International Business Strategies in Action Table of Contents International Business Strategies in Action 1 Table of Contents 2 Task 1: International Expansion of RyanAir in India 4 Introduction 4 External Environment Analysis 4 PESTEL 4 Political 4 Economic 5 Sociological 7 Technological 7 Environmental 8 Legal 8 Porter’s Five Forces 8 Bargaining Power of Buyers 8 Bargaining Power of Suppliers 9 Threat of New Entrants 10 Threat of Substitutes 11 Competition among Existing Players 12 Culture 12 Capabilities and Competencies 13 Market Entry Strategies 13 Mode of Entry 14 Conclusion and Recommendations 14 Task 2: Critical Analysis 15 Introduction 15 Summary 15 Positive Aspects 16 Negative Asp…
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The saturation of the traditional markets and the growing opportunities in the emerging markets like India and China has prompted the firm to take up this strategic decision. The company plans to use its existing low cost no frills model as a part of a low cost strategy to capture the target market. RyanAir is a UK based airline firm established in the year 1985 and has grown presently to a mammoth organization having a fleet strength of 272 aircrafts (RyanAir, 2011). RyanAir mainly operates flights to various destinations around Europe and is one of the most successful brands in Europe. The company aims to replicate its low cost model in India to gain strategic advantage. External Environment Analysis PESTEL PESTEL is a tool that is used to analyze the external environment of a business organization. The tool analyses the political, economic, sociological, technological, environmental and legal aspects of a particular market (Kay, 2010, p.23). Political Political factors affecting RyanAir’s business interests include the extent of market deregulation, taxes as well as permits of operation. The Indian government is a democratically elected and stable government that largely advocates business houses to set up base in India. The Directorate General of Civil Aviations controls the airline industry in the nation. The government has advocated a deregulation policy that has allowed a healthy competition in the nation in the industry segment (Mazumdar, 2008, p.104). The elections are held every five years that gives considerable stability to the government. The administration of the government is divided into executive, legislature and judiciary departments (CIA, 2011). Economic Economic factors that affect the business prospects of an airline company include the economic growth rate and other macro economic data that affect the levels of disposable income of individuals within a nation. India has an impressive GDP growth rate of 10.4 percent as of 2010. The GDP in terms of purchasing power parity stands at 4.06 trillion US dollars that provides a good impetus for RyanAir to expand into India. The GDP in terms of per capita income is about 10.4 percent (CIA, 2011). Figure 1: Sector Wide GDP contribution (Source: CIA, 2011) The oil prices also have a significant effect on the business prospects of the airline companies. Oil prices have recorded widespread fluctuations over the past years and continue to rise at very high levels. The figure below shows the historic as well as projected oil prices. Figure 2: Oil Price Movements (Source: Ringbeck, Gautam & Pietsch, 2009, p.40) The Indian aviation industry also represents good demand growth in terms of future demand as the Asia Pacific region represents wide scope and options for aviation companies. Figure 3: Demand Projections (Source: CII & PriceWaterHouse Coopers, 2010, p.13) Sociological Sociological aspects include demographical aspects and consumer behavior of the target market. India is the second largest populated nation of the world that helps
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