Ryanairs Internal Structure - Essay Example

Table of Contents Table of Contents 1 Executive Summary 2 Introduction 3 Ryanair’s Internal Structure 3 Reputational Challenges faced by the Company 5 Theories of Work-based Cultures 6 Ryanair’s Culture 7 The Effects of Ryanair’s Culture on various Stakeholders 8 Conclusion 10 Recommendations 10 References 12 Ryan Air Case Study Executive Summary A Ryanair airline was officially launched, as a family business, in 1985. It was created with the intention of providing airline services for passengers travelling between Britain and Ireland. Ryanair was launched in an extremely competitive which already had established low cost airlines like Air Lingus. It sought to attract passengers by trying to provide as many services as it could for its prospective passengers. However, it did not have a differentiated strategy. Essentially, Ryanair gained a competitive advantage by aligning three business aspects. In the first place, it sought to generate superior value for its targeted consumers. In addition, it offered better-quality value-adding operations which were conducted in an efficient manner. Ryanair also retained possession of the resource base which was needed to carry out the value-adding operations. It is an established fact that an organisation’s corporate strategy is what creates the drive to realise corporate objectives. This paper will seek to describe the fundamental corporate structures of the Ryanair airline, while also commenting on recommendations that will help in highlighting its best qualities for the purpose of maintaining its competitive advantage. Introduction In 1985, Ryanair was officially launched by Tony Ryan in Ireland. At the start, Ryanair had a small staff of 25 employees. The three men only had a turbo-prop plane with which to ferry commuters between Gatwick Airport and Waterford, which is located in southeast Ireland. Gatwick is still the second busiest airfield in England. The rapid increase in the popularity of Ryanair made Britain’s regulatory authorities take notice of it. Soon, it was allowed to operate with four flights on a daily basis. Ryanair quickly developed, and began to attract even more passengers across the UK. Today, Ryanair is considered to be Europe’s oldest low-cost airline. Today, Ryanair has to deal with a lot of challenges that are posed because of the presence of low cost carriers such as BMI baby, EasyJet, and Thomson, which also operate between Ireland and Britain. For a long time, Ryanair attracted larger numbers of passengers because of its low prices, and several destinations points. Ryanair also marketed itself aggressively, and so was able to cultivate valuable relationships with operators in airports in different cities. Ryanair also made significant changes which were received well by passengers. For instance, in the past, Ryanair would only procure used planes so as to save on costs. However, the airline changed this trend as it benefited from increased proceeds. This helped the airline to be able to source for more business in various ports. Today, Ryanair actually seeks to attract leisure passengers (Button 2009). It does not have to deal with issues regarding congestion, and can afford to cater to the customized needs of its targeted consumer group. Ryanair’s Internal Structure For any organisation to remain relevant in the international scene by attracting increasing numbers of customers, it has to seek to continuously generate new goods or services which have a higher quality than that supported by its business rivals. To gain more customers, the organisation also has to expand its business-related operations to other geographical regions in order to source for new clients. Carrying out such a change could be an extremely expensive undertaking, if done without much prior reflection. This is because the organisation in question has to consider the political concerns, as well as trade policies of the region in which it wishes to establish a plant. The organisation could also be faced with new needs from the new customer base, which it is not yet accustomed to. Ryanair has had to consider all these factors when considering its development into new areas. For instance, the airline is known for conducting low-cost transactions, which are negotiated against the expectation of increasing volumes of business (Dobruszkes 2005). Ryanair also partners with particular contractors to supply food, fuel, duty-paid goods, and drinks, which are sold aboard the plane. Ryanair ensures that all these products are correctly handled, stored, and controlled once they are delivered. Ryanair also benefits from increased business because of its fast turnarounds. According to Barret (2004) Ryanair has a turnaround of 25 minutes. This means that, when compared to other airlines, Ryanair has more frequent departures, which results in increased revenue for Ryanair. This is one of the things that make Ryanair so popular with passengers. In point-to-point airflights, the airline does not interlink with other low-cost carriers. By availing non-stop trips, Ryanair avoids the cost of offering services for passengers who may experience delays that may occur when connecting flights. According to Barret (2004) Ryanair’s standard carrier is the Boeing 737. The corporation made this choice because it would be easier for the airline o be able to benefit from maintenance services, and even spare parts at short notice. Owing to the fact that maintenance crews for this model of plane are more than those of other models, Ryanair is also able to save costs of training maintenance crews. Ryanair has also invested in numerous resources in order to keep its passengers entertained during their trips to different destinations. For instance, Ryanair has invested in internet service, satellite television, and arcade games. In regards to outbound logistics, the airline sometimes utilises isolated secondary airports. Making use of regional airports is something that can facilitate cheaper flights. Moreover, Ryanair saves costs in its lack of some services that are usually provided by other low cost carriers. For instance, Ryanair only allows two flight attendants on every flight, compared to five in other business competitors like EasyJet. Reputational Challenges faced by the Company The main area in which Ryanair has experienced reputational challenges is in the perception of its corporate culture. According to Boesch (2007) Ryanair is known to have an ‘abrupt’ work culture that strikes many as being ‘uncaring’. This means that the airline will not just have to alter its culture in order to change the way it operates, but also convince consumers that it has altered its brand. Any business organisation’s culture has a very large role in determining how it is perceived. Corporate culture describes the experience of working in a place. Corporate culture determines how a business enterprise is perceived externally, as well as internally. Having a well defined brand is what helps employees and customers to be able to form a good impression about the organisation. In many cases, organisations will attract employees who share in its basic principles. There are different theories that can be used to describe the culture in organisations such as Ryanair. Theories of Work-based Cultures Harrison and Stokes classified four factors as being representative of the cultures in business organisations (Slocum and Hellriegel 2006). These factors include role, power, support, and achievement. According to Harrison and Stokes’ theory, organisations with power cultures are founded on hierarchical structures. The power structure is based on telepathy, trust, and personal communication. It is not supported by actual bureaucratic procedures. Edgar Schein’s model is better-rounded. Schein divided corporate culture into three categories: basic assumptions, values, and surface manifestations (Slocum and Hellriegel 2006). Surface manifestations refer to visible components such as behavioural patterns. Corporate values, on the other hand, are not openly expressed by individuals, and are usually seen as the basis for the actions of the labor force. Basic assumptions are the invisible factors that are taken for granted, and could be indicative of a corporation’s association with its environment. Slocum and Hellriegel (2006) came up with a different framework that takes into consideration four groups of corporate culture. These four categories include the entrepreneurial, clan, market, and bureaucratic cultures. The allocation of a corporation’s work-based culture is dependent on its control orientation and operations. The organisations that tend to have bureaucratic cultures include those which are based on rules, hierarchical coordination, operating procedures, and the functions of different workers (Slocum and Hellriegel 2006). Organisations with clan cultures, on the other hand, are based on personal commitment, tradition, socialisation, loyalty, social influences, and self management. The workers of such organisations share a sense of satisfaction in their membership. In organisations with entrepreneurial cultures, there are high levels of creativity and risk taking behaviours. Workers in such cultures are stimulated to engage in untried initiatives which could benefit their corporations (Domanico 2007). Such organisations are often very successful because they provide their workers with the freedom and flexibility that is necessary to realise corporate goals. Organisations with market cultures have employees who aim to achieve market based objectives. In such organisations, the association between workers and their organisation can be contractual, and with a officially controlled system of orientation. Such organisations also reward their employees according to their individual performances. In such organisations, there are low levels of loyalty that are shown by employees towards the management. Ryanair’s Culture When Ryanair was inaugurated, the capitalists who launched it had the idea of creating a low cost airline that would still be perceived as an exciting and fascinating option. This resulted in the airline attracting a specific class of passengers. It is a recognised fact that most of Ryanair’s passengers travel in economy class and book into budget hotels. Ryanair also did not have an official mission when it was first created (Wensveen 2007). This affected the direction that the organisation took. Its creators were merely concerned with generating as much profit as possible. In most circumstances, such a motive would not be enough to run a company in the long-run. There would have to other motives that were centred on meeting the needs and requirements of customers to the best ability of the organisation. This significant lack in practical objectives is probably what contributed to Ryanair’s keenness to cut costs at every possible level. According to Barret (2004) the workers at Ryanair have, for a long time, had to pay for their own uniform, health checks, parking spaces, refreshments, and even Christmas parties. The staff of Ryanair also pays for its own utilities such as paper-clips, pens, and note books. The workers may not charge their personal mobile phones at the expense of the airline, either. From the perspective of the Harrison and Stokes model, Ryanair has generated a power culture. When it was first launched, Ryanair’s sole stakeholder was Tony Ryan. Sometime after, Ryan would hand over the position of president to Mr. O’Leary (Barret 2004). However, O’Leary inherited a structure that concentrated all the power at the top. There was no possibility of the power being shared by any of the junior workers. From the beginning, managers were not encouraged to discuss serious issues affecting the company, or make decisions on the basic functions of the company. O’Leary maintained a hierarchical structure even after the airline continued to develop. O’Leary would only hire engineers, in-flight attendants, and pilots to the staff (Barret 2004). This allowed him to be able to avoid having to deal with challenges to his position, or influence. In as far as Slocum and Hellriegel’s theory on workplace culture is concerned; it is evident that Ryanair has a market culture. Its most important goal is to realise profits at any cost. This does not necessarily present a favourable image to both employees, and customers. In fact, it is not likely that Ryanair’s employees are completely loyal to their organisation (Mayer 2008). The Effects of Ryanair’s Culture on various Stakeholders For a long time, air travel was perceived in many nations as being the province of the rich. This means that Ryanair’s cheap fares impressed and initially attracted many passengers who would not have considered air travel before. This allowed Ryanair to become one of the most profitable organisations in Europe. However, even the rapid development of the airline did not seem to have any effect on the aim’s of the organisation’s bosses to change its emphasis on saving costs. This began to turn customers, as well as employees, against it; until its revolutionary effect in introducing low-cost flights was forgotten. According to Barret (2004) Ryanair has still not learnt how to appreciate its workers as well as employees. For the most part, the airline views its employees as an implement that can be used to realise profits. According to Barret (2004) Ryanair’s employees are made to work extremely hard, even on national holidays. In addition, they can be easily replaced when they stop being as productive as the company wishes. While the workers are able to save on costs by paying low fares, they may feel that it is presumed that they have no right to complain since they are paying such low prices. When Ryanair was first launched, many people in the airline industry felt that it would be a privilege to work for the airline. It was actually quite easy for Tony Ryan to contract employees owing to the fact that people were enamoured with the new, low-cost, airline (Barret 2004). However, as the airline quickly developed, more and more people became dissatisfied with the airline president’s authoritarian style of leadership. The expansion of the workforce, and the introduction of different work-related functions, meant that there would be less contact between the leadership and the workers. The airline’s tough style of management, and impractical policies, though, were not changed to reflect its expansion. This resulted in cultural dissatisfaction among the workers. Conclusion While Ryanair’s low-cost policy was revolutionary when the airline was first launched, it is does not mean that changes cannot be made to improve the airline at present. Ryanair’s policy of cutting costs wherever possible has alienated a significant number of workers, as well as customers. This is because its market culture, as well as hierarchical power structure has not been revised since the days when such factors were central to the realisation of the airline’s success in a competitive industry. Ryanair is, today, a considerably profitable airline which can afford to embrace more modern styles of leadership, and management. It is evident, from its chosen style of management that its clients cannot expect to benefit from anything more than cheap flights that are on time. In addition, Ryanair’s employees may only benefit from rewards and promotions when they show, through their work, that they are deserving of this. Essentially, Ryanair puts very high demands on its workers, but provides them with few, if any, incentives to achieve these demands. For the airline to remain relevant, there have to be changes introduced to the corporate culture so that employees and customers feel that they are considered as being important. Recommendations Ryanair has the duty to try to improve its image and management style in order to retain its customers and employees. When Ryanair was first launched, the loud and abrasive manner of its president was seen as being necessary. In many quarters, it was presumed that this temperament was necessary for a company that was perceived as an upstart. The tough management style of O’Leary was responsible for turning the unprofitable and small Ryanair into the continent’s most profitable low-cost airline. However, the transformation of Ryanair into a profitable organisation makes the stances adopted by its presidents appear inappropriate. Other changes that have to be made by the corporation have to do with the treatment of customers. As Ryanair continues to develop, it is likely that there will be increased passenger flow. To retain these passengers, Ryanair will have to start taking part in customer loyalty initiatives. The existing competition forces such changes upon even the most independent corporations, because the passengers will naturally pick on only the most customer friendly options. The third factor has to do with the organisation’s development. The expansion of a business naturally means that there will be more responsibilities in that organisation. With the addition of different tasks, it is not likely that the organisation will be able to maintain its hierarchical power structure. The fact is that global economic development is likely to result in workers being granted more rights. It is not likely that workers will keep working for organisations that afflict them if they are offered better opportunities. At Ryanair, protests at the way they are being treated could cause employees to disrupt airline operations. This could result in longer turnaround times, and considerable financial losses. Ryanair can engage its employees more by adopting simple procedures that may not cost it much. For instance, it could give its staff more incentives, such as rewards for performances, or even free utilities. Inspiring a clan culture is something that is more likely to consolidate the labour force for the good of the company. References Barret, S. (2004) ‘The sustainability of the Ryanair model’, International Journal of Transport Management, vol. 2, pp. 89-98. Boesch, F. (2007) The Ryanair model - success and impact on the European aviation market, Berlin: GRIN Verlag. Button, K. (2009) Low cost airlines: a failed business model? London: Aerospace Policy Research Center. Dobruszkes, F. (2005) ‘An analysis of European low-cost airlines and their net-works’, Journal of Transport Geography, vol. 14, no. 4, pp. 249-264. Domanico, F. (2007) ‘The European airline industry: law and economics of low cost carriers’, European Journal of Law and Economics, vol. 23, no. 3, pp. 199-221. Mayer, S. (2008) Ryanair and its low cost flights in Europe: marketing plan - Akamdemische Schriftenriehe, Berlin: GRIN Verlag. Slocum, J. & Hellriegel, D. (2006) Fundamentals of organisational behaviour, Mason, Ohio: London: South-Western. Wensveen, J. (2007) Air transportation: a management perspective, Hampshire: Ashgate Publishing Limited. Read More