Ryanair: Analysis of Growth, Benefits, and Associated Risks

This report provides a comprehensive evaluation of Ryanair's growth strategies, examining the directions and methods the airline has employed over a specific period. It delves into the benefits and risks associated with Ryanair's approach, including legal issues related to EU regulations, customer compensation practices, and labor relations. The report analyzes the company's growth methods, such as business acquisition (specifically the acquisition of Aer Lingus) and franchising, assessing the advantages and disadvantages of each strategy. It considers the impact of these methods on Ryanair's profitability, market share, and reputation, highlighting the importance of factors like cost efficiency, legal compliance, and customer satisfaction. The conclusion emphasizes how various challenges, including EU allegations, poor working environments, and financing constraints, influence Ryanair's business success, while also showcasing methods like acquisition and franchising to boost productivity and profitability.

Evaluate the directions and
methods of growth utilized by
Ryanair over the period of the
case study. Assess the benefits and
risks associated

Table of Contents
Main body........................................................................................................................................1
Directions of growth, benefits and risks associated ....................................................................1
Methods for growth, benefits and risk associated with................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

Main body
Directions of growth, benefits and risks associated
Ryanair is Irish low price airline, serve its services in many countries and founded in
1984. Ireland and Dublin is the main and primary operational bases of company where they have
good customer base. As in business growth they are facing many issues which might be impact
on its business profit margin and financial budgets.
There are some issues that affect firm growth and success-
Legal issue or procedures-
Issues statement 1- EU means European Union, it is economic and political union with
28 member states that is placed mainly in Europe. EU purpose is to establish unified economic,
promote peace, break down barriers to borders and trade, monetary system, combat
discrimination, promote inclusion, encourage scientific developments and technological. EU
make some ligation on Ryanair that they are receiving or collecting money from state at certain
airports which is not appropriate for its growth in market (Nagle and Müller, 2017). They
consider firm as publicly owned company, in which they cannot take aid for its airports from
state, it possesses as illegal procedure. EU launched more investigation on firm into allegations
of illegal aid because Ryanair has many more than 20 publicly owned airports such as Beauvais,
Frankfurt Hahn in Gernmany and Paris. As they will not been able to take aid from governments
it considers in illegal and inappropriate in way.
Directions for growth- Ryanair required to serve their services in specific nation or
country without taking resource or help through government. They must gather funds from
market investors and take loan from banks that is beneficial for them as helps to grow it business
better than before.
Benefits- When Ryanair start collecting funds from different source like banks, investors
and shareholders they can grow it business more and more and successfully build its market
image better than its competitors. It is one of the best way to remove allegation placed from EU,
as it helps to serve its services more easily in country.
Risks associated- Investors invest money in business and expect for receiving good
financial returns. If Ryanair cannot give their services effectively in nations, they face issue as
failure in which they are not been able to give returns to its investors according to their
expectations.
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Customer compensation-
Issue statement 2- Customer is person or group of people who purchase products or
service from business or shop. Every company need to satisfy their clients, even if they cannot
get appropriate services they required to give compensation. Ryanair is considered as worst
airlines for avoiding customer compensation. Flight delay, bad weather and mechanical issues is
the main reason behind customers unsatisfactory level, they find out the worst situation when
they try to reach at that particular place for some urgent work (Lohmann and Spasojevic, 2018).
Passenger suffers a lot when flights is delayed by three to four hours, they want compensation
and avoid travel in Ryanair flights which is not good for company growth and business
probability.
Directions for growth- Ryanair pay full compensation to its passengers, that helps to
satisfy their customers and make good connection between them. Company must pay money or
return it on decided time frame that support to gain trust of passengers.
Benefits- When company provide compensation to customer is it very beneficial for them
to grow more and increase profit. Thus, people wants compensation if they consider flight delay
for some specific reasons. Compensation make them happy and satisfy, Ryanair can be able to
build good understanding level and also make good connection or bound with customers through
pay compensation.
Risks associated- Flight delay occurs due to air traffic delays, weather changes and some
issues that cannot be predicted. Thus, if Ryanair pay compensation to each of its passengers
about flight delay, it is very harmful to airlines with low costs.
Labour relations
Issue statement 3- Working environment always need to be good and healthy, in Ryanair
workers give their reviews about poor working conditions. Michael Kevin O'Leary is chief
executive officer of Ryanair, they only thing about profitably and does not focus on workers
comfortable and satisfaction. It is one of the main reason behind poor working environment,
Michael cannot allow employees to take leave. Workers dissatisfied with the decision making
procedure and that is the reason for high employee turn over.
Directions for growth- Leaders must provide workers benefits and leave, that helps to
remove poor working conditions and enhance staff performance.
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Benefits- With the help of healthy and good working environment around workplace, and
give benefits to employees company can retain most talented people with them for longer who
contribute a lot while any working situation effectively.
Risks associated- If Michael give permission to worker about leave and other provide
benefits it directly impacts on Ryanair profit margin.
Prices and availability
Issue statement 4- Ryanair is low cost airline, they want to give their better services to
its passengers, that is why company need to introduce new aircraft. But the main issue is
financing, they do not have much balance to finance new aircraft.
Directions for growth- Share market and stock market loans is the best way or direction
for growth that help Ryanair to get finance or funds for new aircraft.
Benefits- With the help of stock market loans they can be able to launch their new
aircraft and grab the attention of customer as well as drive new ones towards them.
Risks associated- When Ryanair is fail to launch new aircraft according to their plans,
they have to face big financial loss.
Methods for growth, benefits and risk associated with
Ryanair apply many methods and used it for growth of its business, they want to increase
profitability and productivity. Company try to get competitive advantageous which is beneficial
for business as growth and success in marketplace.
Business acquisition is one of the best method that helps to grow business more and
more as compare to before. Acquisition is procedure of acquiring any firm to build strength of
company, merge is mostly similar to acquisition but it defines more strictly to combine all of
interests of both organizations into stronger individual company (Tachitskaia, Panova and
Schislyaeva, 2016). Ryanair must used this method, in which they can acquire some local
airlines that is beneficial for business success and growth in marketplace. For example, Aer
Lingus is Irish airline, it is flag carriers airline and one of the second biggest company in nation.
Ryanair acquire Aer Lingus airline and owned over 29% stock before being purchase out by
IAG.
They buy other company shares more than 50% and target organization shares, after
acquisition Ryanair gains control over Aer Lingus. Ryanair and Aer Lingus do their due
diligence in examining each other;s financial and operational performance. Once ownership is
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adopted or acquired, stakeholders paid for its stake in organization and then procedure of
actually merging two firms together is begins. In short, Ryanair acquire Aer Lingus in which
they are able to take control over company by purchasing their assets and majority of their
shares. This method or technique is very useful and beneficial for business growth and make
good market reputation of Ryanair.
Benefits of acquisition- Acquisition is process give many benefits to Ryanair as it help
to increase profitability. With the support of acquiring Aer Lingus airlines company can generate
more value and revenue. Acquisition benefits is to increase cost efficiency, Ryanair can
maximize their market share as compare to existing competitors via business Acquisition
method. Acquisition and mergers lead to increased value generation for Ryanair, it gives ability
to speedily grow business and acquire assets. By using method of acquisition, company can
access to capital of global firm. It allows access to Ryanair and leaders to enter into new market,
where they grab people attention. If Aer Lingus cannot have assests to keep legal counsel on
hand, acquisition give opportunity to them to protect and retain their image market. When they
joined with Ryanair, they have legal, human resource specialists and financial support which is
available as they needed.
Risk associated with acquisition procedure- Legal risks, differences in culture, lack of
transparency and inefficient communication are the risk associated with this method that directly
impact on Ryanair financial budgets and profit margin. Two companies joint their business with
each other where cultural clash between both of staff is general that affect whole business growth
and productivity.
Franchising- Franchising is form of business growth in which owner of service or
products or procedure obtains distribution through connected dealers or franchisees. In simple
words franchise is one of the best opportunity for Ryanair as it allows starting their business by
following legal procedure (Jankiewicz and Huderek-Glapska, 2016). Company give license to
local airlines to used their services and sell it in marketplace for betterment. It considered as the
best method for business growth, that permit them to have access to business processes,
proprietary knowledge and trademarks in order to used by other party to provide services or sell
products under Ryanair name.
Benefits of franchising method- Franchising give many benefits to Ryanair as it find it
easy to secure finance for franchise. It must cost less to buy the franchise than begin Ryanair
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own business of same type. It helps to established image and good market reputation, proven
work practices and management and also support to access to international advertising and
ongoing help.
Risk associated with franchising- Franchising is process of investing business model,
but company cannot also investing in reputation. When local firm cannot give their effective
services to customer and does not deliver good quality facilities or goods it directly impacts on
Ryanair market image because local company is working with name of it. Reputation damage is
one of the major risk associated with franchising methods that affect whole business structure of
Ryanair as well as its market position.
CONCLUSION
The present report has been concluded that EU allegation, poor working environment,
franchising for new aircraft and other are the reasons that impact on Ryanair business growth and
success. Organization gets different types of directions or guidance that helps to grow and
succeed in marketplace. But all the directions or recommendation is associated with risk and
benefits that straightly influence Ryanair business success. Furthermore, by using various types
of methods such as franchising and business acquisition company can be able to serve its best
and in all around the world. With the help of using these methods Ryanair can increase
probability and productivity better than before.
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REFERENCES
Books and Journals
Jankiewicz, J. and Huderek-Glapska, S., 2016. The air transport market in Central and Eastern
Europe after a decade of liberalisation–Different paths of growth. Journal of Transport
Geography. 50. pp.45-56.
Lohmann, G. and Spasojevic, B., 2018. Airline business strategy. The routledge companion to
air transport management. pp.139-153.
Nagle, T.T. and Müller, G., 2017. The strategy and tactics of pricing: A guide to growing more
profitably. Routledge.
Tachitskaia, E.A., Panova, E.A. and Schislyaeva, E.R., 2016. MERGERS AND
ACQUISITIONS AS A FACTOR OF INTERNATIONAL BUSINESS
DEVELOPMENT. Экономика, экология и общество России в 21-м столетии.
p.138.
Online
What are the risks associated with Mergers and Acquisitions?. 2017. [Online]. Available through
: <https://blog.v-comply.com/risks-associated-mergers-acquisitions/>.
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