The Environmental Case Analysis Of Ryanair Commerce Essay

The Environmental Case Analysis Of Ryan disperse Commerce EssayIn an organisation the close important get is its strategy, beca habituate strategy is the feature which gives the means to the firm to be successful. This is an effective long-term method to conduct an organisation to reach its objectives and goals to stay put on its agonistical edgeThe chain of mountains of this essay is to consult the strategic analysis of environment and the industry together with the companys present strategic choices, and also it is requested to recommend new strategic initiatives and areas for meliorate strategy implementation for the senior management team of Ryanair.This is conducted with the use of six strategic models (SWOT, PESTLE, Porters Five Forces, strategic groups, Value Chain and VRIO) that are recommended to be use to analyse the essential and external environment of the company.Each model go away be taken in to deliberation and discussed carefully to highlight what had begin the persona for the negative perception and the positive perception of both the customers and the companies towards its growth and sustainabilityTherefore this eccentric person study will be analysed to pin point on what should be d champion for the future strategic management of the company.Out of all(prenominal) the low fare airlines in the atomic number 63an industry Ryanair takes the lead. This airline however is from Ireland and its head component is situated in Dublin. London Stansted Airport in UK is its main operational base. Ryanair is named as the largest low cost carrier and the is the third largest airline in the number of passenger numbers.To offer- secure, cost competitive and efficient in dish ups in the aviation pressureing and to retain their employees dedication and devotion to fulfil the objectives of the industry, to maintain stripped standard of on time performance rate while complying will all application regulations and to sustain an environments where d ignity and family values are being utilized.ObjectivesTo compass revenue growth annuallyTo aim on having a bigger market shareTo pass on a better customer service than their tint companiesTo book a stronger business imageReputations with clients than rivalsTo be recognized as a leader among airline industriesTo compete in the global marketTo obtain a st subject competitive benefit(Marivic .B 2009)3.0 Micro environment analysis (Internal analysis)Organisations create worth of customer value being measured by a product performance characterises and by the credits which customers are willing to pay, by utilizing the capabilities and resources that are found internally and reaching the withdraw of standard global rival . These particular collection of capabilities and resources which gives the exclusive advantages to the organisation are in that respectfore measured as core competenciesCarpenter, Bauer, Erdogan (2009)3.1 SWOT analysis (Strength and Weaknesses)StrengthsThe lowe st cost in crease to all the other LCC in EuropeThe low cost leadership had made it stand out from the arena of LCC industry in EuropeThe worlds most gain groundable airlineAccording to the case Ryanair was the most profitable airline in the world on the basis of its operating and net profit margin, on per airline and passenger basis.Brand recognitionIt is claimed according to the case that Ryanairs website was the largest travel website in Europe and the fifth most recognized brand in GoogleThe emplacement of No frill Low fareTo overcome the weakness of low passengers the airline restyled the system with this attitudeCompared to other LCC airlines Ryanair has the most passengers42 million passengers in 2007Most sum up of bases with most amount of aircraftsAccording to the case study Ryanair has flown from 16 bases with over 100 new Boeing 737-800 ordering further 138 new air crafts doubling the sizeHighest control in the EU low cost market29.9% from the entire Low cost marketBe ing the youngest fleet of all the study airlines in the EUReplacing its fleet of old aircrafts with new, more eco friendly aircrafts, minimizing the average age of its fleet to 2.4 years.WeaknessesWheelchair chargersBad reputation and ethical issues reflected when ryanair supercharged 18 pounds to use a wheelchair and in response to the protest it reduced the charge to 50 cents wheelchair toll on every passenger ticket worthless service qualityThe little legroom and unfriendly staff being the worst part of Ryanairs drive in-howExtra charge for food and luggagesCarryon luggages being limited and making them break dance in bags allowing the passengers to walk in with minimum of hold luggageBad relationship with the pi bussRyanair has bullied pilots to force them to agree to new contracts wherer they would have to pay 15,000 francs for retraining on new aircrafts if they left the airline.Airports in the suburbsAway from the main city settle the customers inconvenientNegative respo nse by the passengers for the additional servicesAccording to the case non all ancillary services initiatives were successful in 2005, passengers were resistance to pay additional amount because they thought it is not a worthwhile coronation for a short flight.3.2 The Value chainInfrastructure of the firmAround Europe Ryanair has 16 bases having the main bases in Stanstead and Dublin. The chargers of Ryanair airports are low due to its use of airports that are signifi crouptly away from the congested main airports. As adaptation for surcharges are not included for fuel they have to come out costs of on other ways with implementing chargers for the use of wheelchairs ,food and extra luggages. Ryanair having one type of aircrafts (boeing 737) they only have to train the pilots to fly thos particular even hence back cut down costs as they do not have to be sent to various courses.The hierachial structure of Ryanair is very effective as the managers have to stem to the CEO to make decision from the information given.Human Resource managementHaving the employees sleep in the bases and not having them stay in hotels has made Ryanair reduce costs. Ryanair can make future plans since they have a good roster for most of their workers having 4 days on and 3 days off.Technological developmentOnline employment was introduced by Ryanair for the first time and thus they became eligible to reduce their costs. Self-check service enabling to the passengers was also introduced too thus Ryanair was able to reduce staff and cost. Having the youngest fleets in the EU made Ryanair reduced in costs for the new aeroplanes.ProcurementRyanair only providing a service and having to outsource the material they need. in addition to that they have to buy fuel and equipment collectively with leasing planes.Inbound logisticsOut sourcing of handling services is very common fir a business like thisI.e. cleaning service, food, checkup services and security/safety.OperationsBefore setti ng off it is a must to check out all the planes and equipments by the pilots and the airports used are not very congested and only make point to point tripsMarketing and salesHaving the biggest website in Europe and having large advertising boards made them affix in sales and marketing. However the attempt of introducing the entertainment facility onto flights where customers had to pay more was failed as people refused to pay due to short journeysServiceHaving tried to take place the fleet up-to-date and letting the staff go on course once a year to improve their knowledge and making sure they know all the new regulations made Ryanair powerful on services as well.3.3 VRIO AnalysisResources and capabilities can be regard as things that an organization own. It is essential to settle down and clarify the core competencies to understand the meaning of the different organisational performances. If an organizations resource and capabilities are valuable, rare, inimitable and organized then it will direct to a sustainable competitive advantage. The internal analysis can thus be analyzed through this base of VRIO framework.Carpenter. M, Bauer. T, Erdogan .B (2009)Analysis of the caseRecoursesValuableRareInimitability unionisedCompetitive Implication(1)Human ResourcesNoNoNoNoCompetitive disadvantage(2) pay ResourcesYesYesYesYesSustainable competitive advantage(3)Tangible assetsYesNoNoYesCompetitive Parity(4)Intangible assetsYesYesYesYesSustainable competitive advantage(Table 1)The human resource of Ryanair is a competitive disadvantage as it highlights on questioning relationship with pilots therefore it is not valuable it is not rare it is inimitable and it is not organized as it is not effectively arranged and deployed in the market.The finance resources of Ryanair is valuable, it is rare, it cannot be imitated by other airlines and it is well organised and effectively arranged in the market thus it is a sustainable competitive advantage.The tangible assets of R yanair i.e. the airplane types etc are valuable but they are not rare they can find them anywhere and the planes are imitable as any other company could have the same kind of flights. They are very well organized with the youngest planes and eco friendly with better airlines to come in to the firm in the future. Thus it has a competitive parity.The intangible assets of Ryanair especially the brand recognition are valuable they are rare and they are inimitable and they also effectively help the organisation to be organized. Thus it is a sustainable competitive advantage.4.0 External analysis4.1 SWOT analysis (Opportunities and Threats)OpportunitiesSales increases due to credit crunchAs a pull up stakes of the recent recession the credit crunch made the sales increase as many customers wanted to reduce their costs.Can join the long haul market penetration by the possibility of taking over Aer LingusAs the result of losing the bid Miceal OLeary assumed that Aer Lingus can be bought ov er as it has no long term future.Most routes are being clear as other carriers start withdrawingAs the clash increased with the routes of Ryanair other airlines such as My Travel Light are avoiding the routes all together.ThreatsThreats due to accidentsIf an accident happen in a LCC airline it will Marjory affect the firm as there are a very high percentage of strong reduce in occupyAttacks of terroristsAttacks like 9/11 will reduce the demand for airlines.Increasing fuel priceRyanair limiting its ability to pass on increased costs to the passengers of low fare placing extra fare on the carriers as a policy to find cost saving in other spheres of its operations leading Ryanair for hedging.Possibility of taxation introductionDue to global calefacient there can be a environmental taxationIncreased competition from developing countriesEasyjet having and extra skyttax starFor website booking and customer support Ryanair scored 1/5 in nine of the 16 criterias. (Bitterwallet nd)4.2 The PESTLE analytical technique(Figure 1) The Macro Environmental analysis, What makes a good leader?PoliticalOne of the significant advantages to Ryanair is its political environment as the majority of its procedures are controlled within Europe. This region maintains political stability and it was a fact that we all knew. Even when there is giving medication instability Ryanair does not experience issues as an apprehension regarding passenger volumes or flight destinationsEconomicFor the airlines industry the increment of fuel price caused a major problem they had to cut corners if they did not hedge to accumulate cost on other areas. There can be seen a fall in demand for the flights due to the recent economic crisis. Hence job cuts increased and customers have low disposable income blocking them to spend on vacations. However this could be an advantage for other cheaper airline industries as there are people who are still able to afford a vacation as they are facial expression for lower cost alternatives.SocialThis factor has generally impacted Ryanairs business strategy. The prediction of Buyer behavior are becoming gradually more interwoven to forecast as loyalty are being shifted by the modern consumers from one brand to anther due to the differentiation of price and lack of basic emptor reliability. In addition to that the increasing competition among carriers with low cost fare is resulting in consumers mentally in which carrier to choose when traveling within Europe destinations.TechnologicalThe modern era is advance in technology which means that the entire industry is under change with more eco friendly and efficient. Online booking is one major improvement Ryanair has technological wise having the most visited travel website in Europe together with the fifth most recognized brand on Google wakelessThe heavily regulated industry with laws that are constantly adapting to new changers by not allowing liquid in the customers carry on luggages bring th e legal panorama of Ryanair in to action. The new laws that implies to airline industries are the laws that are put across the industries to be more environmentally friendly. This will thus lead to companies fight ting to reduce carbon emission and make the industry less harmful to the environment to meet the terms of EU regulations.EnvironmentalThe external environment of Ryanair is somewhat stable. Nevertheless understanding the consumer behavior is Ryanairs biggest problem together with utilizing marketing applications to improve entire buyer patronage and sales performance.4.3 Porters Five ForcersThe case study will be discussed through the porters five forces analysis. This analysis is a very powerful yet simple technique to find out where the power stays in a business. This technique is used to comprehend the strengths of the present competitive position and the future where Ryanair is willing to go in.High specialityLowHighMediumBargaining power of suppliersIn the airline i ndustry there is a small number of low fare airlines, thus it shows a high nemesis according to the case Ryanair is being chosen by many customers for its lowest price. However by any chance if there is a price perk up customers have a high potential of switching to another brand in brief customers have no loyalty towards one brand. Which gives the result as bargaining power of the suppliers is low.Bargaining power of buyersThe potential of switching to other airlines are very common with LCCs since the customers are only looking for the cheapest. Therefore if Ryanair increase the cost under any circumstance there is a possibility of losing customer. In that case its evident that buyer bargaining power is high.Rivalry of competitorsAs a result of slow growth in the industry most carriers find it difficult to succeed the chance of succession is limited to a a couple of(prenominal) firms because of the competition for market share. The high fixed cost and low product differentiatio n leads to high rivalry threat. This shows with Air Ligus, GlyBe and Easyjet following the similar path of Ryanair. successor ThreatThere are many substitutes for long trip i.e. Trains Buses, cars, ferries. However one cannot compare a plane with all of the above mentioned alternatives and a plane travel faster than any of them. Therefore substitute threat is crack.The threat of new entryAirline industry is not the easiest to enter it has a lot of barriers. Ryanair is the market leader and with the implementations of new regulations and the pressure to reduce carbon emission makes it a moderate threat of new entry to the market.4.4 strategical groupsQuality321CostAccording to the dimensions of quality and cost of the entire industry (Refer appendix 1)1st group falls under the same strategic group as they have same strategy of low cost leadership.2nd group mainly serving to the people with a moderate income levels and moderate cost therefore they have the same strategy of medium co st leadership strategy.3rd group falls under the same strategic group, as they have the same strategy of high cost high quality.Profitability321Number of passengersAccording to the dimension of profitability and number of passengers of Budget airline industry(Refer appendix 1)1st group falls under the same strategic group as they have low profit and lowest number of passengers2nd group falls under the same strategic group as they have medium profitability and medium amount of passengers travelling3rd group falls under the same strategic group as they have high profitability and the highest number of passenger5.0 Strategic choices and the recommended strategyThe strategic framework of change managementThis framework helps Ryanair to understand the substantial change over recent years and the importance of organisational culture to organizational analysis. It also can be used to identify the key steps that could improve the management of change. However according to the Ryanair case s tudy management is up to a good standard and therefore change management is least importantThe strategic framework for advertising challengersThis framework can be use to Ryanair as it had an incident with a customer where she was mislead by an advertisement, yet this framework is also a less importantThe strategic framework for guest Relationship perplexityThis framework is used to broaden the understanding of CRM.Negative response by the passengers for the additional servicesBad relationship with the pilotsPoor service qualityThese are some of the weaknesses Ryanairs CRM come across thus to fill the brace of the gap between negative attitude towards Customer relationship and to make it more favourable it is a must for ryanair to focus on the CRM.If Ryanair take this strategic frame work in to action they will be able toBecomeThe most favourable airline in the industryThe most profitable budget airlineThe positive word of mouthThe well recognized brand in the industryMoreover w ith Customer relationship management the internal market will be looked in to with a positive sentiment when the employees are motivated and when there is a beginning for employment recognition thus employees will be treated well which will lead to an boilersuit success of the airline6.0 ConclusionRyanair case study was analysed through six analytical techniques (SWOT, PESTLE, Porters five Forces, Value chain, VRIO and strategic groups).Based on the analysers the management can now understand that in order to improve the strategic implementation they must follow the strategic framework of Customer relationship managementIt helps to bridge the gap and to meet their objectives.Therefore when the recommended framework is implemented the vision of Ryanair can be reached easily.7.0 ReferencingBeamish. H.R, 2008 Strategic management, 3rd edition, Pearson prentice HallBourgeois L.J, Duhaime.I.M, Stimpert J.L, (1999) Strategic Management a managerial perspective, 2nd Edition, Dryden press , USABourgeois L.J, Duhaime.I.M, Stimpert J.L, (1999) Strategic Management a managerial perspective, 2nd Edition, Dryden press, USACarpenter. M, Bauer. T, Erdogan .B (March 2009), Developing strategy through internal analysis Principles of management, ,Retrived on 15th April 2010 fromhttp//www.flatworldknowledge.com/pub/1.0/principles-management/29045Carpenter. M, Bauer. T, Erdogan .B (March 2009), Developing strategy through internal analysis, Principles of management and Organisational Behaviour, ,Retrived on 15th April 2010 fromhttp//www.flatworldknowledge.com/pub/1.0/principles-management-and-orga/32825De Puget.G, 2003, French Accent Ryanair black on Emotion, Brandchannel, Retrieved on 11th April 2010 fromhttp//www.brandchannel.com/brand_speak.asp?bs_id=72Eerste. 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London Prentice HallJohnson G, Sholes K, Whittington R, (2005) Exploring Corporate Strategy text and cases 7th Edition, London Prentice HallMarivic.B, 2009,Ryanair financial objective, Thinking made easy, Retrieved on 11th April 2010 fromhttp//ivythesis.typepad.com/term_paper_topics/2009/03/ryanairs-financial-objectives.htmlMun.J, (2008) Analysis of Ryanairs Competitive Advantages Business HYPERLINK http//www.associatedcontent.com/business/?cat=3HYPERLINK http//www.associatedcontent.com/business/?cat=3 Finance , Retrieved on 17th April 2010 fromhttp//www.associatedcontent.com/article/1159874/analysis_of_ryanairs_competitive_advantages.htmlPorters five forces, Mind Tools retrieved on 12th April 2010 fromhttp//www.mindtools.com/pages/article/newTMC_08.htmRyanair,Airfearsflights nd retrived on 10th April 2010 fromhttp//www.airfaresflights.co.uk/airlines/RyanairFigure 1http//www.whatmakesagoodleader.com/macro-environment-analysis.html8.0 Appendixes