Ryanair: SWOT and PESTLE Analysis

This report provides a comprehensive analysis of Ryanair, including a SWOT analysis to identify its strengths, weaknesses, opportunities, and threats. It also includes a PESTLE analysis to understand the impact of political, economic, social, technological, legal, and environmental factors on the company. The report highlights the main issues faced by Ryanair, such as employee turnover due to Brexit, and provides recommendations based on the human relations theory and modern management theory.

Context of Business

Contents
INTRODUCTION OF CASE STUDY............................................................................................1
SWOT ANALYSIS.........................................................................................................................1
PESTLE ANALYSIS......................................................................................................................3
IDENTIFIED ISSUES THROUGH ABOVE ANALYSIS.............................................................5
RECOMMENDATIONS.................................................................................................................6
REFLECTION.................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION OF CASE STUDY
Every organisation operate in a flexible and dynamic business environment in which
various forces affect its operations and decision making process. Determine those elements and
study the same is very essential for every business enterprise in order to offer better services to
its customers and to get competitive advantage. Ryanair, which is a Irish airline having
headquarters in Swords is consider in this report for study. various problems which company is
facing and different theories that can be use b y company to deal with those issues is all included
in this report.
SWOT ANALYSIS
Ryanair- SWOT analysis
SWOT analysis refers to the thorough study of the organisation’s structure, success criteria,
stakeholders and the industry environment to acknowledge the organisation’s strengths,
weaknesses, opportunities and threats.The purpose behind the SWOT analysis is to determine the
major influencing factors that are affecting the development of Ryanair internally as well as
externally. The analyzed factors are to be utilized to forming further strategies and also to make
any necessary changes required in the existing strategies (Aarup, 2017).
Internal factors
Strengths
Management Ryanair is being led by some of the most influential managers, including
its CEO Michael O’Leary who is known to be very outspoken. He believes that a good
leadership approach must include backing of all the sectors together to improve cooperation and
gain maximum results. Ryanair has an organisation structure with a short hierarchy, this
closeness helps the company to maintain effective communication both inter and intra sectors.
Low cost fare Ryanair presents itself as an airline that offers the lowest fares giving them
an incredible competitive advantage. The intention behind placing the airline into this category is
to attract customers with limited spending potential. This unique selling proposition helped
Ryanair to become the most desirable name in the middle-class psychographic segment of target
audience. Another competitive advantage Ryanair possess under the same strength is the service
that offers a one-way pricing policy, unlike any other competitor airline.
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Choice of secondary airports In the hue of avoiding congested airports with inconvenient
turn-around time, Ryanair focuses on the secondary and regional airports. The chosen secondary
airports help reduce airport charges. The passengers spend comparatively less time for checking
in and at the gates than they had to spend at the major airports (Zhu, And Zolkiewski, 2016).
Low cost of operation Ryanair manages to maintain the lowest operating cost in the
short haul airline sector in Europe. More than an advantage it is necessary for Ryanair to
minimize the operation cost in order to provide the lowest fares. Ryanair keeps a tight watch on
the cost of its labour, the fuel, cost of airport, unnecessary expenditure on excessive
maintenance, etc. The high number of passengers also helps balance the cost of operation.
Finances Ryanair is one of the most financially stable airlines in Europe. The company is
known to be generating the highest revenue in the airline sector of Europe. Apart from the period
of fuel prices hike in 2008-09 Ryanair never failed to cover the cost of its capital.
Weaknesses
Low employee satisfaction The employees at Ryanair have claimed to be treated with
disrespect. The staff also states concerns about how they the demands and requests are neglected.
This puts Ryanair in a bad light as opposed to its competitors like Southwest who are branding
themselves as an airline that cares about everybody. The airline refuses to accept union forms
amongst the employees. There have been complaints from the staff such as their inability to
charge the mobile phones on air. The pushing of unfair agreements has also been brought
forward (Rong, and et. al., 2015).
Inconsistent earnings Ryanair earns most of the earnings over the period of summer.
The revenue earned in the rest of the year contributes as a very little portion in the annual
revenue of Ryanair. Since 2008-2009, a consistent trend of losses can be seen during the winters.
The management at Ryanair proposed to resolve this issue by grounding 80 carriers during the
month of winters, thus saving the extra operation and maintenance cost.
Disappointing brand perception Despite of its strong standing unique selling
proposition, Ryanair fails to manage its perception in the eyes of its audience and other stake
holders. According to the surveys and the feedback, Ryanair is perceived to be an inconsiderate,
mean and a rip off brand of airline. This negative publicity has direct and adverse on the
Ryanair’s sales (Zhu, and Zolkiewski, 2015).
External Factors
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Opportunities
Fleet acquisition and route expansion There has been an increase in the number of
passengers over the last few years; this gives an opportunity to Ryanair to buy more carriers.
Ryanair can carefully expand the routes on the basis of the demands of the passengers to attract
more audience. It is essential to invest in a thoughtful marketing strategy to acquire and retain
the customers after introducing the new services (Barabash, and et. al., 2017).
Economic stability Ryanair can improve its brand perception by strategically presenting
itself as an airline that remains pocket friendly even at the time of fluctuating economy. As all
industries face inevitable times when the need of cutting the cost comes and raising the prices,
this mostly happens during the times of economic shakedowns. Ryanair can prepare itself in
advance to face any of such unfortunate circumstances and appear in the good books of the
audiences.
Threats
Natural and economical events As mentioned above, every industry face the consequences
of unfortunate external events like natural calamities or the events like the Brexit that end up
affecting the political and economical structure of an organisation. In addition to these events,
airline industry is vulnerable to air accidents and crashes. Regardless of the reasons behind the
crashes, these events decrease the trust in eyes of the passengers further affecting the sales
(Karjaluoto, and et. al., 2015).
Fuel prices ‘Low fare’ which is the unique selling proposition of Ryanair is achieved by
carefully minimizing the operation cost. This low operation cost highly depends on the reduced
fuel prices. The unpredictable increase in these fuel prices may affect the core model of the
business.
PESTLE ANALYSIS
Businesses are affected by several factors around them. Factors can be internal or
external. External factors are all the circumstances happening outside the organisational setting.
Macro environment consider all the elements of political, economical, social, technological, legal
and environment scenario of the country. It is very essential to study all aspects of macro
environment before taking an important initiative related to growth of business (Gërguri‐Rashit,
and et. al., 2017) .
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PESTLE analysis is marketing tool utilized for analysing the macro environment of the
country. It is used to determine whether the situations of external environment are favourable for
the business or not. PESTLE stands for political, economical, social, technological, legal and
environmental. PESTLE analysis of UK in context with Ryan air airlines is given below:-
Political factors: United Kingdom is a politically stable country. Constitutional
monarchy is prevalent in the country and monarch is the head of the state. Prime Minister is the
head of the country and there is no position of President. Political scenario of the nation is little
bit disturbing because of uncertainties evolved due to Britain revolutionary decision of leaving
European Union. Brexit has its own pros and cons and it will impact the business of aviation
industry. Brexit will cause depreciation in the value of pound sterling which will discourage
employees to stay in the country. Fluctuation in pound sterling value can decrease the revenue of
the company (Liu, and Iijima, 2015)
Economical factors: Nation is facing downfall in value of pound sterling which will
encourage many students of developing countries to study and job in it. It will be beneficial for
the aviation company. Government is going to reduce corporate tax which will positively
influence the profitability of the firm. Gross domestic product rate is increasing in fast speed.
Economy is at the boom. However Brexit create some misfortune for the country but soon it will
recover. Its currency exchange value was decreased over the time but Brexit also open the door
of immense opportunities. Borrowing loan is cheap in the country as inflation rate is very low.
Moderate inflation rate also facilities the accomplishment of financial objective.
Social factors: People of the country are modern and open minded. Several cultures exit in
the country. Citizens are fond of travelling due to which airlines industry is earning huge profit.
UK is not young country as population is growing older. Many industries had been taken the
advantage of elderly population such as vacation industries and healthcare industry. Vacation
industry is linked to aviation industry. It facilitates the growth of airlines by attracting people
through their holiday plans. People have enough money to buy airlines tickets. Also civilians are
highly educated and characterize high moral and ethical values. Moral freedom is very high
among citizens and people are not superstitious. Hence economical factors are favourable for
Ryan air Aviation Company (Al-Qeisi, Dennis, and Abbad, 2015) .
Technological factors: Since ancient era United Kingdom is known to be fulfilled with
advanced and reliable technological infrastructure. Innovation and technology are contributing in
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the growth of the country. Citizens heavily rely on the technology for their household and office
work. Artificial intelligence and automation had been created a comfortable business
environment but killed employment. Advent of artificial intelligence eliminated lower level jobs
such as cleaning and data entry. However major concern for the firm is reduction in strength of
workforce. IT specialists are reluctant to work in UK because of harmful effects of Brexit. Ryan
air can overcome this threat by using automation and artificial intelligence along with building
efficient reward and compensation system.
Legal factors: According to European Union enforced employee legislation, company
cannot get work done from worker from than 48 hours in a week. Organisation is liable to give
their rest of 11 consecutive hours in day. EU employee legislation allows workers to do
voluntary overtime. Also company cannot get work done in lower salary than standard
prescribed by government in their employee legislation of minimum living wage. Government
takes legal action against discrimination in workplace (Turker, 2015) .
Environmental factors: Climate of United Kingdom is very enjoyable. Maritime climate
persist in the country. Temperature is in the range of minimum 0 degree Celsius to maximum 32
degree Celsius. Summers are bearable and winters are cool and pleasant. Rainfall is also
adequate in the country and mainly occurs in autumn season of October (What is the climate like
in the UK. 2014). Effect of global warming is less in the country. Government monitors function
of company to make sure that they do not harm the environment. Government had been set
environmental norms to make industries in terms of environment. Company have to abide all the
environmental norms enforced by the government. Environmental factors are favourable for the
company.
IDENTIFIED ISSUES THROUGH ABOVE ANALYSIS
From the above analysis of macro environment and micro environment it has been
concluded that the main problem that company is facing is employee turnover due to Brexit
effects. Skilled workers are reluctant to stay in UK due to cons of Brexit such as downfall in the
value of pound sterling. Personnel retention rate is decreasing thus employee turnover emerge
out as the biggest problem. It is a serious problem because without human capital machinery and
funds are of no use. Humans are responsible to extract the benefits of technological and financial
resources. Automation and artificial intelligence can help in repetitive work but the creative and
non-repetitive in which deep analysis, decision making, rational thinking and logical thinking are
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involved robots cannot help. Firm is required to find out an effective solution to the problem of
employee turnover in the organization (Lubberink, and et. al., 2017).
RECOMMENDATIONS
Company is facing issue of workforce shrinking because employees are not satisfied with
job due to Brexit harmful effects. There is an urgent to solve this problem company will shut
down or bankrupt. Management theories can help in solving this problem. The two management
theories that manager will apply will be human relations theory and modern management theory.
The detail description and implication these two management theories are given below:-
Human Relations Theory: This theory was proposed by Elton Mayo in early 20th century by
observing employees behaviour by altering work related factors. The theories imply that
performances of employees are enhanced by developing strong social bonding with them.
Researcher observed that social factors are dominant on the environmental factors. Employee
feel valuable than their productivity would increase even if their environmental conditions such
as salary, work hours are reasonable. In Ryan Air airlines context, managers are required to give
importance to their employees. They should realise them that they are valuable for the company.
Company is recommended to developed a good social bonding and emotionally connect with the
company. This approach will help in reducing employee turnover (Crane, Matten, and Spence,
2019).
Modern Management Theory: This theory was developed to contradict the assumptions
of classical management theories. The theory assumes that businesses of current era are prone to
immediate change and complications in the processes in no time. Technology is the major
influencers of this dilemma. Modern management theory assumes that money is not a only
motivating factor for employees as they also desire for happiness, rich lifestyle and conducive
environment. Issue of employee turnover can be solved by blend of mathematical formulas and
on the job training. Company is require to conduct a training and development programme in
order to refine their skills along with deep understanding of their needs and aspirations. It will
benefit the company as skilled employees bring more revenue thus they get more remuneration.
Deep understanding of employee’s problems and concern enable companies to customize work
culture in a proper manner.
Affiliative Approach: It is a leadership style in which priority is given to team members.
Affiliative leaders maintain personal and emotional relations with their followers. Affiliative
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leadership style emphasises on understanding and satisfying the emotional needs of people.
Ryanair is required to maintain a personal and emotional bond with employees. Company needs
to give emotional and informal support to employees. This approach will aid in decreasing
employee turnover to a large extent (Bell, Bryman, and Harley, 2018).
REFLECTION
My Experience
In the beginning writing this report, I came to know about the Britain exit from European
Union which is in short known as Brexit. Brexit has some advantages and disadvantages but in
my research I found that Brexit has more cons than pros. I have to perform extensive research to
understand the long term and short term impact Brexit on the Ryan air. Political scenario seems
to very disruptive for the growth of Ryan air. All other factors perceive to be favourable for the
firm. In the whole PESTLE, I found that environmental and legal factors have static and neutral
impact on the company. When writing SWOT I inferred that Ryanair aviation firm has long
standing strengths like great leadership skills, choices of airports and the vision for unpredictable
economic conditions. These strengths along with the secondary strengths give Ryanair an
impressive competitive advantage. All the four aspects of the research are interrelated making it
easier for analyst to understand the core relationship of internal and external factors. While
analysing the problems of Ryanair I found out that the employees intend to exit the United
Kingdom due to the effects of the Brexit. These are the consequences of the Brexit that citizens
believe that exiting the country would be the best for their overall growth; thus effecting
Ryanair’s operations. In the last task, I have to do deep research on several theories of
management in order to understand the suitability of them with the main problem. I found out
that implementation of human relations and modern management theory along with affiliative
leadership style will help in solving the problem of employee turnover (Pokorska, 2016).
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REFERENCES
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cases in a global context. Routledge.
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Online
What is the climate like in the UK. 2014[Online] Available through<
http://projectbritain.com/climate.html>/.
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