Business Strategy Analysis: Ryanair's Internal and External Factors

This report provides a comprehensive analysis of Ryanair's business strategy, focusing on its internal and external environments. It begins with an introduction to business strategy and the chosen organization, Ryanair, an Irish airline. The report then delves into the macro environment, applying frameworks such as PESTEL analysis to examine political, economic, social, technological, legal, and environmental factors impacting Ryanair. It also utilizes stakeholder analysis and SWOT analysis to assess the company's strengths, weaknesses, opportunities, and threats. Furthermore, the Ansoff matrix model is applied to explore growth strategies. The second part of the report focuses on Ryanair's internal environment and capabilities, analyzing its strategic capabilities and key components. It employs the resource-based view, McKinsey's 7S model, and the VRIO framework to evaluate the company's resources, structure, and competitive advantages. The report also briefly touches on Porter's Five Forces and strategic choices using Porter's generic strategies and Bowman's strategic clock. Overall, the report aims to provide a detailed understanding of Ryanair's strategic positioning and the factors influencing its success in the airline industry.

Business Strategy

INTRODUCTION
Business is an entity which is entrusted with the role to earn maximum profit and
generate maximum income from the activities of business. It is important for companies to come
with strategies that can help them to take the competitive edge in the market. Business strategy is
referred to as the means through which the company can set its desired targets and work on to
achieve it. It is generally the long term planning of the business which consists of guiding
principles which helps in generating the pattern of the decision-making (Aluchna, 2018). The
organisation chosen for this report is Ryanair, an Irish airline which is headquartered in Swords,
Dublin. It has sister airlines, namely Ryanair UK, alta Air and Buzz. It was founded in the year
1984. This report shall cover the appropriate models for internal and external analysis, porters
five forces and business strategies using porters generic and bowman strategic clock.
TASK 1
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies.
The external environment is a condition which exist in whole economy. It comprises of
the external factors which affect the working of business and influences its working. Business
strategy is the principles and techniques that is used by companies in order to achieve the brand
image in market. The company Ryanair is planning many business strategy so that it can ensure
smooth running of it by attaining the goals.
The mission statement of Ryanair is to offer the low fare so that increased passenger
traffic can be generated thereby continuously focusing on cost and efficiency operations.
The main objective of organisation is to set up itself as the leading low fare company in
Europe by continuous improvement and the expanded offering of low fare service.
Different strategic planning techniques
 Business analysis: It is a practice that helps the company in acknowledging its strength
and weakness and Ryanair can take right decisions by identifying its loopholes in
operations of business.
 Benchmarking: It is a practice where the company compare its competitors so that it can
establish the brand image in market. Ryanair can compare its growth with its competitor
so that it can also establish its brand image (Carlier and et. al., 2019).

Various analytical framework to acknowledge macro environment
PESTEL analysis
It is a framework which is used to analyse the key macro environmental factors which
influence the working of company from outside. In context to Ryanair, the PESTEL analysis is
narrated below- Political- It involves the extent to which the government intervene in economy. In
relation to Ryanair, when the passenger tax rate increases, it places negative impact on
sale of ticket. The government of UK has three times increased the rates of tax which
made the tourist scared thereby affecting the sales of company. Economic- It is concerned with the how business is done and how profitable it is. It
includes economic growth, exchange and interest rates, etc. In relation to Ryanair, the
price of pound began to weakened which created the strong barrier and affected the
company badly. UK experienced the squeeze on the spending power of passenger which
affected the profitability of Ryanair. Social- It involves shared attitude and belief of the population. In context to Ryanair,
recently the people of British have began to travel whereby this changing habit have
influenced the short and long distance travelling. This contributed in sales increments as
Ryanair provides low cost flights. Technological- It involves the changes in technological landscape and its impact in
market. In relation to Ryanair, the company can utilise the technological advancement in
providing enhanced service to its customers such as using mobile application to book
ticket, etc. Legal- It involves the compliance with legal norms and rules which helps in successful
trade for business. In context to Ryanair, it uses lost cost strategy which may be
problematic for company as after Brexit, it is required to comply with both UK and EU
laws (Kamesh and Jin, 2018). Environmental- It is concerned with the environmental changes which influence the
working of business. In context to Ryanair, the carbon footprint have been the alarming
point for company so it might affect the operations of airline industry.
Stakeholder analysis

This is an important step in the framing the business strategy as it helps in delivering the
high quality product. It helps in removing and uncovering the barriers which comes when
understanding the progression of project. In order analyse the stakeholder of Ryanair, power
interest grid is being used. High power- High interest- These are the decision makers of company and are required
to be closely managed. In context to Ryanair, the top level management of company
comes under this category as they have the biggest impact on business. High power- Low interest- These include those stakeholders who are required to be kept
in loop. In relation to Ryanair, the employees comes under this category as they are
required to be kept satisfied by providing them with essential details. Low power- High interest- These are required to be adequately informed as they are
helpful in project. It includes travel agents as stakeholders in respect of Ryanair as they
have less power in company but are required to be informed. Low power- Low interest- It includes the stakeholders which are to be monitored as they
may get bored with excessive detail. In relation to Ryanair, the airports come under this
category as they have less power and interest in working of company (Namazi, Dehghani
Saad and Ghoohestani, 2017).
SWOT analysis
It is the framework which is used to identify the strength, weakness, threat and
opportunities of the firm so that it can make and implement strategy accordingly. In relation to
Ryanair, it is narrated below-
Strength
 The company Ryanair has about 450
fleets which makes its biggest strength.
The company is now planning for
increasing it to 600 fleets. Another strength of company is that it
is able ti keep the cost low and it is the
core of business model of Ryanair. It
keeps the cost low in order to attract
customers thereby offering non
Weakness
 The company does not offer cash
refunds rather it offered time limited
vouchers which makes the customer
unhappy and dissatisfied.
 The company has recently cut down
3000 jobs due to restructuring which
resulted in workforce laid off. This
affected the reputation of company
badly.

essential service as the add ons
(Montenegro and Barragán, 2018).
Opportunities
 Ryanair have taken the benefit of Bank
of England Covid Corporate financing
facility where it took loan of 800
million euros which can be used by
company for grabbing opportunity to
expand its business. Due to covid restriction on travelling,
this affected the manufacturers of
airlines so Ryanair can adopt the
opportunity to purchase many airlines
at low cost.
Threat
 the biggest threat is that Ryanair have
no control on the regulation of
government as it has violated the nroms
of covid which affected its brand
image.
 Another threat is the air traffic which is
very less due to covid 19 pandemic. It
shall take time to make the airline
traffic normal till the vaccine is
available widely (Tuwanku, Rohman
and Rofiq, 2018).
Ansoff matrix model
It is a tool used by the firms to analyse and plan the strategies for the growth. It consists
of four strategies which companies can use in order to expand their business. In context to
Ryanair, it is illustrated below- Market penetration- It is mainly concerned with increasing the sales of the existing
offering in the existing market. This strategy aimed not to bring anything new but to
improve sales of present product in same market. Ryanair can use this strategy to enhance
its sales volume with same service in existing market. Product development- It is focused on the introduction of new product but in existing
market. This strategy involves the plan to bring something new in market to attract
customers of existing market. Ryanair can bring some new service in the market so that it
can provide customer satisfaction in existing market to increase the sales. Market development- It is concerned with using the existing product but in new market
so that new customers are attracted to the company. Ryanair can use this strategy to
create new customer base in new market but with existing service which will also involve
less cost.

 Diversification- It is focused to enter new market with new product or service. It is a
complete diversification of company. It involves high risk for company. Ryanair may opt
this strategy but it may involve huge cost for it in entering new market with new offering
(Yerimpasheva and Balgabayeva, 2020).
Ryanair must use market development so that it can new market but with same offering
so that it does not involve high cost fir company and it involves less cost too.
TASK 2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
Strategic capabilities and their key components
It is the process which involves making the improvement and enhancement in the
strategy of business so that competitive advantage can be gained in market. There are six
elements of the strategy which includes purpose, action plan, goal, tools, value and vision. All
these help in enhancing the strategy in order to accomplish the operations rightly.
Resource based view strategy
It is a managerial framework that is used by company so that it can determine the strategy
which can be effectively exploited by company so that it can become sustainable and take
competitive edge in market. There are mainly two types of resources, tangible and intangible.
Ryanair can manage its resources as it is important to use resources in such a manner that they
are utilised effectively for the making of unique offering (Jasni and et. al., 2019).
McKinsey's 7S model
It is a framework that helps the company to analyse its design of firm by viewing the
seven internal elements so that it can identify whether these are aligned effectively or not and
allow the company to achieve its targets and goals. In context to Ryanair, it is illustrated below-
 Strategy- It is the plan which is used by company to achieve the sustained competitive
advantage. The core strategy of Ryanair is to offer low fare flights to the passengers and
sustain in market by competing with market players.
 Structure- It represents the way business units and divisions are organised. In relation to
Ryanair, it follows hierarchical organisational structure which have long chain of
common and communication flows from up to down.

 Systems- It includes the procedures and process of company which reveals the daily
activity of company. The Ryanair has both manual and technology usage in its business
which makes its work quicker and easy.
 Skills- It involves the ability which helps employees of company to perform well.
Ryanair provides requisite training to its employees so that they can give better customer
experience to all.
 Style- It involves the way in which organisation is managed by top management. Ryanair
follows combination of autocratic and transformational leadership style which involves
one leader who has full authority to make decision.
 Staff- It is concerned with what type of employees are there and how many are there.
Ryanair have around 17500 employees in organisation who works for achieving the goals
and objectives of company.
 Shared values- It is concerned with standards and norms which guide behaviour of
employees and action of company. The core value of Ryanair is that it is low priced and
value money and efficiency (Dina and Cahyandito, 2018).
VRIO framework
It is the tool used to bifurcate the resources of company into four components. In context
to Ryanair, it is discussed below-
 Valuable- It involves the resources which add value for customers. Ryanair has its
financial resource under this category as it is very much valuable for the company
 Rareness- It involves the rarity of resources as to how much scarce resource is there..
The human resource of Ryanair are rare for it as they are given specialised training in
order to compete the market.
 Imitable- It is concerned with the affordability to copy the resources. Ryanair has its
customer community as inimitable as it is difficult to imitate culture and community
dedication.
 Organisation- It involves the resources which are fully organised. The distribution and
logistic of company is organised which makes its services efficient (Abdelaal, Khater and
Zaki, 2018).

TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.
It is the strategic tool which is used by companies to analyse the competitive
environment. It is used to minimise or avoid the risk of losing competitive edge which company
has. In context to Ryanair, it is illustrated below-
 Threat of new entrants: It is concerned with the easiness of ability of people to enter the
market. In context to Ryanair, the power of this force is low as the aviation industry is
every expensive and its entry barrier is high. Even the leasing or purchasing of jets is
expensive. So Ryanair is less concerned with new entrants.
 Bargaining power of suppliers: It is concerned with how easy it is for suppliers to drive
the prices up. In relation to Ryanair, the power of this force is high as there are only two
manufacturers of airlines which is Airbus and Boeing and Ryanair purchase the plane
from Boeing so its bargaining power is high due to less number of suppliers.
 Bargaining power of buyers: It involves the force of customers to drive the cost down.
In context to Ryanair, the power of this force is high as the company lacks customer
loyalty due to low fare. The switching cost of consumer is zero and of any Ryanair plans
to increase the price, the customers tend to switch to other airline which results in loss of
business.
 Threat of substitutes: It refers to likelihood of customers to find the substitute or
alternative of what company is offering. In relation to Ryanair, the power of this force is
low as Ryanair offers comparison of its rates with train fare on its website which
encourages people to use the service of Ryanair and doesn't allow them to switch to
substitute which is train.
 Rivalry among existing competitors: It is concerned with the strength and number of
competitors in the market. In context to Ryanair the power of this force is high as there
are many low cost airlines which operate on same route in which Ryanair operates. Every
competitor is striving to lower its cost through reducing the onboard passenger facilities
(Timms, 2017).

TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation.
Porter's generic strategies
It is the strategic tool which describes how the organisation pursues the competitive
advantage in chosen market. There are mainly three strategies involved in this which can be
applied to all product or service and enterprise of any size. In context to Ryanair, it is illustrated
below-
 Cost leadership: This strategy involves being the leader of cost in market. It helps in
gaining the competitive advantage and develops the edge which can drive sales. Ryanair
uses low cost strategy in order to attract more customers. It can still offer low price to
customers while gaining reasonable profit on each of the sale.
 Differentiation: It involves making the offering of company different from that of the
competitors. In order to adopt this strategy, the organisation need to make good research
and must have ability to deliver something of high quality. Ryanair can use this strategy
by bringing new innovative service which is not yet offered by any competitor in its
airline which can help in attracting customers.
 Focus: This strategy has two variants which includes the cost focus in which the
company seeks to get the cost advantage in the target segment. And the other variant is
differentiation which focuses on the seeking distinction in target segment. Both these
variant rest on the difference between target segment of focuser and other segment in
company. Ryanair can adopt this strategy by focusing on cost and in case of
differentiation focus, it must work on bring innovative service in market to gain the
competitive edge over others.
Bowman's strategic clock
It is the strategic tool which investigate many alternative for the strategic positioning that
is how the offering must be positioned to give the competitive position in market. In context to
Ryanair, the strategies are illustrated below-

 Low price and low value added- This strategy involves keeping the price low so that the
company can compete with its contemporaries in market. Ryanair must use relatively low
price so that it can stay ahead of its competitors.
 Low price: This strategy involves producing large quantity of offering and its offering is
also valued in target market. It involves low profit margin due to low price being offered
to customers but high volume of goods can help in generating high profit. Ryanair can
establish itself as low price leader in order gain profits.
 Hybrid: This strategy is very effective as it is the combination of both the above
discussed strategy. The company focuses on providing high value added products on one
hand, and on other it offers low price. Ryanair can use this strategy to battle the
competitive by using its existing low price strategy with brining new innovation in its
service.
 Differentiation: It involves trying the level best to offer product or service which is high
in realms of quality at the average price. Ryanair can use this strategy by focusing on
product quality and also putting significant effort on branding in order to retain loyal
customers.
 Focused differentiation: This strategy mainly applies to the brand which focus on
exclusive and luxury products which are of high quality and are sold at high price.
Ryanair is the low price airline so in order to adopt its strategy it has to change its
management and offer high price service to customers.
 Risky high margins: This strategy involves charging high price for the offering and this
strategy is risky as it involves charging high price and is not suitable for long run.
Ryanair, adopts this strategy has to charge high price for the same quality service which
may be risky for it.
 Monopoly pricing: In this strategy, the company position itself as monopoly leader as it
is the only one which offers such service or product in market. There is no competition in
this.
 Loss of market share: This strategy involves offering such product or service which the
customers do not value. The consumers do not get engage in services which are of high
price so companies need to opt standard price for its offering (Idota, Taher and Tsuji,
2021).

Ryanair is the low fare airline which has its loyal customer base. The company can opt
for the low price strategy which it is already applying so that it can retain the customer base and
can battle the competition easily.
CONCLUSION
It is concluded from the above report that the business strategy is the plan which involves
scanning the internal and external environment in order to plan such strategy which can help in
staying ahead of the competition. Ryanair is the leading low fare airline which has its customer
base. The PESTLE analysis is been discussed which states that the company has negative impact
from political, economic, legal and environmental factor where as the social and technological
factor has positive impact. The SWOT analysis is discussed which provides the strength and
opportunities of company which can help in overcoming the weakness and threat. Further it is
concluded that company can cost strategy in order to stay ahead of competitors and can also use
low price strategy so that it can retain the existing market share of itself. The company has its
valuable, rare, inimitable and organised resources which will help it in adopting the right strategy
for its business development.

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