Business Environment of Ryanair

Business
Environment

Contents
INTRODUCTION...........................................................................................................................1
Background Information on Ryanair...............................................................................................1
Background Information on the Business Environment in Denmark..............................................3
Analysis of the Business Scenario...................................................................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In the modern world, business organisations are largely affected by the environment in
which they operate. It becomes significant for companies to constantly analyse and evaluate their
external environment in order to identify business opportunities that can render them growth in
market place. The corporate business environment consists of a number of positive and negative
factors that hinder or foster an entity to expand in overseas markets (Otter and Halasi, 2018).
These need to be looked upon while exploring the attractive business opportunities in a new
country. The current assignment is conducted upon business environmental analysis of Ryanair.
This is a low cost airlines organisation found in the year 1984. It is having its headquarters
within Swords, Ireland. This corporation is looking forward to explore the opportunity of
Foreign Direct Investment (FDI) in order to carry out expansion in Denmark. This assignment
will take into consideration overview of company and the new country. Also, it consists of
analysis of business scenario in international context. Apart from this, it comprises the primary
challenges that may be faced by company together with some effective recommendations.
Background Information on Ryanair
Ryanair is an Irish corporation pertaining to airlines sector, having its operational base in
Dublin and London. This organisation comprise the bigger portion of Ryanair Holding family of
airline and further includes Ryanair Sun and Lauda together with Ryanair UK as sister airline
companies (Pels, Njegovan and Behrens, 2017). During the year 2016, this entity was recognised
to be the biggest budget airline of Europe in terms of scheduled passengers flown. Also, it
transmitted a larger quantum of global passengers as opposed to any other airlines company.
This airlines company is ascertained to be characterized by speedy growth and expansion.
This has been an outcome of the deregulation of aviation sector within the confines of Europe in
the year 1997 and the successful move of making use of a low cost airlines business model.
Further, the route networking of this entity is found to be serving a total of 38 nations within the
confines of North Africa, Europe together with Middle East (Grant, 2017).
From the time when Ryanair was established, it has developed from a small airline to the
biggest carrier of Europe. In the present time, this corporation has an overall staff of 13,000
pertaining to all its branches across the globe (Francis, Humphreys and Aicken, 2017). Out of
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this quantum, majority of the staff is employed and contracted through several of agencies to
take a flight upon Ryanair aircrafts.
This airlines company became public in the year 1997. Post this, the funds raised as a
result of this was taken into use to carry out expansion of this airlines corporation across the
European territory. The sales of this company rose from about €231 millions in the year 1998 to
€1,843 millions in the year 2003 and further to a total of €3,013 millions in the year 2010.
Together with this, the net profits raised from about €48 millions to a total of approximately
€339 million during the same tenure (Alamdari and Fagan, 2017).
In the year 2014, Ryanair came up with a new advertising and marketing campaign for its
reinvention as a family friendly airlines company. The top management of this entity admit that
approx. 20% of the total customer base of 81 million of Ryanair is families and the aim of the
enterprise is to further raise this figure. To achieve this goal, the airline came up with LiveChat
upon their website which was intended to raise the service delivery of Ryanair. This had
affirmative financial outcomes for the entity.
During 2018, the company was recognised as being the first airlines organisation together
with the sole non-coal power plant to be amidst the 10 corporations with the largest CO2
emissions within the territorial boundaries of European Union. The respective year saw the
emissions equivalent to 9.9 mega-tonnes of CO2. This quantum got enhanced by approximately
49% over a period of last 5 years (Ivanova, 2017). Owing to this, the respective airlines faced
massive criticism from environmentalists. To deal with this and to recover its brand image in
market place, Ryanair has started investing heavily in CSR initiatives now.
The above discussion demonstrates the efforts undertaken by the enterprise to take a
leading position within the confines of aviation industry. Being a well renowned corporation all
across the globe, the airlines take into account the contentment of customers. The brand is highly
conscious of its brand image and thus takes all the possible measures to maintain its goodwill in
audience. This airline has always taken initiatives with the help of which it can expand its
customer base as well as profits (Pels, Njegovan and Behrens, 2017). Through its wide range of
business practices as well as strategic moves, it has been quite successful in maintaining its
positive image and position within the market place.
As it is a well renowned global brand, it is of importance to the company to constantly
render offerings of high quality to people in order to gain satisfaction from them. For this, the
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airline focuses upon development of an experience aimed at the fulfilment of needs and demands
of consumers. When the desires of people are met by the offerings of corporation, their loyalty
towards the company simultaneously enhances.
Background Information on the Business Environment in Denmark
Denmark is considered as a strategic and competitive location for individuals and
groups looking out for investment in a country via exploration of option of Foreign Direct
Investment. The place is equipped with all types of essential facilities which can assist a business
in running properly in an effective manner (Otter and Halasi, 2018). In this regard, Ryanair
offers a positive experience for users such that they intend to stay connected with the corporation
for a long period of time. The top authorities of this entity realise the need of establishing
communication with a large base of people so as to feasibly meet their demands and thus inflate
the sales as well as profitability of the organisation.
One of the major competencies of Ryanair lies in its skilled and competent workforce
which is equipped with all sorts of technical and other skills for execution of business activities
of the entity. Yet another core competency of this company is its long term relations with
suppliers in order to ensure acquisition of high quality raw materials and other essentials for the
production of safe and secure airplanes (Hamad, Elbeltagi and El‐Gohary, 2018). Further, the
entity maintains massive networking with key business associates in order to attain important
information from them. This helps the entity in gaining knowledge about the market
opportunities which it can feasibly explore so as to enable growth and development. Owing to its
extensive networking, Ryanair has acknowledged the opportunity of FDI within the confines of
Denmark. Thus, entity is facilitating expansion in this country with the help of FDI.
In order to effectively launch the operations of Ryanair within Denmark, the manager of
the respective organisation has considered gaining full knowledge of the key aspects of this
nation so as to flourish in the selected location. To execute this, Ryanair’s management has
carried out an external analysis with the help of PESTLE framework.
PESTLE
It is an analytical framework which is used by a company to conduct an external analysis
so that entity can move in to a new place feasibly. The PESTEL analysis of Ryanair is as
follows:-
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Political Factors: Denmark has been ascertained to be a constitutional monarch which is
regarded as the oldest one in the confines of Europe. The political system is based on a
democratic multi-party structure (Hamad, Elbeltagi and El‐Gohary, 2018). This reflects that the
system of politics within the country is liberal enough to facilitate the setup or growth of new
businesses. This will assist Ryanair to effectively execute its expansion within the confines of
Denmark.
Economic Factors: Denmark has a strong economy and owing to this, it serves as a
strategic location for potential investors. Further, it is ranked No. 3 in the world ranking of Ease
of Doing business out a total of 190 economies (Hamilton and Webster, 2018). Additionally, the
infrastructure and other facilities of this country are well versed, facilitating the effective
conduction of business activities. This will aid Ryanair to carry out business in this place while
gaining satisfaction from customers.
Social Factors: Denmark is made up of a number of religions, languages, customs and
practices. In this regard, it is found that the Danes prefer to consume only those products or
services which have their image established in the market place (Hamad, Elbeltagi and El‐
Gohary, 2018). Thus, it becomes necessary for Ryanair to take into account the beliefs of the
population and conduct operations accordingly.
Technological Factors: Denmark is equipped with all types of technological resources
which are required by a corporation to bring a new technology into market (Stentoft, Mikkelsen
and Ingstrup, 2018). Thus, it can be said that Ryanair should keep launching new features and
services within its offerings to effectively appeal to public.
Legal Factors: The aviation sector deals with a large number of lives on a daily basis and
thus it is essential that Ryanair takes into account all the laws and legislations stipulated in this
context to ensure long term market sustainability.
Environmental Factors: It is required by Ryanair to take into account the pollution and
other regulations set by statute in order to act in an eco-friendly manner. With this, the
corporation will be able to gain support from people as well as government of Denmark.
Analysis of the Business Scenario
Ryanair is considering carrying out the business expansion by making entry into
Denmark through Foreign Direct Investment. Large numbers of potential investors are attracted
towards this country owing to its excellent location and facilities available within the country.
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The nation has excellent facilities in terms of infrastructure, communication, transportation,
manpower, logistics etc.
There are a number of positive aspects that can be taken into consideration by investors
while exploring FDI options within the confines of Denmark. This nation has a population of 5.6
million. Denmark has a pool of talented professional personnel who are well versed with English
language. Further the labour market hereby is ascertained to be flexible with lesser litigations
than other nations (Denmark General Information, 2019). This indicates that any corporation can
effectively and strategically procure employees from this location. Also, the corporate
infrastructure of this place is world class with reliability in terms of electricity and water supplies
as well as financial systems. Apart from this, Denmark is a National Organization Member of
United Nations, European Union, North Atlantic Treaty Organization, Schengen, International
Money Fund, Organization for Security and Co-operation in Europe, Organization for Economic
Development, World Trade Organization (UN, EU, NATO, IMF, OSCE, OEC and WTO). The
social welfare network in this country is strong enough providing aid to the investors putting
their funds in this country. In its most recent survey the World Bank calls Denmark No. 1 in
Europe and No. 3 in the world for ease of doing business, right behind New Zealand and
Singapore. Despite the taxes necessary to support the social welfare state, Denmark comes in 7th
in the world on the most inviting countries for capital investment. The corporate taxation in this
country is lowest in EU, equalling to 22% in the year 2018 (Doing business in Denmark, 2019).
Although the opportunities associated with carrying out business in this location are
several, there are a large number of drawbacks that are necessary to be taken into due
consideration for easily expanding corporate operations within the confines of this location.
Although Danish consumers are considered to be early adopters in case of some specific
products Although Danish consumers are considered to be early adopters in case of some
specific products, they usually prefer to consume only those articles which have an established
image within market place and have even proved their technology among the population
(Binderkrantz, 2019).
Thus, both these aspects need to be considered by Ryanair while making use of Foreign
Direct Investment so that it can easily conduct its operations without any intervention from
government. In this regard, the manager of this corporation has carried out an industrial analysis
of airlines sector within Denmark. This will assist in gaining comprehensive knowledge of
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persisting competition and strategies being used by rivals. The Porter’s industrial analysis of
Ryanair is as follows:-
PORTER FIVE FORCE MODEL
It is a model which is used by large number of organization in order to examine the
competitiveness of the company at the marketplace. In context of Ryanair, managers of the
company adopt this model so that they can identify the market area. There are five main
elements which helps in keeping the success of organization at the marketplace.
Competitive rivalry (High): It is the first and foremost element of this model which helps
in identifying the competitors exist within the similar industry. In context of the airlines industry
competition level is quite high which reduces the overall profitability of the company in a
negative manner. There are various airlines companies which provide similar facilities and
services to their customers within low price. In the present context of Ryanair, it has been
identified that management team of the company adopt new and innovative technologies in
order to attract large number of customers (Agrawal and Kumar, 2018). Along with this,
company provide various discounts and offers to their potential and regular customers in order to
retain them for a longer period of time.
Threat of new entrants (Low): It has been identified that airlines or aviation industry is
one of the most expensive industry which consumes lot of funds which becomes difficult for
others to enter into the marketplace. Staff members associated with the company are highly
educated and difficult to find. Along with this, Ryanair provide online booking facilities to their
customers and establish “skylights” which enhance the level of competition and make it difficult
for the companies to enter into the marketplace (Lindgren, 2018).
Bargaining power of Suppliers (High): It has been determined that every organization
requires raw material in order to perform their working in an effective manner. There are only
two companies which manufacture airplanes includes Boeing and Airbus. In the present context
of Ryanair, it has been identified that they purchase their planes from Boeing, which leads to the
manufacturer to charge high prices (Lindgren, 2018). Therefore, it can be concluded that
bargaining power of suppliers is quite high.
Bargaining power of Buyers (High): In the present context of Ryanair, bargaining power
of buyers are quite high as there are large number of competitors available at the marketplace. It
has been determined that there is lack of customers and brand loyalty. Customers across the
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world wants high quality of products and services within low cost and if they get any low price
services they can switch to it. In context of Ryanair, management team of the company perform
their task in such a manner so that they can reduce their operations cost which helps in retaining
customers for a long period of time (Soh and Nam, 2018).
Threat of substitutes (Low): Whenever an organization provide same services to the
similar kind of products and services and satisfy the requirements of customers, affects the
profitability of companies deals in similar kind of product. In the present context of Ryanair,
threats of substitutes are quite low as there are very limited options for the customers. Along
with this, management team of the company decides to provide high quality services by adopting
innovative technologies (Søndergaard and et. al., 2018). This as a result assist them in order to
maintain their goodwill at the competitive marketplace.
CONCLUSION
In accordance with the above mentioned discussion, it can be easily stated that any
corporation can easily facilitate expansion within a new nation by exploring the option of FDI.
However, there are certain external factors that need to be taken into due consideration so as to
conduct a country analysis. Further, it is significantly relevant for investors to even consider the
industrial environment in the new nation so that competitive strategies can be acknowledged and
measures can be effectively taken to deal with them.
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REFERENCES
Books and Journals
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Otter, C. and Halasi, D., 2018. PAYMENT DISCIPLINE OF BUSINESS IN THE EU
COUNTRIES. Ad Alta: Journal of Interdisciplinary Research, 8(1).
Stentoft, J., Mikkelsen, O.S. and Ingstrup, M.B., 2018. Coopetition Segments in a Public-Sector
Context: Insights from a Business Region. International Journal of Public
Administration, 41(13), pp.1084-1094.
Binderkrantz, A. S., 2019. Interest group framing in Denmark and the UK: membership
representation or public appeal?. Journal of European Public Policy, pp.1-21.
Hamad, H., Elbeltagi, I. and El‐Gohary, H., 2018. An empirical investigation of business‐to‐
business e‐commerce adoption and its impact on SMEs competitive advantage: The case of
Egyptian manufacturing SMEs. Strategic Change, 27(3), pp.209-229.
Lindgren, P., 2018. The Multi Business Model Innovation Approach. River Publishers.
Agrawal, A. and Kumar, P. eds., 2018. Social Entrepreneurship and Sustainable Business
Models: The Case of India. Springer.
Soh, C. and Nam, S., 2018. Business and Human Rights Case Study of Korean Companies
Operating Overseas: Challenges and a New National Action Plan. Human Rights
Quarterly, 40(2), pp.287-316.
Søndergaard, M. and et. al., 2018. Gravel pit lakes in Denmark: Chemical and biological
state. Science of the Total Environment, 612, pp.9-17.
Pels, E., Njegovan, N. and Behrens, C., 2017. Low-cost airlines and airport competition. In Low
Cost Carriers (pp. 125-136). Routledge.
Grant, R., 2017. Ryanair: matching the activity system to the strategy. The Business &
Management Collection.
Alamdari, F. and Fagan, S., 2017. Impact of the Adherence to the Original Low-cost Model on
the Profitability of Low-cost Airlines. In Low Cost Carriers (pp. 73-88). Routledge.
Francis, G., Humphreys, I. and Aicken, M., 2017. Where next for low cost airlines? A spatial
and temporal comparative study. In Low Cost Carriers (pp. 113-124). Routledge.
Ivanova, M. G., 2017. Airlines as Tourist Destination Promoters.
Online
Doing business in Denmark. 2019. [Online]. Available Through:<https://denmark.dk/society-
and-business/business-environment>.
Denmark General Information. 2019. [Online]. Available Through:
<https://www.fyidenmark.com/denmarkgeneralinformation.html>.
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