Strategic Business Analysis of Aerlingus: An Airline Industry Report

This report provides a comprehensive business strategy analysis of Aerlingus, the Irish airline. It begins with an introduction to Aerlingus, including its history, current status, and market position, followed by a discussion of the macro environment, including economic trends impacting the industry. The report then applies Porter's Five Forces to assess the competitive landscape, analyzing the threats of new entrants, substitutes, buyer and supplier power, and competitive rivalry. An internal analysis of the industry and strategic groups is presented, along with an examination of Aerlingus's core competencies, generic value chain, and VRIO analysis. A SWOT analysis is also included. The report concludes with recommendations for the company's strategic direction. The analysis highlights the company's strengths, weaknesses, opportunities, and threats to provide a complete overview of the business strategy. The report utilizes diverse frameworks and tools to evaluate Aerlingus within the airline industry.

Running head: BUSINESS STRATEGY
Business Strategy for Aerlingus
Name of the Student
Name of the University
Author’s Note:

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Table of Contents
1. Introduction..................................................................................................................................2
2. Discussion....................................................................................................................................2
2.1 Brief Description of the Organization of Aerlingus..............................................................2
2.2 Consideration of the Macro Environment of the Company with different trends.................3
2.3 Consideration of the Effect of each of the Porter’s Five Competitive Forces within the
Firm’s Industry............................................................................................................................3
2.4 Identification and Description of the Internal Analysis of the Industry and Strategic Groups
in the Industry..............................................................................................................................5
2.5 Analysis of the Capabilities of the Firm of Aerlingus...........................................................9
3. Conclusion...................................................................................................................................9
4. Recommendations......................................................................................................................10
References......................................................................................................................................11

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1. Introduction
A business strategy could be referred to as the set of different competitive movements or
actions, which a specific business utilizes for attracting clients, competing successfully,
strengthening overall performance and also obtaining organizational objectives (Akter et al.
2016). This type of strategy could be eventually understood as a distinct course of action or the
collection of different decisions that provide assistance to the entrepreneurs for gaining business
goals. It is referred to as the scheme for corporate intent as well as action that is eventually
planned and designed with the main purpose of achieving efficiency, meeting various challenges
or threats and securing a beneficial position. Different competitive actions and moves are being
analyzed properly and hence the company is able to eradicate all types of complexities and issues
under every circumstance (Higgins, Omer and Phillips 2015). This report will be outlining a brief
description on business strategy and environment analysis of the popular and significant aircraft
organization in Ireland, Aerlingus with relevant details.
2. Discussion
2.1 Brief Description of the Organization of Aerlingus
Aerlingus is one of the significant and noteworthy aircraft organization in Ireland and the
2nd largest airline within the entire country after Ryanair. It was eventually found in the year of
1936 by the government of Ireland and it was being privatized within the years of 2006 and 2015
and is now a completely owned subsidiary of the International Airlines Group or IAG
(Aerlingus. 2020). The organization’s head office is over the ground of Dublin Airport in Dublin
and they have been doing high business within last few years. More than 4000 employees are
working currently in this organization and the total revenue is 2.2 billion Euros.

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2.2 Consideration of the Macro Environment of the Company with different trends
The organization of Aerlingus is doing business for several years and as a result, they
have an excellent chance of implementing new ideas and ideologies for the business. They have
even moved towards a lower costs carrier model for ensuring that better effectiveness and
efficiency is being gained without much complexity (Johnson 2016). They are ongoing with their
present strategy as well as position of being within between an ultra-low cost carrier as well as
complete service flag carrier within Europe and hence adopting the lower costs model over
transatlantic flight; hence charging for the auxiliary service and incrementing the seating
capacity over their flights by proper reduction in the total number of business class seat and
increment in the economy seat number (Thompson, Strickland and Gamble 2015).
After analysis of the macro environment of the organization, they have to compete with
Ryanair for maintaining a significant position in the market. As a result, the efficiency levels is
lowered and the business gets a better chance for business analysis. Hence, they should continue
with their low cost approach for ensuring that a new market is accessed and the overall
profitability is improved (Lawton 2017). The present economic trend of the country of Ireland
has a direct impact over the aircraft industry. The individuals, who have lesser disposable income
are suffering majorly for the Dublin airport. Major growth has reached out to different countries
that have been dealing with major aspects and features related to the organizational development.
2.3 Consideration of the Effect of each of the Porter’s Five Competitive Forces within the
Firm’s Industry
The organization belongs to the industry of aircraft in Ireland. Porter’s five forces
analyses of the aircraft industry are described in the following paragraphs:

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i) Threat of the New Entrants: This particular force is low for the Ireland’s aircraft
industry. The main rationale behind such interference is that this specific industry is being
featured by being the capital intensive (Shaw 2016). Different equipment and facilities are
needed for managing this designing, testing and even production of the aircrafts, since they
require huge investments, only to be managed by different firms, having strong financial base.
Hence, the barriers for entrance are high for the industry.
ii) Threat of Substitute: The force of threat of substitute is low for the Ireland’s aircraft
industry. Different substitute products are referred to as the parts or equipment, which is being
utilized for manufacturing an airplane. Although, different airlines are making purchases of the
aircraft, they consider a specific product, which matches with the basic requirement as well as
the core criterion that is being outlined by the government of Ireland as well as aviation
administration.
iii) Bargaining Power of Buyer: The next distinct force is the bargaining power of buyer.
The pressure is medium for the aviation industry in Ireland (Eaton 2017). It is being affected by
the distinct presence of fewer larger scale suppliers of aircrafts. The buyers are seeking quality
assurance form aircraft manufacturers. It also can provide a greater deal of leverage to the
buyers.
iv) Bargaining Power of Supplier: Another significant force is the bargaining power of
supplier. As there exists few manufacturers of aircrafts, the suppliers require to focus on the
material supplies and also equate that in their profit margins.
v) Competitive Rivalry: The final force is competitive rivalry, which has a high pressure
on the aircraft industry of Ireland. Several organizations are involved in the production of

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aircrafts that are being supplied to the airlines in the respective international market (Lange et al.
2015). As a result, a moderate level of competitive rivalry is present amongst the existing firms.
2.4 Identification and Description of the Internal Analysis of the Industry and Strategic
Groups in the Industry
The core competencies of the aircraft industry in Ireland and Aerlingus include different
competencies of the aviation individuals, customer service orientation, adaptability as well as
flexibility, interpersonal skills, communication skills as well as team work. The airline industry
comprises of different trends for better effectiveness as well as efficiency without any further
complexity or issue (Daft and Albers 2015). The core competencies of the airline industry of
Ireland are provided below:
i) The first or the most significant core competency is reduction of different operating
costs as well as improved efficiency. For several years, the industry has tried to maintain their
sustainable growth and development by rough conditions. Moreover, the operating costs are
reduced to a high level in Ireland and they are able to deal with distinct complexities and issues
successfully. As a result, customer experience is improved to a high level.
ii) The second distinct and significant core competency is human resource management.
They are managing their employees properly for ensuring that all types of advantages and
benefits are being gained by them to maintain a positive organizational culture (Taneja 2017).
This is being done with great relations with their stakeholders.
iii) The third competency is strong brand name. They have been maintaining their brand
name successfully for several years and as a result, several customers are drawn to the airline for
their performances.

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The generic value chain of Aerlingus is provided below:
Figure 1: Generic Value Chain Analysis of Aerlingus
(Source: Belobaba, Odoni and Barnhart 2015)
The support activities of the organization include firm infrastructure, HRM, development
of technologies and finally procurement. However, the primary activities involve inbound
logistics, operations, outbound logistics, marketing and sales and post sale service (Taneja 2016).
The organizational infrastructure is relative hierarchical and they have ensured that the
organizational management is highly effective and would ensure high support from the
employees. They have started an apprenticeship program for the engineers and provide training
programs for all. E commerce is available for the customers and a good relation is maintained
with the aircraft suppliers. For the primary activities, they have included different aspects and
features for inbound logistics, operations, outbound logistics, marketing and sales and even post
sale services. Proper communication is established to get additional information for the clients.
The VRIO analysis of Aerlingus in the aircraft industry of Aerlingus is provided below:

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Figure 2: VRIO analysis of Aerlingus
(Source: Created by the Author)
Due to the low cost and valuable features, the organization of Aerlingus has been getting
major advantages and features without much complexity or issue. One of the most popular
awards for airline industry is Easy Jet award and this particular airline organization has achieved
this award with stronger financial base (Williams 2017). They are also maintaining proper core
competencies in the business successfully.
The SWOT analysis of the organization of Aerlingus is provided below:
Strengths Weaknesses

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i) They have a larger number of branches in
all the states of Ireland and it is being
supported by a stronger distribution network
for ensuring that the products and services are
available easily.
ii) They have a low cost structure for
customers and hence maximum customer
retention is present.
iii) Automation of processes is possible in the
business.
iv) The financial position is extremely strong
and they have a return on expenditure.
i) The research and development sector of the
company is not at all effective.
ii) They have a high day sales inventory for
the business.
iii) The current ratio of the organization is
low and this can be quite vulnerable for the
business.
Threats Opportunities
i) Highly developed technologies by
competitors is the major threat for Aerlingus.
ii) There can be a chance of new entrants in
the market and these could be referred to as
threats.
iii) Increasing competition is the significant
threat of Aerlingus.
i) Social media involvement is referred to as
the one of the most significant opportunity of
Aerlingus.
ii) They should concentrate on their
technological developments for ensuring
better automation of the processes.
iii) There had been a reduction in the tax rates
of the government of Ireland and it can be a
major opportunity for them.
Table 1: SWOT analysis of Aerlingus

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(Source: Created by the Author in MS Word)
2.5 Analysis of the Capabilities of the Firm of Aerlingus
The behavior and effort of the business of Aerlingus is well directed and resources are
mobilized. Business strategy prepares the top management with an integrated framework for
discovering, analyzing as well as exploiting all types of beneficial opportunities and advantages.
The main pillars of the company of Aerlingus includes a strict adherence to the capacity
discipline, value adding features, proper cost control, innovative partnerships with contract flying
for removing the issues and complexities successfully and ensuring better consumer driven
product differentiation (Daft and Albers 2015). It is considered as a master plan that the
respective management of the organization has implemented for securing the competitive
position within the market and also carry out the operations effectively. Such distinct strategy is
responsible for providing chance of the desired image, destination and direction of the company.
As a result, they have got maximum success in the business.
3. Conclusion
Hence, a conclusion could be drawn that proper analysis of business environment is
extremely important and significant for any company to ensure that all the weaknesses and
strengths are being identified successfully and the organization is able to bring out new chance
and opportunity for subsequent analysis. Moreover, an advantageous position is also being
secured by the organization with such strategy and environmental analysis. It is required for
making an optimum use of different strengths and resources and also counterbalance the
respective weaknesses. There exists three distinct levels of business strategies, which include
corporate level, business level and functional level. As a result, the business lines are eventually
upgraded on top priority and the organization is able to reduce the complexities related to

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business management. The above provided report has properly analyzed the business strategy for
an aircraft organization in Ireland namely Aerlingus. Suitable recommendations are also
provided for the company.
4. Recommendations
Suitable and appropriate recommendations for the organization of Aerlingus are provided
in the following paragraphs:
i) The first recommendation for Aerlingus is involvement of social media. They should
increase their entry to the social media platforms like Facebook and Twitter. As a result, the
products and services are well promoted and customer interaction is increased.
ii) The second recommendation for Aerlingus is involving technological developments.
This technology allows proper data to be collected about the clients and marketing efforts are
improved.
iii) They should implement new methods for ensuring that the reduction in tax rates of
government is considered eventually.

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References
Aerlingus. 2020. [online]. Accessed from https://www.aerlingus.com/html/home.html [Accessed
on 9 April 2020].
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firm performance using big data analytics capability and business strategy
alignment?. International Journal of Production Economics, 182, pp.113-131.
Belobaba, P., Odoni, A. and Barnhart, C. eds., 2015. The global airline industry. John Wiley &
Sons.
Daft, J. and Albers, S., 2015. An empirical analysis of airline business model
convergence. Journal of Air Transport Management, 46, pp.3-11.
Eaton, J., 2017. Globalization and human resource management in the airline industry.
Routledge.
Higgins, D., Omer, T.C. and Phillips, J.D., 2015. The influence of a firm's business strategy on
its tax aggressiveness. Contemporary Accounting Research, 32(2), pp.674-702.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Lange, K., Geppert, M., Saka‐Helmhout, A. and Becker‐Ritterspach, F., 2015. Changing
business models and employee representation in the airline industry: A comparison of British
Airways and Deutsche Lufthansa. British Journal of Management, 26(3), pp.388-407.
Lawton, T.C., 2017. Cleared for take-off: Structure and strategy in the low fare airline business.
Routledge.
Shaw, S., 2016. Airline marketing and management. Routledge.

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Taneja, N.K., 2016. Airline industry: poised for disruptive innovation?. Routledge.
Taneja, N.K., 2017. Driving airline business strategies through emerging technology. Routledge.
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts
and readings. McGraw-Hill Education.
Williams, G., 2017. The airline industry and the impact of deregulation. Routledge.