Impact of Political and Economic Factors on Ryanair

This essay discusses the impact of political and economic factors on the business operation of Ryanair in the UK and EU. It explores the potential threats and opportunities that arise from these factors and their implications for the airline industry.

Running Head: Business Management
Business Management
Essay
System04104
5/23/2019

Business Management
1
PART-1
PEST Analysis and SWOT Analysis
PEST stands for Political, Economic, Social and Technological environmental factors that
affect the business operation in any country or any place in the world. These are the external
macro factors that have greater influence on any organisation. These factors can act in both
ways, either it can affect the business performance of organisation in positive ways or can
affect the business in negative ways. The four factors in the PEST that can affect the business
are as follow:
1. Political Factor: Political factors may include various other sub factors that regulate
the business organisation or may affect the operation of business operation. For
example, political stability provide opportunities to the organisation to grow
continuously while instability in politics may lead to change in business policies, rules
and regulation, change in legal framework for contract enforcement etc. (Srdjevic,
Bajcetic, & Srdjevic, 2012).
2. Economic Factor: Economic factors include change in taxation policy, economic
growth rate of the country, unemployment rate, labour cost, interest rates, and
inflation rates etc. These factors directly affect the growth rate of the business
organisation.
3. Social Factor: The social factors include various social and individual factors such as
demographics, culture of the society, attitudes of people towards health, environment,
education, etc. Change in these factors may also lead to the adverse of positive
impacts on business operation (Shabanova, Ismagilova, Salimov, & Akhmadeev,
2015).
4. Technological Factor: Technological factors include related to changes in the
technologies or effect of technology on product offerings or on the cost structure of
the company. A out-dated technology always create loss for the organisation while an
advance and modern technology leads to the better production and manufacturing
rate, better service to customers which further leads to maximum profit and increased
customer experience.
SWOT Analysis
SWOT analysis stands for Strength, Weakness, opportunities, and threats for the
organisation. These are the internal and external factors that determine the business operation.
These factors are as follow:
Strength and Weakness (Internal Factors): Strength and weakness shows the inner
strengths and weaknesses of the organisation and it helps the company to make its new
strategies according to its strength weakness. The organisation can avoid those factors, which
poses threats for the organisation while organisation can also overcome these weaknesses,
which adversely affect the business organisation and its operations (Ho, 2014).

Business Management
2
Opportunities and Threats (External Factors): These are the external factors that
positively or negatively affect the business operation. For example, opportunities can be in
form of opportunities to explore the business and example of threat is opportunities for other
competitors to enter in the same industries. The political and economic changes are also can
be considered as threats for the business organisation (Moro Visconti, 2016).
Political and Economic Factor
Political and Economic factors are the most important in the PEST analysis. A change
in political scenario may result in change in rules and regulations. However, the role of PEST
in every business organisation is very crucial as it can leads to deregulation or favourable
policies for the company. The impact of politics on the business operation can be considered
as the crucial factors because it hits the whole business operation by changing rules and
regulations. For example, the role of government in is crucial because a stable government
always make a favourable law and business operation will be stable while a new government
will bring various favourable and unfavourable policies and tax reforms that adversely affect
the business. It also happens with technological changes. For example, Change in technology
result in an advance way of producing or manufacturing products or providing best services
to the customers (Sammut‐Bonnici & Galea, 2015).
Current factors which might affect the business
The major factor that can enormously affect the business operation is economic
changes. The economic changes in the country may leads to change in inflation rate, change
in interest rate, and change in taxation policies (Moro Visconti, 2016). For example, inflation
rate may increase the cost of raw material that further leads to increase in operation and
manufacturing cost. A good example is, change in interest rate may leads to high cost loans
from banks that also affect the business operation. Another factor that might affect the
business operation is increasing competition and change in customer preference and tastes
(Mapulanga, 2013). The culture, living standards, demographic is always changing and so the
demand of customers to meet their new expectations and needs. This is another great factor
that influences the business operations. For example, people are not very busy in their life so
the concept of online buying and purchasing taking place by replacing physical store sales.
PART-2
Impact of Political Factor on Ryanair
Political factors majorly influence the Ryanair in UK and EU. For example, in the
current situation of Brexit issue in UK and EU did not clear the future rules and regulations
related to air traffic. It may leads to an uncertainty for Ryanair. In case of agreement failure,
the free access of Ryanair in UK and EU countries might face restrictions in future (Zhu,
Hiltunen, Antila, Huang, & Song, 2015). It is a really worst scenario and a great political
threat for the Ryanair. The unfavourable outcomes of Ryanair not only affect its business
operation in UK rather it also effects its operation in the other countries as well. However,
Ryanair is also registered in Ireland and it also maintains its large airline bases in different
countries of UK. Therefore, an unfavourable agreement may affect the business operation of

Business Management
3
Ryanair in future. Apart from this, pressure from trade unions on the Ryanair can be a major
problem for improving their working conditions and salary. It will lead to a change in the
policies, which might affect the cost of operation in Ryanair (D’Alfonso, Malighetti, &
Redondi, 2011). Apart from this, different taxation policies of government are also a major
problem for the Ryanair.
Impact of Economic Factor on Ryanair in Future
It is well known that there are multiple of economic factors that affect the business
operation of Ryanair in near future. Recession in the UK and EU countries may adversely
affect the business operation. The change in economic scenario after the Brexit or any
adverse agreements between the EU and UK may leads to recession in these countries, which
is directly related to the air business. Large number of people every day travels from UK
countries to EU countries and most of the people travel by air to spend their holidays in
Switzerland, while most of the business people also travel in different part of the countries for
business purposes. However, the recession can be caused by the adverse agreement between
UK and EU may leads to decrease in number of people who air travels. However, the
recession also left many people unemployed in the country, which leads to decrease in
number of people who are travelling by air. Increase in fuel prices, increase in taxes of
government, and increasing taxes and interest rates are also some of the major concerns for
Ryanair in the UK (Casadesus-Masanell & Ricart, 2010).
Impact of social and technological factor on the Business
In last few years, there were so many terrorist attacks happened in the European
countries and security on the Airports still a major concern for the European countries.
People fear to fly and do not want to travel by air because of these securities concerns.
However, because of Brexit and recession the number of people who travel by air is
decreasing because large number of people postponed their plan to visit in European
countries due to heavy ticket prices. Apart from this, changes in the consumer tastes and
preferences in the air travel are also changing because there are many alternatives available
for the people instead of travelling by air (ZHANG & YUAN 2010).
Government in UK is focusing on strengthen the security on Airports and in flights.
Therefore, they advise and guide all the air companies to install latest technology to enhance
the security level on the Airport. It increases the cost of Ryanair and also needs latest
technology for monitoring the unwanted people activities on the airport. Apart from this, the
government also want to installed noise level control technology, renewable energy, and
advance carbon emission control technologies and equipment on the airline industry. These
all leads to the heavy cost for the Ryanair and also affects its business operations in future
(Malighetti, Paleari, & Redondi, 2010).

Business Management
4
References
Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto
tactics. Long range planning, 43(2-3), 195-215.
D’Alfonso, T., Malighetti, P., & Redondi, R. (2011). The pricing strategy of Ryanair. Walsh,
C., Airline Industry Strategies, Operations and Safety, Nova Science Publishers, Inc.,
Hauppauge, NY, 119-141.
Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic
analysis. European academic research, 2(5), 6478-6492.
Malighetti, P., Paleari, S., & Redondi, R. (2010). Has Ryanair's pricing strategy changed over
time? An empirical analysis of its 2006–2007 flights. Tourism management, 31(1),
36-44.
Mapulanga, P. (2013). SWOT analysis in the planning of information services and systems in
university libraries: The case of the University of Malawi strategic plans. The Bottom
Line, 26(2), 70-84.
Moro Visconti, R. (2016). Healthcare public-private partnerships in Italy: Assessing risk
sharing and governance issues with PESTLE and SWOT analysis. Corporate
Ownership and Control, 13(4).
Sammut‐Bonnici, T., & Galea, D. (2015). PEST analysis. Wiley Encyclopedia of
management, 1-1.
Shabanova, L. B., Ismagilova, G. N., Salimov, L. N., & Akhmadeev, M. G. (2015). PEST-
Analysis and SWOT-Analysis as the most important tools to strengthen the
competitive advantages of commercial enterprises. Mediterranean Journal of Social
Sciences, 6(3), 705.
Srdjevic, Z., Bajcetic, R., & Srdjevic, B. (2012). Identifying the criteria set for multicriteria
decision making based on SWOT/PESTLE analysis: a case study of reconstructing a
water intake structure. Water resources management, 26(12), 3379-3393.
ZHANG, M.A, J. H., & YUAN, J. (2010). The strategic analysis of the development of the
logistics industry in Shandong Province based on the SWOT-PEST
matrix. Technology and Innovation Management, 3.
Zhu, L., Hiltunen, E., Antila, E., Huang, F., & Song, L. (2015). Investigation of China's bio-
energy industry development modes based on a SWOT–PEST model. International
Journal of Sustainable Energy, 34(8), 552-559.