Report On Ryanair- Revenue Management | Importance Of Forecast Methods
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Added on 2020-02-05
Report On Ryanair- Revenue Management | Importance Of Forecast Methods
Added on 2020-02-05
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REVENUE MANAGEMENT
In the present scenario, it has become difficult for the business firms to survive and maintainleading position in the industry. On every condition, they have to manage their revenue up to acertain level. In this regard, firms can use varied forecast methods and by considering obtainedresults prediction can be made for the future time period. On the basis of results of the methodslike time series analysis one can make better business decisions and can increase revenue ormaintain stability in the same up to a certain level (Jerath, Netessine and Veeraraghavan, 2010).Thus, there is importance of the forecast methods for the firms which are operating in theaviation industry of UK.Airline industry is one of the fastest growing industries in the UK. There is toughcompetition among the business firms and due to this reason it is significant to make prudentdecisions with changes that come in the business environment. Most airline firms are currentlyfocusing on the revenue management of their business. In order to manage revenue business,firms are focusing on various forecast methods. One of the most important forecast methods istime series analysis. By using time series analysis method, predictions are made in a propermanner. Ryanair needs to forecast its investment cash flows because by doing so it can identifythe amount of revenue which can be earned on the investment that will be made on the specificproject. Before making investment it is important to make prediction about the cash flows thatwill be earned because investment is made in the specific project (Vulcano, Van Ryzin andChaar, 2010). If it is identified on the basis results that are obtained by applying specific forecastmethod on the data set that low amount of revenue can be earned in the business then Ryanairwill abstain from making investment and relevant amount will be spend elsewhere in thebusiness to maximize the profitability. In this way, forecast method will help Ryanair inmanaging revenue in its business. It can be said that there is a great importance of the forecastmethod for the business firms. Demand forecasting is done by Ryanair by using forecast methodlike time series analysis. The results that are obtained by using time series analysis help inascertaining the number of customers which probably can be made by the firm in the currentfiscal year. Ryanair make its entire efforts to achieve target which is reflected by the output oftime series analysis (Meissner and Strauss, 2012). In this way, manage its revenue and ensureconsistent elevation in the same. In order to ensure that all expense will be made in the specificrange budget is prepared by the Ryanair. The results which are produced by the time seriesmethod are used to make projections in the budget. The standards that are determined in the
budget are used to curb elevation in the expenses. This inclines the revenue upward in thebusiness. From this it is clear that forecast methods such as time series analysis help the firm inmanaging its business revenue. There are varied sort of plans which are prepared by the Ryanair in its business namelytactical and strategic planning. Tactical planning supports the implementation of the strategicplanning at the workplace. In case of change in the business environment, it is the tactical planwhich ensures that in every condition strategic plan will be implemented in the business.Strategic plan is one that is prepared to ascertain that specific objective will be achieved in thebusiness. It can be said that there is a great importance of strategic and tactical plan. Thestrategic plan is successfully prepared by using the results of time series analysis (Perakis andRoels, 2010). In the time series analysis method, a chart is generated in the software. In thesechart, different patterns related to the specific variable like cyclical, seasonal and decompositionare revealed clearly. Thus, trend in respect to specific variable in different conditions areidentified by using time series analysis method. By using mentioned technique, past behavior ofthe variable in different situations is tracked and business strategy in respect to managing andincreasing revenue in the business is prepared. Same method is used to prepare tactical plan. Itcan be said that forecast method is highly important in respect to revenue management.Forecasting in respect to revenue management done by the Ryanair may be qualitative andquantitative in nature. There is a vast difference between both forecast methods. Quantitativeforecasting is one in which data set that is related to the firm or industry is taken in toconsideration to forecast future trends. In these methods, it is assumed that past repeat itself. Itstates that whatever happens in the past it will again occur in future time period. Thus, by usingquantitative forecast method, firm predict whether in upcoming time period number of customersin the business will increase or decrease. According to the trend, business strategy is formulatedto improve firm performance in comparison to previous year (Wright, Groenevelt and Shumsky,2010). In this way, growth in revenue is managed. Other method of forecast that can be used tomake revenue management better is qualitative research method. Under this method marketresearch and historical analogy is included. Under market research, firm collects t data frompeople and tries to identify their perception in respect to the organization. By formulatingsuitable plan which is related to the firm, weak point internally is made stronger than before
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