Strategic Management For Travel And Tourism - Myassignmenthelp.Com

Question: Discuss about the Strategic Management For Travel And Tourism. Answer: About Ryanair Ryanair Ltd is an Irish low budget airline, which was established in 1984. It is the biggest European airline and has carried the largest number of passengers, (Ryanair.com. 2017) the airline company has been characterized by rapid expansion and up gradation (Hitt, Ireland and Hoskisson 2012). The report analysis the business environment for the airline company. Macro Analysis Macro Environment Analysis can be described as the analysis of the external environment of the business. These factors lie in the external environment of the business and do not lie within the control of the business. However, these factors have a tendency to affect the business. For Ryanair airline, PESTLE Analysis has been used to determine and identify the present external factors. PESTLE Analysis can be described as an external environmental tool, which looks for six factors present in the external environment of the business. These factors are Political, Economical, Social, Technological, Legal and Environment (Peppard and Ward 2016). The given factors adhering to the Airline Industry are given below: The Pestle Analysis is employed to identify macro-environment influences of the airline industry. Political: The government of every country wants to strengthen their economy and it knows that this can be done by forming certain rules and regulations, which promote the domestic airlines and this leads to setting up rules like preferential rights. The issues relating to the politics have a wide impact on the key operations area of budgeted airlines. The government has certain criteria pertaining to the rules and regulations, which need to be followed by the airline companies. Economic: This factor is extremely crucial to airline companies especially to a budgeted airline firm like Ryanair. Exchange rates, growth rates and inflation rates tend to govern the policies of the airline firms. Increasing cost of fuel often tends to become an issue for the budgeted airlines. These costs may deviate the company from its core offerings (Hill and Jones 2013). On the other hand, in case of a recession more people will use budgeted airlines as a mean to travel. Social: The budgeted airlines will benefit greatly from the current social trend, as more students from countries like Asia are willing to travel to Europe and other countries for higher education. Students generally travel on a low budget and the current trend will be beneficial for the given airlines. Technological: With the advent of technology and application of artificial intelligence in all the processes, the airline companies will be able to reduce costs and carry out the given task more efficiently. If new aircrafts help the company in reduced fuel, the airline industry will greatly benefit. Environmental: Various European countries have become extremely strict because of carbon emission and various pollution concerns. Therefore, various taxes are imposed on the airline companies through which their costs increase and profits decrease (Eden and Ackermann 2013). Abiding by these rules is necessary in order to maintain an image in front of the consumers. Legal: Government has made various environmental and promotional laws, which the airline companies need to abide by to prevent further losses. Micro environment analysis Microenvironment analysis can be described as the internal environment analysis pertaining to a particular industry. The airline industry is an extremely competitive industry where there exists intense competition. The micro environment analysis of the airline industry will be done using Porter`s Five Forces (Wheelen and Hunger 2017). Porters five forces model is a competitive model prepared by Michael porter, which examines the various factors present within the industry, which tend to have an impact on the business. The threat of entry There are high barriers to enter this particular industry such as: High investment requirements- The investment involved in the industry is extremely high, therefore it is not possible for every firm to enter the given industry very easily. Expected retaliation- Retaliation will be taking place in the form of price wars once new firms enter the budgeted airline industry. Legislation or Government action- In case the industry is saturated, the government will not allow new companies to enter the industry. The threat of substitutes In the budgeted airlines market various new companies have entered who have become important substitutes in the given industry. However, the strategies of Ryanair and its first mover advantage are tough to follow. Hence, threat of substitution is low. In the case of Ryanair, there will not be huge impact on its operations in case the industry is introduced to new entrants. Budgeted airlines focus lies on the prices and costs with respect to the given company (Slack 2015). The prices of the company are quite lower than that of the other airlines and hence, new prices with lower prices will not be able to win. The power of buyers As the switching cost in the given industry is low, it becomes increasingly easier for the buyers, which may be the tourist agency or the ultimate consumers to take another airline. Individuals will be able to choose their preferred airline and in no frills, differentiation is difficult (Evans, Stonehouse and Campbell 2012). However, Ryanair has best policies and is clearly the cheapest, which makes the power of the consumers lower. The power of suppliers The suppliers enjoy very high power in the given segment. There are certain things, which are compulsory to any airline and cannot be substituted for, therefore, it is difficult to compromise with the fuel providers and thus increases the power of suppliers. This is a problem being faced by the online industries. Competitive rivalry In the given airline, industry each company tends to provide same service but very few can provide cheap services like Ryanair. There exist price wars and price competitions in the industry. However, Ryanair still holds a dominant position in the market. It remains steady in its growth. Swot Analysis Strength Dominant lowest cost position Most profitable airline industry Good brand image Technology advantage (Lasserre 2012). Weakness Unable to provide additional services New domestic competitors Rising cost of fuel Threats Increasing cost of raw materials Lack of service and training quality New rules Opportunity Unexplored markets like South-east Asian companies Brand image will help it to expand in premier segment also References Eden, C. and Ackermann, F., 2013.Making strategy: The journey of strategic management. Sage. Evans, N., Stonehouse, G. and Campbell, D., 2012.Strategic management for travel and tourism. Taylor Francis. Hill, C.W. and Jones, G.R., 2013.Strategic management theory. South-Western/Cengage Learning. Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012.Strategic management cases: competitiveness and globalization. Cengage Learning. Lasserre, P., 2012.Global strategic management. Palgrave Macmillan. Peppard, J. and Ward, J., 2016.The strategic management of information systems: Building a digital strategy. John Wiley Sons. Ryanair.com.2017.Official Ryanair website | Book direct for the lowest fares | Ryanair.com. [Online] Available at: https://www.ryanair.com/gb/en/ [Accessed 27 Dec. 2017]. Slack, N., 2015.Operations strategy. John Wiley Sons, Ltd. Wheelen, T.L. and Hunger, J.D., 2017.Strategic management and business policy. Pearson.