Business Context of Ryanair Airlines

This report discusses the business context of Ryanair Airlines, including the impact of external factors, application of PESTLE and SWOT analysis, identification of problems, and application of management theories to address employee conflicts. The report also includes a short article on the experience of writing the report.

Context of Business

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Application of PESTLE and SWOT analysis...................................................................1
TASK 2............................................................................................................................................5
P2 Identification of problems from PESTLE and SWOT......................................................5
TASK 3............................................................................................................................................6
P3 Application of management theories to address the issue.................................................6
TASK 4............................................................................................................................................7
P4 Sharing of experience of writing assignment....................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business context refer to the factors and elements that plays a major role in impacting the
function and growth of business. The report is revolving around the business context of Ryanair
airlines. Ryanair is an Irish airline headquartered in Swords, Dublin. It was incorporated in the
year 1985. The report covers the impact of external factors on the growth on the business along
with the identification of company strengths and weakness. Further the report includes the
recognition of problems in business. Moreover the report also contains the solution of the
problems. Lastly the report covers the short article on experience in writing this report (vom
Brocke, Zelt, and Schmiedel, 2016).
TASK 1
P1 Application of PESTLE and SWOT analysis
Growth of the company is mainly influences by the external factors such as government
policies, gross domestic product rate in the economy, inflation rate, cultural acceptance, income
distribution, population growth rate, climate and law and order. Firm needs to take into account
the following factors while implementing any decisions regarding growth of the business.
Success of the business is contingent upon the way company leverage opportunities and
overcome threats of macro environment.
PESTLE Analysis
PESTLE Analysis is a technique used to study the impact of macro environment on the
growth of business. PESTLE stands for political, economical, social, technological, legal and
environmental. These are the major components of macro environment. PESTLE analysis of UK
and its impact on aviation company Ryanair is given below:-
Political factors: Government of UK is now imposing strict rules and regulations on the
functions of aviation industry because of risky nature of pilot job. Air travel is vulnerable to
accident and crashes which is a major concerned for the government. In the first decade of the
century industry faces several terror attacks which shock the entire country. The major terror
attacks industry counter is the infamous aviation disaster of 2001 and 2005 in US and UK
respectively. These disasters create political instability and imbalance. Customers loosed faith in
airline industry. Thus government is forced to enforced strict safety laws that could make flight
1

less prone to accident and customers regain confidence in travelling by air. Even product and
price of aviation companies are regulated by government. Open skies are not some adopted by
some firms thus it creating partiality among aviation companies in the industry. Ryanair is
required to comply with all safety laws proclaimed by the government. It has to make sure the
flight is safe and there is no loophole in safety standards (Saidani, Rolland, and Nurcan, 2015,
January).
Economical factors: Since the ancient era United Kingdom is a wealthy country. It is a
fast growing economy but Britain exit from European Union make pound weaker. This
encourages many citizens of other country to study and work in Britain. Ryanair will earn profit
from large number of immigrants from developing countries. Inflation is increasing with a
moderate pace. Economic scenario of the country is somewhat perfect for growth of any
business. Service sector is prevalent in the country which renders highest job opportunities to
citizens. Although overall economy is good but country experience decline in growth rate of
GDP due to Brexit. After UK exit from EU the country faces several reservations such as
increase in import price due to decline in value of pound sterling. Rise in import price eventually
create product expensive which increased financial burden on the final consumers. It also
negatively influences the profitability of big companies. Brexit made overseas trade complicated
which earlier very smooth.
Social factors: Population growth rate of the country had been increased in recent years.
Citizens of the country are modern and open minded. Tourism sector is a noticeable contributor
in the gross domestic product of the economy. People are fond of travelling due to which all the
businesses related to tourism such as hotels, restaurants, airlines, railways and other transport
services earns immense profit. Population is not young therefore tourism and medical industries
take advantage of this fact. Middle age people have more money to spend on vacation and old
age people are more vulnerable to diseases. UK is famous for giving priority to education
therefore literacy rate is remarkable (Wang, and et. al., 2016).
Technology: Rise in internet and smart phone user open door of several opportunities.
Everything is becoming digital and more convenient. Citizens are becoming habitual of ordering
food and other commodities online. People book railway and airline ticket online. Technology is
becoming more advanced due to which life of citizens is becoming comfortable. Companies are
developing futuristic technology in order to attract and convince customers to buy their products.
2

Country is excelling in every field in terms of technology. Huge investment and talent are
utilized for development of profitable technology.
Legal factors: Law and order of the country is strict enough to discourage crimes.
Government had been enforced several laws and legislations to protect employees from
exploitation by the company. Company cannot get work done from work than 48 hours in a
week. Firm is required to frame corporate policies in such a way that it must not violate
employee laws and legislations. Overall legal landscape of the country is favourable for the
Ryanair (Shi, Li, and Bigdeli, 2016).
Environmental factors: Climate of United Kingdom is very pleasant. Weather of the
country is cool with very low level of pollution. Government is encouraging automobile industry
to create ecological friendly cars. Companies imply proper waste disposable system so
environment would not degrade. Government set certain standard above which pollution is
intolerable. Organisation is required to make sure that no operation of business is degrading the
environment.
Swot analysis
Ryanair categorizes itself as a low-cost airline and frequencies to destinations with maximum
routes. These factors contributed in establishing a competitive advantage over alternate airlines
with relatively higher costs. Despite the low fare policy and other lucrative policies, Ryanair lags
behind in terms of customer service, unclear fare agreements and hidden charges.
SWOT analysis below examines the internal and the external factors associated with airline
industry and their effect on the success of Ryanair (Rekik, Boukadi, and Ben-Abdallah, 2017)
.
Strengths
Low cost per passenger: Low costing airports, quick turnaround times, baggage handling fees
and the labour force are some of the factors that help Ryanair to achieve the lowest cost per
passenger in Europe.
Low Fares The above-mentioned low cost per passenger factor serves as a direct benefit when it
comes to low travelling fare. Ryanair offers the most economical friendly fares in the short haul
markets of Europe. In the recent years, there has been a raise in the average fares of Ryanair. The
airline still manages to offer significant discount to its customers.
3

Airport NetworkRyanair operates 2,400 flights per day from 241 airports in 40 countries. It
serves over 1.,800 routes and has a fleet of 470 aircraft. The vast airport network makes Ryanair
Europe’s the largest short haul network airlines.
FleetRyanair’s fleet consists of the Boeing 737-800, a single type of aircraft. These aircrafts are
relatively new as compared to other airlines with the potential to serve for longer time than those
of the competitor’s aircraft (Souto, 2015).
Choices of Airport Ryanair connects with the airports with minimum turnaround time which
also aides in lowering the cost; as mentioned earlier. The airline also connected with the regions
of airport where the availability of air transit was zero to minimal.
Revenue from Supplements Ryanair offers ancillary services like travel insurance, automobile
rentals, hotels and in-flight sales. These services add up to the primary source of revenue by 20%
(SWOT analysis of Ryanair 2020).
Weaknesses
Inconsistency in earningsRyanair’s maximum earnings depend on the summer season. In
general, aviation industry is seasonal and the seasonality results in a loss during the winters. To
face the losses and make the best out of the seasonal situation, Ryanair grounds 80 aircrafts to
save on fuels and maintenance (Berlanga, and Nebot, 2015, July).
Low Frequencies Some of the destinations offered by Ryanair have low frequency. In addition
to the low frequency, unfavorable departure times result proves as a negative factor when it
comes to customer service.
Unsatisfied Customers Despite the efforts of serving the customers with the greatest quality and
variety of services, Ryanair remains low on customer satisfaction. This collective feedback from
the customers affect the overall brand perception. Secondary airports, which has been mentioned
as a strength is one of the reasons of customer dissatisfaction as passengers detest to travel to the
airports located on the outskirts of the major cities.
Opportunities
Growth in market share Ryanair is the leading name in the European short haul aviation
sector.Regardless of its fluctuation, the aviation sector in Europe shows a great opportunity for
growth. Ryanair aspires to reach 120 million passengers annually in the coming 10 years. The
continuous passenger growth shows the capacity of further increase in the market share (SWOT
analysis of Ryanair 2020).
4

New fleet order According to Reuters, Ryanair made on offer to Boeing to acquire 737 MAX 10
jets. 737 MAX 10 is a bigger aircraft model than the one currently been utilized with a seat
capacity of 230. Increasing the number of fleet will help increasing the average number of
passengers per annum(Ryanair makes Boeing offer for new max order 2019) .
Introduction of new routes Ryanair serves major European countries including UK, Italy,
Germany and Spain. Regardless to say, there is a good scope of route expansion within these
countries. Apart from associating with other airports within the above-mentioned countries,
Ryanair can also introduce new routes catering to the neighboring countries of Europe (Lelková,
and Lorincová, 2017).
Threats
Accidents and other external eventsAir transit will always remain vulnerable to evitable or
inevitable accidents like earthquake, unfavorable weather, mechanical issues, etc. These
problems have existed in the past but the consequences hardly affected customers likability for
air transportover other transit options. These unfortunate incidents drastically affectthe trust
associated with airlines.
GBP depreciation The Brexit has severely affected the value of GBP. Weaker GBP has direct
influence on Ryanair’s annual profitability as it is the major currency in which the airline earns
its revenue.
Taxes associated with air travel the increase in the air travel taxes are resulting in the reduction
of demands. These taxes affect short haul sector more than the long-haul sector, targeting
directly on the unique selling preposition of Ryanair.
Increase in fuel price the fuel price accounts for 45% of the total cost at Ryanair. Since the
airline operates as a low-cost carrier, Ryanair relies on the low prices of fuel for its operations.
This core low-cost operation model is affected greatly due to the global economic and political
reasons.
Increase in competition the upcoming low-cost carriers are proving to be a threat to Ryanair.
These low-cost carriers include EasyJet, Wizz Air, etc. Multiple airline serving in the same
sector gives more options to the customers to choose from thus having a negative impact on the
market share of Ryanair. Ryanair can maintain its position by investing on retaining the loyal
customers and tactfully acquiring the new ones (Kaidalova, 2015).
5

TASK 2
P2 Identification of problems from PESTLE and SWOT
Company relies upon summer season to gain profit. Ryanair cannot generate revenues
throughout the year. Firm bear losses in winter season. Consumers perceive Ryanair as a weak
brand which cannot fulfil the needs and just focus on earning money. This view of people can
affect the sales of the company adversely. Safety issues in the flight is a big concerned for the
customers. Air travel is prone to accident and crashes along with natural calamities such as
earthquake and volcanic eruptions although Ryanair owns a clean image in terms of disasters.
Organisation never experiences any uncertainty. It’s corporate will image will deteriorate if
company’s airplane meet with an accident or any other uncertainty. Airport and navigation price
increases due to hike in ex fuel price. Flight journey tax is increased at noticeable level which
leads to reduction in the demand of flight ticket. Thus hamper the sales and profitability of the
firm. Price of Kerosene if highly volatile in nature. Jet fuel cost composition is almost half of the
overall cost. Hike in jet fuel price increase the cost of service to such an extent that organisation
sometimes left with no profit only loss. It also impacts the value of pound sterling negatively.
The main problem for the company is dispute among employees and spoilage of employee
relations. The scientific management theory and democratic leadership is applied below to
solve the problem (Hu, and et. al., 2017, November).
TASK 3
P3 Application of management theories to address the issue
Problems are inevitable part of business it will arrive no matter the extent of precautions
a company is taken by the company. Companies should focus on the effective solution of the
problem. As Ryanair airlines is facing an issue of conflict among employees due which
employee relations is perish. Two popular management concepts are applied below to solve the
problem.
Scientific management theory: According to this theory, managers should engage themselves
in understanding the worker’s potential, capabilities, skills and motivation in order to do correct
assignment of work. Managers should optimize and standardized work environment. This theory
is proposed by Taylor Swift. The theory contains four principles of management. Company is
6

required to deeply understand the nature of dispute evolve among employees. Managers are
required to spend time with employee to better understand their argument. Listen to the
statement of all the employees and analysis all the statements in order to draw conclusion that
give justice to right employee (Meyer, and Peng, 2016).
Democratic Leadership: Company needs to permit employees to express their views, opinions
and ideas to the managers. It will be effective to solve the issue of dispute that arise in the
organisation. Managers are required to adopt democratic style of leadership to address the
problem. It will solve the problem by considering the argument of majority party. Managers have
to measure pros and cons of the argument. Managers have to be answerable to the final decision
implemented.
TASK 4
P4 Sharing of experience of writing assignment
When I start writing this article I came to know the political and economical scenario of
the country. I observe the ways in which external factors impact the growth of business. I am
good in analysing data but I faced little difficulty in analysing the data in this assignment. I came
to know the improvement areas in my analytical skills. Drawing out an effective solution for
solving the problem of the firm is challenging. I have to develop deep understanding of the
concept to conquer the problem. I have to do a critical analysis of all the leadership to come up
with most effective style according to the problem. Choosing the best management theories to
overcome the issue required extensive research on the management subject. Overall the
experience of writing this report helped in gathering new knowledge and discovering strong and
weak points of writing skills.
CONCLUSION
From the above report it has been concluded that all external factors except political
factors are favourable for the company. The report also concludes that company has several
strengths to leverage opportunities and mitigate threats and some weaknesses to be overcome.
Further the report concludes that company is facing problem of dispute among employees due to
which employees relations is deteriorate. The report find out that problem can be solved by
applying scientific management theory and adopting democratic style of leadership.
7

8

REFERENCES
Books and Journals
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management. 36(3). pp.486-495.
Wang, Y.S., and et. al., 2016. A conceptual model for assessing blog-based learning system
success in the context of business education. The International Journal of
Management Education. 14(3). pp.379-387.
Shi, X., Li, F. and Bigdeli, A.Z., 2016. An examination of NPD models in the context of
business models. Journal of Business Research. 69(7). pp.2541-2550.
Rekik, M., Boukadi, K. and Ben-Abdallah, H., 2017. An end-to-end framework for context-
aware business process outsourcing to the cloud. Computers & Electrical
Engineering. 63. pp.308-319.
Souto, J.E., 2015. Business model innovation and business concept innovation as the context of
incremental innovation and radical innovation. Tourism Management. 51. pp.142-
155.
Lelková, A. and Lorincová, T., 2017. Prediction of manipulation as a core part of social
intelligence through selected personality traits in the context of business
area. International Journal of Organizational Leadership. 6. pp.102-108.
Kaidalova, J., 2015. Towards a definition of the role of enterprise modeling in the context of
business and IT alignment (Doctoral dissertation, University of Skövde).
Meyer, K.E. and Peng, M.W., 2016. Theoretical foundations of emerging economy business
research. Journal of International Business Studies. 47(1). pp.3-22.
Saidani, O., Rolland, C. and Nurcan, S., 2015, January. Towards a generic context model for
BPM. In 2015 48th Hawaii International Conference on System Sciences (pp. 4120-
4129). IEEE.
Berlanga, R. and Nebot, V., 2015, July. Context-Aware Business Intelligence. In European
Business Intelligence Summer School (pp. 87-110). Springer, Cham.
Hu, J., and et. al., 2017, November. An evaluation framework for design-time context-adaptation
of process modelling languages. In IFIP Working Conference on The Practice of
Enterprise Modeling (pp. 112-125). Springer, Cham.
Online
SWOT analysis of Ryanair 2020.[Online] Available through<
https://centreforaviation.com/analysis/reports/ryanair-swot-analysis--michael-olearys-maniacal-
focus-on-being-the-lowest-cost-producer-96465>/.
9