This section of the research contains a detailed discussion of all analytical models adapted to the study of Ryanair’s current business together with solutions to the identified problems. The SWOT analysis and Fielder’s Contingency Model focused on discovering areas that can be maximized for competitiveness and others that can lead to huge losses if ignored. Further, the Leader-Member Exchange (LMX) Model looked at which practices and processes should be adjusted or eliminated by Ryanair management.
2.1 SWOT Analysis
2.1.1 An Overview of the SWOT Analysis
SWOT stands for Strength, Weakness, Opportunity and Threat. It is an essential analytical model adopted by organizations for the purpose of understanding business environments, particularly the internal and external factors that influence outcomes in a volatile market. Business strategies implemented in businesses require regular reviews for necessary adjustments that aid goal attainment or elimination of unproductive activities (Melear., 2006).
Ivancevich et al (2007) described SWOT as strategic planning tool. The analytic model proves useful in identifying an organizations strongest and weakest links, including opportunities and threats present in the business setting. According to Kouzes and Posner (1987), SWOT does not only help managers in decision making, it is important where factors from external and internal environments need to be synced for profitability and sustainable growth. In addition, SWOT aids in problem identification processes; enables prompt decisions where a quick-and-direct action is necessary; and presents several options to achieving business growth, especially where there are new opportunities or threats are unavoidable. Lamb and McKee (2004) noted that SWOT helps Consultants justify their choice of road maps to solving organizational problems. Without the analytical framework, it becomes difficult to determine which changes are necessary, what activities are productive or non-productive, and when existing strategies fail to achieve their objectives. Importantly, SWOT allows room for flexibility. Mid-way reviews may be conducted during the implementation, with any desirable changes applied for positive results (Gudmundsson., 2019).
Figure 10: The SWOT Analysis Model
Source: Author (2018)
2.1.2 Internal Analysis
A SWOT analysis presents all internal factors that organizations should address or maximize to achieve goals. It is essential to every company’s survival and is what distinguishes successful and ailing organizations. With this analytical model, managers/supervisors scrutinize delivery of products/services in the chain to measure performance against objectives (Pitt & Brown., 2001).
Although weaknesses are responsible for an organization’s failure and are mostly found in the internal environment, it is not limited to it. According to Pettigrew (1979), some circumstances can transform a weakness into strength. The internal factors found within organizations are as follows: Customers’ loyalty; Operating Capital; Patent Rights; Quality/Number of Employees; Copyright Materials; Efficient Organizational Structure; Skilled Suppliers; and Effective Distribution Channels (Novicevic et al., 2004).
2.1.3 External Analysis
The external analysis concentrates on identifying factors in the external environment that represent opportunities and threats to any organization. These include the markets, eco-system and third parties as presented in Figure 11. Impact from external environments (high or low) are not controlled by organizations, rather, managers need careful examination of the factors to be able to correctly distinguish threats from opportunities (Sandford., 2007).
Source: The Author, 2018
Companies discover their purpose for existence in markets, which serve as a point-of-contact for buyers and sellers of goods and services. Markets may be digital or physical. According to Valentin (2001), Consumers influence the success or failure of businesses and, as such, they represent a crucial aspect of marketing.
In the eco-system, there are lots of factors which exert influence on organizations although they are unconnected to the markets, for example, technological developments which are either maximized for efficiency and growth or neglected for low productivity or stagnancy. Factors in the eco-system separate successful manager from the fold (Jago., 1982).
Lastly, third parties include governments, business partners, competitors, regulatory institutions and the media, including any other influential factor which is neither considered part of the market or eco-system.
Explanations on the external analysis indicate that every organization compete in political, economic, social and legal settings which have direct impact on activities thus providing threats and opportunities for managers to identify and properly manage (Gharajedaghi J., 2006).
Further explanations on the cyclic influence of factors in the external environment are shown in Figure 12 below:
Figure 12: External Sources of Business Opportunities
Source: Author, 2018
Similar to the identified opportunities, the external environment also functions with threats classified under the following variables: lowering of price by competitors; increased cost of supplies; unfavourable government regulations and so on (Newstrom & Davis., 1993).
Figure 13: External Sources of Threats to Business Growth
2.1.4 How the SWOT Analysis Works
The SWOT analysis revolves around four quadrants: Strengths, Weaknesses, Opportunities and Threats, which influence the activities of change and innovation leaders in organizations. A good application of effective SWOT strategies ensures productivity, growth and sustainability. According to Beare et al (1997), the SWOT strategy is classified into two: “SO + ST” and “WO + WT”. The first category stands for Strengths and Opportunities, as well as Strengths and Threats. The second group comprises of Weakness and Opportunities plus Weakness and Threats.
“SO + ST” looks into the internal factors that can aid maximization of existing opportunities in the external environment. It also focuses on the organizational strength that can eliminate or reduce the threats or negative impacts from the external environment.
On the other hand, “WT + WO” aims at identifying opportunities that can transform an organization’s weakness into profits by eliminating or reducing impact from factors that pose as threats to business.
2.1.5 Advantages of Using the SWOT Analysis
Findings from the research show that using the SWOT Analysis provides several advantages to individuals, groups and organizations. The merits, according to Witkin & Altschuld (1995), are as follows:
- Aids planning, implementation and supervision of projects.
- Serves managers as a problem-solving tool.
- Its flexible, easy and comprehensive approach allows users to link results from organizational strengths, weaknesses, opportunities and threats while formulating effective policies or solutions.
- It creates room for collaborations between Consultants and clients, particularly from managers whose ideas, experiences and contributions aid formulation of more effective strategies.
- It offers top management of organizations a sense of ownership for adapted business strategies thus inspiring participation among the ranks (Chaudhry & Javed., 2012).
2.1.6 Disadvantages of the SWOT Analysis
The SWOT analysis has been criticised for being objective in nature. According to Lewis et al (1995), the analytical framework is disliked because of its dependence on data which may have been gathered by biased scholars. The involvement of clients in the research process also creates room for distorted results. In addition, focus on organizational Strengths makes users disregard the underlying Weaknesses, Opportunities and Threats. Therefore, decisions emanating from SWOT findings may not provide the best business strategies (Büyüközkan & Ilıcak., 2019).