Microeconomic Concepts and Their Application in the Business Environment: A Case Study of Ryanair

Business
Environment

INTRODUCTION
Business environment can be defined as the term of marketing environment which includes various factors and
forces which impacts the ability of the company in order to build and maintain a successful relationship with the
customers. The business environment is basically classified into two main categories that is internal business
environment and external business environment. Internal business environment is within the organization where
strengths and weaknesses are analyzed and the external environment is outside the organization where threats and
opportunities of the company are examined in the form of political, economic, social, technological, legal and
environmental factors associated with the business environment. The following discussion is basically based on the
economic environment which is defined as the one of the factors of the external environment which affects the
buying and purchasing habits of the consumers and business which directly affects the performance of the company.
These factors are not in the control of the company either on a large or small scale. Economic factors include the
demand and supply, elasticity, employment, Gross domestic product, inflation and many more (Cherunilam, 2021).
As per the given case study, the chosen organization is Ryanair, it is one of the leading international airline company
headquartered in Ireland and established in 1984. It is one of the Irish ultra-low cost carriers founded which has the
primary operational bases at London airports. As per the research it is investigated that the company is cheap in
offering their services to the customers and also provides good services with low rates to the customers. Therefore,
the following discussion is based on the scenario given in which the arguments of the article using microeconomic
concepts are discussed, theory and its application is referred to the main issues which are related to the demand and
supply along with the elasticity with proper findings and conclusion in context of the Ryanair.

FINDINGS AND DISCUSSION
Explain the main argument(s) of the article using microeconomic concepts/terms
The given scenario is based on the Ryanair company which operates under the airline industry. Article is all about the
company facing the profit issues warning as fares fall. The company has cut its forecasting of profit and blaming the air
fares lower than expected. Article also states that the company has named the worst short haul airline along with the
facing of compensation claims to go to the court and warns on profits as strikes hit income. Low rates of the flights are
resulting in the reduction in the profits gained by the company and if they continue to operate with such prices then
they will definitely face the loss and coming time. Recently the company has forecasted that the fares will fall by 2%
but it lowered 7%. This is making the problem to fight against the competitors in the industry because other brands
are already giving the comparative prices to the customers along with the good services (Hrechyshkina and
Samakhavets, 2019). Company always expect to carry more passengers than forecast but it somehow fluctuates. It is
becoming difficult for the company to make the cuts to air fares because of the unexpected Brexit and security
development has extremely impacted the yields. The company has also faced the strike from the employees working
in the company because of the summer season has forced them to cancel most of the flights and also refused to offer
the passengers compensation. Strikes have an adverse impact on the company and also in the revenues and profits
generated by them. Company is also affected because of the industrial action by air traffic controllers. As per the
research and investigation in the article, the scenario is all about the theories and applications of demand and supply
along with the elasticity. So therefore these two areas are being focused in the context of the company as per the
given case study (Hamilton and Webster, 2018).