Each organization has been affected by factors that affect the entire performance. In this regards different companies are trying to establish organizational objectives that would cater to the growth and development of the company. Primarily, the goal of this paper is to analyze industry in term of their mission, objectives, external and internal environment, behavior of organization and significance of international trade and the European dimension for UK business.
OVERVIEW OF THE COMPANY
Business environment refers to sum total of all external forces. They have a far reaching impact on the development, performance and outcomes of international business. There are various components of business environment. They are as mentioned below:
1. Economic environment
2. Trade environment
3. Financial environment
4. Political environment
5. Socio-cultural environment
6. Labour environment
7. Competitive and distributive environment
The above environmental forces interact with each other to provide opportunities and threats to international business. National differences in environmental forces influence benefits, costs and risks of doing business.
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As talking about Ryan Air it is one of the largest low cost carrier operating more than 200 routes to 22 nations.
The Ryan Air is the runaway success as from the beginning it evolved to be profitable airlines and continuing its hard effort till today to be the most reliable and service provider airline ever.
Every organization has its own mission, vision, goals and objectives. It differs from organization to organization because of service it provided and rules and regulation it follows. Ryan Air has also developed its own mission, objectives and goals.
Ryan mission is to become a leading airline in Europe by providing the complete service to the customers and to provide opportunities to the employees. It focuses on the long term benefits of the company.
Goals are desired outcomes or targets. They guide management decision and form the criteria against which work results are measured. They are often called the foundation of planning. Every organization has its own specified goals.
Ryanair intends to rebel against all of the “said” free services. It believes that every organization goal is to take customer from point A to B. Ryan itself is appalled of the high airlines a fare that has been dominating the industry boastfully asserts that travelling does not need to take so much money. In fact the flight fares Ryan air offers cost as a little cent to no one at all (excluding the taxes and the other costs)
Purpose of Ryan air:
It truly serves travelling to the masses. It does not only seek to reshape the airline industry but spark a campaign and revolution led by the low air fares airlines as the best valued airlines by putting down the impractical overpriced airlines. Ryan air does not only focus quality but it promises to deliver which is the whole focus of the transport business. The low cost airfare is always sure to win the competition even in the direst, the most intense circumstances. This is the significant strength of the Ryan air. With its impressive cost management outlook to increase more passengers seats and expands routes. By expanding routes it is possible for Ryan air to open new niche where there is no frontal competition. Thus it may proceed its goals in expanding to more little known routes and increasing more passengers in their plane while offering more premium services that the customer will end up purchasing for a more convenient flight.
Stakeholders are any constituencies in an organizations environment that are affected by the organization's decision and actions. These groups have a stake in or are significantly influence by what the organization does. In turn, these groups can influence the organization. Stakeholders are the people who are affected by and who can affect the activities of the firm. There are two types of stakeholder: primary and secondary.
The major stakeholders of the Ryan air are:
the shareholders participate in distribution of profit, additional stock offerings, assets of liquidation, inspection of company books, election of the board of directors and other rights established in the contract of the firm.
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the suppliers are the part of the value chain. In exchange with the suppliers product, services or expertise the firm is expected to be a source of business and facilitate a professional relationship in contracting for, purchasing and receiving goods and services.
competitors are also the important stakeholder. They expect the company to observe the norms of competitive conduct established by society and the industry.
the national government and other governmental departments are important stakeholders that have direct impact on the firm's strategies. The government expect the firm to pay taxes, to adhere to the letter and intent of public policy dealing with the requirement of fair and free competition, discharge of legal obligations
the local communities are also important stakeholders. The firms need to participate in community affair and to provide regular employment and support to the local government.
2) The objective of my report is to analyze the external environment in Ryan air-Southwest-of European airlines case, which is very important factor for the firm's formulated effective strategy. The external environment consists of a wide array of economic and sociopolitical factors. It is the specific market arenas that the organization has chosen in its strategy; it provides the business opportunities to the firm and it's also a source of threats or forces that may impede the successful implementation of a strategy. Macro-environmental Analysis (PEST factors affecting Ryan air Airlines) To analyze the macro environment, I will use the PEST analysis, which refers to political, economic, social and technical factors that confront Ryan air airlines. This analysis provides a no exhaustive list of potential ... helps Ryan air, because customers replace traditional mainstream carriers as they seek lower fares. Threats for Ryan air are:-Ryan air fuel costs depend on the oil market. The cost of fuel is increasing, due to oil prices raise globally. This affects company speed development and earning ability; Ryan air operating expense has increased. -Increasing low fare competition on the market and limited economic growth on the South and East European markets. -Customers, as I already mentioned are very price sensitive and also regional airports gain bargaining power for second round. -Increase in air traffic control charges as more planes fly in the sky. -Weak employee's relationships cause less production efficiency and effectiveness. It may waste Ryan air resources and capabilities. -The high salaries the company pays.
Firm's strategy should take external opportunities and threats and internal strengths and weaknesses into account. This is done by SWOT Analysis. The SWOT-Analysis is an effective way of identifying internal strengths and weaknesses of any organization and of examining opportunities and threats of the external environment. The analysis' objective is to take advantage of the opportunities the environment offers, and to avoid or minimize environmental threats.
The aim of this report is to carry out a investigation of Ryan air's external environment and a strategic analysis of Ryan air, to identify opportunities and threats it might face, and its strategic capability, to isolate key strengths and any weaknesses that need dealing with. Finally, a SWOT analysis will be carried out to assess the extent to which Ryan air's strategies are suitable to what is happening in its task environment. Ryan air is Europe's largest low-fares, no-frills short-haul carrier. The organization was founded in 1985 as a conventional airline but re-launched itself in 1990/1991 as a low-cost carrier, replicating American Southwest Airlines' business model. Since then Ryan air has grown substantially and successfully. The company currently has 146 routes to 84 destinations in 16 countries, and carries more than 15 million customers annually. Ryan air aims to be Europe's largest airline in 8 years (www.ryanair.com)
The external Airline industry is highly competitive and volatile thanks to the European Union Commission desire to enhance competition between airlines. It ruling against State Aid would be highly disadvantageous to Ryan and more and more advantageous to airline companies who are also joining the budget airline trend such as easyjet, virgin express, bmlbaby, flybe etc. these rival carriers will put more to the fuel wars. Ryan air is one airline that makes more enemies than allies because of its aggressive nature, some of which are its own customers. Ryan air is going to have to adjust to providing the services it has sworn not to provide without an added cost as it is pressured by issues such as the proper treatment of the disabled and the trade prospect of the trade union.
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The European airline industry has historically been dominated by national carriers like British Airways, Lufthansa and Air France, whose aggregate share of intra European routes was about 70 percent by the end of 1998. But from 1990 a rising share of the market started to migrate to the budget carriers because of the deregulation policy of the EU. This essay contains an analysis of the European airline industry as a part of the transportation industry at the beginning of 1999 with a special emphasis on the budget sector. In that sector, one of the most famous and successful budget carriers, Ryanair, will be contemplated with regard to its strategy and its strengths and weaknesses. Finally, a short summary will be done about what happened in the European airline industry between 1999 and 2003.
Considering the high level of population density and the continuous enlargement of the EU, the market of the airline industry is quite large and with a high potential to grow. In 1999, the growth rate in the European market is one and a half times that in the American market and there are still several intra-European international routes with potential for new operators. The predominant airlines in the market are the big national carriers, like Air France, British Airways and Lufthansa, but there are already many new budget airlines with Ryanair and easyJet as the famous ones, but also Virgin Express, Debonair, KLMuk, Go and Air One. However the competitive rivalry between those two groups stays moderate, while it is quite high within each group, which will be explained more detailed later applying Porter′s Five Forces model.
Furthermore there are differences between the customers of the two groups, the mature airlines and the budget airlines, which also explains the rather low rivalry between them. The low fares airlines concentrate predominantly on budget conscious leisure and business travellers who are not customers of the more expensive airlines because they have otherwise used alternative forms of transportation or might not have travelled at all. In contrast national carriers′ customers are rather interested in "frills" which are not offered by the budget airlines like in-flight meals, advance seat assignment, cargo services and other amenities.
In the airline industry, flights are considered as products which seem to be quite differentiated between mature and budget airlines, but within the budget sector of the "no frills" airlines, the products are more homogeneous concerning the services the passenger buys, and only differ in prices.
That development in the European airline industry was only possible because of the deregulation and the liberalisation policy of the EU started in 1997. But in 1999, the regulatory influences of the EU can still be seen in many sectors of the industry. Getting and keeping the air operator licence is not easy and requires complying with all EU regulations concerning especially the maintenance of the used aircrafts, hushkitting, and continuous air traffic controls. Furthermore, EU regulatory authority interdicts ground handling monopolies at European airports and forbids the airports to offer differential deals to different airline operators. And finally the abolition of duty free shopping within the European Union from July 1999 will cause heavy losses for all airlines, losses of revenue and of incentive to flight attendance, but also losses due to increased landing charges announced by the airports.
Additional to the restrictions of the EU, the European airline industry suffers from specific problems like the relatively shorter distances on intra-European routes, comparing to the USA, which causes higher expenses on a per "Available Seat Mile" basis. Moreover the airports and skies of Europe are more congested than in the USA, which forces new entrants into smaller airports far away from large metropolitan cities.
But in spite of all these problems, the European airline industry seems to be very profitable with regard on the positive, relatively high profits earned by the mature airlines, like British Airways, as well as by budget airlines, like Ryanair.1
In order to escape the competition and to improve their profitability, national carriers tend to form alliances among themselves or with smaller airlines, even with budget airlines. According to the case study, by 2010, the airline industry could consist of a maximum of four groupings of national airlines. This would change, of course, the competitive situation, which looks as follows in 1999, applying Porter′s Five Forces Framework.
As it has already been mentioned above, the rivalry between existing mature airlines and budget airlines is low because of quite different flight offers and different customers, but also because established airlines concentrate on primary congested airports while budget airlines operate on secondary airports. However the competition within the budget sector is very high because of quite similar "no frills" flights only sometimes different in price.