• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Analysis Ryanair's external Marketing environment and strategy

Extracts from this document...

Introduction

Analysis Ryanair's external Marketing environment and strategy 1 INTRODUTION The aim of this report is to carry out a investigation of Ryanair's external environment and a strategic analysis of Ryanair, 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 Ryanair's strategies are suitable to what is happening in its task environment. Ryanair is Europe's largest low-fares, no-frills short-haul carrier. The organisation 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 Ryanair 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. Ryanair aims to be Europe's largest airline in 8 years (www.ryanair.com). 2 ANALYSIS OF THE EXTERNAL ENVIRONMENT This is a crucial part of a strategic analysis because organisations do not exist in a vacuum, they are part of a complex world and many factors can influence operations, beneficially and unfavourably. However, these can be difficult to comprehend due to their complexity, diversity and fast changing nature. Necessarily a number of techniques have been developed to facilitate the process and to '...contribute to answering the key managerial question...'of what '...opportunities and threats might arise in the future' (Johnson & Scholes 2002). 2.1 PESTEL analysis This identifies the main micro-environmental influences by classifying them into six groups: Political, Economical, Socio-cultural, Technological, Environmental and Legal. ...read more.

Middle

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.opec.org). = Budget airlines have work-hard cultures to keep costs down (Gilbert et.el 2001) meaning a scarce number of multi-skilled employees which '...can bargain away a significant fraction of potential profits...' (Porter 1980). = However, carriers tend to experience economies of scale which gives purchasing power. Consequently, airlines are able to negotiate favourable deals with most of their suppliers (Johnson & Scholes 2002). Rivalry among existing firms = Already very competitive industry. = Numerous new entrants intensify competition, although several newcomers have struggled to establish themselves and failed, Debonair and AB Airlines for example. = The over-crowded market, and commodity nature of the product, means that airlines are battling to fill planes. Aggressive pricing, efficient distribution and innovative communication mixes are frequent competitive measures. = However, 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.al 2001). = Nevertheless, 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. = Mergers, acquisitions and alliances are increasingly used for consolidation and competition. EasyJet bought Go, bmibaby partnered with Germanwings (Economist 01/03/03 & Hotten 13/03/04). Ryanair acquired Buzz but paid too much and was forced to close it to boost its productivity. ...read more.

Conclusion

Although growth is slowed down new planes has been ordered aiming to double the fleet by 2009. = 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). Safety is guaranteed as contracted work is supervised and planned by Ryanair staff (Johnson & Scholes 2002). Technology development = Ryanair uses its website to monitor bookings to see how full planes are minute by minute. If numbers fall prices can be slashed immediately to attract buyers thus increasing the load factor. However, '...they don't hesitate to raise prices if demand is buoyant' (Bowley 21/07/03) which leads to effective yield management. 3.2 Key Strengths and Weaknesses Strengths Weaknesses Cost-consciousness at every level Isolation of airports Ability to drive down costs Poor judgement in route selection and acquisition Fast turnaround times Targets very narrow market Cross-utilisation of employees Poor brand image Website Negotiation skills Ability to achieve growth Use of secondary airports 5 CONCLUSION The aim of this report was to carry out a strategy analysis of Ryanair, Europe's largest low-cost no-frills airline. From this it became evident that the organisation operates in a complex environment with fast changing influences that affect its business both beneficially and unfavourably. It also enabled identification of some of the sources of Ryanair's competitive advantage: core competencies, unique resources, key linkages and the superior cost performance compared to its closest competitor. However, it also became clear that the organisation still has a lot to learn from best practice. In general Ryanair's strategies match its task environment although it fails to address certain crucial issues. If these are not dealt with they could lead to future problems and reductions in profits. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Marketing and Markets section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Marketing and Markets essays

  1. Sullivan Ford Auto World Report - Discussing Marketing in the Service Industry

    the success of these changes from the customer surveys delivered to her to ensure they have been effectively employed. Stage 2 The next stage involves a series of marketing exploits involving both ends of the business to further encourage custom.

  2. Pest Analysis Ryanair

    Technological: The technologic development and increased use of the internet has only made life easier both for the customer and the company. It reduces the distribution cost for the company. Customers can easily compare prices and make decisions based on their preferences.

  1. Strategic Marketing Report - Virgin Trains

    Virgin records) has boosted the smaller newer chains and also given them the appearance of value and quality associated with the Virgin label. Weaknesses; The service is unreliable and of a poor standard so its poor quality means the price is high for what the service gives so it's a rip-off.

  2. Event management

    computers and internet is opened a whole new field of art and cultural exchanges (i.e. It can be seen through the different art objects the culture of other countries, emotions, social matters) * The rise of Internet ordering (tickets) has further increased the volume of sales and public awareness *

  1. I have been asked to produce a marketing strategy for an existing or new ...

    Different research methods take varying amounts of time to conduct. If research is not up to date then it become invalid. Secondary research isn't always suitable as it has to be adapted to be suitable for the content it is being used for, because when it was first researched, it was researched for another cause.

  2. For this project I have been instructed to come up with a marketing strategy ...

    about consumers preferences, whether they buy certain products, what design features are preferable and what kind of retail outfits are most frequently used for purchasing certain products. Sources of marketing information The information that companies collect through market research can be in one of two forms, either quantitative or qualitative data.

  1. creating a marketing proposal

    Market research can assist a firm in identifying which segments of the market are most likely to buy its products. And to get information that may be useful to the firm when marketing new products. By gathering information, the firm should be able to make better decisions about what to do next.

  2. This coursework entitled "Marketing" is about creating a marketing strategy for a new or ...

    The car market is highly competitive so if the company ignored the wants of the consumer they would loose out on sales. Marketing and other business functions Marketing links in with every other function in the business. It both influences them and is influenced by them.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work