Business Strategy Report: Ryanair's Competitive Environment Analysis

This report provides a comprehensive strategic analysis of Ryanair, examining its operational environment and competitive landscape. The analysis begins with an overview of the macro-environment, including political, economic, social, technological, legal, and environmental factors influencing the airline's operations. It then delves into the micro-environment, using Porter's Five Forces model to assess the intensity of competition within the airline industry, considering the threat of substitutes, rivalry among existing competitors, the bargaining power of customers and suppliers, and the threat of new entrants. The report also includes a competitor analysis, identifying key rivals such as Qatar Airways and their strategies. Furthermore, it assesses Ryanair's internal capabilities through SWOT and VRIO analyses to evaluate its strengths, weaknesses, opportunities, and threats, as well as the value, rarity, imitability, and organization of its resources. The conclusion summarizes the key findings and implications for Ryanair's strategic positioning and future prospects within the airline industry.

Business Strategy

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
A) Macro environment......................................................................................................................3
B) Five competitive forces.................................................................................................................4
Competitor analysis...........................................................................................................................5
Analysis of firms capabilities............................................................................................................7
CONCLUSION.....................................................................................................................................8
REFERENCES......................................................................................................................................9

INTRODUCTION
It is very essential for business to analyse the internal and external factor which are
affecting the functioning of the organization so that the organization can make decisions and
plan accordingly. Ryanair is a Ireland company which is having its headquarters in Ireland
itself. There are 225 destinations which the organization is covering and number of
employees in the organization are 17,500 as of 2019. This report is going to consist of macro,
micro and competitive forces which are affecting the functioning of the selected industry.
MAIN BODY
A) Macro environment
It is very important for the organization to analyse the external forces or environment
which can affect the organization so that there is a better direction which can be implemented
in the organization. These external forces are not in the control of the company which is why
making decisions accordingly are very essential.
 Political Factors
The taxes have increased by the government which is having a negative impact on the
tickets of the organization which is making the company have low profit margins (Anwar,
Shah and Hasnu, 2016). There is at least three times raise in the taxes by the government of
UK because of Brexit which is making the company increase the prices of their company as
well. The largest base of the company is UK and if the government is doing that then they
will not be able to function effectively.
 Economic Factors
Ryanair is a low costing airline for the customers but because of the high taxes the
company is not being able to maintain their economic factor in the market. There is a
minimum spending on the passengers leisure travel with this airline which is not good for the
company’s reputation in the market.
 Social Factors
There is a new study of the population of United Kingdom which is out of ten people at
least nine people go away for holidays which can be a great advantage for the organization.
There is safety and comfort which the passengers look forward for in airlines which Ryanair

can provide the customers (Hsu, Moore and Neubaum, 2018). The prices are low only then
the society would like to travel by flights is another factor which will have to be considered.
 Technological Factors
There is a requirement of innovation and new creative service which can attract more
customers in the organization. To have minimum errors in the airlines can also be done by
this so that there is a better profit margin which the company can have. There is a lot of
investment which is being made by Ryanair in their technological factor so that the company
can have a better functioning.
 Legal Factors
Ryanair is following the rules of all the countries effectively so that the company can
function effectively in the market. There are a lot of rules like safety, comfort, information,
etc for the customers and the employees of the company which are being followed effectively
so that there is a better functioning (Yuliansyah, Gurd and Mohamed, 2017).
 Environmental Factors
There are measures and strategies are being developed by Ryanair for reducing the outlet
of CO2 in the environment so that there is a better functioning in the market. It is very
essential to have an effective functioning in the market.
B) Five competitive forces
This is a tool which is used by Ryanair to analyse the competitive market in the country
so that the decisions and strategies in the market can be improved. The competition is
increasing which is why it is very important for the company to have a better functioning for
themselves.
 Threat of substitute (Low)
The services in airlines are fixed and it is low as of now in the company because the
company is not being able to invest a lot in the products but just give the basic services to the
customers so that the company can maintain their standards (Pucheta‐Martínez and Bel‐Oms,
2019). There is a strong strategy which is being used by Ryanair which is helping the

organization have low prices but the company has expanded themselves in other industries as
well which is why the company is making the expected revenue generation in the market.
 Rivalry (High)
There are a lot of competitors or rivalry in this industry. Ryanair is having Emirates,
Cathay Pacific, etc competitors in the industry which is having a large base of customers and
better reputation in the market which is why this airline is not being able to expand them. It is
very important for Ryanair to expand them so that they can have a better functioning for
themselves (Christ, Burritt and Varsei, 2017).
 Buying power of Customers (Medium)
The customers are having a medium say in this because they can also not control Brexit
which has taken place which is why they need to pay for the tickets high price than they used
to in the past. It is very important for the company to find other ways so that they can expand
themselves effectively in the market so that there is a better functioning of the company.
 Buying power of Suppliers (High)
Since the competition in the market is high there has to be a balance on the suppliers as
well because there are limited suppliers in Ireland there are raw materials which are coming
from United Kingdom so that the best of services and products can be given to the customers
(Vermeulen and et.al., 2020). It is very important for the company to get more suppliers in
the company so that they can have a control on the suppliers as well which is going to be cost
friendly for Ryanair.
 Threat to new entrants (Low)
There is a requirement of a lot of investment which needs to be done by any new
company which wants to entire this field. There is a lot of experience and skilled employees
which Ryanair is having in the market which is making the company have a competitive
advantage in the market which is a very essential factor.
Competitor analysis
Ryanair Company is located in Ireland. Company involves in air services since 1985.
The organisation engaged in ensuring safe air journey and in such a process organisation is

connected to more than 200 locations all across the globe. Over the period of time airline
sector has become one of the fastest growing market sectors in the global business
environment. Airline sector is growing at the rate of more than 4% all across the globe. Due
to effective growth rate the entire sector becomes very competitive in nature. In order to
conduct the business operations Ryanair Company needs to compete with other organisations
like Indigo, British Airways, Qatar Airways and many other airways companies. Qatar
Airways can be summarised as among the major competitor for the Ryanair Company. As per
the financial report analysis of Ryanair Company it can be stated that the company is growing
at the rate of 3% per year. The sector becomes very competitive as the number of passengers
travel from air is increasing every year. Apart from the increasing in the total number of air
passengers company’s growth rate has reduced from 7% in past to 3% every year (Pagliari
and Graham, 2019). As per the company’s performance charts company’s delivers the air
services to almost 157 million passengers every year. Due to economic growth of many
developing countries like India, China and other emerging economies the scope of air sector
has also improved. Economic growth rate positively affects the per capita income of people
in country which allows peoples to travel from air modes. As the air medium of travelling is
expensive as compare to other road and sea routes it needs for economic potential of peoples
in the society. Positive influences with the economic growth in many developing countries
number of passengers travel from air lines has increased drastically in developing countries
especially. This increasing number of demand in sector has attracted to aggressive
competition for the Ryanair Company.
Company has channelized the affordable pricing strategies to improve its demand in
market. Airline sector considers as the luxury sector due to its high product prices. In such a
high pricing market low cost strategy can be an attractive tool to channelize in order to
improve the growth potential of the market. Ryanair Company follow the low cost strategy in
which company is selling its products at the lesser prices compare with other key market
competitors (Bilotkach, Rupp and Pai, 2017). This strategy allowed company to grow
effectively in the market. Company has also expanded its customer base with the support of
low pricing strategy. As the company could witness the affordability issue of the potential
customers. Improved customer base with the support of emerging per capita income of people
has improved the potential capabilities of the company in the market.

Analysis of firms capabilities
Capability the term denoted with the fact how much the organisation is capable to
sustain and grow in the market competitiveness. In order to analysis about the capabilities of
the company SWOT Analysis and VRIO Analysis is an effective tool that can be channelizes.
SWOT Analysis of Ryanair Company
SWOT Analysis is an analytical tool comprises with company’s strengths,
weaknesses, opportunity and threats of the organisation.
Strength
Company is engaged with the following strengths.
Low cost: Costing is an important aspects in airlines sector. As the industry is consisted as
the luxury category (Paschalidou, Tsatiris and Kitikidou, 2016). The prices in the airline
sector are generally high as compare to other competitive sector such as road ways and rail
ways. In such competitiveness company is catering affordable air travel services to its
customers.
Customer oriented practices: Company is keen to channelize customer oriented services.
Customers play key role in improving the growth potential of the organisation. This aspects
of the organisation allows company to meet up all expectations of the target customers.
Quality services: Ryanair is well known for its high quality services. In such a competitive
business environment quality of services play an effective role to improve the growth
potential of the organisation.
Weakness
Weaknesses of the company can be projected in following points.
Not focuses on innovation: Innovation plays a huge role in improving the growth potential
of the organisation. In such a highly competitive business sector innovation provides scope to
organisation to increase the market demands of company’s products (Paes and et.al., 2019).
Company do not much engage with innovation.
Outdated services: Company’s services can be projected as the outdated services. This also
caused to negative brand image of the organisation.

Opportunity
Business expansion opportunity: Business expansion is among the key opportunity
available for the company. This will improve the growth potential of the organisation.
Threat
Inflation: Inflation has been the biggest threat associated with the company.
Competition: Competition is also the key threat associated with the Ryanair Company.
VRIO Analysis
VRIO Analysis can be utilised to assess the capabilities of the Ryanair Company.
Valuable: Company give huge emphasis over customer satisfaction (Sesar and et.al., 2018).
Due to high customer satisfaction organisation is capable to deliver valuable services as a part
of its business operations.
Rare: Company is well known for its affordable pricing structure. Due to its affordability in
pricing structure it can be denoted that the organisation is rare in its nature.
Imitable: Airline is among the highly competitive sector. As company is engaged in
delivering passengers from one destination to other. There is not much scope to imitate in the
industry.
Organised: The business operations of the company is well organised on the basis of the
demands of the sector. Due to its customer oriented services company get access to
competitive advantages in the market.
CONCLUSION
This report has concluded the macro environment associated with the company.
Macro environment provides brief information about the different factors such as political,
economical, social and other factors that influences demands of the products. This report also
analysed the five competitive forces to assess the role of different forces influences the
performance of company. Competitive analysis has concluded to project the biggest
competitors like Qatar Airways and other for the company. SWOT and VRIO Analysis have
also summarised to assess the capabilities of company.

REFERENCES
Books and Journals
Anwar, J., Shah, S. and Hasnu, S., 2016. BUSINESS STRATEGY AND
ORGANIZATIONAL PERFORMANCE. Pakistan Economic and Social
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Bilotkach, V., Rupp, N. G. and Pai, V., 2017. Value of a platform to a seller: Case of
American Airlines and online travel agencies. Available at SSRN 2321767.
Christ, K.L., Burritt, R.L. and Varsei, M., 2017. Coopetition as a potential strategy for
corporate sustainability. Business strategy and the environment. 26(7). pp.1029-
1040.
Hsu, P.H., Moore, J.A. and Neubaum, D.O., 2018. Tax avoidance, financial experts on the
audit committee, and business strategy. Journal of Business Finance &
Accounting. 45(9-10). pp.1293-1321.
Paes, L. A. B. and et.al., 2019. Organic solid waste management in a circular economy
perspective–A systematic review and SWOT analysis. Journal of Cleaner
Production. 239. p.118086.
Pagliari, R. and Graham, A., 2019. An exploratory analysis of the effects of ownership
change on airport competition. Transport Policy. 78. pp.76-85.
Paschalidou, A., Tsatiris, M. and Kitikidou, K., 2016. Energy crops for biofuel production or
for food?-SWOT analysis (case study: Greece). Renewable Energy. 93. pp.636-647.
Pucheta‐Martínez, M.C. and Bel‐Oms, I., 2019. What have we learnt about board gender
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Strategy and the Environment. 28(2). pp.301-315.
Sesar, V. and et.al., 2018, September. Industry Structure in Developing Company's Long-
Term Business Strategy. In 2018 ENTRENOVA Conference Proceedings.
Vermeulen, A and et.al., 2020. Business Strategy Game: Implementing and Executing Broad
Differentiation.
Yuliansyah, Y., Gurd, B. and Mohamed, N., 2017. The significant of business strategy in
improving organizational performance. Humanomics.