MICRO, MACRO AND INTERNAL Environment (Marketing environment) Monitoring and evaluating the external environment is an important issue

because changes in external environment imply changes in strategy. Johnson and Scholes provide a framework for analysing business environment

The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'. Micro Environment is analyzed by using PESTAL analysis ANALYSIS OF THE EXTERNAL ENVIRONMENT ————————————– Ryanair PESTLE Analysis PESTLE is the acronym for political, environmental, social, technological, legal and environmental, and this tool, devoted to carry out analysis considering the external influences to an organisation’s activity, is of fundamental importance to properly develop a reliable strategy. The political aspect of this tool considers the possible political influence on the strategy pursued by the organisation. For Ryanair this aspect has represented a considerable advantage, in that the European Union is a completely stable political region and the EU integration has allowed the carrier to expand its activity and routes. On the other hand of it, the airline is affected by the decisions posed by other political organisations like the OPEC, the organisation that unite the oil producer countries and that decide on the oil costs, determining its output quantity, distribution and global supply chain. The incredibly high cost of fuel has strongly affected Ryanair revenues, showing how the industry is particular sensitive to oil cost fluctuation. The social environment is currently mainly characterised by demographic trends, particularly the ageing population and by changing consumers preferences, which are quite difficult to predict and are very much linked to the price of the service. The ageing population factor is likely to impact the travel industry in the next decade and to cause a shift in land transport, easier to access, to use and allowing movements from and to central town/city areas. Another uncanny social trend is represented by the tendency to the “cocoon effect” every time a terrorism act is carried out, people, following events like these, prefer to avoid travelling and stay home. On the other hand of it, it is very likely that the younger generations are much more likely to use carriers for their travels and are the more and more enjoying the benefits of a common European area where they can move from a capital to another in an average 1 hour 45 minutes time at very low prices. As for the Economic factors, one of the most relevant indicators is represented by the increase pro capita income, which let transpire increasing possibility for the industry. Currency fluctuation, especially with reference to the fuel hedging activity put in place by Ryanair, could affect the carrier strategy and bring in business risks. The migration trend within the European region, nonetheless, can bring benefits to the airline development and revenues. As for the technological PESTLE aspect, the video conferencing system could deter business people to travel in many circumstances, but not leisure travels. It must be said that technology has been crucial for Ryanair’s success and it’s likely to be important also in the future. Internet, in particular, has allowed the organisation to avoid lot of costs. But also the aircraft new generation engines, in terms of less emissions and less fuel consumption will allow the organisation to move on through its cost reduction strategy. The legal aspect has had and could still have negative effect on the carrier’s activity, the emission constraints set by the European Commission, its activity on implementing and monitoring antitrust law and policies, and the EU legislation on working time regulation and union recognition, sooner or later will affect Ryanair’s policies and this could seriously 1

Political = on May 1. = Stansted airport. Ryanair has protested as it will raise its costs (Done 20/10/03). Environmental and Legal.caa.co. Economical. the more and more attention is provided to the environment in terms of both emissions and noise pollution and the presence of many non-for-profit organisations fostering and endorsing a law on the quality of air. 2. is one of the most rapidly growing airports in Europe (www. low interest rates” (Insley 18/01/04) and other favourable borrowing conditions. Sociocultural. Stansted is Ryanair’s London base and an expansion would enable substantial traffic increases thereby facilitating consolidation (Johnson & Scholes 2002).co. oil prices look likely to remain high or rise Ryanair faces persistently high or rising fuel prices. anyway. As for the environmental aspect. beneficially and unfavorably. supported by the European Union. accompanied by necessary rail and road infrastructure. and this trend means an increase in the possible customer base (Insley 08/02/04). could represent a future threat. One of these is Stansted.uk). the continent will see the biggest expansion of EU to date when ten states become new members. For Ryanair new markets will open which suits its growth plans. low inventories and an upsurge in fighting in Iraq. it will mark one of the most important days in recent European history. CAA’s new requirements command airport financing without cross-subsidisation on a stand-alone basis. During Christmas sales boomed and analysts believe it will continue as customers are “encouraged by the highest employment figures in 28 years. a political force = Increased trade union pressure =EU expansion =EU Abolishment of Duty-free sales =Severe security measures and restrictions = newly imposed charges like ”Climate Protection charge” =French government support for national carrier =New EU regulations Economical = OPEC controlling the oil prices. 2003. = Inside Europe -Political stability =Outside Europe Middle East – OPEC. = The Civil Aviation Authority (CAA) is responsible for setting “price caps on airport charges’at airports designated by the Secretary of State’ (www. Technological. aiming to double passenger capacity within ten years. owned by BAA. 2 .threaten its revenue result. Consequently discounts will be removed and charges possibly increased.baa. Ryanair services regional airports.uk/). =Europe’s stable economy and stable consumers =Fuel Price Increases =Depreciation of US dollars =Regional subsidies =Eastern EU expansion =Europe: Cars & High-speed Trains Socio cultural = Holiday home ownership in Europe is increasingly common for Britons. This is a crucial part of a strategic analysis because organisations do not exist in a vacuum. opening up the European countryside to buyers. which has hitherto “benefited from discounted airport charges and cross-subsidy from the higher charges paid by the airlines at Heathrow and Gatwick airports’ (Done 18/12/03). they are part of a complex world and many factors can influence operations. With a tight US gasoline market. mostly as already seen for the likely imposition of new taxes.1 PESTEL analysis This identifies the main micro-environmental influences by classifying them into six groups: Political. has already given evidence of being sensitive to the issue and of being adopting the necessary measures to control the phenomenon. BAA plans to build a second runway and terminal there. By applying this framework to Ryanair it is possible to summarise the key forces in the general environment to present opportunities and threats to the organisation. Ryanair.

Regional Airports have little bargaining power as they are heavily dependant on one airline Bigger airports. Price of aviation fuel is directly related to the cost of oil (Ryanair controls these through hedging). Ryanair fears that high-fare airlines and expensive hub-airports will lobby the EC into investigating other deals. and ordered Ryanair to pay back ‘3m. a significant proportion”of senior citizens” are able to indulge in high levels of leisure-orientated consumption” (Brassington & Pettitt 2003). can thus increase ancillary services by offering on-line shopping. =Grey Market Increase =Increasing travelling lifestyles =Increasing business travelling Technological = New technology will allow mobile phone and broadband use on-board.and long-haul flights. training and marketing costs against guarantee of “a certain level of business for 15 years’ (FT 10/11/03). 3 . unfair competition was claimed and the European Commission (EC) decided that discounts on landing fees and ground-handling services are illegal. This will raise Ryanair’s prices. using Charleroi as precedent (Done 29/01/04). Legal = Ryanair uses mainly secondary airports which enables negotiation of favourable deals with the owners. =Technology Expansion Internet sales/gambling Satellite television Low fuel consumption cars High speed trains =Increased internet competition Environmental = A recent White Paper emphasised “the environmental importance of including aviation within the global emissions-trading scheme” (Newman 03/12/03). ‘Because of better healthcare and financial planning. which doubles the ‘5 and ‘20 economy passengers currently pay for short. giving early warnings of problems to ground crews. Ryanair here has an opportunity to increase its market share. Furthermore. possibly deterring the most price-sensitive customers. Ryanair’s policy is to try and avoid these airports. TV screenings and mobile phone usage against a fee. and the figure is increasing. where Ryanair’s competitors operate. the satellite link could boost operating efficiency by being used to monitor planes. Presently an increase in air passenger tax is planned.= The over-55s now represent approximately one third of most EU-countries’ populations. However. At Charleroi Ryanair was given 50% off landing fees plus contributions to local amenities.Industry’s profitability and competitiveness Bargaining Power of Suppliers Boeing are RA’s main suppliers Only 2 possible suppliers of planes – Boeing and Airbus Switching costs from one supplier to the other is high because all mechanics and pilots would have to be retrained. thereby enhancing safety and minimising grounding (Economist 01/03/03 & Economist 01/04/04). aimed at providing financial incentives for companies to cut greenhouse-gas emissions and to tax aviation fuel across EU. Carriers. Analysts recommend developing specific marketing strategies for this market highlighting its growing importance (Lohmann & Danielsson 2001). =Allegations of misleading advertising =Law suit Illegal subsidies from Airports Wheelchair charges Porter’s five forces Determine the competitive intensity and therefore attractiveness of a market. including Ryanair. have greater bargaining power.

when the fast line to the channel tunnel is completed’ (Wright 01/12/03). Eurostar has been winning customers from airlines since its opening and many short-haul flights “could be eliminated after 2007. Immediate price war if encroaching on existing LCC route. such as economies of scale and experience curve effects. reservation systems and promotion. = Budget airlines have work-hard cultures to keep costs down (Gilbert et. = However. = Other modes of transport are no tenable threats generally. Cars etc.opec. Competitive Rivalry 4 . = The over-crowded market means “there are too many budget aircraft playing Europe’s skies for too little money’ (Clark 07/02/04). negates threat to some extent (Gilbert et. Restricted slot availability makes it more difficult to find suitable airports.el 2001) meaning a scarce number of multi-skilled employees which “can bargain away a significant fraction of potential profits” (Porter 1980). New Entrants Some barriers to entry: High capital investment. = However. Ferries. TGV. airlines are able to negotiate favourable deals with most of their suppliers (Johnson & Scholes 2002).al 2001) there is low customer loyalty.Bargaining power of suppliers = The price of fuel is directly related to the cost of oil which is determined by Opec and out of control of the industry (www. = Procurement managers are now influential in the travel patterns of their business travellers. Threat of substitute products or services = Videoconferencing for business companies has not had the impact expected and is no threat (Gilbert et. carriers tend to experience economies of scale which gives purchasing power.g. price wars can be launched against newcomers. = As Europe’s skies are congested there is a lack of slots (Hanlon 1989) forcing new entrants into secondary airports and less profitable routes. Bargaining Power of Customers Customers are price sensitive Switching to another airline is relatively simple and is not related to high costs(Internet-all airlines are online) Customers know about the cost of supplying the service No loyalty Bargaining power of buyers = Price dominated short-haul market with little or no product differentiation.al 2001).org). Need for low cost base Flight Authorisations Threat of new entrants = High start-up costs needed for aircrafts.el 2001). Threat of Substitutes No brand loyalty of customers No ‘close customer relationship’ No switching costs for the customer Other modes of transport. Eurolines. Eurostar. = Due to incumbents’ cost advantages. Buyers thus face low switching costs (Porter 1980) = As price is “more important to passengers than product” (Gilbert et. the market is expanding which pulls in new entrants and reduces the effect of entry barriers (Johnson & Scholes 2002). = However. e. Consequently.

hard to emulate and generates competitive advantage.al 2001). Price is the main differentiating factor Rivalry among existing firms = Already very competitive industry. competition is intensified as conventional carriers adopts “many strategies of the no-frills carriers and continues to cut costs’ (Done 29/01/04). With low fares but a higher level of service (more frills and main airport servicing) they are a big threat. efficient distribution and innovative communication mixes are frequent competitive measures.The LCC market is highly competitive Most cost advantages can be copied immediately Low levels of existing rivalry as the two major low-cost airlines have avoided direct head to head competition by choosing different routes to serve However if any company does decide to compete on the same basis as Ryanair there will be heavy pressure on prices. acquisitions and alliances are increasingly used for consolidation and competition. features especially valued by customers and used to outperform competition. the “ability to perform at the level required for success’ (Johnson & Scholes 2002). or can be. unique resources. Firms must understand what customers want and adopt product/service features accordingly. Ryanair acquired Buzz but paid too much and was forced to close it to boost its productivity. and commodity nature of the product. means that airlines are battling to fill planes. = Mergers. Applying some of them to Ryanair facilitates identification of the organisation’s key strengths and weaknesses. EasyJet bought Go. = The over-crowded market. meaning that how one is performed affects the performance or cost of another.1 Value Chain analysis This is a “systematic way of studying the’activities undertaken by a firm’ (Thompson 1997) and a means of identifying how competitive advantage is. = Numerous new entrants intensify competition. margins. competitive advantage is created. created and sustained. although several newcomers have struggled to establish themselves and failed. core competences to meet the CSF. A number of tools exist to analyse strategic capability. = Nevertheless. and hence on profitability Not much differentiation between services. Ryanair’s Value Chain 5 . The activities are “related by linkages within the value chain’ (Porter 1985). Debonair and AB Airlines for example. carriers vary somewhat in segmentation by targeting different markets (narrow versus wide customer base) and offering divergent routes (regional towns versus main cities) which reduces rivalry somewhat (Gilbert et. The value chain consists of primary and support activities that together produce the profit margin. Aggressive pricing. When the most critical of these are performed better or more cheaply. ================================================================================================== Internal Analysis 3 ANALYSIS OF STRATEGIC CAPABILITY A strategic analysis also includes investigation of the strategic capability. 3. = However. To succeed companies need: Critical Success Factors (CSF). bmibaby partnered with Germanwings (Economist 01/03/03 & Hotten 13/03/04). compared against those of organisations both inside and outside the industry. and key linkages generate competitive advantage. Value activities should be benchmarked. to learn and improve on best practice (Laverick & Brown 1992). leading to competitive advantage.

Outbound logistics = Use of isolated secondary airports often requires further transport arrangements for customers. either on the website or through reservations centres. means that Ryanair is “able to obtain spares and maintenance services on favourable terms. = Point-to-point flights mean no interlinking with other carriers. and computer reservation charges.1 Primary activities Inbound logistics = Dependency on suppliers to deliver fuel as well as food. As Ryanair have not adopted the surcharge for fuel they have to cut costs in other ways by charging for the use of wheelchairs. This limits the level of market share Ryanair can achieve. = Fast turnarounds (core competence). 3. agent’s commission. Ryanair also only have one type of plane which is the Boeing 737. Southwest excels with 15 minute turnarounds as its “activities complement each other in ways that create real economic value’ (Porter 1996). Marketing and Sales = Heavy spending on advertising and promotions to expand its market is reduced as most advertising takes place on the website.al 2001). Operations = Use of standard model plane. There promotion is also used to sell excess capacity. drinks and duty-paid products to be sold on-board (Gilbert et. Most of these airports are significantly further from the city centres. extra luggage and food. Direct marketing is “used occasionally with the customer database’ (Gilbert et. some destinations are “so geographically obscure that they can’t support regular services’ (Pratley 05/02/04). They have a hierarchal structure. = A relatively young fleet reduces maintenance.1. handled and controlled upon delivery = Low-cost deals are negotiated against promise of large and growing volumes of business (Felsted 04/11/03). facilities cheaper and Ryanair can negotiate favourable deals. = Ryanair considers branding virtually irrelevant as it believes that price is most important to customers.Firm infrastructure Ryanair has 16 bases around Europe and their principle bases are in Stanstead and Dublin. 25 minutes. and enables relationship marketing which produce customer retention equalling increased productivity (Ali-Knight & Wild 2001).al 2001). = These need to be stored. Boeing 737. but then has to pay higher landing charges which is reflected in their higher prices (Bowley 21/07/03). spare and fuel costs. and EasyJet has won awards for its brand (Brand Strategy 2001). Ryanair reduce airport charges by avoiding congested main airports by using secondary and regional airport destinations. It also enables fast turnaround times. as evident on some intraScandinavian routes for example (Done 04/11/03).ryanair. = Over 90% of bookings are made directly.al 2001). which creates market awareness. The website saves on “staff costs. avoiding the cost of providing through service’for connecting passengers’and delays’caused by late arrival of connecting flights’ (Johnson & Sholes 2002). where they have CEO and then other department managers who have to report back to the CEO who makes the decisions from the information he is given. limits costs of staff training and offer flexibility in scheduling aircraft and crew assignments’ (Johnson & Scholes 2002). More frequent departures (two more a day than competitors) with few planes increases revenue (key linkage).com). contributes a large part of its success to its well established brand values (Gilbert et. while significantly contributing to growth’ (Johnson & Scholes 2002). Southwest. is the most important cost advantage as it enables high aircraft utilisation (Felsted 04/11/03). and more on-time departures as the airports are less congested (Johnson & Scholes 2002). such as two-for-one offers. This is reflected in its not always so good image in the press. using regional airports saves costs as charges are lower. However. 95% of Ryanair’s flights are punctual compared to 88% for EasyJet (www. EasyJet does the opposite and flies to big cities. = However. they therefore only have to train their pilots to fly the one type of plane and can cut down costs as they do not have to send them on lots of courses. Also. Ryanair can “offer direct non-stop journeys. 6 .

Ryanair was taken to court for charging disabled passengers ‘18 for wheelchair usage (Tait 03/12/03).al 2001). direct booking gives greater control over sales of ancillary services. = The low service damages the brand which leads to reduced business. They also encouraged you to buy the hotel package as 7 . They tried to introduce entertainment onto the flights that you had to pay for however this was unsuccessful as people were not willing to pay due to them being short-haul journeys. For example. Although growth is slowed down new planes has been ordered aiming to double the fleet by 2009.1. = A very basic product is offered and Ryanair now plans to remove the last frills (Gow 16/02/04). advertisements in the tube and large advertising boards in the airport. They have a good roster for some of their workers which mean that they have 4 days on and 3 days off. • Inbound logistics – outsourcing of handling services (cleaning services. They also introduced a self-check in service which enables the passengers to check-in and therefore reduces the staff needed and also costs. Service = Virtually no frills lower costs considerably. They also have also got the youngest fleet in the EU which they have done in order to reduce their costs by using newer aeroplanes. and eliminates need for tickets which reduces check-in times. on a perairline and per-passenger basis (The value chain • Technological – • Procurement – as Ryanair do not produce any products. this is done by the pilots. Safety is guaranteed as contracted work is supervised and planned by Ryanair staff (Johnson & Scholes 2002). 3. enable fast turnarounds and very low ticket prices (Gilbert et.2 Support activities Procurement = Purchasing power enables negotiation of favourable deals (core competence) with suppliers. Technology development = Ryanair was one of the first firms to introduce online booking and therefore was able to reduce their costs. • Marketing and sales . important revenue contributors. They have to buy fuel and equipment as well as leasing their planes. food. However. Margin in 2006 Ryanair was the most profitable airline in the world on the basis of its operating and net profit margins. they can therefore make future plans. they sell duty-free products as well as food and drinks. = Buys mostly during recession when prices are down = Good buyer-supplier relationships ensure reliability and low-cost procurement of services (many functions are contracted out).they have the biggest website in Europe. If numbers fall prices can be slashed immediately to attract buyers thus increasing the load factor. However. The question is how much customers are willing to forgo before switching to competitors. They are also less costly as they do not need as many repairs. and is known for transferring passengers to later or alternative flights without notice if original flight is not full enough (Johnson & Scholes 2002). Uses not very congested airports and only make point to point trips. • Operations – they have to check all the planes and equipment before setting off. they therefore outsource the material they need. Will it be possible to sustain the necessary load factor with an even narrower target market’ Southwest is more successful than Ryanair but has not stripped away all frills (Porter 1996). medical services and security/safety) it is very common for a business to outsource these elements. Human resource management Their employees are able to sleep in these bases instead of having to stay in hotels and are able to reduce costs. They also try to increase sales by selling the products in flight. ‘…they don’t hesitate to raise prices if demand is buoyant’ (Bowley 21/07/03) which leads to effective yield management. Ryanair uses its website to monitor bookings to see how full planes are minute by minute. they only provide a service.Furthermore. these demand “large and’ growing volumes based on passenger numbers’ (Felsted 04/11/03) which is becoming difficult to sustain as Ryanair expanded too quickly. = Travel agencies are used on a small scale as necessary when opening new routes in unknown markets.

as is number of employees per aircraft ⇒ reducing cost per Available Seat Mile (ASM) and Revenue Seat Mile (RSM) ⇒ good operating profit up to fiscal 2004 ⇒ healthy balance sheet and war chest. activities fit together to create low cost ⇒ difficult to undercut Ryanair on cost. Low and reducing break-even load factor. allow to increase revenues • Point-to point flight. market leader with first mover advantage. car renting. increase capability to attract finance. travel insurance and transport. Brand name: Ryanair through its 14 years in the LCC market has developed a very well recognized brand name. Their staff has to go on courses once a year to improve their knowledge and make sure they know all the new regulation. • Pursuing clear strategy. • Most developed route system with frequent departures on many routes and reasonable punctuality ⇒ pre-empting potential competitors on the same routes. aggressive and innovative management • Effective business model that coherently delivers low fares • Secondary and regional airports allow cost reduction and fast turnaround • Strong balance sheet and cash generation allow to face eventual problems.g. withdrawal of Go from Dublin-Scottish routes in 2001) and /or extra services (but customers must consider these worth paying for). outside plane sponsorship. • Service – try to keep fleet up to date. on board entertainment and sales. • Customers happy with value for money proposition of Ryanair. Similarly. and therefore on price (but see weaknesses for some cost vulnerabilities). as opposed to hub-and-spoke. enhance safety and fuel efficiency • High rate on punctuality and low baggage loss rate give reliability to the organisation • High rate of aircraft utilisation. • Leadership – Michael O’Leary and management team are determined competitors. efficient and effective low cost operator (Case Exhibit 6).) • SWOT Ryanair SWOT Analysis Strengths • strong Pan European brand (36 bases) • Biggest and most profitable LCC in Europe • Focused. 8 .g. reduces financial risk. allows services cost reduction • Low labour non-unionised cost • Low cost due to flat and simple form of organisation • Major earnings from innovative ancillary services • Solid network with 4 hubs • Success of merger and partnerships • Supply network • Services diversification • Inorganic growth • Strong fleet operation • Well-balanced network Ryanair first budget airline in Europe. • Ryanair is creative and resourceful in constantly finding new sources of revenue – e. enhance capability to take risks and face new challenges • Competitive price on aircraft purchase • Reduces barriers to its entry in new markets. average length of passenger haul is moving in the right direction. unless they can offer better value than Ryanair through lower prices (which requires them to have lower costs or take the pain of losses – e. training cost. easily cleared.well which includes hotel reserves. whilst contributing to increase barriers to new entrants • High seat occupancy rate and lowest cost seat-mile in short-haul flights • Uniform and modern fleet saves on maintenance.

Eliminates the need of travel agents High seat density: All Boeing aircraft: A uniform fleet saves on maintenance and training costs Fast turn-around: High Service performance: Punctual. • Overly cost conscious? Could be irritating to passengers. currency fluctuations make fuel costs unpredictable. Previously relatively high customer satisfaction rating of Buzz appears to have been obliterated rather than leveraged in the way Buzz has been subsumed into Ryanair. other than value for money. alongside history of industrial relations problems. also newer planes will require less maintenance. Charleroi): Acts as a barrier to entry Internet site (94% bookings) www. • Very vulnerable to financial market sentiment and high expectations. question marks over staff commitment and loyalty. so profit warning was disastrous for share price.g. majority free floating shares could result in over 50% ownership outside EU ⇒ loss of airline licence. Has first mover advantage on regional airports (e.Benefits from low airport charges: These aid the low cost base Ryanair benefits from. • Outsourced services outside Ireland may mitigate against employee commitment and intense company knowledge necessary to create adequate customer service. low baggage loss. Small headquarters: Low on overheads Point to point: No hub and spoke. high rate of flight completion. older aircraft entail higher fuel and maintenance costs.ryanair. Fuel and other risks hedging. • Staff issues – EU legislation regarding compulsory trade unions. This suggests that low fares are the only factor that attracts customers to Ryanair. Also. Note that customers are very dissatisfied with Ryanair. High aircraft utilization: Ryanair flies its planes for longer thus generating more revenue from its assets. also. 9 . lowers cost as no through services required. Modernised fleet which leads to less expensive maintenance: Will become more uniform with only one model (737-800). these give a good image of the company’s reliability. Weaknesses • Exposed to regulation on airport deals and passengers compensation • Distance of secondary airports from main locations • Lack of appropriate frequency in certain routes • Brand is strictly linked to a low cost model and maintain the position could be challenging • Too exposed to outsourcing • Market extremely sensitive to price elasticity • Prone to bad press in that its top management is perceives as arrogant and provocative • Poor customer service • High seat availability could be a problem when flying to less popular destinations • Limited slots in main airports could be a problem in the future • High sensitivity to new taxes • Low level of empathy for employees • Low employees morale • Constant innovation requirements to sustain the business model • High turnaround could increase CO2 emissions • Unstable social climate /strongly unionised • Domestic and EU flight unprofitable • Declining performance of main activities • Declining revenues Cost structure – aircraft utilisation in question with lower number of hours per day than easyJet.com: Lowers the cost of distribution as over the phone bookings are more costly.

officials and journalists) whose support might have been useful in certain situations. below. Treats • New entrants in the market and increased competition in the near future • Some flag carriers have tried to reposition as low cost carriers • Some other traditional carriers have reduced fares which could undermine the market share • Dependent on oil market • A serious accident could endanger trust on low cost industry • Environmental taxes • Hi-speed trains and land transport • Exclusive reliance on the internet as distribution channel could endanger business activity in case of disruption • The lack of union recognition could seriously undermine the brand • European Court decision exposure may constrain expansion plans 10 .g. part of the fleet could be leased out • Strategic agreement • Open sky agreement • Sustainable development • Cargo market • Maintenance market • Differentiation by reliability and quality of the service provided EU enlargement: There will be a lot of new destinations opened up Still potential to capture market share: The LCC market share could more than double Benefits from less exposure to geopolitical risks: As only really operates in Europe Economic slowdown actually helps Ryanair. etc. Niche market: Restricted expansion possibility Distance of some regional airports from advertised destination: Over time customers may find this a big inconvenience.) Prone to bad press: Ryanair is perceived as arrogant and the slightest incident gets a lot of press coverage. competitors. Ryanair is extremely sensitive to changes in charges(increase in fare value) Charge for using wheelchairs and Little leg room Charge extra for food and other services as well as charging for luggage Poor security = increase risk from terrorism Relationship with pilots is very bad . Poor service: people skills. the EU decision about Charleroi. • Much antagonism against Ryanair is really directed against Michael O’Leary personally.risk of strike. the court decision on wheelchairs. Opportunities • European market still offers considerable potential for developing the business model • Underway industry consolidation offers opportunities for new routes and airport deals • EU enlargement allows to expand in new markets • Demand based on price should remain high independently of economic cycles • Bad condition of Italian air industry gives opportunities for consolidation in the Italian market • USD weakness makes Boeing aircrafts cheaper • Good leasing aircraft rates will facilitate expansion • High fuel price will drive out unprofitable competitors • Better industry margin as unprofitable competitors cease trading • Operating within Europe not exposed to geopolitical risks • Mergers/acquisition could allow to expand to popular business and leisure destinations • Increased mobility of middle-class population is expected and time becomes the more and more scarce • Possible withdrawal of traditional players from less traffic-intense destinations • During eventual financial downturns. e. ‘steals’ customers from traditional carriers as they seek lower fares. Is his personal ‘in-your-face’ style a double-edged sword? (See discussion on question 5. some politicians. Aer Rianta.• Reputation – Ryanair has antagonised many constituencies (trade unions.changes in corporate culture.

The factors identified from SWOT that will support the organization 11 . to the detriment of revenues • Mergers/acquisitions could threaten the existing low cost structures • External shocks: Economic recessions. terrorism and viruses spread • Oil prices • Fierce competition • Low cost carriers • Consolidation in the airline industry Dependence on oil markets: Fuel costs depend on the oil market. Powerless to prevent introduction of duty for fuel or environmental charges: This would reduce its growth potential as it relies on price stimulation. or routes could become battleground(e. if the strategy should one day be the same it would give ground to fierce price completion. need for peaceful coexistence. Customers are very price sensitive Ryanair and Easy jet limit one another’s growth “rout wise”.• Risk of increasing air control charges • Different strategy with main competitor flying from and to main airport.g. Limited growth on the South European market Regional airports gain bargaining power for “second round”. Dependence on economic cycle Increase of low fare competition European court decision: This may make expansion more difficult and costs rise in the future. As more planes fly in the sky.: London-Rome) Face increase in air traffic control charges.

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