Report on Case Study
Ryanair is a low cost airline who operated more than 1,800 flights daily throughout over 30 countries predominately in Europe. Given they are a low-cost airline, they operate “lean” and due to this, they did not place a strong emphasis on their employees or customers. They solely compete on price and this has caused several organization issues such as the autocratic control approach of management over employees, high turnover, low morale and a weak organizational culture.
The airline company Ryanair currently is a leader in the low cost airline industry. However, there are many issues with staff that could hinder operations in the future, and hinder the company from hiring and retaining top talent. Without this talent, Ryanair could easily lose their competitive advantage and find their customer service levels drop.
Ryanair used to be founded in 1985 via the Ryan household to grant scheduled passengers between Ireland and UK, as a choice to the kingdom owned monopoly airline, Aer Lingus. Initially, Ryanair was a full-service carrier, with two instructions of seating, leasing three different types of aircrafts. Despite boom in passenger volume through the end of 1990 the company had disposed-off five chief executives and accrued losses of IR£20million. It’s fight to live to tell the tale in the early Nineteen Nineties,the airline transformed to grow to be the first Europe low fares, no-fill carriers, built on the model of Southwest Airlines, the US successful airline. Ryanair floated on the Dublin Stock Exchange in 1997 and is now quoted on the Dublin and London Stock Exchange. After its makeover into a finances airline, Ryanair never regarded back, as it introduced new bases and routes and aircraft. Despite the up and down cycles in the airline industry over the decades. Ryanair persisted its upward trajectory, being amongst the world’s most worthwhile airlines and leaving all others behind.
Ryanair offer a range of ancillary services, consisting of in-flight beverages, food and merchandise and internet-related services. It distributes accommodation, travel insurance and vehicle leases thru its website. Delivering these services via net allow Ryanair to expand sales whilst reducing unit cost.
Ryanair’s share reached an excessive of €6.30 in April 2007 and plummeted to €1.97 in October 2008, as international fairness markets tumbled. By mid-2009, the shares were buying and selling in the €3.20 to €3.40 range, with an anticipated medium time period target of €4.20, primarily based on anticipated income and a P/E ratio of thirteen After its flotation in 1996, Ryanair’s coverage was once now not to pay dividends on its shares. It retained revenue to fund its business operations, the acquisition of additional plane required for new markets, growth of current offerings and hobbies fleet replacements.
Ryanair’s boom is dependent on to get right of entry to an enough number of appropriate take-off and landing slots at prices constant with its budget strategy. In many cases, there is opposition for these slots alongside with the risk that airport will elevate charges. Ryanair continuously rail in opposition to airport costs at Dublin and Stansted, redeploying aircrafts to airports with decrease charges. However, it has cancelled route from Madrid and Barcelona following an enlarge of over one hundred percent in expenses at these airports. Indirectly, Ryanair is additionally prone to extra taxes and charges, such as vacationer taxes imposed through government.
Ryanair has been in litigation with the EU about alleged receipt of kingdom useful resource at certain airports. An EU ruling in 2004 held that it had received unlawful state useful resource from publicly owned Charleroi Airport, its Brussels base. Ryanair used to be order to repay €4 million. On appeal, in 2008 the EU selection was overturned, and Ryanair used to be refunded. The EU launched in addition investigation into allegations of unlawful resource purportedly subsiding Ryanair at as many as 18 publicly owned airports such as Frankfurt Hahn in Germany. Competitors launched other prison challenges against Ryanair. Furthermore, Ryanair vigorously antagonistic French authorities attempted to defend Air France by forcing easyjet and Ryanair to go their French-based body of workers from British employment contracts to more luxurious French ones.
Following pay freezes in 2009 and 2010, Ryanair issued a 2% company-wide pay amplify in 2011. It was once criticized for refusing union cognizance and allegedly supplying terrible working conditions. The British Airline Pilots Association tried to prepare Ryanair pilots in the UK, keeping the proper to ballot Ryanair pilots to be a part of the union. In July 2006, the Irish High Court stated that the Ryanair had bullied the pilot to accept new contracts, the place pilot would have to pay €15000 for retraining on new aircrafts if they because of this left the airline, or if the company was persuaded to negotiate with union during the following five years. Meanwhile, it used to be contesting the declare of some pilots for victimization underneath the new contracts.
Ryanair was once ordered to pay €1million in prison value after court docket refused the airline get admission to to the names and addresses of pilots who posted fundamental comments about the company, on a site hosted by means of the British and Irish Pilot unions. It claimed nameless pilots were the usage of a website to intimidate and harass foreign-based pilots to discourage them from working for the company.
Ryanair has conceded that iciness lay-off due to grounding of plane may want to have an unsettling effect on staff, disrupting full time everlasting employment. Notwithstanding, the adversarial incidents in its industrial relations history. Ryanair appear to have no trouble in recruiting new personnel which include pilots.
Ryanair continues a range of insurances: aviation third-party liability, passenger liability, company liability, director and officers’ liability, aircraft loss or damage, and different enterprise insurance, steady with enterprise standards. It believes it’s insurance plan coverage is adequate, although now not comprehensive. This insurance plan does not declare for losses that came about due to unexpected events, like airspace is closed and aircrafts are grounded due to the ash cloud or harsh weather. It is almost impossible to declare for limitless liabilities. If for example, EU may additionally legislate a limitless liability for an air provider in the match of demise or injury suffered by using passengers.
Other price range carriers of numerous measurement and boom ambitions and regional emphasis, varied in levels of passenger services and the use of important or secondary airports. A contrast with the US budget airline market suggests that penetration in Europe is much less than in USA which endorse a boom component for airline enterprise in Europe.
Q1 VRIO Analysis
Ans VRIO Analysis:
Capability Resource or
Competency? Value? Rarity? Inimitability? Organisational Support?
1. Ancillary services like food and merchandise ‘Yes ‘ ‘Yes ‘Yes ‘Yes
2. Available seats for all passengers ‘Yes ‘ ‘Yes ‘Yes ‘Yes
3. Cheap air flight ‘Yes ‘Yes ‘Yes ‘Yes
4. After sales service ‘Yes ‘no x’ ‘Yes ‘Yes
Based on the above resources can Ryanair develop its nucleus competency, on which a competitory advantage is possible. In order to calculate out whether the above resources can be translated into competitory advantages for Ryanair, the VRIO theoretical account can be deployed.
V-value. This emphasizes that whether the resources are being able to be deployed to run into the demands and outlooks of clients. Uniting the resources of ancillary services like food and merchandise brings about an increase in value to the flight service. With the resources of accommodating the large number of passengers also tempts the cost to reduce and bring about a fall in air fares which ultimately increases the value of Ryanair.
R-rareness. In the short-haul budget air hose concern, Ryanair has subsidies and decrease airport charge. Other rivals, particularly its strongest and most direct rival, EasyJet, do not hold that resource. This makes Ryanair’s authorities subsidies and airport charge decrease rare and valuable. On the other hand, the authorities subsidies and airport charge decrease are given to Ryanair is because its secondary paths and ability to pull clients. Therefore, it helps secondary airdromes develop rapidly and convey much more tourers and ingestion for local authorities. Consequently, the resource is barely transferred.
I-imitability. Apparently, it can be seen through the instance that Ryanair, compared with other air hose, owns a large cost advantage. And this resource, as mentioned in the old paragraph, is barely transferred or imitated.
O-organization. Based on the instance, Ryanair makes good usage of its assorted resources and capablenesss to present the lowest cost and lowest monetary value successfully. The strong direction squad and effectual CEO, its effectual operating scheme and selling scheme all make the deployment of its resources successful, on which its competitory advantage is built up.
In decision, Ryanair exploit its resources and capablenesss successfully to keep the cost leading and supply the lowest monetary value to clients, which is besides its competitory advantage.
Sir Bilal Dossani
Q2 SWOT and TOWS analysis
Ans SWOT Analysis
Strengths (INTERNAL) Weaknesses (INTERNAL)
Ancillary revenue from ancillary services like food and accommodation. It earns significant amount of revenue from these services which constitutes 20.2% of the total operating revenues in 2012
They promote and advertise their services through tropical advertising methods including press conferences which reduces their advertising costs.
It transport more passengers than other airline in the Europe.
It enjoys a strong bargaining power against its suppliers which is an additional strategical area to control expenses
It has associated with poor customer service, tricky service agreements to increase ancillary revenues like ambiguous baggage policies.
It is not diversified in other complementary segments of the aviation industry like cargo or maintenance.
It refuses to recognize trade union and negotiates with Employee Representative Committees (ERC)
It is more dependent on the key Personnel like it’s CEO Michael O’Leary.
Opportunities (EXTERNAL) Threats (EXTERNAL)
The orders of massive aircrafts over the period of ten years will enable to produce more revenue in the upcoming future.
The current market of traditional airlines is dominated with high cost structure rather than low cost business model which will yield unexploited growth to Ryanair.
Ryanair has implemented a companywide programme to improve its customer service and perception which is again making Ryanair competent with other rival firms in the low-cost airline industry.
Ryanair has tended to produce its strongest financial results in times of economic weakness through a combination of increased price sensitivity from passengers and capacity cuts from many competitors. The current outlook for continued economic austerity across much of Europe could provide a favourable backdrop for continued market share gains
Increasing fuel prices are a threat to Ryanair’s cost of providing service and making it difficult to compete in the low-cost airline industry.
After Brexit it has threat of significant fluctuation in the pound against euro which might bring change in the demand for air travel
Air travel, regardless of the carrier, is vulnerable to geopolitical events and natural phenomena such as earthquakes and volcanic ash disruption. With a hitherto unblemished record when it comes to fatal accidents, public perception could be adversely affected if Ryanair were to be involved in a major crash.
Ryanair has a strong presence in UK but after Brexit the travelling routes and policies of UK and EU might differ which will create problems for Ryanair.
Sir Bilal Dossani
Q3 Change Models
Ans John Kotter’s 8 Step Change Model
John Kotter introduced the “Kotter’s 8 Step Change Model” to improve an organization’s ability to change and to increase its chances of success. Following the Kotter’s 8 Step Change Model plan will help organizations succeed at implementing change.
Creating a sense of Urgency
In this step employees get aware of the need and urgency for change, support will be created. This requires and open, honest and convincing dialogue. This convinces employees of the importance of taking action. This could be accomplished by talking with them about potential threats or by discussing possible solutions.
Create a guiding coalition
It is a good idea to establish a project team that can occupy itself with the changes the organization wants to implement. In this group manages all efforts and encourages the employees to cooperate and take a constructive approach. Preferably, this coalition is made up from employees working in different jobs and positions so that all employees can rely on the group and identify themselves with the team members. Because of the open character, the groups can also function as a sounding board, which enables an open communication.
Create a vision for change
Formulating a clear vision can help everyone understand what the organization is trying to achieve within the agreed time frame. It makes changes more concrete and creates support to implement them. The ideas of employees can be incorporated in the vision, so that they will accept the vision faster. Linking the adopted vision to strategies will help employees to achieve their goals.
Communicate the vision
The most important objective of step 4 of Kotter’s 8 Step Change Model is to create support and acceptance among the employees. This can only be achieved by talking about the new vision with the employees at every chance you get and by taking their opinions, concerns and anxieties seriously. The new vision must be fully adopted across the entire organization.
Before change is accepted at all levels, it is crucial to change or, if necessary, remove obstacles that could undermine the vision. By entering into dialogue with all employees, it will become clear who are resisting the change. To encourage acceptance of the vision by the employees, it helps when their ideas are incorporated and implemented in the change process.
Create short term wins
Nothing motivates more than success. Create short-term goals so that the employees have a clear idea of what is going on. When the goals have been met, the employees will be motivated to fine tune and expand the change. By acknowledging and rewarding employees who are closely involved in the change process, it will be clear across the board that the company is changing course.
According to John Kotter many change trajectories fail because victory is declared too early. However, change is a slow-going process and it must be driven into the overall corporate culture. Quick wins are only the beginning of long-term change. An organization therefore needs to keep looking for improvements. Only after multiple successes have been achieved, it can be established that the change is paying off.
Anchor the change
The last step of Kotter’s 8 Step Change Model. A change will only become part of the corporate culture when it has become a part of the core of the organization. Change does not come about by itself. Values and standards must agree with the new vision and the employees’ behavior must provide a seamless match. Employees must continue to support the change. Regular evaluation and discussions about progress help consolidate the change.
Sir Bilal Dossani
Q4 a Strategic Recommendations
Q4 b Suitability, Feasibility, Acceptability
Ans a &b
Strategic Development Recommendations and Evaluation
Entrance to New Markets
The best amongst all the above mentioned strategies the entrance to new markets is the best strategy for Ryanair to maximize its growth. Entrance to new markets mean that Ryanair should start its operations outside the Europe like Gulf and Asian countries etc. There are no such other airlines that could be able to compete with an airline like Ryanair because all the airlines in these countries are approximately in their introduction or decline stages. Also there are no such airlines in these countries that could offer such low fares as offered by Ryanair.
Utilize Fleet During Winter Months
Ryanair must take some measures to deter the cash outflow during winter as they have grown their market share substantially. As the European economy is highly sensitive, Ryanair must ensure the cost cutting strategies in fuel as well. However, Ryanair must locate new regions for fleets during winter to ensure high sales with substantial revenue.
This strategic move may bring more pressures on the firm as they have been experiencing less-busy flights during winter. As specified above Ryanair must locate new regions as well, it must find regions experiencing less harsh winters during winter months in Europe. This would bring Ryanair in profitability during winters again. If their planes are not capable enough to move on longer distances as they have been used to move within Europe, they must rent new aircrafts which can move to long distances. Those aircrafts are not only capable of going long distances but also they are big enough to entertain large number of customers in one take-off. This may reduce the fuel cost as large numbers of customers would be entertained in one go. This would increased the profitability and reduce the cost. Altogether, utitlizing the fleet during winters will bring increased profits.
Recognize Trade Unions
Trade unions play vital role in extracting more work from the employees. However, strong trade unions may also act adverse. Ryanair from start does not recognize trade unions which adversely affect the productivity of employees as they feel insecure in terms of rights and pay. This situation has been with the Ryanair which reduced the employee count of 8388 in 2012 from 8560 in 2011.
Recognizing trade unions would bring employee in a comfort zone and they may feel more secure as their rights and jobs will be protected. This would bring increased productivity in terms of quality as well which would bring more customer satisfaction and more profits.
Sir Bilal Dossani
Summary and Conclusion
Rising prices and EU-wide recession has accelerated the percentage of change in the competitive landscape. It has led multiple airlines to shut their businesses like Malev (Hungary), Spanair (Catalonia) and many more. There is a need that Ryanair must focus on cost cutting methods to increase it’s profits. Additionally, it also need to improve working relations with the employees to bring more productivity in the work. With the austerity move in the Europe, Ryanair must also contribute their part by diminishing the ostentatious activities going in the firm. Cost cutting methods will sustain the competitive advantage to Ryanair and with improved relations with employees will motivate them to be more focused on work and lead to customer satisfaction.
Sir Bilal Dossani