Business Environment Assignment Sample

An In-Depth Examination of Ryanair's Organizational Structure, Stakeholder Interactions & External Influences in Response to Evolving Economic, Social & Political Factors

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Introduction Of Business Environment Assignment

The business environment is generally referred to as the aggregate of all factors that affect an organization's operation. A set of conditions influences the functionalities of a business and is necessary for a business to make informed decisions, manage risks, and identify opportunities for growth. The report is made to achieve the objectives studied or researched through learning outcomes. The report highlights the business overview of Ryanair, the size of the business, the business of process, and the organization structure. Further, the report interprets the impact of Brexit, the Covid-19 Pandemic, and the UK government's improvement plan on Ryanair's internal and micro-environment. The evaluation is further done based on PESTLE factors. Consequently, the report provides a complete investigation of the firm's internal, micro and macro business environment (Thomas, 2015).

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Figure1 A Ryanair 737 taxis for a test flight at Boeing Field

(Source: Andrew W, 2023)

The internal business environment contains the entire factors that are surrounded by the control of the organization. For example, organizational structure, culture, resources, processes, products/services, brand and reputation which are the factors that makes up the internal business environment. The micro business environment is referred to all the internal and external factors that affect the operations specific to a smaller business context which is a subset of the broader business environment. For example, customers, competitors, suppliers, partners, employees, management, financial resources, and regulations comprise the micro-business environment. The macro business environment contains all the external factors that control the performance of a business on a broader macroeconomic scale. For example, economic, political, technological, socio cultural, environmental, and legal factors which are the major macro business environment factors that shape the business.

Section 1

Business Overview

A low-cost carrier, Ryanair is headquartered in Dublin, Ireland, and has operational bases throughout Europe, including in the UK, Spain, Italy, Germany, and Poland. Since its establishment in 1984, it has expanded to become the biggest airline in Europe based on passenger volume. More than 1,800 flights per day are offered by the carrier to more than 200 locations in Europe and North Africa. Ryanair uses a low-cost business strategy that enables it to remain profitable while providing customers with affordable prices (Barrett, 2017).

The airline's revenue is mainly derived from the sale of tickets, but it also makes money from ancillary services like baggage charges, in-flight purchases, and priority boarding. Ryanair carried over 149 million passengers in its network. The airline currently has over 450 Boeing 737 aircraft in its inventory, and it has orders for an additional 210 aircraft that will be delivered between 2019 and 2026. Regarding its financial performance, Ryanair announced the fiscal year 2020 revenues of €5.36 billion and a net profit of €1.002 billion. As of September 2021, the business had over 17,000 employees and a market value of about €21.5 billion (Barrett, 2016). Ryanair is a low-cost airline company that operates in the transportation sector of the travel industry.

The Direct Competitors:

  1. EasyJet: With headquarters in the UK, this major European low-cost carrier runs more than 1,000 flights throughout 30 nations.
  2. Wizz Air: A low-cost carrier based in Hungary that flies to destinations throughout Central and Eastern Europe as well as the Middle East.
  3. Others that directly compete with Ryanair in the low-cost carrier market include Norwegian Air, Vueling, and Jet2.

The Indirect Competitors:

  1. British Airways: Full-service airline headquartered in the UK that offers both short- and long-haul flights.
  2. Air France-KLM: French-Dutch Airline Company that operates both Short- and long-haul flights throughout Europe and beyond (Mendonça, 2020).
  3. Lufthansa, Turkish Airlines, and Emirates are significant indirect competitors of Ryanair.

Organizational structure and leadership team

Ryanair has a hierarchical organizational structure, with a distinct line of command and a centralized decision-making process. Ryanair's organizational structure includes:

  • Board of Directors: Responsible for monitoring the strategic direction and financial performance of the organization, the board is comprise of non-executive directors and executive directors, including the CEO, CFO, and other senior managers.
  • Senior Management: In charge of day-to-day operations of the company, including setting pricing policies, managing the airline's network, and supervising finance, marketing, and other departments.
  • Operations: It is responsible for the airline's fleet management, scheduling flights, and on-time performance.
  • Commercial: It is responsible for setting pricing strategies, managing customer relationships, and creating supplementary revenue streams.
  • Finance: Budgeting, forecasting, and reporting are all responsibilities of the finance department.
  • Human Resources: It is responsible for overseeing employee relations, recruitment, training, and development (Christoffer, 2019).

Section 2

The impacts of Brexit and the Covid-19 Pandemic on Ryanair's internal environment

The Brexit and Covid-19 pandemic has had significant impacts on Ryanair's internal environment, including its operations, financial performance, and workforce.

Brexit:

The UK's choice to leave the European Union has had a variety of impacts on Ryanair's operations. First, in order to meet the new rules, the airline had to modify its operating licenses. Second, the revenue of Ryanair has been impacted by the decline in demand for travel to and from the UK as a result of the uncertainty regarding Brexit. Finally, Brexit has raised the expense of regulatory compliance, including visa requirements and customs procedures (Abubakar and Dogoji, 2015).

Covid-19 Pandemic:

The Covid-19 pandemic has considerably impacted Ryanair's business processes and financial results. The pandemic caused a sharp decline in air travel demand, which resulted in the cancellation of flights and a substantial loss of revenue. Up to 80% of Ryanair's capacity had to be reduced, which had an effect on its workforce and led to employment losses. The pandemic has also raised the price of health and safety precautions like cleaning and disinfecting aero planes, giving personal protective equipment, and putting social isolation protocols in place (Harvey and Turnbull, 2020).

The impacts of the UK government’s recovery plan on Ryanair’s internal environment

There are likely to be both favorable and unfavorable effects on Ryanair's internal environment as a effect of the UK government's recovery plan, which consists of a number of policies and initiatives targeted at assisting the nation's economic recovery from the COVID-19 pandemic.

The extension of the furlough scheme offers financial assistance to workers who are unable to work due to the pandemic, might be advantageous for Ryanair because it enables the airline to keep its staff and prevent redundancies. But if the furlough scheme is kept in place for a long time, it might also result in lower productivity and higher expenses for the business.

Support for green initiatives, such as the promotion of electric cars and the development of renewable energy sources, is another component of the recovery plan. Ryanair has been working to reduce its carbon footprint and become a more environmentally sustainable business, so this could have a favorable effect on the atmosphere inside the company. Ryanair's expenses could rise, and its profitability could suffer if the government's efforts result in higher taxes or regulations on aviation fuel (Numano?lu, 2020).

The recovery plan also includes initiatives to support the tourist sector, which could be advantageous for Ryanair as a low-cost carrier. However, the government's initiatives could have a detrimental effect on Ryanair's market share and profitability if they result in greater industry competition or a move towards more environmentally friendly modes of transportation.

Section 3

The impacts of the UK government’s recovery plan on Ryanair’s micro-environment

The recovery plan of the UK government is probably going to have a variety of effects on Ryanair's microenvironment, which includes the company's direct stakeholders like clients, vendors, rivals, and partners.

Support for the tourism sector, which might boost demand for air travel, is one possible effect of the recovery plan on Ryanair's microenvironment. Increased competition and price pressure could result from higher demand, though, which Ryanair's bottom line might get affected.

The extension of the furlough program, which might have an impact on the company's relationships with its employees and suppliers, is another possible impact of the recovery plan on Ryanair's microenvironment. If the furlough plan is kept in place for a long time, it might result in lower output and higher costs for the business because it might have to pay employees who are unable to work (Caputo, et.al 2019). Due to financial constraints, Ryanair might need to renegotiate contracts or postpone payments, which could have an effect on the company's ties with suppliers.

The impacts of Brexit and the Covid-19 Pandemic on Ryanair's micro-environment

The microenvironment of Ryanair, including its immediate stakeholders such as customers, suppliers, competitors, and partners, has been significantly impacted by both Brexit and the COVID-19 pandemic.

Brexit:

Ryanair's operations and interactions with its stakeholders have been affected by the increased uncertainty and regulatory changes brought on by Brexit (Ahmed, et.al 2019). The assessment of the British pound has fluctuated notably ever since the Brexit vote, which has had an impact on Ryanair's revenues and costs. Brexit has also created uncertainty around the availability of labor, particularly for low-skilled jobs such as cabin crew and ground staff. Ryanair has warned that a shortage of workers could lead to higher costs and disruption to its operations.

COVID-19:

Ryanair's microenvironment has been greatly affected by the COVID-19 pandemic, especially in terms of its interactions with clients, suppliers, and employees. The pandemic has significantly decreased demand for air travel, which has caused the business to experience decreased revenue and capacity. Due to the need to reduce costs, Ryanair was compelled to renegotiate contracts and fire staff, which had an effect on its relationships with suppliers and employees (Khomyak, 2021).

Section 4

The impacts of PESTLE factors on Ryanair’s operations

PESTLE factors are the elements in the macro environment that can influence a business's operations. The following are some of the major PESTLE elements that could affect Ryanair:

  • Political factors: Modifications to political factors like laws, taxation, and government policies may influence Ryanair's business operations. Ryanair's routes and locations, for instance, may be impacted by changes in aviation regulations, just as taxes may raise operating expenses and reduce profitability (Efthymiou, et.al 2021).
  • Economic factors: The economy's performance, especially the demand for air travel, can have an impact on Ryanair's operations. For instance, a recession or other economic downturns possibly will consequence in a decline in the desire for air travel, which could have an achieve on Ryanair's earnings.
  • Social factors: Ryanair's operations may be impacted by changes in social factors like demographics, consumer behavior and societal values. For instance, changes in customer preferences for sustainability and eco-friendliness may have an impact on the company's marketing and operations, and alterations in demographics may have an impact on demand for specific routes and locations.
  • Technological factors: Advances in technology can impact Ryanair's operations, particularly in terms of efficiency and cost savings. For example, the development of more fuel-efficient aircraft or the use of automation in maintenance and operations can help Ryanair reduce its costs and improve its profitability.
  • Legal factors: Ryanair's activities may be impacted by changes in legal aspects such as rules, lawsuits, and intellectual property rights. An environmental sustainability-related regulation change, for instance, could have an effect on the company's operations and profitability while a lawsuit pertaining to safety or customer service could harm the company's image and result in decreased demand.
  • Environmental factors: Ryanair's operations may be impacted by climate change and environmental sustainability, especially in terms of rules and customer preferences (Morlotti, et.al 2020). For instance, changes in customer preferences for eco-friendliness and sustainability can affect the demand for air travel, while laws related to emissions and environmental sustainability can affect the company's operations and costs.

Conclusion

Based on the micro, internal, and macro analysis of Ryanair, a few suggestions are made for the company. Ryanair can increase customer loyalty and draw in new clients by making investments in its customer care. Ryanair can reduce the risks and boost its income streams by diversifying its route network. Ryanair can increase productivity, lower the risk of labor conflicts, and avoid negative publicity by improving its employee relations. By focusing on environmental sustainability, Ryanair can reduce its environmental effect and enhance its standing with stakeholders and customers who are concerned with environmental issues. Ryanair can put itself in a position for success in a rapidly changing regulatory environment by keeping an eye on and responding to these changes.

Ryanair, like other airlines, can benefit from the UK government's tourism recovery plan in several ways. To promote domestic travel, the government has declared that it will start a new tourism program. In order to publicize these initiatives and provide travelers with special offers, Ryanair can collaborate with the government. Also, to increase connectivity, the government has declared that it will spend money on new rail and road infrastructure. Ryanair is recommended to take advantage of this investment and expand its domestic route network. Ryanair can offer flexible booking options and incentives such as hotel booking discounts or free attraction tickets to encourage more people to travel.

References

Abubakar, S.G. and Dogoji, B.A., 2015. An investigation into the management of organizational culture and its impact on employee performance in the context of the aviation industry: a case study of some legacy and lowcost airlines in the United Kingdom. International Journal of Advanced Academic Research, 1(2), pp.1-19.

Ahmed, J.U., Khan, M.M., Sultana, I., Ahmed, A. and Begum, F., 2019.Ryanair: A Low-Cost Business Model in the European Airline Industry. In SAGE Business Cases. SAGE Publications: SAGE Business Cases Originals.

Barrett, S.D., 2016. Ryanair and the Low-cost Revolution.In Air Transport in the 21st Century (pp. 163-178).Routledge.

Barrett, S.D., 2017. The sustainability of the Ryanair model.In Strategic Management in Aviation (pp. 371-380).Routledge.

Caputo, A., Borbély, A. and Dabic, M., 2019.Building theory on the negotiation capability of the firm: evidence from Ryanair.Journal of Knowledge Management, 23(2), pp.240-262.

Christoffer, S., 2019.How leadership affects organisational performance during times of business transformation: the case of Ryanair’s CEO Michael O’Leary (Doctoral dissertation).

Efthymiou, M., Usher, D., O'Connell, J.F., Warnock-Smith, D. and Conyngham, G., 2021. The factors influencing entry level airline pilot retention: An empirical study of Ryanair. Journal of Air Transport Management, 91, p.101997.

Harvey, G. and Turnbull, P., 2020. Ricardo flies Ryanair: Strategic human resource management and competitive advantage in a Single European Aviation Market. Human Resource Management Journal, 30(4), pp.553-565.

Khomyak, A., 2021. Ryanair business strategy analysis in the face of Covid-19 crisis.

Mendonça, P., 2020. Trade union responses to precarious employment: the role of power resources in defending precarious flight attendants at Ryanair. Transfer: European Review of Labour and Research, 26(4), pp.431-445.

Morlotti, C., Birolini, S., Cattaneo, M. and Redondi, R., 2020.Introducing connecting flights in LCCs' business model: Ryanair's network strategy.Journal of Air Transport Management, 87, p.101849.

Numano?lu, H., 2020, April. Strategic pricing practices: Ryanair example. In DIEM: Dubrovnik International Economic Meeting (Vol. 5, No. 1, pp. 73-82). Sveu?ilište u Dubrovniku.

Source: Andrew W, 2023. A Ryanair 737 taxis for a test flight at Boeing Field, RYANAIR TO FLY ACROSS THE ATLANTIC? USING WHICH AIRCRAFT?, (Online). < https://www.airlinereporter.com/2015/03/ryanair-to-fly-across-the-atlantic-using-which-aircraft/> accessed on 25.02.2023.

Thomas, M., 2015.Ryanair: success before love. Strategic Direction.

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