Ryanair Essay Example | Topics and Well Written Essays - 2500 words

Ryanair - Essay Example Porter suggests that a firm should follow either differentiation strategy or cost-leadership. They do not submit a mission or vision but they continue to be the largest low-cost leader in the European air industry (Box and Byus 2007). This requires an absolute dedication to low-cost performance in every element of the value chain. Thus, they have quick gate turnarounds, non-union operations, their compensation plans are in the form of performance-based incentives, and they fly to secondary airports which too results in cost savings. They have been successful so far because they could compete against the tradition carriers as consumers have become price-conscious. They are able to maintain price advantage and they get most of their bookings online. They replicated the South West Airline model of offering â€Å"no frills† services and focused on the most price-sensitive segment (Leavy 2003). Is Ryanair’s strategy sustainable? Ryanair’s strategy has become questiona ble due to the impact of cost savings in every function. This can be better understood through environmental analysis. Michael Porter has developed a set of tools and framework for environmental analysis. ... Economical The economy of Europe as a whole is stable and the domination of Euro as the common currency adds to stability. The consumers in Europe too are stable so overall the economical factor has low impact on the industry. However, outside Europe the market is undeveloped and these economies are unstable. Moreover, the economic crisis has impacted all low-cost carriers since 2008 which ash prompted stringent actions from the low-cost carriers (Dunn 2009). Social The airline industry depends on the changing consumer demand. Ryanair could succeed so far because of the price-consciousness of the consumers. However, consumer demographics keep changing and the airline has to be cognizant of the changing consumer preference. Even a small price difference can change the mindset of the most loyal consumer. Thus the social factor has a high impact. Technological The technological factor has a low impact because Ryanair has invested in standardized but latest aircrafts. However, they do no t use technology in employee relations or in customer relationship management. Legal This has a high impact as they have been charged by the EU for receiving illegal subsidies for its base airport (O’Higgins 2005). Its website also had several consumer complaints which prompted the airline to shut down the website (O’Higgins 2005). The airline was also in a dispute against the British Airports Authority (BAA) for alleged monopoly abuse over fuel levies. Environmental This has a high impact because ‘climate protection charge’ has been levied against the airline. Frequent landings and take-off on short-haul flights have high impact on the environment (O’Leary 2007). PESTLE Evaluation The external environmental analysis suggests low impact