Review of Ryanair Article: Microeconomic Concepts and Analysis

This presentation analyzes Ryanair's business operations through the lens of microeconomic theory. It begins with an introduction to microeconomics and its relevance to business, using Ryanair as a case study. The presentation then reviews an article discussing Ryanair's profit warnings and explores the core concepts of elasticity, the law of demand, and the law of supply, illustrating how these factors influence the airline's pricing strategies, customer behavior, and overall market position. It explains the concept of elasticity, emphasizing its crucial role in understanding how price changes affect demand and supply within the market. The presentation further delves into the law of demand, explaining the inverse relationship between price and demand, and the law of supply, describing the direct relationship between price and supply. The presentation also addresses substitutes, success factors, and the impact of external variables on the airline's operations, providing a comprehensive overview of the microeconomic factors influencing Ryanair's performance and strategic decisions. Finally, it concludes with a discussion of these microeconomic factors' influence on the airline industry.

Review of an article and to expand on
the aspects of microeconomic theory

Table of content
INTRODUCTION
Article review
Elasticity
Law of demand
Law of supply
CONCLUSION

INTRODUCTION
Micro economic is a scale of economic theory that can empower and favour the business entity for enhancing
the individual level of potential and capability as a business venture.
The role of the micro economic is to understand the reality of market and guide the company to formulate the
best and advanced level of practices and approaches that can support the best form of overall growth and
development for the business enterprises.
This presentation is based on the case study of Ryan Air Company.
Company is founded in the year 1984.
Company is associated with the airline sector that can empower the people to facilitate through the airline
services at a global level.
The aim of the project is to understand about the different micro economic factors and aspects that can support
the company to approach the best level of business operations that can meet up overall business objectives.

Article review
The article depicted about the sales of the Ryanair Company and its potential changes.
This certainly depict about how the pricing related strategies of company could change and influence the sales of the business entity.
The fares of company are expected to fall that could also allowed the company to attract new potential customers associated with the
market along with the existing customer base.
In the winter season fares are expected to fall down by 7%.
The impact of this fares fallen down is the total expected passengers are now more in number that are travelling with the airlines of
company.
The impact of this is such that the profitability of company could also increase due to the reduced fares that could attract to the potential
customer base in market.
This is a basic nature of economics when the prices come down this certainly increases the demand of product in market.
The previous expectations related tp air fares fall was 2% but the fall was reported as 7%.

Elasticity
This is a core concept belong to the micro economics.
This is a concept that clearly demonstrates that in case a price of one commodity get
increases than this would certain affect positively over the demand of other respective
alternative options in market.
The concept of elasticity is very crucial.
This concept of micro economic clearly reflect that price of the product is a driver that
certainly influence supply and demand of product in respective market.
This is essential in regards to the business venture to take a support of this concept in
respect to drive the overall demand of product in the market.
Price Elasticity of demand clearly state that in case the price of one product increases this
would certainly reduce the overall market demand of the same product.
In case of the price of the product decreases this would certainly boost up the overall market
demand of the same product.
Micro economic has clearly indicated that in case the business entity is looking forward to
increase the demand of product in market than it has to certainly decrease the price of its
product in market.

Law of demand
The law of demand says that factors being constant, price and demanded quantity of
good and service and goods are related in inverse proportion with each other.
 As the product price rises, product’s demand will fall.
The law of demand gives explanation about consumer choice behavior when price
change.
Consumers buy less of a product if they find the price increasing and thus demand
for good subsides.
This is the natural behavior of consumer choice.
It occurs when a consumer realise that if a product is pricey and unnecessary, they
can do without it.
This is often referred to as a situation of decreasing marginal utility.

Movement along curve of demand

Continued
The graph depicts the movement of the demand curve.
When the price of a commodity rises from P3 to P2, the demand for that commodity
falls from Q3 to Q2, then back to Q3 and so on.
The demand curve depicts the total quantity demanded at each price point along the
market's consumers.
 The movement of the demand curve reflects the price change, but not by self-
increasing or diminishing demand.
Demand fluctuates in magnitude and shape in response to changes in consumer
preferences, income, and economic goods, but not in response to price changes.

Change in demand curve
It is vital to understand the difference between the concepts of quantity and demand in
economics.
 Demand depicts the relationship between a consumer's wants and the number of units in
a given quantity of economic items.
The term "demand change" refers to a movement in the graph of consumers' wants and
requirements in terms of available resources, as well as a change in the position or form of
the curve.
Demanded quantity, on the other hand, is a reference to a point on the horizontal axis.
The term "change in demanded quantity" refers to movement across the demand curve as
a result of price changes.
 Both ideas are sometimes confused, but there is a distinction to be made: rising or
falling prices do not indicate a decrease or increase in quantity requested.

Demand influential factors
Many factors influence the shape and position of the demand curve.
 People's willingness to spend more is considered to raise demand for items as
earnings rise.
 The availability of complementary products that compete with a specific economic
commodity tends to reduce demand for the good since similar customer demands can
be met.
Also, the availability of near complementary products has a tendency to raise the
demand for low-cost commodities, since customers may find it more useful to use two
goods together than to use them separately.
Ryanair assesses market conditions such as rising income and the availability of
substitutes, and then helps to gives the right service at the right price to stimulate
demand.

Substitutes
Substitutes
Substitutes for Ryan air include railways, sea routes, car rentals and Eurotunnel.
These are the different ways of transport which customer can take for going other
than airlines.
The alternative substitute for the airlines are Easyjet, Wizz Air and Air Lingus.
Sensitivity of customers to change in price of Ryan air flights
 Customers have a keen watch on change in airline prices as Ryanair is one of the
cheapest airlines operating in UK and change in price can affect customers to
choose substitute like EasyJet.
 Thus, airline has to be cautious of providing price which the customer has
expectations from their brand.

Factors for Success
Threat of new entrant for Ryanair is low.
Airlines have to follow suit with lowering of Ryanair’s fares and competitive
advantages.
By Brexit, uncertainty and trading being ceased competitors of Ryanair have been
adversely affected.
The organization Ryan air has used strategies which can put it ahead in the race.
It has ensured that prices have been competitive by using time tested formula.
The airline has kept tickets cheap and thus customer gets value for what is paid.