Ryanair Case Study: Analysis, Problems, and Solutions

This case study analyzes the internal and external factors affecting Ryanair's operations and performance. It discusses the problems faced by the company, such as staffing issues and the impact of Brexit, and provides solutions to improve its brand image and profitability.

RYANAIR CASE
STUDY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
PESTLE ANALYSIS..................................................................................................................1
SWOT Analysis...........................................................................................................................2
Problem faced by Ryanair...........................................................................................................3
Solution to the problem faced by Ryanair...................................................................................5
Reflection.....................................................................................................................................7
References........................................................................................................................................8

INTRODUCTION
Internal and external factors of business environment affect business operation and
performances so it need to be considered by firm in order to gain competitive advantages in the
market. This report is about a case of Ryanair Company that is facing lot of problem in its
effective operation of business such as increasing cost, staffing issue and effects of external
factors such as Brexit. Its image has been adversely impacted because of low customers and
employees’ satisfaction and loyalty. Therefore this report analysis and evaluates about various
internal and external factors through pestle and swot analysis that impact on Ryanair operation.
Various challenges that are faced by firm while operating its function and its solution for
increasing brand image of Ryanair.
TASK
PESTLE ANALYSIS
It is an analytical tool that is used by most of company to formulate strategies by
evaluating various external factors such as policies of government, economic condition, social
behaviour of people and technologies changes and other factors of environment that affect on
company operation. Pestle analysis of Ryanair helps in understanding external factors that
impact operation and performance of company. Therefore pestle analysis of Ryanair is done
below:
Political factors: Due to Brexit policies of government of UK is not stable at the same time
departure of UK from EU has resulted in air traffic. Therefore it has resulted in reduction of EU
airlines access to UK market and vice versa thus such political situation impact negatively on
operation of business (Božanov, 2018). Political restriction has result in decline in flight and
increase cost thus impact on its profit margin and sales volume. Within last 24 years UK
government is continuously increasing tax rates more than three times on both short and long
term journey thus it had scared tourist and reduces sale volume of company.
Economic Factors: Oil prices are continuously rising that impact on cost of company at the
same time decreasing value of pound has also create barrier and negatively impact on firm
operation and profit margin. Profit earned by Ryanair are less than it invest in capacity growth so
company has planned to offer short –haul capacity in order to increase traffic.
Social Factors: Brexit has resulted in high employment rates and decrease in disposable income
of customers so they are less willing to spend money for leisure travel. But despite of that most
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of the British people likes holiday through travelling. Therefore social factors have impacted
positively on Ryanair by increasing its sales and profitability (Aithal, 2017). Mostly people of
UK prefer low cost flights due to low disposable income of customers.
Technological Factors: In today generation people are getting more and more about various
updation in technologies and they are continuously using internet and social media for playing
games and watching videos. Some people also use social media to know about various flights
and customer experiences in order to choose a particular airline. Therefore Ryanair by using
social media is able to increase its sales and attract large number of customers. Mobile banking
system provide ease and comfort to customers to book air tickets in advance and make payment
easily while staying at home.
Environment Factors: Increasing heat waves is rising concern for Ryanair as it increases
temperatures above aircraft such impact forces company to bring alternative operation strategy in
order to meet climate changes (Kim and et.al., 2017). Rising awareness among people and
government about protection of environment has forced company to reduce carbon emission.
Legal Factors: There are various legal challenges that are faced by company such as it has to
follow rules and regulation of both UK and EU. Ryanair has also suspended many fights to EU
due to aware of fact of agreement between UK and EU thus reducing its operation, sales volume
and profitability. Therefore legal laws and different restriction impact on company performance
and profit margin.
SWOT Analysis
Swot analysis helps in identifying and evaluating various internal factors that protect
company from various threats and helps in gaining opportunity in order to gain competitive
advantages. Swot analysis of Ryanair is as follows:
Strength: Ryanair strength lies in low cost strategies as it is one of the lowest airlines in the
world that offers services at lower cost in terms of cost peer seat, cost per passengers. Traffic
cost and production capacity of Ryanair are less than other competitors so it helps in attracting
large number of customers. Continuous Innovation in technology such as short-haul flying is also
strength that helps in gaining competitive advantages in the market and satisfying needs of
people in effective way. Low cost model was first initiated by Ryanair in Europe so it helps in
gaining customers satisfaction and loyalty. Online check- in and automated bad drop are some of
the innovation bring by Ryanair in airline industry.
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Weakness: Despite of company strength that are certain areas in which company lack that need
to be improved in order to grow and success in the industry. Brand perception is one of the
disadvantages as it had been seen that its brand in underperforming in rage of polls, surveys and
awards instead it offers safe travel at low fare. Seasonal earning is also another disadvantage as it
has been seen since 2008 company is making losses in winter season.
Opportunities: Company has many opportunities to grow and expands its business and build
strong brand image by improving customer services. Company by changing its website and
increasing its presence in social sites can close connect with people can enhances their level of
satisfaction (Lurati and Zamparini, 2018). Ryanair by taking continuous feedback and
improving its services is able to meet needs of people. As business travellers are increasing at
rapid pace company can introduce various offers in order to business man to choose Ryanair
airlines for travel.
Threats: Increasing competition response is one of the threats that company as it is well known
to offer services at lower cost so no competitor can match it in Europe but at the same time it had
to improve customer’s service and brand image to grow and survive in the industry. Therefore it
can face competition in terms of quality of airport network and their satisfaction level.
Management system of company is also not effective as employees of company are highly
dissatisfied with working environment so less focus of management can impact on long term
growth of company.
Problem faced by Ryanair
From the above analysis it can be stated that there are various problem faced by Ryanair
while operating its function such as unorganised staff and various impacts of Brexit has resulted
in decreases in sales and profit margin and increasing cost (Asif and et.al., 2017). All such issue
should be considered by company on immediate basis for effective operation of business in the
industry. Various problems that are faced by Ryanair can be study in detailed for further
knowledge:
Staffing issues: Ryanair is facing situation of high employment turnover and absenteeism due to
bad policy and in appropriate working condition. Therefore company must ensure that it provide
better working environment to its employees in order to grow and survive in the industry. It had
also been noticed that Ryanair plays less attention for benefit and welfare of its employees and
compel employees to work overtime. Employees are not given much break and work continuous
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that create a felling of stress and exhausted thereby reducing their performance and productivity.
Thus, employees are not able to provide better and qualitative services to customers that impact
on overall performance and profitability of company. Organisational structure of firm is also
inappropriate that result in confusion and misunderstanding related to task performed by each
individual. Many staffing issue exist within company that hinder other function and performance
of various employees. Cabin crew and other employees are not provided with sufficient
compensation and forces to work longer at minimum compensation which create dissatisfaction
among employees. Therefore company has to immediate take step to improve employee’s
satisfaction and retention for long term growth and success of company.
Increasing cost: As prices of fuels and oil are continuous rising that adversely impact on cost of
Ryanair and reduces its share of profit margin. Higher prices of oil increases cost of company as
it is well known for providing services at low cost. At the same time company sales has
decreased due to brexit people are not willing to travel and many flights have been suspended
from EU to UK and vice verse. Unsatisfied staff also increased cost of company as it has to hires
new employees for effective operation of business. Therefore, increasing cost of Ryanair should
also be pay attention on immediate basis in order to meet demand and needs of customers.
Brand perception: Despite of low cost service provider in airline industry Ryanair is not able to
create customers satisfaction and loyalty. Most of the people, data and media reveal that
company does not offer qualitative services to its customers (Kumar, Dabas and Hooda, 2018).
Media also claims that in order to provide services at low cost it does not ensure safety and
security of people. Thus, such brand perception impact on company profitability and sales
volume and reduce customer satisfaction and loyalty. Various services such as booking of ticket
and seat, quality of infrastructure of airport is not as per expectation of customers. Therefore,
company also have to find ways and method to satisfy needs of customers in most effective
manner in order to grow and survive in airline industry. There are large competitors with better
services that can attract people to choose their company services over Ryanair so it had to plan
for improving its brand perception to enhance its profitability.
Ryanair has to firstly resolve its internal issue of staffing and appropriate management of
employees in order to gain competitive advantages. It can be stated that all such issue should be
immediately addressed and resolved so that company can increase it sales volume and profit
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margin and improve its brand image to provide better and qualitative services at affordable rates
(Porada and Smejkal, 2017). By resolving such problem on time company is able to continue its
operation and protect itself from various threats at the same time able to take advantages of
available opportunities to increase its sales and profit margin.
Solution to the problem faced by Ryanair
There are various solutions that can be used by Ryanair to resolve its problem in order to
improve its customer’s satisfaction and loyalty. Various model and theories can be used to solve
different problem and effective management of people within firm for achivemnet of desired
goals. Therefore different model and theories of management that can be used by Ryanair are as
follows:
Scientific management theories: It was invented by Frederick Taylor that stated that to increase
performance of employees that need not have to be forced to work hard rather the work should
be divided among people. This theory is used worldwide for effective management of people as
it says “fair wages for fair day works”. Tayor stated that employees that put extra effort needs to
pay extra over and above their compensation thus motivating them to increase their performance
to provide better customer satisfaction and reduce cost of company (Setiawati, 2020). Whereas
employees that are underperforming needs to pay less wages so that they are motivated to work
hard for render qualitative services and increasing sales and customers satisfaction.
Administrative management: This theory invented by Henry Fayol is a top-down approach that
examines business and suggests way to effectively manage people within firm. Manager plays an
important role in motivating employees to work hard for achievement of firm goals and
objectives. There are six responsibilities that a manager perform such as plan, organise,
command, control, coordinate and think about future that is forecast. Therefore manager while
performing its various roles and responsibilities has to follow 14 principles suggest by Fayol to
motivate and influence employees to work effectively. Manager of Ryanair has to follow all such
14 principle in order to resolve problem related to high staff turnover and to reduce chance of
absenteeism. Various principles that need to be followed by manager of Ryanair airline are:
Division of work: It stated that work should be divided on basis of employee capabilities and
skills to perform specific task that helps in effective performance and productivity of individual.
Manager of Ryanair airline by appropriately dividing work and defining organisation structure
can remove issue related to staffing. It will helps in effectively coordination and cooperation
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among employees as they know each other roles and responsibilities thus helps in effective
achievements of company goals.
Equity: Other point that needs to be considered by company is equality among employees that
means manager of company has to provide equal opportunities to all employees for their growth
and development (Highlighting the problems existing in Ryanair, 2019). Manager by promoting
equity among employees is able to build strong interrelationship and motivate them to work hard
for growth and success of company.
Discipline: Ryanair has to follow appropriate and fair policy and procedure so that employees
are happy and satisfied and perform effective to provide better and qualitative services to
customers. Manager should make such an environment where subordinate must respect and obey
order and decision of top authorities and self disciplined to perform its work.
Initiative: Manager of Ryanair by taking initiative from employees in decision making helps in
creating felling of belongingness and motivates it to work hard in order to provide best customer
experience.
Authority and Responsibility: For effective operation of company it should clearly defines
roles and responsibilities, their interrelationship and authority to take decision within firm. All
such clearance helps in effective coordination and cooperation among employees and reduces
change of conflict regarding task and function. Thus, it reduces burden and stress of employees
and motivates them to increase their performance and productivity.
Esprit de corps: Manager of Ryanaire by creating felling of pride and loyalty of customers
reduce their problem that they are undervalued or they have less importance within firm thus
motivate them to work hard.
Subordination of Individual Interest to general Interest: Manager of company has to
coordinate goals of individual with organisational goals such as it has to pay attractive
compensation and incentive as company grow and success in order to retened their loyalty and
satisfaction.
Stability of tenure: Ryanaire has to make effort to solve issue related to labour turnover as it
increase cost of company by hiring new individual. Therefore, company has to find reason of
high staff turnover and make appropriate changes to provide better services and reduce cost of
company.
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Remuneration: AS we know that employees of Ryanaire such as crew member are not paid
appropriate compensation as per their work and efforts (Mutungi, Mutungi and Fuentes, 2016).
They are force to work overtime but for that they are not given attractive compensation so
manager has to plan attractive and innovative compensation and incentive plans to motivate and
influence employee to work effectively.
Unity of direction: Leader and manager of firm should provide guidelines and direction related
to work, activities and function performed by each individual within firm thus reduces wastage
of time and cost of Ryanaire at the same time able to meet needs of customer within limited time.
Centralisation and decentralisation: All crucial decision of company should be taken by top
management whereas day to day operation decisions are to be delegate to other employees
(Kajan, 2017). By initiating their participation helps them in motivating and create a felling that
they have high value within firm.
Scalar chain: A chain to be followed within firm that line of command from top management to
lower it helps in resolving issue of staffing and increasing cost due to ineffective performance of
employees.
Unity of command: Manager should provide good working environment and build strong
relationship among employees so they work together for achievements of common goals.
Reflection
While making report I have learnt lot of things such as various internal and external
factors of environment that can impact on company operation. Model and tool used by company
to evaluate its external factors such policies of government, economic condition and social
preferences or limited amount of resources. I have learnt that company in order to gain
competitive advantages has to consider such factors while formulating strategies to attracts
customers and increase its sales (Tarr, 2018). Company has to effective mange its internal
resource such as people and resource in order to achieve its objective and satisfy needs of
customers. I have also learned from above analysis that firm has to use its strength to remove its
weakness and various opportunities to remove threats. As per my analysis Ryanaire by not
focusing on management of its employees has to face situation of increase cost and less
customer’s satisfaction. Therefore I learned for effective management of employees various
theories and models of management can be used to motivate employees to work for growth and
success of company.
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CONCLUSION
From the above analysis it can be concluded that Ryanaire is adversely impacted from
external environment so it has to formulate strategies in order to improve its brand image.
Management of company should use various theories and models to motivate employees and
reduces employment turnover. Lastly it can be explained that internal capabilities and strength of
Ryanaire helps in gaining opportunities and competitive advantages.
References
Books and journals
Aithal, P. S., 2017. Industry Analysis–The First Step in Business Management Scholarly
Research. International Journal of Case Studies in Business, IT and Education
(IJCSBE), 1(1). pp.1-13.
Asif, M. and et.al., 2017, August. Building related PV systems in GCC countries: a SWOT
analysis. In 2017 IEEE International Conference on Smart Energy Grid Engineering
(SEGE) (pp. 234-237). IEEE.
Božanov, I., 2018. PESTLE analiza proizvodnje lavande (Doctoral dissertation, Josip Juraj
Strossmayer University of Osijek. Faculty of Agrobiotechical Sciences Osijek.
DEPARTMENT FOR AGROECONOMICS.).
Kajan, E., 2017, July. Revisiting Interoperability Issues and Challenges in the Era of Ubiquitous
Social Web of Everything. In Proceedings of the International Conference on
Computing for Engineering and Sciences (pp. 1-5).
Kim, Y. J. and et.al., 2017. Analysis of Nanoprecipitates in a Na-Doped PbTe–SrTe
Thermoelectric Material with a High Figure of Merit. ACS applied materials &
interfaces, 9(26). pp.21791-21797.
Kumar, A., Dabas, V. and Hooda, P., 2018. Text classification algorithms for mining
unstructured data: a SWOT analysis. International Journal of Information Technology,
pp.1-11.
Lurati, F. and Zamparini, A., 2018. Communication SWOT Analysis. The International
Encyclopedia of Strategic Communication, pp.1-8.
Mutungi, S., Mutungi, E. and Fuentes, R., 2016. 11 Management Theories. Sustainable
Management Development in Africa: Building Capabilities to Serve African
Organizations, p.188.
Porada, V. and Smejkal, V., 2017. Forensic identification and its possibilities in the process of
detection, investigation and proving of cyber offences. International Day of Science
2017-Economics, Managemnet, Innovation.
Setiawati, L., 2020, January. Impact of Teacher Certification Toward Learning Quality: A Case
Study in Elementary School. In International Conference on Business, Economic,
Social Science, and Humanities–Economics, Business and Management Track
(ICOBEST-EBM 2019) (pp. 151-154). Atlantis Press.
Tarr, J. C., 2018. Using Instructional Design and Cognitive Load Management Theories to
Improve the Efficiency of a Video-Based College Algebra Learning Environment
Through a Note-Taking Guide and Learner Control. Arizona State University.
Online
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