Analysis of the external environment of "Ryanair –"Southwest" of European airlines" case

Essay by stanlevskiUniversity, Bachelor'sA-, May 2009

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The objective of my report is to analyze the external environment in "Ryanair-'Southwest" of European airlines" case, which is very important factor for the firm's formulated effective strategy. The external environment consists of a wide array of economic and sociopolitical factors. It is the specific market arenas that the organization has chosen in its strategy; it provides the business opportunities to the firm and it's also a source of threats or forces that may impede the successful implementation of a strategy.

Macro-environmental Analysis (PEST factors affecting Ryanair Airlines)To analyze the macro environment, I will use the PEST analysis, which refers to political, economic, social and technical factors that confront Ryanair airlines. This analysis provides a no exhaustive list of potential influences of the environment on the organization. Each of the forces is categorized by a particular macro-level external influence, which directly impacts strategic direction at Ryanair.

The political environment can have a significant influence on businesses as well as affect consumer confidence and business spending.

The political environment is one of major advantages to Raynair, as the majority of its operations are contained within Europe. This region maintains political stability, thus Ryanair does not experience issues with governmental instability in Europe as a concern regarding passenger volumes or flight destinations. Political factors in our case are:-Irish government policy from September, 1989. This policy were known as "two airline policy" valid for three years and was directed at benefiting both Irish carriers Aer Lingus and Ryanair. The new policy ruled that the two major Irish airlines will not compete on any international route and they both had to have separate routes-European Union deregulation of the airline businesses from 1997; set up a number of low-cost airlines offering no-frills services. This deregulation enabled Ryanair to open new routes to continental Europe.