Porters 5 Force, Pest and Swot Analysis Assignment

Porters 5 Force, Pest and Swot Analysis Assignment Words: 4683

Table of Contents: Primary Research 1. 0Introduction 1. 1Leadership definitions 1. 2Leadership theories 1. 3Conclusion of primary research Analysis of primary research 2. 0Introduction 2. 1Profile of manager and business 2. 2Analysis of questionnaire finding 2. 3Conclusion Theory regarding porters 5 forces framework 3. 0Introduction 3. 1Porters five forces diagram 3. 2Analysis of Porters five forces 3. 3Past analysis of Ryanair 3. 4Conclusion Application of SWOT analysis 4. 0Introduction 4. 1SWOT analysis for Ryanair 4. 2SWOT analysis for Aerlingus 4. 3Conclusion Appendices Figure 1. Personal reflection Progress reports References Primary Research 1. 0 Introduction: As part of our primary research we had to define leadership, as well as explaining four leadership theories. We later used these when constructing a questionnaire that we used when interviewing a Manager of our choice. 1. 1Leadership definitions: The definition of leadership can be explained in many different words, but generally imply the same meaning: House and Baetz defined leadership as “a process of social influence involving two or more people: The leader and a follower (or potential follower).

This is a very basic understanding of the concept of leadership. Collins and Porras take a different approach and explain leadership from the aspect of leaders. They believe “leaders have a vision of how the organisation could be better and can aspire followers to pursue that vision. Carefully crafted visions contain powerful imagery about the future. ” A similar approach is taken by Kirkpatrick and Locke as they describe leaders as being “bright, self-confident, high energy people who know something about the situation they are trying to affect and take control when they must. 1. 2Leadership Theories: McGregors Theory X and Y: In theory X McGregor states that the only reason people work is for money and they don’t get satisfaction out of their job. However in theory Y, McGregor takes a different approach and states that people work for more than just money, that they can be motivated by the want for job satisfaction and acceptance in the workplace. Situational Theory: Proposes that leaders choose the best course of action based upon situation variable. Different style styles of leadership maybe more appropriate for certain types of decision making.

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The three dimensions allow classification of situations according to how favourable the situation is for the leaders influence (Fiedler) Behavioural Theory: Based upon the belief that leaders are made and not born. This theory focuses on the actions of leaders, not mental qualities or internal states. According to the theory people can learn to become leaders through learning and observation. The university of Michigan studies conceptualised two dimensions of leadership behaviour and employee-centered behaviour. (Likert). Contingency Theory:

This focuses on particular variables related to the environment that might determine which particular style of leadership is best suited for the situation. According to this, no leadership style is best. Success depends upon a number of variables including style, qualities of followers, and aspects of the situation. Fielder studied leadership in widely varying groups. His work built a contingency theory of leadership that considered the characteristics of the leader and of the situation. (Fiedler) 1. 3Conclusion of Primary Research:

After defining leadership and the leadership theories, we gained a better understanding of them which enabled us to construct a questionnaire to complete our research by interviewing a person in a Management position. Analysis of Primary Research 2. 0Introduction: In this section we will be analysing the primary research we carried out. After the construction of a questionnaire, we all participated in the interview of a manager. After this, we analysed the answers of the manager in relation to leadership theories, thoughts and approaches. 2. 1Profile of Manager and Business:

As part of our assignment, we interviewed Mary Conroy. Mrs. Conroy is a Clinical Nurse Manager. She is currently managing a section of St. John’s Hospital in Enniscorthy, Co. Wexford. Mrs. Conroy works as part of a hierarchy organisational structure at present. She manages the Clinical Nurse Manager and the staff in her section of the hospital but is also managed herself by the Clinical Nurse Manager who is in charge of the running of the hospital. 2. 2Analysis of questionnaire findings: In order to complete the allocated work, we were required to interview a manager.

From this, we were able to analyse the answers in relation to theories, management styles and thoughts. Behavioural Theory: This theory is based upon the fact the leaders are made and not born. It is clear from our interview that Mrs. Conroy agrees with this theory as she agrees that leadership skills can be developed through training and education, rather than just being a natural gift. McGregor’s Theory X and Theory Y: Theory X states that workers only work for money, while theory Y argues that workers can be motivated by the want for job satisfaction.

It is clear the Mrs. Conroy agrees with a bit of both theories, as she believes that people would not be there if the work was voluntary, but that job satisfaction also plays a major role in employees work. Situational Theory: This proposes that leaders choose the best course of action depending on the situation variable. In this case, she clearly agrees with this, as she says that it depends on the actual situation as to what way she must lead and this may change the type of leadership style she must adopt at the time. Contingency Theory: Mrs.

Conroy believes in contingency theory, as she believes that not one leadership skill is suitable for all situations, as the theory would suggest. She believes this as she has been in situations where she has had to show different leadership styles and because of this, she welcomes different approaches and workers suggestions. Human Resource Management: In relation to Human Resource Management (HRM), Mrs. Conroy believes that you need to have sufficient resources to maintain a healthy working environment, which also need to be accompanied by sufficient breaks and good pay rates.

This will ensure adequate HRM in the workplace. She also believes that supervision can play an important role in workers performance, however too much supervision can make workers feel uneasy. Scientific Management: This management style relates to workers performance relating to their work conditions. Mrs. Conroy agrees that efficient breaks are necessary to encourage them to increase the output. She believes piece rate is also important for increasing productivity, but doesn’t always prove to be efficient as she says that the quality of work can sometimes suffer.

She further believes that benefits-in-kind are not necessary, as the theory may argue, but simply being fair to employees is. Bureaucracy: This promotes efficiency in the business by adding structure to the organisation. She believes that the delegation of work because it can lighten the workload and as people have different levels of skills and experience, work can be allocated appropriately. She believes that this can put structure in an organisation which will increase success. Frederick Winslow Taylor – Management Thought:

This thought relates to the specialisation of labour and discovering the one best way to do a job and providing training. Although Mrs. Conroy does agree with this it is clear that she welcomes different approaches to doing a job, provided they adhere to policy, procedure and safety relating to working conditions, as she believes these are the extremely important in the workplace. Henry Fayol – Management Thought: Henry Fayol believes that an organisation works better when it is divided into categories where employees specialise in a particular area. It is evident that Mrs.

Conroy agrees entirely with this thought, as she believes that it is very hard to be efficient in all areas and this type of division helps produce expertise. Max Weber – Management Thought: This thought relates to the belief that there should be an authority of hierarchy in an organisation to provide structure to the business. Mrs. Conroy agrees that there must be a certain amount of division relating to hierarchy to maintain structure in a business. However, she does not agree with total hierarchy division as it does not promote equality in the workplace, which is essential for boosting the morale of the organisations employee. . 3Conclusion: After analysing the primary research we gained a better insight into the work of managers and how they deal with everyday situations in relation to leadership theories, thoughts and approaches. In our analysis we concluded that Mrs. Conroy is a very efficient manager and can relate mainly to the human resource management school as she values the opinion of her employees. Theory Regarding Porters 5 Forces Framework 3. 0Introduction: Porters five forces analysis is a model that is designed to give an organisation a better understanding of its competitive position.

It is also used for determining ways to gain a competitive advantage over both new and existing competitors in the current market place. This assignment will analysis the theory to Porters Framework. The second part of this assignment will apply Porters 5 forces framework to Ryanair. In order to do this it considers the five main forces currently existing within the market place. These include: ?Competitive rivalry. ?Suppliers in an organisations value chain. ?Buyers in an organisations value chain. ?Possible substitutes to the organisations produce / service. Possible new entrants to the market. 3. 1Porters five forces Diagram. Risk of entry by Potential customers Bargaining powerRivalry amongBargaining power of suppliers. existing firms of buyers. Threat of substitute Products 3. 2Analysis of Porters Five Forces: 1. Rivalry among existing firms: The type of competitive rivalry in the airline business is medium. Ryanair fell there is a medium threat from other airline companies, however because Ryanair is such a major airline competitor they are able to withstand the competition.

In order to remain competitive, Ryanair utilise a low cost strategy, while other firms such as Aer Lingus concentrate on quality and comfort as their main strategy. Possible threats to Ryanair are mostly the airlines that are based in Europe. Some of the major European airlines include: •Aer Lingus. •British Airway. •Air France. •Aer Arann. •Atlantic Airways. •Easy Jet. There are much more airlines that exist in Europe, however they do not pose as much threat to Ryanair as they are not as popular. This is because the range of their destinations would not appeal to the majority of the Irish population. . Bargaining Power of Suppliers: The bargaining power of suppliers is generally high as without suppliers the airline would not be able to run sufficiently. These provide the airline with the main necessities to ensure that they run effectively. The main suppliers for Ryanair include: (i)Planes: The only two suppliers of planes are Boeing, a US Company and Airbus, which is a European company. Ryanair use Boeing as their main manufacturers. The standard plane used by Ryanair is the 737-800. This costs in the range of 51 – 57. million dollars. (ii)Landing Slots; These play a major part in the running of planes, because without them planes would not be able to land safely. The price of a standard landing slot can vary depending on the airport. At Dublin Airport the standard price of a landing slot is €20 million, whereas at Heathrow Airport they are estimated to be worth approximately ? 30 million. These figures are in accordance with times on line. This also states that when landing slots go to auction the price can exceed to the range of ? 1. 5 billion.

However, although prices are high and landing slots are few, their power as a supplier is only medium as the airlines already own them. (iii)Fuel: Fuel has high power as a supplier, as it is vital for the running of planes. The price of fuel has risen significantly in recent years. This is because OPEC, a major oil supplier owns 71% of the world’s oil reserves. The price of fuel is displayed in the following figures: 1999 -$16 per barrel. July 2008 -$147 per barrel End 2008-$75 per barrel. In July 2008, prices for fuel reached its highest at $147 per barrel.

This is due to a lack of competitors. However due to the recession prices of oil have plummeted and are currently $75 per barrel. This is still much greater than in 1999. OPEC has resources in a number of countries. These are known as the member countries and consists of: •Algeria •Angola •Ecuador •Indonesia •Iran •Iraq •Kuwait •SP Libyan •Nigeria •Qatar •Saudi Arabia •United Arab Emirates •Venezuala Although OPEC is clearly the main fueld provider, alternative fuel providers include: •Mariah Fuels •World Fuel Services •AV Fuel (iv)Labour: Labour has medium supply power.

The labour force of Ryanair consists of about 2,700 employees. These include: •Airport staff. •Pilots. •Flight Attendants. 3. Threat of Substitute Products: This would have low power because the airline industry is extremely popular and offers consumers transport direct to a wide variety of destinations in a short time. The main alternative transport includes: •Boats: This is a very efficient type of transport as it gives the consumer freedom to walk around when on-board, check-in is not as long and this means less waiting around. It is also cheaper and cars can be brought abroad when travelling.

However it does not travel to as many destinations and it takes much longer to get there. •Trains: This does not allow you to travel outside Ireland, but it is a very efficient transport system within Ireland. •Bus: Buses are similar to trains as it is an efficient type of transport, but does not allow for travelling abroad. Overall it is clear that air transport is the most efficient means of transport as it allows people to go anywhere in the world at a reasonable price. 4. Bargaining Power of Buyers: This has a high power in the airline industry because consumers want the best price available.

This therefore causes competition between airlines as well as between the consumer and the airline, as they both compete for the best price. Danny McCoy estimated that 100,000 people have left Ireland so far this year. This shows that Ryanair will not run out of customers as they utilise a low cost strategy and this will encourage customers to fly with them. 5. Risk of Entry by Potential Customers: There is a high risk of the entrance of new customers, as there is a large number of people beginning to fly, who may never have flown before. If Ryanair continues to keep a low-cost strategy, customer will be encouraged to fly with them.

Although some people may prefer comfort and quality and this is not included in Ryanair’s price. This means that Ryanair must engage in intense competition and advertising campaigns to attract possible new entrants. If Ryanair feel under threat from other airlines, it could mean they will have to raise their prices in order to provide a comfortable and good quality flight. 3. 3Pest Analysis of Ryanair. Political Factors: The political factors affecting Ryanair’s position in the airline industry is very limited. The current Government position is not very strong and is undermined by the privatisation of the Company.

Ryanair is a plc company which means that the owners of the company cannot lose anything beyond the amount of their investment if the company goes bankrupt. Economic Factors: In considering the economic position of Ryanair they seem to contain a strong short and long term economic position. In current times consumers are travelling twice to three times a year and if it continues in the long term Ryanair and other companies will have to keep competing both in their prices and the quality of their product. As interest rates continue to rise this will surely affect the future of the company.

The long term prospect for the airline economy is very dull due to the current world wide recession. This recession will cause Ryanair to expand their service and to be more flexible in both price and quality. Social and Cultural Factors: A major barrier to Ryanair’s progress is the worldwide market is language and brand loyalty. Ryanair is excelling in the domestic and immediate surrounding market in Ireland and United Kingdom. Another barrier that seems to influence the choice of the customer is the leisure time available to them, the amount of time they have to shop, relax and eat etc.

The final influence on customers is the amount of money available to them for holidays, flights and expenses. Technological Factors: Technology is a major factor in determining the success of Ryanair in Ireland but also must consider the countries they wish to fly to. Ryanair communicate with customers through both internet, advertising, questionnaires, television, direct mail, radio, bill boards and newspapers. Technology is a main factor in the process of putting this advertising through efficiently. 3. 3Conclusion: We conclude that Ryanair are a very low cost airline and they are very popular among their customers.

They do not undergo much threat from rival airlines. We can tell this from using Porter’s five forces analysis as it examines all the different areas of the airline company. It shows us that Ryanair are currently at a competitive advantage. Application of SWOT analysis to Ryanair in comparision to Aer Lingus. 4. 0Introduction: In this we will complete a SWOT analysis for Ryanair in comparison to Aer Lingus. This Therefore should identify the strengths, weaknesses, opportunities and threats to both the Airlines. In this assignment we will evaluate the theory relevant to the S. W. O.

T analysis Framework. This assignment will also apply the S. W. O. T analysis to both Aer Lingus and Ryanair. Please find below the S. W. O. T analysis of both Ryanair and Aer Lingus. SWOT ANALYSIS FOR RYANAIR. Strengths: It is a low costing flight. It has brand recognition through out Europe and has a lot of power in sourcing low cost airports. It has a lot of power in negotiation. It has an aggressive strategy in gaining market shares and expanding its business. It has a proven history of stimulating new traffic. It can fly to many destinations i. e. 12 European bases.

It is a very popular and well used airline that provides services on a constant bases. Weaknesses: Attempts to pass on cost increases have strong impact on low average fares. It has hidden charges that make the flight prices more expensive e. g. they charge extra for luggage and taxes. It does not focus on luxury flights e. g. a meal or drinks are not included in the price. It has a difficulty in keeping costs down in inflationary environment. It has non-central location of some secondary airports. ____________________________________________________________ _ Opportunities: There is a growth in the tourism section.

They can expand to more locations e. g. Transatlantic/Asian and China. Due to the exit of competitors from the market this allows for purchase of landing slots. There is also room for expansion in the Spanish Market. More countries are joining the European Union and there will be a chance of more E. U. destinations. Threats: Due to the recession there is a downturn in the market growth. There could be lots of new competitors joining the market. If fuel prices rise to a certain level it could determine the outcome of the company i. e. make a profit or loss. If there is a weakness in Sterling it will lead to the cost of flights decreasing i. . less profit for the airline industry. If global warming increase there will be further environment taxes to prevent pollution increasing to a higher level SWOT ANALYSIS OF AER LINGUS. Strengths: Their brand is widely known throughout Ireland, UK and America. They possess very valuable landing slots in one of the main EU airports in Heathrow. They have no hidden costs i. e. all the cost is in their original fares. They are a comfortable airline and customer satisfaction is their main priority. They have a young, flexible and highly skilled workforce. They possess a reasonable young fuel efficient fleet of planes.

They give a good friendly, local first impression i. e. their logo is a Shamrock and the colour green is associated with Ireland. Weaknesses: They are a relatively small firm in comparison with other main competitors. Their planes are generally small in size. There stakeholders are in constant conflict due to the main decisions to be made internally in the Company. Their planes are expensive to build due to labour cost inflation i. e. the cost of building planes. They are not a low cost airline and this does not appeal to most customers. They have poor industrial relations due to workers constantly going on strike. ___________________________________________________________ _______________ Opportunities: There is a growth in the tourism section. They can expand to more locations e. g. Transatlantic/Asian and China. Due to the exit of competitors from the market this allows for purchase of landing slots. There is also room for expansion in the Spanish Market. More countries are joining the European Union and there will be a chance of more E. U. destinations. Threats: Due to the recession there is a downturn in the market growth. Not as many people are taking holidays. There could be lots of new competitors along with the existing competitors.

If fuel prices rise to a certain level it could determine the outcome of the company i. e. make a profit or loss. If there is a weakness in Sterling it will lead to the cost of flights decreasing i. e. less profit for the airline industry. If global warming increase there will be further environment taxes to prevent pollution increasing to a higher level. 4. 1SWOT analysis for Ryanair: Strengths: •It is a low costing flight. •It has brand recognition throughout Europe which will attract more customers. •It has a lot of power in negotiation, power in sourcing low cost airports. It has an aggressive strategy in gaining market shares and expanding its business. •It has a proven history of stimulating new traffic. •It can fly to many destinations i. e. 12 European bases. •It is a very popular and well used airline that provides services on a constant bases. Weaknesses: •Attempts to pass on cost increases have strong impact on low average fares. •It has hidden charges that make the flight prices more expensive e. g. they charge extra for luggage and taxes. •It does not focus on luxury flights e. g. a meal or drinks are not included in the price. •It has a difficulty in keeping costs down in inflationary environment. It has non-central location of some secondary airports. Opportunities: •There is a growth in the tourism section. •They can expand to more locations e. g. Transatlantic/Asian and China. •Due to the exit of competitors from the market this allows for purchase of landing slots. •There is also room for expansion in the Spanish Market. •More countries are joining the European Union and there will be a chance of more E. U. destinations. Threats: •Due to the recession there is a downturn in the market growth. Not as many people are taking holidays. •There could be lots of new competitors along with the existing competitors. If fuel prices rise to a certain level it could determine the outcome of the company i. e. make a profit or loss. •If there is a weakness in Sterling it will lead to the cost of flights decreasing i. e. less profit for the airline industry. •If global warming increase there will be further environment taxes to prevent pollution increasing to a higher level. 4. 2SWOT Analysis for Aer Lingus: Strengths: •Their brand is widely known throughout Ireland, UK and America. •They possess very valuable landing slots in one of the main EU airports in Heathrow. •They have no hidden costs i. e. all the cost is in their original fares. They are a comfortable airline and customer satisfaction is their main priority. •They have a young, flexible and highly skilled workforce. •They possess a reasonable young fuel efficient fleet of planes. •They give a good friendly, local first impression i. e. their logo is a Shamrock and the colour green is associated with Ireland. Weaknesses: •They are a relatively small firm in comparison with other main competitors. •Their planes are generally small in size. •There stakeholders are in constant conflict due to the main decisions to be made internally in the Company. •Their planes are expensive to build due to labour cost inflation i. e. he cost of building planes. •They are not a low cost airline and this does not appeal to most customers. •They have poor industrial relations due to workers constantly going on strike. Opportunities: •There is a growth in the tourism section. •They can expand to more locations e. g. Transatlantic/Asian and China. •Due to the exit of competitors from the market this allows for purchase of landing slots. •There is also room for expansion in the Spanish Market. •If they run into any financial difficulty they can be privatised i. e. bought by a private company. •More countries are joining the European Union and there will be a chance of more E.

U. destinations. Threats: •There is a further reduction in the cost of Ryanair flights and this puts pressure on Aer Lingus. •Industrial relations could deteriorate and cause the breakdown of the Company. •The rise in number of European airlines could put strain on Aer Lingus as this could mean lower prices forcing Aer Lingus to lose existing customers. 4. 3Conclusion: We concluded that Ryanair are at more of an advantage competitively as their strengths are much greater while their weaknesses are much fewer. However, opportunities and threats for both airlines are similar. This is due to them being in a very high demand and similar market.

It is also clearly evident that Aer Lingus proceed as a quality air line. Appendices Fig: 1. 0 MANAGEMENT QUESTIONNAIRE: Rachel Conroy, Edel Mackin and Shane McGuire. 1. Do you think leadership skills can be developed? 2. Do you think you were born a leader? 3. Do you believe leadership skills can be attained through training and observation? 4. Do you believe money is the main motivational factor in your workplace? 5. Are your employees (a) self-motivated or (b) do they require a lot of direction and controlling? 6. Are your employees lazy and what would you say is their main motivational factor? 7.

Do you agree that allocating work to workers is an effective method? 8. Do you agree that benefits-in-kind are necessary to achieve co-operation in the workplace? 9. Do you believe sufficient breaks will increase employees work rate? 10. Do you think supervision is an important role in a workers performance? 11. What characteristics do you believe a supervisor should have? 12. Do you feel all situations can be dealt with in the same manner? 13. Do you think there is different ways of dealing with different situations, depending on the actual situation? 14. Do you think a certain situation can determine the type of leader you are at the time? 5. Do you think you have the ability to be an effective leader in any situation? 16. Do you think there is a right way to do every job or do you welcome different approaches? 17. Do you believe an organisation is more efficient when it has been divided into set categories that deal with different areas? 18. Do you believe that employees should be organised in a hierarchy of authority from the top of the organisation to the bottom? 19. Do you believe that tasks should be divided and delegated to specialists so that responsibility and authority are more clearly defined? 20. Do you believe peace rate increases the productivity of workers?

References: Collins, J. C. and J. I. Porras (1996). Building you Company’s Vision. Harvard Business Review 76 (Sept-Oct): 66-77 Fiedler, F. E. (1965) Engineer the Job to Fit the Manager. Harvard Business Review 43: 115-22 House, R. J. and M. L. Baetz (1979). Leadership Some Empirical Generalisations and New Research Directions. In staw, B. M. , ed Research in Organisational Behaviour. Greenwich, Connecticut: JA1 Press pp 342-46 Kirkpatrick, S. A. and E. A. Locke (1991) Leadership: Do Traits Matter? Academy of Management Executive 5: 48-60 Likert, R. (1961). New Patterns of Management. New York: McGraw-Hill.

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