Case Study of European Budget Airlines

Case Study of European Budget AirlinesRyanair is one of the leading airway companies of Europe. This flight path order is known for its let out-down toll and spunky quality servicing. It operates more than 1,400 flights per day from 44 bases and 1100+ scurvy forage routes across 27 countries, connecting 160 destinations (Ryanair-a, n.d.). This writing endeavours to analyse Ryanair, with special vehemence on situation analysis, decisiveness do, excogitationning and hold inling execute, leadership and government activityal building. This paper will conclude with some plausible recommendations on future issue and progress.Situational AnalysisSWOT is a genuinely helpful counselling beam of light for analysing the situation of a company. Ryanair was established in 1985, and despite its picayunecomings it established a strong position in the market place.StrengthsRyanair has developed a strong put up name in air lane industry as a meek make up go supplier.R yanair has been in the respiratory tract lineage company since the last 25 years and has gained sufficient experience in it.Ryanair has developed its internet facilities and has do it an consequenceant selling point. This helps the company to eliminate the speak tos of agents.Ryanairs fleet includes aircrafts with advanced sitting capacity and low maintenance cost.Ryanairs services performance is of last standard with punctual fleet timing.WeaknessTo save cost, Ryanair charges its passengers for services care refreshments, wheelchair etc. It creates precise impression among passengers about the company.It is not a favorite(a) skyway with the high class passengers.OpportunitiesThe European Union market is expanding with quantify and most of the passengers prefer low get a considerable for their air travel.Regions like spousal relationship America and Asia have greater scope for low cost provider like Ryanair.ThreatsThe existing flight path companies are following str ategies that bring low the cost and hence competition within the industry is increase with time.The oil market is a major supplier to airline moving in. In recent years, expense of oil has increased significantly.The customers are becoming very price and service sensitive.Porters 5 ForcesThe bargaining power of suppliers is very high as the go of aircraft manufacturer and oil suppliers are very less in the market. availableness of right-hand(a) airports is as well as very principal(prenominal) for this industry. However, airports bargaining power is kind of low as they depend on aircraft companies. The bargaining power of customers is very high as they have many oppositewise(prenominal) airline service providers to require from. The barrier entry of airline industry is rather high as it requires heavy investments and technical expertise. Airline is the fastest mode of transportation for foreign and long distance travel. No other substitute can jib the service of ai rline industry. Competition among existing rival is the most import factor in this industry. The rivals are competing with each other for increasing their market share. In European Union, Lufthansa, Ryanair, Easy jet etc are leading airline companies.3. Decision Making3.1. Decision Making Process in RyanairRyanair provides low cost and high quality airline services to its customers. It places customer cheer above all other priorities. The purpose qualification process is principally centred on concerns regarding ways to provide higher customer services. Fleet planning, airline come on, fleet scheduling etc are some of the chief aspects of Ryanairs effective conclusion making process.3.2. Decision Making ApproachDecision making procession can be outlined as strategic tone-beginninged of an formation. Ryanairs counsel squad suggests to follow perspicacious decision making approach. The rational decision making approach is an ongoing and dynamic process. This approach help s to identify the underlying problems and to gamble relevant solutions (Kroon, 1995 p.187). For example, in 2004, when the company was passing through a monetary crisis, rational decision making approach not only helped it to get the better of it but besides paved the path of emergence.3.3. Types of Problems and Decisions Making In RyanairIn 2004, Ryanair was one of the worst performers in FTSE Eurotop 300 index. During that period, competition in airline industry was very high in the European nations as many new companies entered the market. Despite the stiff competition, the company enjoyed a healthy growth rate till 2003. But the heeds inability to substantiate and rectify the essential weakness of its decision making process stunted its growth.3.4. Decision-Making Conditions in Ryanairdarn framing the strategic move for any decision making process Ryanairs first priority will be to analyse the elements of external competition. The European airline industry is crowded wit h many leading companies like Lufthansa, Virgin, Aer Lingus, and British Airway etc. Consumers needs are withal very important for Ryanairs decision-making. Prior to 2003, the companys concern for customer service was very low, except the low fare advantages.3.5. Decision-Making StylesThe decision making style of Ryanairs management squad seems to be affected by different factors. However, the decision making methods are quite flexible. After analysing its rapid growth during 2002-2003, it can be claimed that it centralisees on short term documentary rather than long term goals. Creativity is another major feature of its decision making style.3.6. Decision- Making Biases and ErrorsRyanairs temporary discover during 2004 brought into fore many drawbacks of its decision making process. Robbins has identified some unexplained prejudices and errors of decision making like biases relating to overconfidence, anchoring, confirmation, availability, escalation of commitment etc (Robbins , 2009, p.126). Ryanairs decision was affected by two major biases i.e. anchoring biases and status quo biasness. Its decision making was base on the past success that failed to take in to account unfavourable macro-economic conditions resulting from 9/11 attack on WTC.4. Planning4.1 deal and Mission StatementVision and military mission statements help an organisation to prepare a roadmap for its operative activities. Ryanairs ordained website does not have the vision and mission statement of the company. However, the public statements of Michael OLeary and other higher executive member of Ryanair indicate that it aims to fulfill growth and success by being the terminal cost provider in airline industry (Box and Kent, 2007).4.2. Purposes of PlanningIn general, the purpose of planning is to bring forcefulness and efficiency in the running(a) activities of a business. The implied mission and vision of Ryanairs go throughably states its purposes of planning. To counter the in creasing competition, the company has decided to follow low cost strategy. Hence, its planning is designed after taking into consideration this objective.4.3 Planning And Performances in RyanairAccording to Riezebos, planning is a very crucial element of usable activity that affects the performance level (Riezebos, 2001, p.12). Planning is one of the major tools of motivating participants to procure the common organisational goal. Due to rational decision making approach, the company is able to plan its operational and strategic activities properly. Ryanair is able to achieve its bum with the help of an effectual planning process.4.4 Types of Goals in RyanairThe primary goal of Ryanair is to generate the lowest cost airline service provider in Europe. The belief of offering low fare proved successful for the company. However, initially it failed to understand the necessity of good service for customer. Currently, the company is committed to provide lower fare, high quality se rvice and punctual air schedule (Ryanair-b, n.d.).4.5 Types of Plans in RyanairRyanairs decision making process follows rational approach and it also follows rational model for its planning process. Basically, planning can be divided as short term goal and long term goal. The companys management team was concerned only with the short term goal. The company often changes its plan as per the requirements of the market. In 2002, the companys plan was to provide low cost fare and after 2004, its planning process also took note of service quality.4.6 hap Factors in PlanningRyanair faces three major contingency factors. Firstly, the organisational level affects the operational planning of middle and low level managers. Secondly, the uncertainty of macro-environmental or other external factors affects the planning process. Therefore, Ryanair aims to develop a flexible planning schema. Thirdly, the long and short term objectives of Ryanair affect its planning process. The company always t ries to put up on its current objective.4.7 ObjectivesThe primary objective of Ryanair is to attain cost leadership in European airline market. However, to achieve this objective, the company needs to scale down on other long term goal. These include increasing its operational activities to enter new markets like North America, developing customer centred business model and increasing the use of internet as a major selling point (OCuilleanain et al, 2004).4.8 heed by Objectives (MBO)Management by objective (MBO) approach of management leads to increase in the performance of organisation. MBO is a result-oriented, non-specialized managerial process for the effective utilization of organisational resources by integrating individuals with the organisation and the organisation with the environment (Goyal, 2005, p.304). During 2004, in order to overcome its crisis situation, the company introduced MBO approach to purify its performance.4.9 Strategic Management ProcessRyanairs strateg ic management process is based on its objective of achieving cost leadership in European airline industry. The company has improved its positioning by implementing proper strategic management process. The key elements of its strategic management include low fares, high frequence of point-to-point flight within short routes, proper route choice, reduction in operating cost, increase the internet use for selling, maintenance of safely and high quality service etc (OCuilleanain et al, 2004)5. Organising5.1 Organisation Structure and DesignProper organisational construction and design helps to develop efficient management performance. There are quad elements of organisation structure and these are departmentalisation, span of oblige, centralization and formalization. Appendix 1 depicts the organisation structure of Ryanair. Michael OLeary is the CEO of the company and at that place are vii Directors and a Chairman. For each department like customer services, finance, HR etc, there are individual head management personnel having a team.5.2 twine of CommandThe Chain of command in Ryanair is based on its organisational structure. The extension 1 portrays that the CEO is the chief person of command of the organisation. However, the decision making process in Ryanair includes all the senior managers of each department. To maintain high level of foil and to develop two-way communication arranging in cross functional departments, the chain of command is very essential.5.3 Span of rigThe span of control in Ryanair is effective and helps to maintain a skillful organisational growth. The span of control of the CEO Michael OLeary is the highest and most effective. As per appendix 1, the inherent department is required to report on the ongoing activities to the CEO. The CEO on with the Directors and Chairman is responsible for making the final decisions of the organisation. However, for better planning and implementation, the employees should be involved in the decision making process.5.4 Centralization and decentralizationThe decision of centralization or decentralization depends on the nature and expansion of business. Ryanair is a multinational company having different units in European countries and North America. For the airline industry, decentralization is more preferred over centralization. However, Ryanair follows a centralized organisational model. Decentralization of organisation will help it to compete with the major competitors of different markets.5.5 mechanical and Organic organizationThe mechanistic organisations are those having a well defined hierarchy. Ryanair has a centralized organisational structure and it is an example of mechanistic organisation. Appendix 2 shows the major difference between the mechanistic and organic organisation. The company has been very strict in maintaining its relationship with the employees. However, such organisational structure of Ryanair creates biases and errors in decision making proce ss.5.6 Contingency FactorsThere are many factors that affect the organisational structure of a company. The industry trend, the growth structure, the cordial and demographic characteristics of employee customers and vision and mission of the company etc are the major contingency factors that help in scheming the organisational structure. The leadership quality of the higher management also affects the organisational structure. The organisational structure of Ryanair is also affected by external competition and its leadership style.5.7 Job Characteristics computer simulationOne of the primary objectives of Ryanair is to provide high customer services and in this respect the employees are the most important resource. In order to enrich the quality of job, the company motivates its employees to achieve the common organisational goal i.e. growth. The company aim to offer agonistical salaries with excellent benefits that are simple and easy to understand (Ryanair-c, n.d.).6. Leaders hipThe leadership style is an important influencing factor organisational growth and success. The major leadership skills of Ryanairs management focus on the low cost fare for airline. The fleet of Ryanair includes single-class aircraft that increases the seating capacity. However, the leadership skills of Ryanair have led to its success of 2002-2003 and trial of 2004. The leadership in Ryanair strives to focus on position, seniority and authority. check off7.1 Control ProcessThe control process is the key element for Ryanair as it wants to achieve the lowest cost leadership. In order to facilitate effective and efficient control system, employees must be properly organized. Ryanair has developed proper system for regulating the control process by managing its employees.7.2 Types of ControlRyanair strategic moves and policies control various aspect of the organisation. Firstly, cost controlling activity is the major criteria for low cost fare airline and it includes labour cost, ma rketing cost, airport charges. It also reduces the service cost by controlling many activities. For example, in 2003, it did not offer meals of refreshments to passengers who faced delays (O Higgins, 2004,).7.3 Managerial Approaches to Implement ControlsRyanairs management team approach for implementation of control, strives to bring down the financial expenses. However, proper organisation polish and operational activities are also very important to improve its service qualities. Fleet control and market control are necessary for achieving the competitive strategy. The market control managerial approach of Ryanair involves the comparison of profit and expenses with that of its competitors.7.4 Management Information SystemFor establishing better management system, Ryanair has brought technological advancement in its organisations non-operational activities. For example, it has developed its website for using it as a major selling point. The increasing use of internet has made the m anagerial activity more efficient. At present, the company is aiming to achieve 100% internet ticket booking.Contingency Factors in ControlLike the decision making process, controlling activity of an organisation is affected by uncertainty of macro-economic factors and the cultural and social characteristics of employees. In the airline industry, the major contingency factor is the competition and conflicts related to organisational objectives. Ryanairs management aims to revoke these contingencies factors related to employees by rewarding them for their efforts.7.6 Corporate GovernanceRyanair is listed on capital of the United Kingdom and Irish Stock Exchanges in Europe. The company is responsible for following proper business ethics and compliance as per the unified governance. The entire management teams including the Directors and CEO are committed to maintain the standard corporate governance. Its business policy clearly defines the role of Directors and other members in meet ing its corporate responsibility.Balanced ScorecardBalanced pretend card is the most fashionable management tool used by organisations. Ryanairs strategic management system can be explained with balanced score card. To bring efficiency in its operational activities, Ryanair concentrates of four major areas i.e. finance, customer, business process and learning and growth.8.1 BenchmarkingTo achieve the objective of becoming the lowest cost provider in the European airline industry, Ryanair has set its benchmark for cost controlling activities. At present, it is the lowest cost provider in the industry and hence, it has developed its own benchmark. For example, in 2003, the company reduced its cost for wheelchairs services by bringing a third party wheelchair suppliers who charged passengers for supplying wheelchairs.8.2 Value ChainThe measure chain of the company strives to provide the lowest fare possible. Appendix 4 portrays the value chain which includes other important aspects of the airline industry. To develop a cost effective operational process, the company has combined its balanced score card, benchmarking and value chain.RECOMMENDATIONSTo ensure success, Ryanair must bring some changes in its management and business model. Some of the useful recommendations are given below.It must focus on its services to meet the passengers minimum expectation.The company should include the employees in the decision making process.As many other rivals are also following low cost strategy, Ryanair can bring certain innovations in its service process.Internal communication should be encouraged for better transparency and motivation.It should develop its public image by increasing corporate social activities.For maintaining low cost fare, it should emphasise on the financial aspects.10. ReferenceBox, T. M. and Kent, B. 2007. Ryanair (2005) favored Low Cost Leadership. Online. operable at http//findarticles.com/p/articles/mi_qa5452/is_200705/ai_n21289700/pg_2/. 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