Business and the Business Environment Assignment : Ryanair

Business and the Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Identify the positive and negative impacts of the macro environment (PESTEL) on Ryanair
‘s operations with some relevant examples.................................................................................1
2. Conduct internal and external analysis of Ryanair and identify the strengths and
weaknesses...................................................................................................................................4
SWOT Analysis...............................................................................................................................4
3. Explaining how strengths and weaknesses interrelate with external macro factors in
company.......................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A business is the activity that includes the processing and providing of goods and
services to an individual or an organisation in return of the proper profit or revenue. A business
is deeply affected by the extent of operating environment. Thus, this can be said that the effective
planning of the business operations and action plans will help the organisation to have an
effective growth (Van der Wagen and White, 2018). For this report, the case study related to
Ryanair is been chosen. It is a UK based airlines service entity.
The report will cover the positive and negative impact of the macro environmental factors
that can impact RyanAir’s business. Also, the internal and external assessment of the
environmental factors is been performed to identify the firm’s strength and weaknesses. Other
than this, the interrelation of firms strength and weaknesses to its external macro factors is been
evaluated.
MAIN BODY
1. Identify the positive and negative impacts of the macro environment (PESTEL) on Ryanair ‘s
operations with some relevant examples
The external macro environmental factors such as the political and economic issues, social
impacts, technological and environmental constraints and legal obligations will have the deep
and significant impact on the business of the selected Airline organisation (Calabrese and et.al.,
2018). The RyanAir has the following positive and negative impact on their operations which are
as follows:
Political
Positive impact:
 The political support and easy accessibility to runways in the countries of European
continents and other nations has been a key reason for the effective development and
success of the airlines. Besides this, the political ties has helped the firm to have a good market hold in the
foreign countries. This has been the catalysing factor for the business organisation.
Negative impact:
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 The political connections have created certain restriction for the organisation too.
Increase in the Air traffic and load on the Airports of other countries have caused the
stressful condition for the selected Airlines firm.
 Also, it makes the company critically answerable to local authorities over their each and
every function. This can impact their business operations and execution of the activities
in a significant manner.
Economic:
Positive impact:
 The low cost fares of the air carriers has improved the sales and growth of the selected
business entity. Besides this, it has been successful in creating a loyal customer base and
improve its revenue generation. It has given a competitive advantage to the organisation
over its rival or competitor firms. The rise in the economic situations of many countries have created a better opportunity
for the organisation to handle the business operations and their application of effective
operational strategies. Other than this, the minimum comeback or withhold time on
Airports helps the firm to save a good amount for operations.
Negative impact:
 The hidden costs, charges on every service and deceiving advertisement leading to not
providing the proper value for money to the customers will impact the business
organisation in a significant manner (Chuang and Huang, 2018).
 Also, the economies of many countries are not is well conditions to support air based
transportation system that can impact the business operations and thus cause the selected
business entity to reduce its operations and revenue.
Social:
Positive impact:
 The social growth and development of an organisation that has created a positive
perception about the company in the mind-set of the people has been a major growth and
development factor for the organisation that will help the firm to have a good market
presence. RyanAir has diminish the social backdrops and had made Air based travelling
accessible to all the section of society.
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 Also, the adoption of the occasion based travelling packages like on Christmas etc. and
recruiting the staff from various social backgrounds have promoted the goodwill and
perception for the firm.
Negative impact:
 The false claims and excessive air traffic or increase in number of passengers have
created the environment of deceiving and negative publicity for the firm that can impacts
its operations to a greater extent.
Technological:
Positive impact:
 The use of Boeing 747 and other advance technologies in the Air based transportation has
created a huge impact in the sales of the organisation that not only assisted the selected
enterprise to meet their customers’ requirements, but also cost cut the fuel expenses for
its carriers (Van der Wagen and White, 2018). Use of modern technologies for the ticket booking, cancellation and knowing their flight
status has been the major reason or the growth and development of the firm.
Negative impact:
 Any technical glitch or failure can lead to the breakdown of the complete system. This
will not only impact the profits of the firm but can also, ruin the customer’s goodwill.
 Also, the online system is susceptible to get hacked, intruding the personal information of
the customers or employees of selected firm.
Environmental:
Positive impact:
 The use of low fuel consuming air carriers and latest technologies have affected the
business operations of the organisation to a greater extent. Besides this, it helped in
reducing the load on the environment. The usage of online services and reduction of the paper work is also an environmental
advantage enjoyed by RyanAir.
Negative impact:
 The emission level and the use of non-renewable resources can lead the firm to face
certain severe issues in the future.
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 Also, the depletion of land to set the Airports for its carriers is the major environmental
impact on RyanAir.
Legal:
Positive impact:
 The proper following of the legal obligations that are related to the air transportation has
helped the selected organisation to have a goodwill and flawless performance of its
business operations (Alles and et.al., 2018). Also, the proper following of the business operation will help the selected firm to manage
the business operations and carrying their business operations in most effective manner.
Negative impact:
 Any legal case regarding the deceiving or unfair charges can impact the business
operations to a greater extent. This can also lead to the failure of the business of the firm
in a country.
 Other than this, any strict legal obligation can be severe for the organisation handling the
business activities to a greater extent.
It can be critically evaluated that macro environment has certain positive and negative
impact on Ryanair which is illustrated above. The political support is required for easy access to
runways, however, negative effect is that it leads to increase in air traffic and load on airports.
While, low-cost airline is quite economical for customers for availing services, however, it can
cost customers as certain hidden costs exorbitantly raised misleading customers.
Social impact is fruitful as business is able to provide low fares to majority of society.
While, false claim with regards to increment in passengers has affected it. Technological
enhancement is effectively used by firm such as Boeing 747 resulting into good sales. While,
online system needs to be powerful so that hacking problem may be resolved. Environmental
impact is positive low fuel is consumed by it, however, emission level must be met by it.
2. Conduct internal and external analysis of Ryanair and identify the strengths and weaknesses.
The internal analysis of the cited business organisation for an organisation will include the
SWOT analysis of the firm which is as follows:
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SWOT Analysis
Strength Weaknesses
 As per the case study provided, the
low costing of the organisation’s
services have helped the firm to have
the good market share and customer
base is the major strength of the firm
(Calabrese and et.al., 2018).
 The efficient use of the latest carriers
have helped the organisation to
manage their business operations and
activities in an effective way.
 The hidden cost and absence of a
proper expenditure structure is the
major weakness that can impact the
overall operations of the organisation.
 The taxation and the effective
management of the business activities
of the firm. For example, Tenuero
Tourist Tax.
 Employee turnaround and
dissatisfaction of work force and
employees has been emerged as a
major weakness in recent time (Davis,
2018).
Opportunities Threats
 The growth in the economies of
various countries and their operations
will lead to the proper implementation
of the business activities and setting
up of their business.
 More people shifting towards the air
travel is the effective planning of the
business operations and action plans
that will help in the suitable rise in the
setting up of the business operations
effectively.
 The placing of hidden cost can reduce
the good will of the company. It will
impact their operations and cabin
adversely affect the sales of the
organisation.
 The legal restrictions like employee
welfare or related to customer service
can also impact the business operations
and placing of the action plans to a
greater extent.
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 Other than this, the rise in market
competition due to many other airlines
offering cheaper packages to buyers
can emerge as a major threat factor.
Assessment of the External environmental factors will include the Porter five force model
which is as follows:
 Threats from new entrants: This factor will be taken in consideration by the firm in order
to manage their business operations to a greater extent (Lindgren, 2018). The entry of
many new airlines in the cheap air transportation business will impact the operations of
the organisation to a greater extent. It is a factor of high intensity threat as it may cause
the firm to lose its market share.
 Threat from existing competitor: As many companies are entering into the market of air
transportation, Ryanair is adversely affected. This will lead to the placing of the business
operations and alter their strategies. It is a factor of low intensity threat as the selected
fiorm is already well established in cheaper air transportation sector.
 Bargaining power of suppliers: The bargaining will be high if the number of suppliers
are low. Ryanair has to see through the management of the communication and
negotiation with its suppliers, which are limited in number. It will help in the proper
management of their functions. It is a high intensity threat factor as the selected
enterprise can’t afford to lose any of its suppliers.
 Bargaining power of buyers: The selected firm is also required to manage its operations
that will help the organisation to carry their activities in an effective manner. It is a low
intensity threat as Ryanair has seen a rise in its customer base and more the number of
customers lower will be the chances of negotiation.
 Threat of substitution: The growth of competition and many companies involving in this
business will cause the firm to lose its market share. It is a moderate intensity threat
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factor as although Ryanair is well established in its sector, it is susceptible to get
replaced by other airlines offering cheaper and all inclusive services.
On the basis of this analysis, this can be said that the strength of the firm is its low cost
running and cheap air wages is the major strength for the firm while the hidden cost is the
biggest weakness of the firm (Ionescu, 2018). Moreover, it can be critically evaluated that
Ryanair has adequate customer's base and it provides clarity that firm will have less negotiation
of prices from buyers. Thus, bargaining power of buyers is low. While, substitution threat is
moderate as there are various low-cost airlines which can dominate firm's operations and
overtake it.
3. Explaining how strengths and weaknesses interrelate with external macro factors in company
The strengths and weaknesses of Ryanair are effectively interrelated with various
external macro factors. Management of Ryanair should compare its strengths with macro factors
like economic, social, political, legal, technological and environmental factors as organisation is
a giant in aviation sector and has major influence of macro factors on its operations. This will
help to formulate strategic and related operational policies. Interrelationship of macro factors and
strengths and weaknesses are listed below-
Economic-
The economic factors particularly includes exchange rate fluctuation, change initiated in
interest rate which affects Ryanair's operations up to a major extent (Zlatev, 2018). It will have
another effect on company as after UK will leave EU, recession and economic growth of UK
will tend to fluctuate. However, strength of business is that it is financially sound and as a result,
sudden change in economy will not affect its growth, pricing and marketing strategies. This is
the strength of Ryanair to accomplish goals even in difficult situations While, its weaknesses are
offering poor services to customers, fewer facilities etc.
Social-
It is required in order to maintain social and cultural factors, company should have viable
resources, well-trained staff and must fulfil demands of customers as per their taste. Ryanair has
the ability to provide better and low-cost services to target middle class people so that they can
travel at lower fares. However, weaknesses of Ryanair are poor customer services are provided
due to which sales come down. Moreover, sudden change in demand of people may widely
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affect company's earnings up to a major extent and frequent cutting down of jobs which leads to
creating a negative social image.
Political and legal-
Political factors such as change in legal rules and policies have major influence on
organisation's policies. Ryanair could be seriously affected by what will be outcome of Brexit as
after it, UK government will change the laws. Since, Ryanair is an Irish company, it will have to
abide by changed procedures and policies (Kaschny and Nolden, 2018). On the other hand,
strength of organisation can be interrelated with political and legal factors as it has an expertise
and well-trained staff which will have better impact on company and offsetting legal
complications with ease.
Technological-
Technological factor has larger impact on company as online ticket booking is already in
the market. Marketing strategies and distribution should be effectively integrated through digital
channels for better outcome. The strength of Ryanair is that it has official mobile app by which
travellers can book flights and track the status quite effectively. On the other hand, digital
communication strategy needs to be implemented by it so that people may be connected socially.
Thus, firm will have good profits and customer satisfaction. Weaknesses are that it needs to
implement good marketing and digital channels for improving upon customer's satisfaction.
Environmental-
It is major macro factor particularly in aviation sector. This is because heat waves are
increasing as temperature is rising above maximum ground operation temperature leading to
change in climate (Dziedzic, 2018). Ryanair needs to develop alternative and better strategy in
order to prevent from getting climate change. However, Ryanair is using fuel-efficient aircraft
fleet and preventing from environmental distress. Thus, macro factors have major impact on
company's performance.
It can be critically assessed from above strengths and weaknesses of firm with reference
to macro factors that it needs to made perfect integration of technological and environmental
element so that low fuel may be used and emission level may be controlled in a better manner.
Moreover, it requires following political and legal requirements for enhancing overall
operational activities with ease. Thus, it weaknesses may be converted into strengths by
effectively complying the same.
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CONCLUSION
On the basis of the analysis conducted above, this can be said that the internal and
external analysis will help the Ryanair to grow and develop, the PESTEL and SWOT is been
used that will help the organisation to identify their strength and weaknesses of the selected firm.
The assessment and interrelation of the firm will help the organisation to have a sustainability in
market which will aid to the growth of the business enterprise to meet their customer demands.
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REFERENCES
Books and journals
Alles, M. and et.al., 2018. Continuous monitoring of business process controls: A pilot
implementation of a continuous auditing system at Siemens. In Continuous Auditing:
Theory and Application (pp. 219-246). Emerald Publishing Limited.
Calabrese, M.and et.al., 2018. From mechanical to cognitive view: The changes of decision
making in business environment. In Social Dynamics in a Systems Perspective (pp. 223-
240). Springer, Cham.
Chuang, S. P. and Huang, S. J., 2018. The effect of environmental corporate social responsibility
on environmental performance and business competitiveness: The mediation of green
information technology capital.Journal of Business Ethics. 150(4). pp.991-1009.
Dziedzic, M., 2018. Determinants of air traffic volume and structure at small and medium
regional airports in Europe (Doctoral dissertation, University of Huddersfield).
Ionescu, L., 2018. Robust Efficiency of Airline Resource Schedules.
Janić, M., 2018. Landside Accessibility of Airports: Analysis, Modelling, Planning, and Design.
Springer.
Kaschny, M. and Nolden, M., 2018. Innovation and Transformation: Basics, Implementation and
Optimization. Springer.
Lindgren, P., 2018. The Multi Business Model Innovation Approach. River Publishers.
Van der Wagen, L. and White, L., 2018. Event management: For tourism, cultural, business and
sporting events. Cengage AU.
Zlatev, V., 2018. Market Volatility and Risk Factors. InBusiness Dynamics in North
America (pp. 149-181). Palgrave Macmillan, Cham.
Online
Davis, R., 2018. Ryanair strikes: 'Their brand is built on being reliable bastards’. [Online].
Available through: < https://www.theguardian.com/business/2018/jul/07/ryanair-strikes-
their-brand-is-built-on-being-reliable-bastards>
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