Porters Five Forces to Analyze the Competitive Environment in which Ryanair operates Bargaining Power of Suppliers
Porters Five Forces to Analyze the Competitive Environment in which Ryanair operates Bargaining Power of Suppliers - Essay Example
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The customers of Ryanair are putting on them a lot of collective pressure so that they can lower the travel expenses and improve the quality of their airline services. The customers associated with Ryanair are enjoying a higher bargaining power since switching to other airlines with better services is very easy with little or no costs.
In the case of Ryanair, the substitutes for their transport systems include railways, sea transport, and road transport and any strategy by them poses a threat to Ryanair profitability. However, Ryanair is still able to operate at a lower cost, leading to lower cost of services that attract more customers.
The threat of new entrants in this industry is relatively low due to high costs involved in the initial stages of the business set up that many cannot afford. Economics of scale can only be enjoyed by big players like Ryanair and this makes other possible investors be scared away (O’Cuilleannain, Falle, Sobokta, Kleinert, Chassart, Farrell, 2004). There is also difficulty in gaining access to distribution channels that poses a barrier to new entrants.
Since the airline industry is highly fragmented, competition is very high leading to low returns. In order to survive, Ryanair is constantly coming up with unique business models in order to outweigh their competitors and make reasonable profits.
Ryanair is luck since it is based in Europe whereby European Union is a complete stable political region that provides a good environment for business to thrive. The integration of the European Union has provided an opportunity for this airline industry to expand its operations very swiftly without hurdles (Muller, 2011). The operations of Ryanair are also affected by the OPEC since its an organization that determines the fuel prices that Ryanair operates on.
This paper tells that in the past, Boeing has been the main supplier of Ryanair, however, things are changing since they are looking for rival companies who are also dominant in the air market. Cormac, a Chinese manufacturer is on the list of those attracting Ryanair interest due to the number of seats…
(Vodafone Limited, 2011) BACKGROUND INFORMATION: Sir Ernest Harrison the chairman of UK’s largest radio technology Maker Racal Electronics plc’s in 1980 signed a deal with Lord Weinstock of General electric company (GEC’s) which allowed Racal Electronics to use and access some of GEC’s tactical battlefield radio technology.
The firm’s total profitability depends largely on the existence of rivalry in the industry. Market concentration further determines the extent to which rivalry exists in the market. Airports, routes and hub served by numerous carriers can account for intense rivalry in the industry.
Carrefour is a retailer company operating in thirty-two countries and is the largest international food retailer. Its internationalization process has taken a period of 40 years and hence, is rated as a very successful business. The company operates hypermarkets, supermarkets, discount and convenient stores as their main formats of sale.
Competitive forces have been identified as critical determinants of the level of profitability of any business. Experts have highlighted that a business should understand both the nature and the strength of different competitive forces so that it can draw its strategies.
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The forces help in identification of the power of a business situation. The analysis is used to understand the strength of the firm’s current competitive position and the position’s strength (Boone and David, 45). Strategic analysts of a
cific suppliers), describe each supplier’s overall operation and identify what is supplies; for each supplier group are there many or few; who has power over whom?
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The author states that it is evidenced that the company will be on the competitive advantage when it has more of the customer focus and advertisement. This is done uniquely from its competitor so as to beat them. This year, analysts are forecasting earnings increase of 39.81% over last year.
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