Examine Whether Ryanair Is A Prisoner Of Or A Master Of Its Environment.

Examine whether Ryanair is a prisoner of or a master of its environment.

A business does not function in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as environmental factors. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.

A popular definition of the environment is described as everything that happens out side the organisations boundaries. [Chapter 3 in organisation Theory: Concepts and Cases, Fourth Edition, Stephen P Robbins and Neil Barnwell.

David P Baron (2003) described the environment as split into two different components of the business environment; the market, includes those interactions between firms, suppliers, and customers that are governed by markets or private agreements such as contracts.(Baron 2003) This describes the every day working of a firm that most managers have to deal with.

And the non-marketing component, the social, political, and legal arrangements that structure interactions outside of, but in conjunction with, markets and private agreements. (Baron 2003) It encompasses those interactions between the firm and individuals, interest groups, government entities, and the public that are represented not by markets but by public and private institutions.

Baron also went further to discuss the parts of the non-marketing component described as the Four I's- issues, interests, institutions, and information, which highlights the fact that Government and politics play important roles in the world of business. Government is a critical factor in the non-market environment and politics often shape competitive dynamics within markets.

The other factors that can affect the business can be heighted in a PEST analysis:

• Political вЂ" how changes in government policy might affect the business.

• Economic вЂ" how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.

• Social вЂ" how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health & Safety

• Technological вЂ" how the rapid pace of change in production processes and product innovation affect a business.

Recent Environmental changes in the airline market;

The recent rise in the value of the euro has meant that, it is more expensive for people in the UK to purchase Ryanair tickets due to the increase in the exchange rate. Euro is valued at 0.79 to the Pound at the 23-4-08. This could mean that sales for Ryanair tickets will fall and sales going to their rivals easyjet a UK airline.

Changing Social environment, the influx of foreign emigrates across Europe means there is more potential for having more frequent routes that have heavy traffic similar to the profitable Dublin to London route.

Increase the price of fuel world wide as the price of a barrel of crude oil has reached a record high of $120, Opec responded by saying it would not be increasing the supply of oil, because it had noting to