RYANAIR'S INTERNAL ENVIRONMENT

Ryanair's Internal Environment

Ryanair's Internal Environment

Introduction

Creating a sustainable marketing strategy for Ryanair means to organise its future. To plan the future one has to know the present in a broader perspective. This is the starting point of an environmental analysis, which identifies the internal and external parameters of the particular environment an organisation is operating in and translates it into useful plans and decisions. The environmental analysis gives Ryanair the opportunity to identify the main factors affecting the industry it is operating in and to find its opportunities and capabilities (Antoniou et al, 2001, 65-92). Above all it is important to answer the question “What business are we in?” by defining the industry the organisation is competing in since this gives the opportunity to identify competitive advantages relatively to others. Ryanair is positioned as being in the European low-budget airline industry. This creates a competitor group consisting of other European no-frills airlines and low-budget sub brands of traditional airlines but excludes full-service airlines.

Company Background

Ryanair began in 1985 in competition with Aer Lingus flying to the United Kingdom and Ireland. The company had a commitment to low fare air travel and making air travel affordable for everybody. The airline didn't really begin to come of age until the years 1990 and 1991 when new management took control (Calder, 2002, 15-20). Before that the airline had made a loss of 25M in the previous four years. In 1991 the airline made its first profit and was carrying over 700,000 on just five routes. Expansion and success rapidly continued and in 1997 full European Union transport deregulation came into force that allowed Ryanair to open up routes otherwise inaccessible.

Ryanair, Europe's biggest low-fares airline (LFA) reported its third quarter results for 2007 with net profits dropping 27 percent compared to a net profit of 48 million a year earlier. Ryanair cited poor market conditions, fuel costs (oil prices at $90 a barrel) and concerns on recession in the UK and many other European economies for its current performance and not so strong future profit expectations. With average winter fares dropping almost 5 percent its' underlying net profit in the three months to end December fell to 35 million euros ($52 million).

Ryanair Value Chain Analysis

Firms make products or provide services by engaging in many different activities. The basic structure of these activities is embodied in the firm's value-chain. Value-chain activities are of two types: primary activities and supportive activities. Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and services. Support activities include human resources, accounting and finance operations, technology, and procurement. All the activities primary and support are potential sources of competitive advantage or disadvantage of any firm.

In Ryanair case, parts of the inbound logistics are Ryanair's low-cost deals, negotiated against promise of large and growing volume of business. Also, they include dependency on suppliers to deliver fuel as well as food, drinks and duty-paid products to be sold on-board; they need to be stored, handled and controlled upon ...