External Environment Analysis of Ryanair Free-Samples for Students

Questions: 1.Discuss two Contemporary Macro-environmental trends Pertinent to the Organisation you are analysing 2.Incorporate at least two applied literature references into your Macro-Environmental analysis to demonstrate wider reading on such issues 3.Address all five elements of Porters Five Forces model 4.Incorporate and discuss at least two applied literature references into your industry Environment analysis to demonstrate wider reading on such Issues. Answers: 1.Macro-Environmental Trends The macro-environmental trends of a company can be compiled in the form of PESTLE analysis that defines the factors that affect the macro-environment of a company. The six factors that are together called PESTLE are Political, Economic, Social, Technological, Legal and Environmental factors (Zalengera et al. 2014). Two contemporary macro-environmental trends of Ryanair can be analyzed and described using the economical and technological factors of the applied PESTLE model. Figure 1: PESTEL or PESTLE Model (Source: Ho 2014) Economical Factor The main macro-environmental factor of an airlines company like Ryanair depends upon the economical situation of the company as well as the region. The airlines operation runs on the use of fuel and providing air transport to the passengers. The revenues generated from the business depend significantly on the price of fuel, operational cost of the transport and the ticket income gathered from the passengers. Technological Factor Technological factor is another macro-environmental trend for Ryanair. Age old aircrafts consume more fuel and the maintenance costs are also high. On the other hand, due to technical upgrades, the latest aircraft models are more fuel-efficient and need lesser maintenance costs (Sarwar, Ramachandran Hosseinian-Far 2017). Hence, the business of Ryanair depends upon the technical setup used in the business. 2. Literature References According to Aithal (2016), PESTLE model is an important model for analyzing the macro-environmental trend of a company. The six factors that are together called PESTLE are Political, Economic, Social, Technological, Legal and Environmental factors. The business operations of a company depend on all of these factors. Moreover, according to Ho (2014), the macro-environmental factors like GDP, annual revenue, rise in customer count and annual sales, growth of the external environment of the company, all depend upon the effects of the PESTLE model. In other words, the PESTLE model must be analyzed before attempting to gain a high share in the market and avoid competitive rivalry from other companies. 3.Porters Five Forces Analysis Porters Five Forces Analysis can be used as an effective tool for analyzing competitive business environment of an organization. The Porters Five Forces consist of the following five components. Threat of New Entrants In the modern business setup, nothing can be called a one-sided business. Even if a company decides to startup an entirely new business in an area, within a few weeks or months, there are new entrants in that particular business. As a result, the competition in the business increases (Dobbs 2014). Moreover, the competition further increases if the new entrant provides the same services at a lower cost. In this case study of Ryanair, there are already alternative airline companies with which, Ryanair is competing. However, there is also good chance of new airline companies growing in the same region. Bargaining Power of Suppliers Bargaining powers of suppliers can significantly affect the costs of the resources and supplies procured from the supplier. As a result, the costs of services and operations also undergo significant change. Generally, in order to provide best quality services, the companies seek the suppliers who will provide the best quality materials (Porter Heppelmann 2014). However, the suppliers also seek high revenue in return of providing the necessary resources. Hence, if the suppliers are able to convince the company to pay a high amount in return of the suppliers, the operation and service costs of the company will also increase. As a result, the market competitiveness of the company will also decrease. In this case study, for instance, the operational costs of Ryanair will increase if the fuel vendor sells the fuel at a very high price than usual. Figure 2: Porters Five Forces Model (Source: McLay 2014) Bargaining Power of Buyers Bargaining power of buyers can also significantly affect the market competitiveness of the company. Buyers are those who access the services of the company in return of a suitable price. Buyers are always expected to bargain with the company to reduce the prices of the services if possible (Rothaermel 2015). If due to the bargaining powers of the buyers, the company is forced to provide services at a very low price, it is possible that the company will encounter significant losses. However, it will boost the market competitiveness of the company. Threat of Substitutes There are always threats of substitutes in the market. When a company provides a particular product or service, depending on the success of the product or service, other companies will also start business with similar product or service. As a result, there will be a number of substitutes for the same product or service. Now, the success of the product or its substitutes will depend on the quality, price and acceptability of the customer (Marshall 2013). If the substitutes of the product are better in quality and cheaper, the original company will lose market competitiveness. In this particular case study, there are several airline companies that are competing with Ryanair for providing air transportation to the customers. The customers prefer the airlines with the lowest prices for travelling the same distance. However, Ryanair should also ensure their prices are not too low that will result in incurring losses for the company. Rivalry among Existing Competitors Rivalry among existing competitors is the result of the outcomes of the four above mentioned forces when acting together. The winner of this rivalry depends upon the qualities and prices of the services provided by the companies. Moreover, other factors including customer care service, delivery time, promptness of services, availability of services anytime and others also decide the clear winner of the rivalry among existing competitors. For the case of Ryanair, there are several rival airlines companies that compete with Ryanair for providing air transport to the passengers (McLay 2014). Now, the success of Ryanair will depend upon the quality experience of the passengers during flight as well as the prices of flight tickets. Moreover, their success will also be determined by their availability and frequency of flights, customer support and other service related factors. 4.Literature Analysis According to Jarzabkowski and Kaplan (2015), Porters Five Forces Analysis can be used as an effective tool for analyzing competitive business environment of an organization. It is known from their works that in the modern business setup, nothing can be called a one-sided business. Even if a company decides to startup an entirely new business in an area, within a few weeks or months, there are new entrants in that particular business. Again, McLay (2014) emphasized on the fact that bargaining powers of suppliers can significantly affect the costs of the resources and supplies procured from the supplier and as a result, the costs of services and operations also undergo significant change. Porter and Heppelmann (2014) in their works said that bargaining power of buyers can also significantly affect the market competitiveness of the company. Buyers are those who access the services of the company in return of a suitable price. Buyers are always expected to bargain with the company to reduce the prices of the services if possible. On the other hand, Marshall (2013) expressed that when a company provides a particular product or service, depending on the success of the product or service, other companies will also start business with similar product or service. As a result, there will be a number of substitutes for the same product or service. According to the researchers, the success of the product or its substitutes will depend on the quality, price and acceptability of the customer. Finally, Rothaermel (2015) have based on their research on the market rivalry and competitiveness. They said that rivalry among existing competitors is the result of the outcomes of the four above mentioned forces when acting together. The winner of this rivalry depends upon the qualities and prices of the services provided by the companies. Moreover, other factors including customer care service, delivery time, promptness of services, availability of services anytime and others also decide the clear winner of the rivalry among existing competitors. References Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies, operating concepts business systems.Browser Download This Paper. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), pp.32-45. Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis.European academic research,2(5), pp.6478-6492. Jarzabkowski, P. Kaplan, S., 2015. Strategy tools?in?use: A framework for understanding technologies of rationality in practice.Strategic Management Journal,36(4), pp.537-558. Marshall, S., 2013. Evaluating the strategic and leadership challenges of MOOCs.Journal of Online Learning and Teaching,9(2), p.216. McLay, A., 2014. Re-reengineering the dream: agility as competitive adaptability.International Journal of Agile Systems and Management,7(2), pp.101-115. Porter, M.E. Heppelmann, J.E., 2014. How smart, connected products are transforming competition.Harvard Business Review,92(11), pp.64-88. Rothaermel, F.T., 2015.Strategic management. New York, NY: McGraw-Hill. Sarwar, D., Ramachandran, M. Hosseinian-Far, A., 2017, January. 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