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Critical Evaluation of Ryan Air's core competencies

The business environment of a firm consists of all the external influences that affect its decisions and performance. These can be categorised as Political, Economic, Socio-cultural and Technological factors, and fitted into a framework called the PEST analysis (Grant, 2001). Let us now conduct a PEST analysis for Ryan Air in the market environment it operates in.

The PEST Analysis identifies a number of key environmental influences that are, in effect, drivers of change (Johnson et al, 2001). The political, economic, socio-cultural and technological factors that influence the market development are listed systematically and assessed. It offers a checklist that enables market entrants and participants to consider and assess the external risks and opportunities the particular market is exposed to and to implement the adequate strategies and measures to hedge or harness them respectively.

Differentiation - This translates to making one's product or service sufficiently different from competing product offerings, such that customers are willing to pay a premium for the differentiated attribute of the product (Williams, 2004). This strategy is a useful shield for organisations from competitors and substitute products, as it enables them to retain existing customers and protect them from being acquired by competitive product offerings. An example of a product that uses the differentiation strategy is the HBO premium subscription channel. While its main line of business is buying the rights to movie channels and then broadcasting them like its competitors, it also differentiates its product offerings by broadcasting homemade productions, soaps and mini-series. This ensures that the differentiated product offering from HBO is preferred by the subscribers, giving it a bulk of the premium channels market.

Focus - Focus strategies draw upon concepts of positioning and addressing the needs of niche markets with a product using a specific attribute or a set of attributes. Here, organisations typically conduct detailed research into desirable attributes in a product, and the market segment that prefers these attributes. Once it sees a market that is large enough to cater to, so as to ensure it breaks even and makes desirable profits, it goes ahead and applies this strategy. To illustrate, Rolls Royce focus on the exclusive segment of car purchasers and cater to them, Dell focuses on the direct selling market to sell its products, etc.

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