Sustainability and Ethics Consultancy - Ryanair Ltd - Case Study Example

SUSTAINABILITY AND ETHICS CONSULTANCY Name Course Institution Date Executive Summary Ryanair Ltd has played a significant role in enhancing sustainability. According to the report by CSRHUB (2014), Ryanair Ltd has scores above average in matters of energy and climate change control, environmental policy and reporting and resource management (Creaton, 2007). With a customer base of about 81 million, the company risks environmental degradation due to the number of flights per day. To address this challenge, and cut down the cost of operation, the company has increased the number of seats in most of its planes. This demonstrates the maximum utilization of resources (Creaton, 2007). The company has also engaged in corporate social responsibility through a number of practices. It has increased customer satisfaction through quality services, affordable costs and efficiency though automation. The employees have benefitted from training and favorable working conditions. The CSRHUB and sustainability (2014) demonstrates that the company scored 54 in community development and philanthropy. The company applies the Carrol’s CSR pyramid to enhance its goal sustainability strategies. Background information The sustainable development in the tourism sector has become a major social phenomenon that has attracted a lot of interest. Sustainable development, according to United Nations Environmental Program (UNEP), should be focused not just on economic development, but eradication of poverty and preventing environmental degradation. While it is imperative for companies to foster economic development, this should not be achieved at the expense of the environment and the social welfare. Global warming has become a major problem that is threatening sustainable economic development in many countries. With increased emission of carbon dioxide, temperatures have increased affecting the agricultural sector and leading to unpredictable weather conditions. The tourism sector, especially the aviation industry has a role to play in enhancing sustainable development. This can be achieved through the presence policies, rules and regulations that show how a given company aims at addressing the challenge of environmental degradation. Currently, the aviation industry seeks to overcome air pollution through technology. This has seen many companies such as Airbus and Boeing develop planes that consume fuel efficiently. The Ryanair is one of the airlines that have been struggling to maintain the sustainable growth and development. According to a report by the Business and Leadership (2010), Ryanair was ranked in the bottom 10 in the list of the most ethical companies. The list of the 581 companies had been prepared by the Geneva-based Covalence. The results were based on 45 criteria, which included waste management, human rights policy, corporate social responsibility and leadership. Another report by the CRSHUB (the global largest CSR and sustainable rating institution) indicated that the Ryanair was performing averagely on many aspects of sustainability. For instance, the company scored 54 on energy and climate change control, 61 on environment policy & reporting and 57 on resource management (CRSHUB, 2014). In governance, the company scored 55 on leadership ethics and 52 on transparency and reporting. The company has been under criticism for mistreatment of employees. In 2014, the company’s office in Marseille was put under police investigation, for allegedly failing to adhere to the employment laws. Initially, the company did not allow its employees to form or join unions, as this was perceived to be a threat by the management. In terms of employee relations, the company scores averagely. It has been criticised for discriminating against the physically challenged passengers. The company is responsible for both its internal and external stakeholders. The internal stakeholders include the employees and shareholders. The employees are interested in working in a company that demonstrate equality and respect of human rights. Employees want to be given an opportunity to participate in major decision-making process. They also want to belong to a labour union that ensures their social welfare is safeguarded. The external stakeholders are employees, government, and the community. The company seeks to ensure that it attracts and retains its customers in order to gain a competitive edge. To achieve this, the company’s chief executive Michael O'Leary announced in 2014 annual general meeting that plans were underway to ensure that the company improved its customer services. This would see the company increase its employees from the current 81 million, hence being able to generate more income. The company owes cooperate social responsibility for the community through the efforts of protecting the environmental pollution. The company has environmental policies that seek to address the challenge of environmental degradation that may affect the surrounding communities. Strategy Sustainability in Ryanair refers to a number of factors that could be different from other institutions. In most cases, sustainability, especially in the western ideologies means prevention of environmental degradation while at the same time enhancing economic development. In Ryanair, though, the sustainability does not only focus on prevention of environmental pollution and economic development, but also customer satisfaction, employee motivation and fostering social development. For instance, Ryanair Company continues to reduce fares to customers through strategies such as, enhancing online transactions and elimination of agents. To demonstrate its support for environmental conservation, the company has a set of policies, rules and regulations that indicate the responsibility of internal and external shareholders in conservation. Further, the company continues to motivate its workforce through improved working conditions. Hence, sustainability is a complex ideology that does not only focus on economic and environmental issues, but also how the company aims at improving the social welfare of both the internal and external shareholders, including that of employees, customers and the society. It also refers to establishment of an effective leadership that is able to ensure proper and timely implementation of policies that seek to foster sustainability. Practising sustainability means that the organization has been able to cut down the cost of operation, while increasing its revenue. For instance, through the low fare strategy, Ryanair has attracted more than 81 million passengers. The company has taken the advantage of the economic turmoil in Europe to provide affordable airline services. The sustainability also means that the company is able to prevent employee turnover, which results in huge losses when it occurs. Instead, the company is fostering good relationship with employees, and other stakeholders to foster a good working environment and enhance social wellbeing and economic development. In the case study of The Ryanair company has a strategy that is aimed at ensuring that the challenge of environmental degradation and has been resolved. To demonstrate its seriousness in environmental conservation, the company has established a department that addresses the challenge through the formulation of policies and strategies to achieve the goal. With a passenger volume of more than 81 million, the company poses a lot of danger to the environment due to the number of flights. Currently, the company has than 1,400 flights per day and connects in more than 160 destinations in 27 countries. As such, there is a need to ensure that the management puts in place a comprehensive strategy that demonstrates how the company aims at addressing the environmental challenges. The CSRHUB (2014) asserts that the Ryanair’s mission and vision is to ensure that it promotes a sustainable growth and development. The company has demonstrated this through the resource management and the implementation of the current the existing environmental policies. While the company has scored averagely in terms of promoting a sustainable environment, it has shown its willingness to control air pollution and use its resources efficiently. The efficient use of resources has been demonstrated by the increased passengers’ seats in the planes through elimination of certain facilities that the management considers unimportant. This has seen each place carry maximum number of passengers, hence being able to respond to the demand of increased number of passengers. The company’s sustainability strategy demonstrates its corporate social responsibility (CSR), especially to its customers. To cut the cost of operation, the company has been able to eliminate agents, and physical check-ins. being a low-cost carrier, the elimination of agents means that customer deal directly with the company. Through this strategy, customers pay less for the services rendered. They also reduce cost of movement by fostering the online transactions that allow customers to know the status of their flights. This also prevents overcrowding at the airport and reducing the number of workforce. The technology has seen the company reduce the cost of operation. Consumers In its attempt to adhere to the rules and regulations of CSR and sustainability, Ryanair uses the Carrol’s CRS Pyramid. Proposed in 1983, Carrol’s pyramid focuses on four main levels of SRC. These include philanthropic, ethic, legal and economic (Hockerts, et al., 2008). However, Ryan air concentrates more on the last three levels. In terms of ethics, the company ensures that it does not exploit customers through provision of affordable services. It has sought to improve the quality of services, as well as enhancing effectiveness and efficiency. Legally, the company has sought to respect the environmental and employments laws, which every company is expected to adhere to. It has environmental policies, which it has executed to address the challenge of environmental degradation. Finally, the company has fostered a strong economy through increasing its customer base from 66 million in 2010 and 81 million. It has also put in place aggressive marketing strategies. Consumers are imperative in any organization since they determine its success or failure. The Ryanair Company has played a significant role of addressing the economic needs of its customers, as part of its corporate social responsibility. The 2007/2008 economic turmoil saw job losses, reduction in income and profits and increased unemployment in Europe and other parts of the world. The high inflation coupled with the high cost of goods led to reduction in people’s disposable income. With this kind of economic crisis, most people were looking after an airline that would ensure that they travelled at a cheaper cost. One of the main philosophies of the Ryanair Company is to provide affordable services to clients, without compromising on quality. This strategy saw Ryanair remain economically stable in 2008 despite the effects of global economic turmoil. Through the quality services, the company witnessed its customer base grow to more than 81 million passengers. This explains why the company has become one of the busiest in Europe, with the highest number of passengers and flights per day. Secondly, the company is involved in corporate social responsibility where it ensures efficiency and effectiveness in its services. The kind of strategy has contributed to the unprecedented increase in the number of passengers. The company has automated most of its services, meaning that customers can transact from their convenient place and time. The customers enjoy reduced cost of transactions, which is economically beneficial. This coupled with the elimination of intermediaries (agents) has also enhanced service delivery. The company is also able to interact directly with its customers. This is necessary since customers receive first-hand information and can get instant feedback. On the other hand, the company is able to know the perception, attitudes and customer behavior. This information is crucial as it affects the company's decision-making. For instance, Ryanair management, through its interactions with customers, has realised that about 20% of the passengers travel as families. As a result, the company has announced that it will be providing special package for such target group, which probably will be in the form of reduction in fare. The company has however, been criticised for a number of practices that may affect its sustainability. One of the most important forms of social responsibility is to ensure that every customer is treatment fairly, despite his/her physical ability, age, race or socioeconomic status. While the Ryanair has addressed the challenge of customer exploitation by other airlines, it is yet to solve the issue of equality. In 2012, for instance, a woman aged 69, and ailing from colostomy was denied the permission to bring her medical kit on board. This is despite the fact that she has a written letter from her doctor explaining the importance of carrying the kit. In 2002, the company was sued for not providing wheelchairs for the disabled passengers. In awarding its injunction in 2004, the court indicated that the airline and its owners had the responsibilities of ensuring that such services were made available to disabled patients. While the company complied with the court’s directive, it responded by increasing a charge of 0.50 pounds to all its flights (Smith, 2009). This was a demonstration that the company was not willing to sacrifice on behalf of its passengers. It chose to pass the cost on the patients, a situation that is unacceptable for a socially responsible company. The company has also been involved in a number of controversies involving the content of most of its advertisements. In one of its advertisement’s the company had a provocative headline that read ‘"Expensive Bastards!". This phrase was used to refer to the British Airlines (BA), which according to Ryanair was about 5 times more expensive. While this could be true, the use of such strong messages causes social uproar and negatively affects the company The above analysis indicate that customers value the efforts taken by companies towards the improvement of quality delivery of service, increasing efficiency, and making services more affordable. It shows that customers are more concerned about how the sustainability strategies and corporate social responsibility (CSR) undertaken by a company. Companies will be attracted to companies where they are appreciated. They will remain loyal organizations that understand their tastes and preferences, which Ryanair, despite some criticisms, has tried to achieve. However, the can increase its sustainability credential through fostering equality and effective communication with customers. It can also increase its funds allocation towards philanthropic services. This may include providing scholarships to less fortunate members in the society or providing clean water to affected communities. These social responsibilities will ensure that the company becomes more attractive and profitable. Sustainability marketing Sustainable marketing involves a number of practices that are meant to enhance better relationship with stakeholders, protect environment against losses, and making the business economically stable. Sustainable marketing may involve a number of activities that include, and not limited to use of aggressive marketing strategies to foster growth, minimizing the use of resources, and promoting and supporting sustainable businesses. However, sustainable marketing is not an easy strategy to implement, explaining why most companies are yet to achieve. In Ryanair Company, the management has supported the sustainable marketing through increasing efficiency and effectiveness. One of its strategies is to increase the number of seats by creating more space in existing planes. This has seen the company reduce the number of flights per day, hence saving on fuel, and carbon emission. Secondly, the sustainable marketing involves the use of aggressive marketing strategies that target a specific market segment. The management has increased its allocation towards marketing leading to the increased number of customers and profits. Thirdly, the company has played a significant role in promoting and supporting its sustainable development. For instance, the statistics by the CSRHUB (2014) indicates that the company scored 61 points out of 100 on environment policy and reporting. It also scored 54 on climate change and energy control, and 57 on resource management. While the company can do better to improve its sustainability, it been able to promote its sustainability strategies, hence contributing towards the elimination of practices that may lead to environmental degradation or unhealthy relationships with its stakeholders. Conclusion and Recommendations Ryanair has played a significant role in ensuring that it promotes a sustainable development and engages in a number of corporate social responsibilities. The company has increased efficiency and effectiveness through automation of its services. It has also made its services affordable to middle class, hence increasing the number of passengers and profits. The company has scored high in terms of environmental conservation, motivating employees through training, and enhancing customer satisfaction. However, despite the current efforts, there are a number of limitations that need to be addressed to ensure that the company reaps the benefits of its sustainability program. The following recommendations will ensure that the company enhances its sustainability program: Firstly, the company should enhance fairness to all its passengers, regardless of age, physical abilities, race or social economic status. Secondly, the management ought to ensure that as it enhances aggressive marketing strategies, it does not use messages that are controversial and provocative. This may be interpreted as being insensitive and lacking in social responsibility towards other competitors. Thirdly, the company needs to invest more in sustainability marketing where it promotes and supports its CSR and strategies leading to mitigation against environmental degradation. These recommendations coupled with enhanced quality delivery of services will make Ryanair company gain a competitive edge in the market. References Creaton, S. (2007). Ryanair: The full story of the controversial low-cost airline. London: Aurum. ISBN 1-84513-293-9. Creaton, S. (2004). Ryanair: How a Small Irish Airline Conquered Europe. London: Aurum Press. ISBN 1-85410-992-8. Calder, S. (2002). No Frills: The Truth Behind the Low Cost Revolution in the Skies. London: Virgin Books. ISBN 1-85227-932-X. Hockerts, K, Casanova, L, Gradillas, M, Sloan, P, & Jensen, E. (2008) ‘An Overview of CSR Practices Response Benchmarking Report’, INSEAD Working Papers Collection, 67, pp. 1-50 Smith, O. (2009). "Ryanair to improve clarity over 'hidden charges'". The Daily Telegraph London. Boscamp, E. (2013). "The World's Busiest Airlines". Huffington Post Business and leadership Ryanair ranks near bottom of ethical companies listhttp://www.businessandleadership.com/sustainability/item/19553-ryanair-ranks-near-bottom-o Read More