The aim of this report is to provide recommendation for how Ryanair can keep its continues growth and market in pursuing price cut and aggressive expansion in light of crippling fuel cost ,faltering demand of customer and global credit crisis challenging the airline industry in the European market. Objective The report set to achieve the following objective ; Analyse the macro environment pertaining to Ryanair strongest business model Analyse the micro environment of Ryanair .Analyse the market and competitor in the airline industry Observe the recent trends in the airline industry Provide a recommended strategy for Ryanair in the European market Intention The report intends achieve a solution to how Ryanair should have a success in the European market and how to deal with the threat of crippling fuel costs, faltering demand and the global credit crisis facing the airline industry.
Methodology In order to answer the posed objective above the report will not deal with primary research but rather will focus on academic material, industry reports and review of the recent development especially in the European market . This report will used models to assess the both macro and micro environment. These are the models which will used achieved our objective . PESTLE model will used to assess the macro environmental conditions of the European market in respect to Ryanair operation that the external activities that Ryanair needs to deal with to help to draw strategy that have competitive advantage.Porter 5 force analyses of the airline industry which Ryanair is part of the industry, the SWOT model will be used to assess the internal aspect of the company and external aspect respectively and evaluate sustainable competitive advantage over its rival in the industry, the TOWS model will used to recommend strategy for Ryanair in respect in pursuing price decrease and aggressive expansion, also the emergent and prescriptive strategy processes regard to Ryanair.
Scope This report will focuses on the airline industry particularly Ryanair a budget airline facing its loss in 20 years due to high cost of jet fuel and faltering demand. ( Milmo, D 2008 the guardian). Ryanair is slashing its fares despite the above challenges facing the airline industry, but ryanair’s chief executive said the primary motive for the sale was to stimulate faltering demand rather than drive rival out of business. Milmo, D 2008)The purpose of this report is how Ryanair can undergoes its massive expansion and launch a major price cuts programme aiming to shore up weakening demand at a time when Ryanair is warning of potential losses.
(Arnott, S. 2008,independent p,42)and how Ryanair can keep its market share and continues growth which in the sense of taking competitive advantage over its rivals in the European market.Background This report will be on the background information from the text, Ryanair launches price war as sales slump and the airline is facing its first loss in 20 years( Milmo, D. 2004) in respect its aggressive expansion which facing are challenge of high oil prices, global recession and decline in the tourism industry how can Ryanair remain as the low fare airline which want to dump fare as down as can and how can its rival in the European market will respond to this aggressive action from Ryanair or can Ryanair take competitive advantage with its moves.
Macro environment includes all the factor that have influence on an organization which the organization or the company have no control over, but they have an influence on the organization or the company externally. The following are components of the macro environment; political and legal economically socio-cultural technological environment factors in some marketing called the (PESTELE).Political & Legal factors have influence on the company concerning Ryanair its operation is within the European region and political stability in Europe is very stable term of freedom and speech which is the sign of democracy, however Ryanair has to deal with political a issue that is comforting the airline industry for example terrorist attack. The recent event that has occurred such as September 11 2001 on united state of American attack and July 7 2005 terrorist attack in London.As an European airline and following an effective promotional strategy Ryanair sales grew irrespective of this danger. Nevertheless the unstable political global situation is a major factor of insecurity in the airline business.
Ryanair, still being a main carrier between UK and Ireland and heavily using London stansted is especially affected by the fact that more terror attacks are predicted for Great Britain (Der Spiegel, 2004) another problem facing the airline industry and that matter has politically influence on Ryanair is the uncertain nature of oil price.Since the political atmosphere of the major oil producing countries are political unstable the future of oil pricing will a major problem for the airline industry which Ryanair is also part. Also because Ryanair operate within the European Union government regulations are important in the airline industry for matter Ryanair is not an exceptional to these regulations. The deregulation not helped Ryanair but also increased competition and traffic. This has lead to increased regulation by the European Union government in terms of safety and environment( Hoffmann 2004).
Ryanair is facing an inquiry by the European consumer protection authorises. Eva Lichtenberger, an Austrian MEP, has said she plans to ask the European commission to investigate Ryanair on the impression that certain commercial charges included in flight prices are in fact government taxes (Hans Kundnani, 2006). these some of macro environmental factor influencing the Ryanair and also the industry as whole. Economical that has influence on Ryanair and also the entire airline industry as whole.
Since Ryanair operate within the Europe. The region is noted to be economically stable. The economic environment which Ryanair thrive in 2004 is relatively stable in terms of maintaining operations successfully and contributing to the financially well-being of European nation in the process. European union have a many of integrated currencies that this region is economically stable and can provide Ryanair with value in the form higher volumes of consumer patronage(Ryanair annual report, 2004).In the recent economic meltdown the whole world is experiencing global recession which European nation is part of the economic meltdown which will an effect on the operation of Ryanair because seems to be the largest and most successful low fare airlines which targets leisure travellers and the visiting friends segment of the market (Hoffmann2004)with the global recession Ryanair customers that which consist of leisure traveller and there will be decline in the tourism industry however have significant decline in the economic situation in Ryanair.Currency fluctuation and exchange rates is problem Ryanair needs to looks because the fluctuation be the sterling and the US dollar Socio-cultural is also another macro environmental condition that has an influence on the company and this case Ryanair in the airline industry.
Severe acute respiratory syndrome (SARS) an epidemic can have influence on the airline in industry (cnn. com, 2003) the World Health Organisation (WHO) has already forecast a global epidemic within some years to come. his will affect Ryanair business, because Ryanair strategy is the higher number of sold seat among the leisure travellers (Hoffmann 2004) Ryanair operate within the European which lifestyle will not change very much but because the availability of money has be tight where banks are not ready lend to consumers and they do with a very high interest rates will have effect on Ryanair consumers but the company as whole in respect to lending money for investment.European market and this region the consumer behaviour of the region is very high because it higher purchasing the culture of very high spending but the recent economic meltdown where there is recession in most of European nation where Ryanair operate there will a slowdown in economic activities of leisure traveller which is the targets group of Ryanair. Technological& Environmental part the macro environment that has influence on the company here Ryanair in the airline industry.Firstly, technological factor concerning Ryanair been one of the most successful airline in the European market is in the position to have money purchasing new jets with modern technology to be competitive Ryanair is in talk with both Airbus and Boeing with the delivery 400 new aircraft from 2012and also beyond 2012 (Arnott, 2008) the independent this shows Ryanair is in the to sustain in purchase new aircrafts so that its gain competitive advantage over its rivals and gives their choice in this respect.
Also environmental is an external part of the environment that has in impact on Ryanair in the airline within the European market which Ryanair operate, Europe is region which has strong regulation concerning environment issues in fact the region is noted in world for championing most the regulation and Ryanair been in an industry which pollute the world the most for the carbon emission and also noise pollution. Certain airport in the united kingdom (including London stansted and continental Europe have established local noise restriction which has to do with on limit the number daily operations.Ryanair (Annual Report 2004) with all this regulations Ryanair has taking the step to replace its Boeing 77-200 aircraft with737-800 which has less emission lower fuel burn which reduce the impact on the environment opportunity to create competitive advantage against its rival in the industry. External Threats One of the possible threats to ryanair is the threat of new entrants in the low-fare airline in the European market.
Due to the low entry barriers in the airline industry because of the deregulation by the European government in the airline has pave way for a lot of competition in the industry.The regulation has made it easier and easier for competitors to enter the market. Already there are well established competitors like easy jet in the low fare business the only different between ryanair and easy jet is because they don’t have direct head to head competition by choosing different routes to serve pressure on price, but there are many in the industry which will go direct head to head competition with ryanair to adopt its business model by given consumers low fare and no frills. Another threat for ryanair is the global recession which will decline in the overall tourism industry where the region European market.Ryanair as the largest and most successful of Europe low fare airline targets in the first instance leisure travellers and visiting friends and relative segment of the market because the whole region economy is in recession which will threaten ryanair targets of the market( Hoffmann, 2004) , There are a lot of legal threat from the European commission whether the airline accepted illegal subsidies from the state-owned airport at Charleroi, outsides Brussels (Lavery, 2006) The rebuff would undermine ryanair’s when dealing secondary airport, often state-owned.
OpportunitiesIt is most likely that ryanair will keep their position in the market because of ryanair has the money to expand it business inform of ordering more aircraft beyond 2012 and also expected to take market share by reducing ticket price with the help of the economy downturn which will give opportunities for strong, well financed airline such ryanair to grow, because ryanair has the balance sheet to benefit from the downturn (Gergely, 2008) Also the ryanair can take advantage of its position in the European market to the emerging market like china because ryanair has the money and strongest business model and balance sheet to expand the market from European market to another market which seems to have big market opportunities.
