Impact of External Factors and CRM on Ryanair's Operations

Desklib provides past papers and solved assignments. This report analyzes Ryanair using PESTEL, Porter's Five Forces, and CRM.

BUSINESS CONTEMPORARY DEVELOPMENTS AND
BUSINESS MANAGEMENT
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Executive summary
The research question associated with the report includes the identification of the
external influencing factor that impact Ryan air. It additionally includes the critical
analysis of Customer Relationship Management (CRM) regarding effect on internal
policies and effectiveness of response. For the execution of this report, the
identification and analysis of the external factors has been conducted by the use of
PESTEL analysis and Porter’s five forces model. The entire report is segmented into
two tasks where the second task corresponds to the analysis of CRM as theme.
Multiple operational and financial policies of the organization have been taken into
consideration for the theme based analysis. The report is concluded with two
mutually related deductions in the domains of influencing factors and CRM. Four
recommendations have been additionally provided at the end of the report. Similarly,
a brief profile of Ryan air has been provided in the appendix.
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Table of contents
Introduction................................................................................................................. 4
Task 1......................................................................................................................... 5
Task 2....................................................................................................................... 15
Conclusion................................................................................................................ 21
Recommendation......................................................................................................22
Appendix 1................................................................................................................ 26
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Introduction
The establishment and growth of any business is characterized by the development
and identification of multiple factors that influence decision making and policy
framing (Palei, 2015). The aim of this report lies in the identification of the external
factors that influence Ryan Air. Additionally, it includes the analysis of the importance
associated with the external factors relative to the mentioned organization. However,
the scope of the same includes the analysis and understanding of the customer
relationship management associated with the organization. The objectives
associated with the report include the use of business management and
identification models such as PESTEL and Porter’s five forces for the initial task. The
corresponding task includes the identification of the CRM and the influence of the
same on the decisions undertaken by the organization as well as the development of
the policies associated with CRM and business operations.
For the conduction of this report, six major factors in the form of PESTEL and five
major force from Porter’s would be taken into consideration. In the segment of CRM,
a three segmented approach would be undertaken for analysis of the management
and business modules. Additionally, few areas of improvement would be identified
for the airlines in the domain of CRM in the short and long run.
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Findings and analysis
Task 1
Identification and importance of the primary external influence that affects
Ryan air
This segment would include the use of PESTEL analysis to identify the external
factors that influence Ryan air. Additionally, Porter’s five forces would be undertaken
to include the analysis of the importance of the factors against the organization.
Through PESTEL analysis
The primary external forces would in the following order:
Factor Influence Importance
Political For an organization like
Ryan air that is currently
one of the largest service
providers of Europe,
political factor modulate
and influences the
servicing of the
organization. Some of the
political events that has
influenced the airline
would be Brexit.
Additionally, the
constitutional monarchy
character of the political
system of UK would and
has been influencing the
airlines
In the segment of Brexit,
the occurrence of the
events would result in the
increase of cost of travel
from EU member nations.
This would be because the
post Brexit, fuel cost would
rise in terms of taxes
(McKee and McKee,
2018). The airlines being a
low cost budget carrier,
this forced increase in the
prices would result in
either in decrease in
customers or potential loss
in the short term.
Similarly, in the domain of
the constitutional
monarchy, individual
governments levy
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corporate taxes for such
private organizations
(Balmer, 2017). As a
result, the operating cost
of the same increases
over time which would
compel the organization to
reduce spending on
customer facilities in the
value added segment.
Economic This factor is and would be
the driving factor that
influences the
organization. This would
be because; variation in jet
fuel prices over the years
and in various nations has
been impacting the net
income of the organization
over the years.
Additionally, post Brexit,
this Sterling Pound would
be essentially weaker in
the short term. This would
further influence the
finances of the
organization.
From figure 1, it is evident
that jet fuel has been
decreasing over the years
as well as quarters. This
reduction the fuel prices
have enabled the
organization to develop its
fleet of aircrafts which
currently stands at 430
units of 737s (ryanair.com,
2019). The importance of
the variation in exchange
rates includes the poor
quantity acquisition of high
quality jet fuel. In short
run, the airlines have and
would be forced to reduce
cost and vary routes to
sustain a profitable
business amid stiff
competition.
Social In this factor, the major
social segment would be
In the segment of
customer preference, it is
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the customer preference
on the use of flights.
Another influencing factor
would be the comfort
seeking individual for
whom the finance is
secondary.
generally seen that
individuals prefer to travel
by trains in short distance
than flights (Abrate et al.
2016). This puts pressure
on Ryan air, as the
organization would have to
continuously-optimize the
travel time as well as the
ticket basic ticket prices.
Technological The major technological
factor that affects the
airlines is the logistics and
communication. In most
cases, this factors exerts a
negative influence unless
extensively managed
This would be because,
since the organization is
currently the flag bearer of
low cost European air
transport, mitigation of
such daily challenges
results in the development
of brand image of the
organization coupled with
increase of customer
satisfaction.
Communication in forms of
instant applications and
real time tracker results in
the development of
customer relationship as
waiting time could be
reduced to minimum
through this (Cats and
Loutos, 2016).
Environment In this factor, the major
segment would be the
pollution produced from air
This would be because;
modern customers are
more concentrated on
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travel. On an average, air
travel produces most
pollutants that are
suspended in the
stratosphere and
mesosphere. This
influences the customer
demand in the current era.
sustainable developments
across all domains. For
those individuals that have
low time restrictions,
pollution relative to air
travel would reduce the
need of the same (Hankey
et al. 2016). Hence, there
would be loss of
customers with increase in
expenditure per head for a
particular route.
Legal In this segment, the major
influencing factor would
again be Brexit in the long
run. In the short run
however, legal aspects are
associated with the
multiple grants and
subsidies as received by
the organization (Gössling
et al. 2017). Both would
influence the statutory
obligation of the airlines
towards its customers as
well the government in
terms of travel, leisure and
tax.
The importance of the
same would be due to two
reasons. Post the event of
brexit, the airlines would
have to include multiple
servicing and custom
regulations of UK and EU.
Similarly, the rise in the
profits of the organization
due to government
subsidies enables the
airlines to follow the
governmental norms in
case of deficiency of
services.
Table 1: PESTEL analysis
(Source: Created by author)
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Figure 1: Variation of jet fuel prices over the years
(Source: airportwatch.org.uk, 2018)
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Figure 2: Pollution comparison of different transports
(Source: futuretravel.org.uk, 2014)
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Figure 3: Fleet strength and traffic of Ryan air
(Source: investor.ryanair.com, 2019)
Through Porters five forces
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Figure 4: Porter’s five forces model
(Source: cgma.org, 2014)
From the above figure, the influencing factors could be analysed based on the below
structure.
Force Influence Importance
New entrant This force would cater
poor influence on the
organization. This would
be because; customers
would essentially go for
brand image than new
comers in hospitality and
servicing sector.
The importance of this
force and degree of
influence would be on the
customer volume (Arafa
and ElMaraghy, 2016).
This because, a frequent
flier or a first time flier will
prefer a branded airline.
For example, an individual
flying from Dublin to
London essentially looks
for efficiency of airlines in
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