Ryanair Case Study: Analyzing Business Strategies and Challenges

This case study analyzes Ryanair, starting with an introduction to the airline and its business model. It includes a detailed SWOT analysis, examining the company's strengths, weaknesses, opportunities, and threats. A PESTLE analysis then assesses the political, economic, social, technological, legal, and environmental factors affecting Ryanair. The study identifies employee dissatisfaction and staff retention as a critical problem, requiring immediate attention. The proposed solution involves applying McGregor's Theory X and Y to address management approaches and improve employee relations. The report concludes with an experience report and references, offering insights into Ryanair's challenges and potential strategies for improvement. This assignment explores various management theories to find solutions for the issues faced by Ryanair.

Ryanair Case Study
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Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
SWOT Analysis of Ryanair.........................................................................................................1
PESTLE analysis of Ryanair.......................................................................................................2
TASK 2............................................................................................................................................4
Evaluation of the main problem Ryanair is facing which requires immediate action.................4
TASK 3............................................................................................................................................5
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Proposing solution to the problem identified by using management theories and concepts.......5
TASK 4............................................................................................................................................6
Experience report.........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
INTRODUCTION
Established in 1984, Ryanair is an Irish airline with its headquarters located at Dublin,
Ireland. It was recognised as the largest European carrier with respect to volume of passengers in
2016. One of the main reason behind its popularity is the successful implementation of business
models encouraging low-costs. Providing low-fares for short European routes is the unique
selling proposition of the company (Abbott, 2015). In this project report, a SWOT analysis and
Pestle analysis of Ryanair is being done to analyse the strengths and weakness of the company
and understand the competitive position of the company. Further, the problems which were
identified as part of previous swot and pestle analysis are being discussed to arrive at a possible
solution. At last, the report aims at providing the management of the company with action steps
that can be taken to ensure mitigation of existing problems.
TASK 1
SWOT Analysis of Ryanair.
Being one of the most popular airlines across European airline industry, it is imperative for
the managers of the company to be aware about the strengths, weakness, opportunities and
threats which exists for the firm. Here is a brief SWOT analysis of Ryanair:
Strengths:
One of the biggest strength for Ryanair is the low per unit costs of the company than any
of its competitors. It allows the company to offer cheaply priced air-tickets to its customers. Low
fares as a result of low costs is another core strength of the company (Yuan, 2013). Along with
this, Ryanair has implemented many technological innovations in its operations which has
helped the company to bring in a revolution in the customer experience of short-haul flying
across Europe. Large size of operations also adds to the strength of the company.
Weakness:
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Over the years, the main objective of Ryanair has been to provide its customer a safe air
travel at the lowest possible fare which has resulted in a negative brand perception among the
people. Poor performance of the company in a number of polls and survey are testimony to the
fact that it has a brand image of cheap airlines. Earnings of Ryanair are mainly seasonal and
witness fluctuations which is also another weakness when it comes to consistency and growth in
operational as well as financial performance of the company.
Opportunities:
Improved customer service and employee satisfaction is a huge opportunity for Ryanair
airlines which the management should take full leverage of. To improve the interaction between
the airlines and its customer, the company has taken some concrete steps like building a website,
a new mobile app etcetera. The company recently placed a firm order of 100 Boeing 737 aircraft
which is considered a pioneer in the aircrafts industry. This will allow the company to increase
its flying capacity and size of the operations. A sustainable market share is also an opportunity
for the management of the company.
Threats:
There are many factors which pose external threat for the company. Increasing air travel
taxes has decreased the demand to some extent. Negative publicity by the media for Ryanair has
been one of the main reason why the company has attained a negative and low brand image as
compared to its competitors (Aruna and Anitha, 2015). Recently, there were many internal issues
as well which hindered the operations of the airlines such as low staff retention and loss of
management focus. These are some of the major threats that the company is facing right now and
the management should take immediate steps to convert these threats into opportunities of
improvement.
PESTLE analysis of Ryanair.
Pestle analysis is a business tool which is used by the management to understand the
impact of macro-environment factors on the operations of the organisation and decision-making.
It is a tool which helps in early identification of opportunities and threats that may arise in future.
Here is a Pestle analysis of Ryanair:
Political factors:
Political factors refers to the factors related with political stability in the territory in
which an organisation operates. The increasing frequency of terror attacks across Europe is a
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political factor which negatively affects the demand (Williams, 2012). With Brexit, there is a
uncertainty prevalent which is a challenge for the company. Government support is increasing
for the local carriers which is also another factor which affects negatively the demand and
operations of the airlines.
Economic Factors:
Increasing amount of fuel rates has resulted in an increasing cost which has forced the
company to increase the fares. Even the slightest of change in air-fares results in a substantial
change on the demand. Along with this, weaker economy and gross national income across
Europe has also affected the demand for airlines significantly. There has been a substantial
decrease in the number of passenger that were being carried pre-Brexit and post-Brexit.
Social Factors:
Consumers nowadays prefer to commute by high speed rails instead of airlines over short
haul routes which has affected the Ryanair massively. Over the years, the USP of the company
has been providing better customer experience in short-haul flights across Europe but with this
recent customer preference of high speed rails, there is a great threat for the company. Although,
the policy of the management to expand its operations and increase the number of long-route
flights can help the company to fight this adverse effect of recent customer trends and
preferences.
Technological factors:
The management of Ryanair has been quick in adapting all the latest technological
innovation and development into the company’s processes and operations. The company has
build a dedicated website with much better user interface for customers to book tickets and get
all their queries solved (Buchan, 2017). A mobile app has also been developed to increase the
interaction between the customers and the airline. These factors present some opportunity for the
company to increase its operations and growth rate.
Legal Factors:
The company may soon require to comply to both the UK and EU rules and regulations
due to Brexit. The company also faced a lawsuit recently due on the allegations of receiving at
some airports aid of the state. Ryanair has faced a lot of legal complications from the Irish
government also recently with the merger of the airline Aer Lingus stating that the merger is not
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in the best interest of the Irish customers. Thus, legal factors pose a significant amount of threat
for the company.
Environmental Factors:
Ryanair has been among the very few airline companies that has been focusing on the
greenhouse gas emissions and carbon footprints. It has a very strong initiative of mitigating the
adverse effects of its operations on the environment and nature. It has been operation aircrafts
under age of 6 years and has the minimum emission as compared to any of its competitors
(Davis, 2013). The management of the company should take leverage of this opportunity and this
could also help the company to create a better brand image.
It can be concluded based on the above analysis that the macro-environment factors present
in the business environment of Ryanair pose some threats but along with the threats there are
many opportunities also which can be exploited by the management to increase growth-rate and
profitability.
TASK 2
Evaluation of the main problem Ryanair is facing which requires immediate action.
After a brief analysis and evaluation of the market environment of Ryanair airlines and the
strengths and weakness of the company, there were many problems that were identified but one
of the major problem which requires immediate attention of management and for which action
steps need to be taken as soon as possible is the problem of employee dissatisfaction and staff
retention. The company has very dissatisfying relations with its employees mainly the pilots. The
company was allegedly been reported against the charges of bullying its employees and pilots to
agree to the new terms of contract under which the employees were also required to pay
compensation in case of any loss suffered by the company which had anything to do with
negligence on part of employees. Pilot victimization was one area under which there were
several cases against the company (Deery and Jago, 2015). This problem is harming the
reputation of the company significantly and making the existing workforce unhappy leads to
further recruitment problems as each individual is bound to think many times before applying for
a job into Ryanair. It is quite evident that the wages and the treatment that the employees of this
airlines deserves is not what they actually are getting. In recent surveys, most of the employees
of Ryanair were dissatisfied with the poor working conditions and the pay-model adopted by the
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company. Fresh talents of the company don’t want to associate themselves with this
organisation. Pilots of the company were recently told that they needed to pay themselves for
their training for bigger aircrafts were created a discontent in the employees. Even for the
uniforms and crew meals, staff are expected to pay by themselves.
The reason why this problem needs immediate attention is that it seeds or cultivates many
other problems as well which hinder the profitable operations of the company. The company has
been facing a high staff turnover because of the working conditions and other factors which are
already mentioned. This leads to more recruitment and training models which results in an
increasing operational cost of the organisation which further affects profitability and focus of the
management. The management of the company is more busy in dealing with internal problems in
the organisation rather than preparing competitive strategies. Long working hours and poor
working conditions leaves the employees stressed and exhausted which then makes it difficult
for them to deal nicely with the on-board passengers (Gürbüz, Şahin and Köksal, 2014).
Employees work hard and still feel undervalued by the company and this is the reason why they
are not able to be nice to the customers and passengers and not perform their duties with
motivation and enthusiasm. Over the years, this has not only resulted in high staff turnover and
low employee retention but a lot of customers have also disconnected themselves because of the
on-flight behaviour of the cabin crew and poor customer service. This further decreases the
image of the company and builds a negative perception. Employees of the company don’t feel
motivated to perform to their best capacity. Thus, this problem requires immediate attention and
consideration of the management if the firm wants to maintain its competitive position in the
industry and wants the employees to feel more satisfied and loyal towards the organisation.
TASK 3
Proposing solution to the problem identified by using management theories and concepts.
McGregor’s theory of X & Y:
In 1960, McGregor proposed a human motivation theory of X & Y. According to the
theory X, an average human being exhibits laziness and is self-centred, he is not willing to
change and lacks any ambition. In such a case control and power are used to manage the staff.
On the contrary, theory Y suggests that an average human being is enthusiastic and passionate
and is more than just self-centred. He wants to assume responsibility and foster a growth
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personal as well as organisational (Hur, 2018). According to McGregor, the best way of
managing such people is to manage as little as they can. It is quite evident that the managers of
Ryanair exercise a strict control on its workforce and adopt the management of staff as in theory
X. The management should try to adopt the theory Y of managing its staff. It should believe that
its employees are willing to perform to their best capacity in the interest of the organisation as
well as personal interest. Many surveys show that staff appreciate the liberty and authority
delegated to them by the top management which motivates them to work more efficiently and
assume more responsibility. Thus, management should adopt the management practices of
managing staff as conducted in theory Y.
Herzberg’s two-factor theory:
According to the two-factor theory proposed by Herzberg, the factors which promote job
satisfaction and employee motivation are different from the factors which encourage job
dissatisfaction. The factors which motivated the employees were linked with job enrichment
such as responsibility, value, recognition, satisfaction etcetera. These factors go a long way in
helping to motivate an employee (Tedeschi, 2013). The absence of dissatisfying factors may still
create job dissatisfaction but their presence certainly doesn’t encourage motivation among the
employees. Thus, the management of Ryanair should focus on elimination of all such factors
which hinder the process of motivation such as poor working conditions, high degree of control
and supervision, employee communication systems, poor recognition systems etcetera. There
already exists many motivating factors in the daily job routines of the employees at Ryanair such
as travel opportunities, good salary package, meeting people from different countries and never
boring job description. Only the elimination of the factors which discourage motivation of the
workforce can help the management to induce better performance in its employees and maintain
employee retention and job satisfaction. Linkage of proper reward systems with employee
performance should also be another strategy adopted by the management to boost employee
motivation and confidence.
The above discussed theories of management can help the managers of the Ryanair
airlines in solving the problem of employee retention and huge staff turnover and the company
could achieve great performance results from its employee in quick time.
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TASK 4
Experience report.
The time that I spent in writing this report based on the case study of Ryanair has been a
memorable one since it was full of learning and experiences that hold a great importance in
today’s world. During the course of writing this report, I came across many business tools used
to analyses the competitiveness of any organisation such as SWOT analysis and Pestle analysis. I
personally believe that this report writing will always have a significant impact on shaping my
professional as well as personal life and fostering of growth and development. I realised that
there are many problems that an organisation faces during its operations but the management of
the company always focuses on identifying the key problems which may cultivate other
problems as well. I made sure that every part of the report writing includes information from
sources which are authentic and have considerable credibility. Just like every other human
endeavour, I’ve realised that this report is also not perfect and may contain some errors and
shortcomings. I prepared myself to take any criticism and suggestion in an optimistic way which
may help me to cultivate new sources of inspiration. I would love to get another chance to
undertake report writing assignment such as the above one quite soon and would work in the
future to improve my learning and outcomes out of the assignment and make sure to learn from
every mistake that I committed in this report so that I don’t repeat the same mistakes in the next
work. By taking and embracing constructive criticism out of this report, I wish to improve my
further work and minimise the shortcomings that may arise.
CONCLUSION
On the basis of above report, it has been concluded that swot analysis and pestle analysis
helps the management to determine and identify the problems in operations and take steps to
solve them (Witt, 2012). The market environment of Ryanair presents a lot of opportunities as
well as threats for the company. The management of the company should strategically develop
policies to make the best possible exploitation of opportunities related to environment and
technological factors It has been concluded that employee retention is one of the biggest problem
that Ryanair airlines is facing right now and the above discussed management approaches can
help the company to increase employee satisfaction and staff turnover.
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REFERENCES
Books and Journals
Abbott, R.J., 2015. Pestle Analysis for Students.
Aruna, M. and Anitha, J., 2015. Employee retention enablers: Generation Y employees. SCMS
Journal of Indian Management. 12(3). p.94.
Buchan, J., 2017. Lessons from Ryanair. Nursing Standard (2014+). 32(11). p.28.
Davis, T.L., 2013. A Qualitative Study of the Effects of Employee Retention on the
Organization. ProQuest LLC.
Deery, M. and Jago, L., 2015. Revisiting talent management, work-life balance and retention
strategies. International Journal of Contemporary Hospitality Management.
Gürbüz, S., Şahin, F. and Köksal, O., 2014. Revisiting of Theory X and Y. Management
Decision.
Hur, Y., 2018. Testing Herzberg’s two-factor theory of motivation in the public sector: is it
applicable to public managers?. Public Organization Review. 18(3). pp.329-343.
Tedeschi, J.T. ed., 2013. Impression management theory and social psychological research.
Academic Press.
Williams, K., 2012. Brilliant Business Plan: What to know and do to make the perfect plan.
Pearson UK.
Witt, A.C., 2012. From Airtours to Ryanair: Is the more economic approach to EU merger law
really about more economics?. Common Market Law Review. 49(1). pp.217-246.
Yuan, H., 2013. A SWOT analysis of successful construction waste management. Journal of
Cleaner Production. 39. pp.1-8.
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