so that it could continue to provide cheap flights to customers.
Porter (1998) highlighted potential risks that companies adopting any of the three generic strategies might face. For a strategy competing on costs, the main risks are when competitors are able to imitate the strategy itself, or technology changes. When the target segment (in this context – price conscious travellers) becomes structurally unattractive, it also poses a risk to the company. This can happen when the demand for low fares disappears due to changing consumer tastes. Ryanair therefore needs to have a defensible position in the industry with relation to Porter's 5 Forces. The 5 Forces are: (1) Threat of new entrants, (2) Bargaining Power of Buyers, (3) Bargaining Power of Suppliers (4) Threat of new substitutes and (5) Intensity of Rivalry among the competitors. For example, Ryanair depends heavily on its suppliers like Boeing and the various airports for favourable rates of equipment purchases and landing fees. If there is a shift in the balance of power, Ryanair's cost focus strategy may no longer be profitable. This can also be demonstrated when alternative modes of transport to flying like trains or by sea are perceived to be more attractive (cheaper), since Ryanair's targeted segment are travellers who are only price conscious. Porter (1998) also points out that a generic strategy can be compromised by the temptation of growth, when it becomes "stuck in the middle". Ryanair is the dominant player in the sector, and this risk is particularly high at this stage. According to Porter (1998), "focus involves deliberately limiting potential sales volume". Ryanair's "no frills" policy may have to change as they are actively expanding their flight route network and distance. It would be impossible for Ryanair not to provide meals on longer haul flights, and as a result their cost focus strategy may become blurred.
There are some limitations to the practical value of the generic strategies theory in the sense that they may not always be easily applicable in practice. As mentioned earlier in this essay, Porter (1998) failed to define clearly what he meant by an "industry", and the vagueness of the term meant that Ryanair's strategy can be identified differently: as a cost focuser if the airline industry is considered in its entirety, or as a cost leader if the low-cost segment is seen as an industry on its own. The theory also hardly considers price as a factor, and he only suggest that a cost leader can set prices near industry average and earn higher profits due to lower costs. This has not been the case for Ryanair, and they continue to set prices lower than most of their competitors.

Ryanair has emphasised competition in costs. However, it is clear that pursuing the strategy successfully takes more than just trying blindly to achieve lower costs. According to Kay (1995), the distinctive capabilities or core competences of an organisation are what provide a competitive advantage. Stalk, Evans and Shulman (1992) defines a capability as "a set of business processes strategically understood". Porter (1998) state that strategic capabilities are about core competences how resources are deployed into activities and hence create competitive advantage. In essence, Ryanair has evolved from competing on costs to a capability-based competitor. The critical success factor of the sector was price, and Ryanair was very aware of it, judging from the valiant efforts to drive costs down.

The no-frills policy of the company creates opportunities to increase efficiency and employee motivation through sales commission and excess total remuneration and hence placing genuine and practical value on porter's generic strategies. For example, the absence of free in-flight services enabled cabin staff to earn commission on duty paid sales and in-flight refreshments. As a result, motivation of staff increased and the aircraft cleaning time in between flights were reduced, leading to higher productivity. Contracting out services to third parties also protect Ryanair from potentially costly industrial actions also proves porter's generic strategies are being implied since financial output is being minimised.

Ryanair has the reputation of being the low fare airline in Europe. Another capability differential is cultural capability. This refers to the organisational culture of an organisation, and how it creates competitive advantage. Ryanair's culture is steeped in achieving low costs, with most habits, routines, beliefs, attitudes and values geared towards that objective. These competencies are embedded deeply and Johnson and Scholes (2002) suggest that the cultural capability often refers to organisational knowledge, which cannot be easily imitated.



Experience is a strategic asset that Ryanair possesses. As the first low-fare airline in Europe, it had pioneer advantage which provided them with the important experience. Although Ryanair may have had to make mistakes as the "pioneer" company, experience is cumulative, and that only serves to let it become more efficient. Michael O'Leary is a unique resource to the company, and his knowledge and management style contributed much to Ryanair's success but the success was no doubt also down to the practical value of porter's generic strategies.

Conclusion

Ryanair needs to remember that it has to be aware of the dynamic business environment which is changing constantly and hence needs to continually focus on porter's generic strategies. The current industry critical success factors will eventually become the norm, and new ones will emerge. Ryanair's quest for the lowest cost may also eventually be its downfall, since there has to be a limit to the number of amenities that can be removed before the threshold quality level of its service are breached when customers may no longer find it acceptable, regardless of how low the fares are. Nonetheless the practical values of porter's generic strategies and the product life cycle have placed Ryanair in good stead. The differentiation and cost strategy used by Ryanair and propelled them into the European airline business.





References

De Wit, B & R, Meyer (1999) Strategy Synthesis, London, International Thompson Business Press

G, Johnson & K, Scholes (2002) Exploring Corporate Strategy, 6th Edition, Financial Times, Prentice Hall Europe

Hall, R (1993) "A Framework linking intangible resources and capabilities to sustainable competitive advantage", Strategic Management Journal, vol. 14, no 8; pp 607-618

Kay, J (1995) Foundations of Corporate Success, Oxford, Oxford University Press

Porter, M.E. (1998) Competitive Strategy – Techniques for Analyzing Industries And Competitors, New York, Free Press

Stalk, G., P. Evans & L.E. Shulman (1992) "Competing on capabilities: the new rules of corporate strategy", Harvard Business Review, vol. 70, no.2: 57-69, in De Wit & Meyer (1999): 221-231

Ryanair: How a Small Irish Airline Conquered Europe by Siobhan Creaton Aurum Press Ltd; Updated Ed edition 1 Aug 2007

Michael O'Leary: A Life in Full Flight by Alan Ruddock - 27 Jul 2007 Penguin Ireland 27 Jul 2007

No Frills: The Truth Behind the Low-Cost Revolution in the Skiesby Simon Calder (Author Virgin Books; New Ed edition 9 Feb 2006

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