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Ryanair: Europe's Largest Low Fares Airline
Ryanair is a European bases low fare airline that connects 160 destinations in its global operations. The airline has 44 bases covering 1100 route over 27 nations. Tony Ryan established the airline in 1985. He introduced low fare operations following successful models used by southwest airlines in 1995 under the supervision of a new management team. Some of the policies implemented by the airline include the adaptation of a single aircraft, low fares, direct booking and no frills. These policies allowed the company to benefit from an increase in its customer base since 1991. The company plans to replace the current aircraft used with a Booing Dreamliner to cater for the targeted customer growth to 80 million passengers. The airline also plans to invest in technology to enjoy the benefits associated with e-business. The use of technology such as the internet enables the organization to market its products, facilitate payment and communicate with its customers. As the competition in the airline business coupled with the unpredictable economic growth, Ryanair should implement strategies to secure its competitiveness in the business (Nankervis, 2005).
PESTLE analysis of Ryanair
The pestle analysis used in evaluation of the macro-environmental factors affecting a business, enables the organization to understand the challenges affecting the business. The analysis used in strategic management covers political, economic, social, technological, environmental and legal factors.
1. There is an increase in pressure from trade unions in Europe.
2. The expansion of the European Union has affected the environment.
3. The European Union has abolished duty free sales increasing the prices of commodities sold by the airline.
4. The company faces stern security measures and restrictions (Kernchen, 2007).
1. Increasing fuel prices increase the operating cost.
2. The increase of cars and high-speed trains affect the airline business.
3. Depreciation of the U.S. dollar negatively affects the operations of the company.
4. Regional subsidies increase the operational costs of the airline.
5. European union commission ruling on compensation influences the business negatively.
1. There is an increase in grey market in the region.
2. The travel lifestyle in the region is increasing market for the company.
3. Increase in business in the region has resulted to an increase in business traveling.
4. An increase in substitutes traveling modes affects the business through competition.
1. The improvements in technology facilitate technological expansion of the organization. Technological expansion involves satellite television, low fuel cars, high-speed trains and internet sales (Kernchen, 2007).
2. Improved technology enables the organization to compete adequately with its rivals in the global market.
1. The business faces challenges from environmental agencies and the government to reduce pollution.
2. Noise pollution levels control needs monitoring.
3. Control of carbon emissions (Kernchen, 2007).
1. The company faces allegations of misleading advertisements.
2. The company faces numerous lawsuits from subsidiary Airports and wheelchair charges.
The external environment provides threats and opportunities for the growth of the organization. The presence of technology and the unpredictable economy ensure that the business grows. The organization should evaluate the threats and ensure that the management is prepared. Competition from other forms of transport needs minimizing to ensuring that the products provided by the airline are competitive. The environment poses more threats that opportunities thus the need for the business to implement strategies to ensure that it attains a competitive advantage. The factors impact the business strategy negatively as growth of the business depends on many variables. The adaptation of the Dreamliner will increase the number of customers and reduce the cost to the company. The external factors increase the price of the discounted product affecting the strategy (Brassington & Pettitt, 2006).
SWOT analysis of Ryanair
SWOT refers to the acronym for four factors affecting an organization within the internal environment. The four factors combined constitute the SWOT Matrix. The four factors are strength, weaknesses, opportunities and threats. The SWOT analysis is evaluates the competency of an organization in the future.
1. The organization is a low cost leader placing it ahead of its competition with competitive prices.
2. The airline has an established market thus has an adequate customer base to market its products.
3. The company is an innovative leader employing innovative methods to reduce its costs.
4. The airline has established routes spread globally.
5. The company maintains a strong public image, which attracts customers to its services.
6. The airline has a safety committee, which assures customers of a safe travel environment.
7. The company provides a wide range of products to cater for all segments of the market (Brassington & Pettitt, 2006).
1. The airline refuses to recognize unions thus face political opposition.
2. The company lacks a specialized customer relations program thus a volatile relationship.
3. The organization faces an uncharacteristic management expansion.
4. The company has poor relations with its competitors which results to lawsuits.
1. The airline has the probability of growing due to globalization of businesses.
2. The company can offer free flights as a way of offering discounts.
3. The company can use technology to make its products efficient thus competitive advantage.
4. The company can use the growth in tourism to expand its operations.
5. The company can use innovative forms of business to reduce costs (Capon & Hulbert, 2007).
1. The presence of new market entrants and mergers between competitors poses significant risk to the company.
2. Trade Unionism also poses a threat to the airline with a risk of increased operational cost.
Substitute transport poses a risk to the business.
3. The increase in industry criticism also threatens the growth of the company.
From the SWOT analysis, it is evident that the company has a variety of challenges and opportunities to grow in the future after implementation of its proposed strategies. The company should monitor the SWOT matrix to ensure that the strengths counter the weaknesses and the opportunities counter the threats.
The marketing strategies implemented by an organization enable the attract customers into its organization. The airline spends a substantial amount of their revenue on advertising the organization. The company spends about 2% of its revenue on promoting the brand name. The marketing strategy used by the airline includes promotion through the website. The airline has a website, which provides information about the company. The airline's website is available in 20 languages to ensure that a wide client base has access to information. The company interacts directly with its clients through its website through its customer care section. The use of technology also enables the customers to enjoy flexible booking hours and reliable schedules (Doole & Lowe, 2008).
Another marketing strategy used by the company is the use of low rates. The company provides various products, which are at competitive rates compared to products from other companies in the market. The company uses a combination of innovative strategies to reduce the operation cost, which in turn enables the airline to market its products cheaply. Maintaining low rates below its competitors enables the organization to enjoy an increasing customer base. The clients who spread the word give the airline free advertisement, which enables the company to grow (Brassington & Pettitt, 2006).
The company will adopt modification of its operations to attract customers to the organization. The use of the Dreamliner set to replace the Booing airbus will enable the company to acquire a new look and compete with other airlines in the business. The capacity of the Dreamliner will be able to cater for the targeted 80 million customers. Adaptation of this marketing strategy will enable the company to increase its capacity and reduce its operation cost. The reduced operating cost will increase the profitability of the organization in tough economic times. The organization can use the revenue…[continue]
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Ryanair's price strategy is very clever, as the company's prices are low enough to be appealing to customers, but are not low enough to cause the company any serious financial damage in the medium term or long-term. This price strategy seems sustainable for at least a medium period of time. The company can afford this reduced ticket fare due to its continuously increasing number of customers. However, there are a
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