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Environmental and strategic analysis - Essay Example

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Environmental and strategic analysis

This is due to its low cost strategy. Like any other company, when the management makes decisions it has to be guided by different factors that directly or indirectly affect the company. All organisations are affected by external and internal factors and like any other company, Ryanair is not left behind. It is advisable for the airline to use the PEST analysis to view its policy making strategies thus look at how the company is performing to ensure that it does not lose market. Such analyses will ensure that the management is able to keep, ignore and adapt strategies to make the company more competitive and unique (West, 2007). The paper will examine Ryanair airline by using Porter's 5 forces and McKenzie 7s framework.
To understand how Ryanair Airline has been able to survive to the resent times it is advisable to use Porter's 5 forces analysis to critically examine its strategies. The strategy and its concepts came from Michael Porter. The 5 forces were derived from Industrial Organisation economics which generally helps a company to know its intensity in competition moreover show what attracted the company to join the market. It should be noted that the amount of profit is what attracts the company to the market whereas unattractiveness is simply the implementations of poor strategies that lead to a loss. According to the forces, when a company approaches pure competition it means that it is becoming unattractive. According to Porter such implementations are referred to as micro environment which are within the company and they do affect how a company is able to reach its customers. Customer service provision is what brings about profit in the company (McGahan, 2004, pp. 203-205). The stages of the framework are discussed below step by step.

Threat of substitute products
According to the strategy, a company can decide to offer products or services that will act as substitutes to change the demand of its customers. The customers will be attracted by the change in prices (McGahan, 2004, pp. 203-205). Ryanair has been able to attract various customers by offering low cost services. This has increased its competitive nature as vary many customers have shifted from the other airlines to it. Moreover, it is one of the largest airlines in Europe increasing its chances of attractiveness.

Threat of the entry of new competitors
When a company ventures in a sector that builds up high levels of profits, it will definitely increase its attractiveness for other companies to venture in the market. When there is high entry in the firm, the profit level of the company will definitely decrease. For this reason, a company needs to differentiate its service and product provision from its competitors. This will definitely mean that it has to advertise its new services and increase its customer-company communication skills. When Ryanair introduced its new low cost strategy, it used advertisement as a strategy to inform its customers and attract more customers. Ryanair has had a series of controversies in its adverting strategies when it was busy informing its customers on its new strategy (McGahan, 2004, pp. 203-205).

In 2005, Ryanair had to pay a fine of 250,000 (US$319,000) for publicly advertising that "the air fare of Ryanair is 391% cheaper than the air fare of Air France-KLM" (Breitbart News, 2005). Although the UK courts legally allow comparative advertising, the ...Show more

Summary

Ryanair being the low cost Irish airline has its headquarters situated in Dublin. It has the largest operation bases in London Stansted and Dublin international Airport. The airline was founded in 1985 and it was named after one of the numerous owners; Christy Ryan…
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