Now I am going to discuss Ryan air’s (RA) current strategic position by analysing its macro (external)and micro (internal) environment.
Macro environment consist of those major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. Now, i am going to analyse company’s position by using PESTLE and porter’s 5 Forces. Pestle Analysis:
This is mainly used to analyse the wider macro environment in which the business operates. The organisation normally have no control over PESTLE factors and at best should try to accommodate and device strategies around these factors or issues.
The political environment in EU has been stable, enabling Ryan air to expand its routes and activities successfully. The increase in Air Passenger Duty in UK in 2009, 2010 and 2012 (£11, 12, 13 ) and the EU Airport Charges applicable from March 2011 have affected the operating costs of Ryan air consequently. The repeated European government owned Air Traffic Control strikes have also caused a huge loss for airline industry as these strikes forced RA to cancel huge number of flights. Ryanair also had to pay compensation to passengers based on EU 261 reforms. Economic factors
The interest rates in England is 0.5% which has a positive affect and will encourage RA to borrow money on low interest rates to expand their business activities. (buying air crafts etc.) The high unemployment rate in EU and UK has resulted in less people travelling even by low-fare airiness. This has a negative impact on RA as the ratio of domestic flights in Uk has been decreased due to less disposable income. The economic instability in Greece, France, Hungary and Italy has resulted in low demand for air travelling, that's why many airlines are cutting their routes including RA.
The social environment
It can be explained by different demographic trends. Majority of the people living in UK and EU countries are individualistic and they prefer to travel during their vacations. A substantial increase in leisure travelling, student migration programs within the EU nations has resulted in an increased demand for low-fare airlines especially Ryan air. The free trade concept specially in European union, has made possible for Rain Air to earn some revenue from the business community. Technological factor
Internet is the most powerful tool available to travel marketers. RA and its competitors have their internet-based reservation system which helps to increase the number of passengers. RA uses the modern aircrafts with new generation engines, which result in less emissions and less fuel consumption; and allows the company to move on through its cost reduction strategy. Ryanair has introduced online check-in and self services in airports for the passengers which has received a mixed response from the passengers especially people travelling with families. Legal factors
The emission constraint set by the European commission and its activeness of monitoring antitrust law and policies, sooner or later will affect the RA strategies; as EU legislation on working time regulation and union recognition, could seriously threaten RA policies and revenues. Due to BAA airport monopoly, Uk Court of Appeal asked BAA to sell Stansted and Glasgow airport (October 2010) to increase competition; which has helped RA in increasing their market share by increasing the traffic at those airports which had declined due to BAA's high cost and mismanagement. Environmental...