Compare the challenges to selected business activities within a selected organisation, in two different economic environments. The organisation I selected for this assignment is Ryanair. Ryanair is an Irish low cost airline. The head office is located at Dublin Airport, Ireland with the operational bases at Dublin Airport and London Stansted Airport. Ryanair is one of the largest airlines in Europe. Boom: Boom is the opposite of a recession. Boom occurs when more goods are being produced and consumed and incomes are rising. The impact of a boom economy on Ryanair:
Ryanair is growing as a result of the effects of the boom. They are planning a major expansion in Scotland after announcing new routes and that it is going to build its biggest maintenance base there. This will create more jobs locally. Ryanair will also need to invest in more aircrafts and equipment. This will help support the manufacturing industry. By expanding the business, Ryanair can provide more flights. They can meet consumers demand and also attract more customers with their flight offers. This will increase their business revenue because they will sell more flights.
Ryanair’s reputation will get better because they will be happy with the service and tell other
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If the employees work long hours the cost of the wages will rise because of the amount of hours the employees work. Increased demand for imported goods and services: Ryanair have to provide their flight tickets for higher prices because of the VAT being increased. The VAT is increased in a way to profit and going from the boom because this is the time were the business is going up after a down fall they might had. Government tax revenues will be rising quickly: Revenue is the income that the company receives from its business activities, usually from sale of goods and services to customers.
In the United Kingdom revenue is referred to as turnover. Sales – cost of production = revenue. The government tax revenue being raised quickly means that the money has a fast overturn because when the customers pay the money to Ryanair for the tickets and after that Ryanair pays the tax with that money. Company profits and investment increase: In the boom economy the company makes more profit and therefore makes more investments. The impact of the boom is to recover from the things that didn’t work from the previous recession and investments they have made will be more efficient.
This will enable the company to make changes within the operation of the business. Rising productivity: The impact of the company being in boom is that the flights they provide being improved and new employees will be employed. This shows that more goods are being produced so this means that its productivity is rising. The impacts of the boom on the company include being able to expand the company, investing across the countries and employing more people. The number of employees increased because of the fact that the business is doing well and needs for new recruitment for new flights to be made; this will increase wages.
Recession occurs when people involved in business become more cautious and customers cut back on spending, and start to save more; manufacturers and sellers cut back on their orders, produce fewer goods and start to cut back costs in general, including by laying off workers. Unemployment: The economic situation of people looking for work and being willing to work at the prevailing wage, but unable to find a job. The impact of recession upon unemployment is that the rate will rise because when the company doesn’t have any money to pay the employees then this will lead to unemployment.
Low-skilled, low-educated workers and the young are most vulnerable to be unemployed in a downturn because the jobs will be given to skilled, educated and experienced workers. Business: A business is a commercial enterprise that attempts to earn a profit by providing services and/or manufacturing products that are offered for sale. The impact of recession upon business is that the sales tend to fall but then they rise again in a boom. Social effects: Less wages and more unemployment means a decrease in consumer spending.
The loss of a job is known to have a negative impact on the stability of families, and individuals’ health and well-being because people worry when they can’t pay their bills and buy food. When people are unemployed, they are reluctant to spend money on luxuries such as travelling. The impact of the recession on Ryanair: Negative: Ryanair lost profits as they had to cut fares to keep the passengers coming and the fuel cost and added environmental taxes have increased their expenses.
There was a decline in real income, which means the income of an organisation after taking into consideration the effects of inflation on purchasing power. Inflation occurs when the value of money begins to fall, thereby decreasing purchasing power. So Ryanair had less money to invest. Jobs are also at the risk of being lost because they are selling fewer flights and this will lead to less staff needed to work for Ryanair so there will be redundancies. The impact of the recession was added to by the ash cloud.
Due to the ash cloud, thousands of passengers were stuck at airports and Ryanair had a duty to provide them with food and shelter. They have to pay back the money for the people who booked tickets for flights that passengers could not get on. Ryanair was accused of failing to take travellers and repay expenses almost four months after the volcanic ash led to cancelled flights. Positive: Ryanair have taken on extra staff to deal with complaints due to the volcanic ash incident. This will help the local economy because they can provide short term jobs for the local people.
Ryanair insists it will continue to expand across Europe. Some companies went bankrupt so this will lead to more opportunities to get new customers. More customer’s mean more profits so there’s more money to invest. This will help Ryanair to survive the recession. Some airlines will go bankrupt which is good because Ryanair will have less competition on the market. The impact of recession upon Ryanair is that it makes aircraft purchasing cheaper because there will be less demand in the market. The number of Ryanair passengers will increase because there will be less competition for customers.