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The low-cost Airline Ryanair - Essay Example

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In any industry, several forces in conjunction form the success or failure of any firm that operates in it. These forces include those factors, which affect a business from outside its immediate environment, which is the macro environment. …
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The low-cost Airline Ryanair
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Download file to see previous pages In any industry, several forces in conjunction form the success or failure of any firm that operates in it. These forces include those factors, which affect a business from outside its immediate environment, which is the macro environment. Porter’s Five Forces Model makes it easier for one to analyze these various factors in relation to any industry, as it outlines the basic factors, which one should observe to understand a company’s chances for success and market attractiveness. Ryanair, an airline in the transportation industry, forms an interesting choice of company which one can analyze using this model. To start, one needs to have a brief idea about Ryanair. It is a low-cost airline, which is the second largest airline in Europe, and belongs to the transportation sector of the tourism industry. The reason it forms such an interesting choice is that it is one of the largest in the world in terms of international passenger number and the second largest (Amason, 2010) in terms of passenger number.
This success of the airline is intriguing, and leads one to wonder whether the success can be explained by the recent deregulations that happened in the aviation industry in Europe in 1997 or whether it is due to the low-cost business model that Ryanair operates under. Either way, it is an intriguing case for anyone interested in studying companies from a business management aspect (Amason, 2010). Porter’s Five Forces Model includes firms, which study the competitive environment of the firm.
In relation to the competition it faces from other firms, Ryanair competes against several rivals. These include another low-cost Irish airline Aer Lingus, which came into direct competition with Ryanair ever since it switched to a low-cost business model. Other competitors include MyTravelLite and Go (Hoffman, 2007), both of which were at a point in time, in competition with Ryanair, although it was not long before Ryanair was able to beat them due to its low cost strategies. Aer Arann and CityJet are some more examples of competition, which Ryanair faces, while EasyJet is this airline’s largest competitor (Hoffman, 2007). The airline industry is one where no one firm can hold monopoly, because each successful firm has different strategies and different core competencies, which earn them a fair share of market share. In addition, it is a large industry, which automatically means there will be several competitors. As for the power of customers, it is not a strong force in this particular industry. The customers are more or less price takers in the airline industry, as there are dozens of airlines, which cater to customers belonging to each price category. While it is true that these airlines use low-cost strategies due to the customers only, it does not mean that the customers have the power to influence the rates of fares of these airlines. Similarly, the power of suppliers is also not very relevant to this industry. The start-up costs as well as any materials and services the airlines use for their planes or operations make a large proportion of their costs. However, their magnitude is what influences the airline’s decisions, not the wishes or demands of the suppliers, which makes the power ...Download file to see next pagesRead More
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