Strategic Analysis of Ryanair



Strategic Analysis of Ryanair

Task 1

Ryanair is the leading airline of Europe competing on low costs. Founded in 1985 by the Ryan family, it started its operations as a scheduled airline offering only one route, i.e. from Ireland to UK. In very little time, the airline established itself in the international aviation industry, as a low cost airline providing international routes. The technique which Ryanair use for its business enterprise is robust, making efforts to turn Ryanair into the number 1 low cost leader airline across Europe. The objective, which Ryanair has, set through this technique, is to position itself as the top low-fares scheduled passenger airline of Europe. In order to achieve this objective, the company offers incredibly low fares established to create demand, and target those leisure and home business travellers, who are fare conscious.

The selling policy of Ryanair is selling one-way seats, while setting the fares with respect to the demands of various flights. Rather than using large and congested airports, Ryanair focuses on using secondary airports that are comparatively less congested, and provide high rates for on time departures. As a result of choosing secondary airports, Ryanair had fast turnaround times and can avoid a high rate of terminal delays, which eventually leads the company to gain a competitive edge over other airlines in managing expenses (D. M, 2000).

PEST Analysis

Political

The company is subject to high risk from changes in government policy. These policies could significantly affect the company as its revenues are affected from it. The strict policies include high taxation and frequent changes in policy, which makes it difficult for the company to adopt to. As a result, the company is involved in various legal disputes both within the country and with European Union. These disputes are related to business dealings of the company. Moreover, the country they fly to support their own flagship carrier. The company also have to face concern from the local bodies, who regularly raise voices against the noise produced and the way the runway is constructed. However, the government may benefit the company, when it will come to the promotion of tourism (Johnson, 2006).

Economic

The country is witnessing an economic recession and the government has hinted of a decline in the expenditure, which is causing the problem to increase. In the recent years, there has been a decline in consumer spending too, indicating a slowdown in the economy. Hence, Ryanair may also be affected from such economic changes, causing the sales to become stagnant or decline.

Social

In the recent past, many airline companies have opened up and there is overcapacity in the industry. The rates are now very affordable, giving people an opportunity to visit different places by travelling airline. The lower rates could now attract consumers from a wider demographic of customer.

Technology

It is important for the company to keep on coming up with the latest technology to maintain its competitive edge. If the company fails to adopt new technology than it may ...