Ryanair Five Forces Analysis

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RYANAIR FIVE FORCES ANALYSIS 1. SUPPLIER There are four major types of suppliers in the airline business: * Aircraft manufacturer * Airport * Fuel supplier * Labor To analyze the bargain power of each supplier, we would like to divide the analysis into five different dimensions: * Influence to purchaser: To what extent, does the buyer’s performance depend on the supplier? Since RYANAIR is a cost-efficient firm, it makes sense to evaluate the influence based on cost structure. * Influence to supplier: To what extent, does the supplier’s performance depend on the purchaser? We use revenue to analyze how much the purchaser’s business mean to the supplier. * Supplier concentration: what kinds of choices/substitutes does the purchaser face? Whether the product/service is easy to substitute? * Switch cost: What are the costs to switch to a different supplier? * Integration: The intention and feasibility for the purchaser to integrate the supplier, or for the supplier to integrate the purchaser Conclusion: Suppliers | Supplier’s Bargain Power | Influence to Purchaser | Influence to Supplier | SupplierConcentration | Switch Cost | Integration | Aircraft Manufacturer | H | H | M | H | H | L | Airport | M | M | L | M | H | L | Labor | M | M | H | M | M | L | Fuel Supplier | L | H | L | L | L | L | That makes Ryanair has one supplier with high bargain power—Aircraft manufacturer Boeing, two suppliers with medium bargain power: airport and labor, then one with limited bargain power—fuel supplier. 2.1 Aircraft manufacturer a) Influence to purchaser Components | % / Total Operating Expenses | Fuel and Oil | 42.96% | Airport and handling charges | 14.91% | Route charges | 12.43% | Depreciation | 8.28% | Aircraft rental | 2.49% | Maintenance, materials and repairs | 2.84% |

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