Case Study of Management of Globalization at Ryanair
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Published: Mon, 5 Dec 2016
With increasing globalisation, numbers of companies are entering different foreign markets but some of them only attain success. This is because of their lack of knowledge about free markets advantages and limitations and role of enterprise within organisations (Brooke 1996). Firms that operate by assessing the impact of globalisation are much able to operate successfully rather than the firms that operate without analysing the impact of globalisation (Vittorio 2006). In this report all these aspects will be discussed with the help of a company, Ryan Air that is one of the oldest and most flourishing low-cost airlines of Europe (About Us 2011).
This report will be completed by analyzing all previous researches or studies done in this field and its implications in real life. Different researchers and theorist have analysed free markets, globalisation and role of enterprise within organizations. With their analyses they have also given different theories and approaches that can be used in a workplace to maximise its opportunities. All these theories and approaches will be used to analyse that what extent free market conditions have allowed Ryan Air to grow and prosper (Iyer & Masters 2000).
As well it will also describe, at what extent the company had benefitted from free market conditions and to what extent it was constrained by limitations on this market. In addition to this, here it will also be analysed that how company and other markets are driven by enterprise led organisations. In the end, it will also be analysed that what extent the air travel market relies on globalisation and what is the importance of global expansion for Ryan Air. As well, in this report the importance of global markets in other industries will also be evaluated along with the analysis of importance of globalisation.
Critical Evaluation of Ryan Air’s Entry
Ryan Air was established in the year 1985 and it entered low cost European air travel market as a low cost airline. The company attained huge success in Europe and it was all because of free market conditions (About Us 2011). The company success due to free market conditions can be understood effectively by critically evaluating it along with the discussion of its benefits and limitations.
Significance of Free Market Conditions to Ryanair:
Free market conditions refer to an economy or market in which buying and selling of products and services is done without any restriction related to price and valuation. European air travel market is also highly affected with free market conditions that in turn have also affected Ryan Air (Brooke 1996). The company is highly affected by free market conditions and it is an important reason of its growth and success. Due to the effect of free market conditions, the company along with its competitors has become able in allowing market forces to determine the price and values of air travel offered by them (Vittorio 2006).
The free market concept was initially conceptualized throughout the First World War but in present it has become a reason of number of economies success. With the free market conditions of Europe, Ryan Air has derived various benefits like flexibility, freedom, and variety that in turn assist it in growing its business operations in Europe and in other foreign countries (Suneja 2000). With the free market conditions like deregulation and free market entry, Ryanair has been able to exploit the Irish and subsequently the European transport market (Brophy & George 2003).
With the free market conditions, the company has become able in switching its services on the basis of the widespread market conditions. For example, if there is demand on one route, the company is free to change its operations and other route so can take advantage of current profitable route or service (Iyer & Masters 2000). The company is able to change its operations or process without undergoing the scrutiny of extreme government protocols. As well, the company management is also free to alter its services and their management according to their own suitability or accessibility for gaining a competitive edge (Rugman 2002).
Benefits & Limitations of Free Market Conditions to Ryanair:
With the increasing free market conditions, Ryanair has attained several benefits in terms of increased freedom, flexibility and limited government controls or protocols. Free market conditions in Europe have allowed company to undertake activities that please them. Consequently, it can serve customers in a way it wants and sell services they think will help it in growing and prospering (Brophy & George 2003). In this free market economy, the company also have freedom to change and alter their business operations. As well, government controls are very less to company operations that provide it with a benefit of increasing significantly at national as well as international level.
Although there are some government guidelines to operate in air travel market that need to be followed by Ryanair but it has freedom to manage its operations in a way it feels appropriate or beneficial (Rugman 2002). The company have freedom to increase its number of flights and as well determine prices according to market forces or conditions. In condition of increased demand of air travels, the company is free to increase its number of flights so that more and more profits can be attained in comparison to existing competitors. The increased demand of customers can be satisfied significantly by undertaking diverse business decisions and increasing number of flights (Brophy & George 2003).
The free market conditions also present Ryanair with an advantage of serving its customers with innovative products and services. In regard to free market economy, the company have an advantage to determine what services it will render to its customers with diverse innovations so that they can be offered with best products and services (Vittorio 2006). In this way, it can be said that it is a tool through which Ryanair can easily attain competitive advantage and core competencies.
In addition to significant extent of benefits, free market conditions have also presented Ryanair with several limitations like increased competition, high threat of new entrants, high bargaining power of customers etc (Iyer & Masters 2000). In free market economy, there are number of low cost airline companies that operate in Europe and present customers with different innovative services. In this kind of environment, it becomes difficult to retain customers in long-run as well their bargaining power is also high as they have several choices available at a time (Rugman 2002).
Threat of new entrants is also very high that several times have presented Ryanair with number of limitations. In starting, the company competitors were not as high as in present and due to this, it requires a more planned approach and business strategy (Ryan Air 2009). Free market conditions and economy have served company with number of benefits as well as with some limitations.
Role of Enterprise in the Creation and Development of Ryanair
In present the concept of an enterprise driven organization has emerged in which the whole organization is undertaken as an enterprise directed with continuous transformation and change. The emergence of this concept is due to uncertain market environment and rapid changes in consumers tastes. By creating and developing an enterprise driven organization, a businessman can significantly attain success (Box & Byus 2007). Similar is the case with Ryanair that also made use of enterprise to become a successful low-cost European airline company. In the creation and development of Ryanair, enterprise played a substantial role that can be understood by critically reviewing its effect.
Recognition of Ryanair as Enterprise Driven Organisation:
Ryanair was started in the year 1985 with only 57 employees and with one 15 seater turboprop plane that used to carry 5000 passengers on one route. In subsequent year of its operations, the company employees increased along with the number of passengers it used to carry. In the year 1990-1991, the company passengers increased to 700,000 (Box & Byus 2007). For attaining growth, the company made use of several marketing strategies. As well, the company also transformed its management team so that effective operations can be brought out in the company.
The success attained by the company shows that from the time of company initiation, it was having potential of becoming market leader. It was all due to the effect of Michael O’Leary as CEO who kept company recognised as enterprise driven organization (Wallace, Tiernan & White 2006). Although, the company have confronted several troubles, but from starting its CEO assisted its entrepreneurs to establish and develop their company as an enterprise. This in turn assisted in the creation of an enterprise culture in Ryanair (Graham & Nafukho 2007, p. 130).
From beginning, the company and its managers have confronted number of problems mainly in concern to handling business operations, management and cost structures. All these troubles have been resolved by implementing different marketing strategies and transforming old strategies. It would not have been possible, if company CEO have not developed an enterprise culture (Mattila, Nandhakumar, Hallikainen & Rossi 2009). By becoming an enterprise driven organization, Ryanair has become able in surviving in the present competitive market and growing in the marketplace (Box & Byus 2007).
Its enterprise-driven culture has facilitated it in implementing different marketing strategy and attaining different competitive advantages like online booking, one class travel, point-to-point flying, in house marketing, ticketless boarding, reduced turnaround times, corporate partnerships, bargaining power, new aircrafts etc (Ryanair’s Competitive Advantage 2009).
Due to its effective business operations that are directed with an enterprise culture, it is regarded as the most punctual airline between Dublin and London. It is also recognised as the second largest airline in United Kingdom and Europe’s largest low-fares airline. It operates with a network of more than 57 routes in 11 countries. It is also served by a fleet of 31 Boeing 737-200 and -800 aircraft with more than 1,400 employees. Its enterprise driven culture help it in constantly concentrating on driving its own costs and serve customers with lowest possible fares and as well as continuously remain profitable.
Effect of Enterprise Driven Organizations on Other Markets:
With the discussion of Ryanair and effect of enterprise driven organizations on its development and creation, it can be said that enterprise driven organisation does not only affect travel and tourism industry. Other markets and industries are also highly affected by enterprise driven organizations (Graham & Nafukho 2007, p. 129). In present almost all industries are confronting significant competition and high market uncertainty. For resolving this type of market threats, it has become essential to adopt enterprise-driven organization as it assists marketers in managing their organizations in regard to emerging changes.
By creating and developing an enterprise-driven organization, it becomes easy for different fields marketers to manage their survival as well as growth. They become able to manage changes related to market and customers trends (Mattila, Nandhakumar, Hallikainen & Rossi 2009). As well, it also benefits companies with an advantage to create an all-inclusive culture in which everyone operates with coordination and collaboration so that business can be handled effectively (Kongol 2010).
In modern era, numbers of markets are encountered with environmental uncertainty and they are trying to improve their organizational efficiency, and eventually performance. This problem can be resolved effectively by creating and developing an enterprise-driven organization as it will assist them in implementing standardized processes and practices throughout borders and their different divisions (Kongol 2010). A consistently enforced enterprise culture assists in the standardization of business processes. As well it also helps in fulfilling all needs of management control by managing all information into one system and making it available.
Enterprise-driven organisation become able in a creating an integrated organisation structure that in turn assist managers in anticipating future trends and operate accordingly. In this way, it can be said that enterprise driven organizations does not only affect travel market as it make a positive effect on almost all markets (Mattila, Nandhakumar, Hallikainen & Rossi 2009). By creating and developing an enterprise culture all organisations can attain different advantages according to their own success needs and requirements.
Impact of Globalisation on Organisations
Globalisation is a new concept that refers to processes through which different economies and societies of the world are integrating with the help of a global network. The practice of globalisation is increasing day-by-day as it serves companies with number of advantages like global expansion, significant growth and worldwide image. The significant advantages of globalisation are encouraging present organizations to globalise their business operations that in turn are affecting their overall business activities (Wallace, Tiernan & White 2006). This can be understood effectively with the help of Ryanair and air travel market affect of globalisation on it.
Reliance of Air Travel Market on Globalisation:
Air travel market success basically depends upon the travelling needs of customers. In present almost all countries people like to travel other countries with some or other reason that imposes challenges for air travel marketers to globalise their operations (Hartungi 2006, p.730). Due to this increasing trend of travel and tourism, it has become essential for air travel marketers to globalise and this in turn also renders with several advantages related to high growth and worldwide success. This altering travel trend of people demonstrates that travel market substantially relies on globalisation.
If, a travel company is not able to operate at international level it would not be able to tap international market opportunities. Travel industry connects two places that may be from a single nation or country or from different countries (Marquardt 2007). For success in travel market, it is essential to globalise and serve customers with different national as well as international routes. Significance of globalisation can also be understood by evaluating its affect on Ryanair and its business operations (Townsend, Yeniyurt & Talay 2009, p. 540).
In starting, the company used to operate at two routes, but subsequently, it focussed on increasing its routes to different European countries. With globalisation and the EU air transport deregulation, the company opened up new routes to Continental Europe and carried more than 3 million passengers to 18 different routes. As well, with the effect of globalisation, the company also tried to focus on global expansion and it also initiated services to Stockholm, Oslo, Paris and Brussels.
In present, Ryanair operates on more than 1000 routes throughout Europe. As well, in the year 2008, the company also entered US market with an aim of global expansion. These different expansions done by the company and been planned evidences importance of global expansion for the company and its management.
Importance of Global Markets in other Industries:
In addition to travel industry, globalisation is also important for other industries like electronic equipments, pharmaceutical, agriculture, food & beverage, oil and petroleum etc. In present almost all industries wants to operate with the help of global markets so that they can attain more profits and growth (Hartungi 2006, p.729). With increasing globalisation and free market economies different economies of the world are trying to integrate their industries so that they can take advantage of each other’s skills and practices (Ricks 2006).
As well, it has also become a trend for companies to operate in global markets as with this they can attain a global recognition that in turn can be used to attract potential customers. In present customers prefer global brands rather than traditional brands as their lifestyles and way of living has changed and improved also (Cheng & Mittelhammer 2008, p. 860). Consumers, whether they belong to low, medium or high income group prefers global brands as it gives them a sense of high living standard. This change in consumers taste and preferences encourages companies to operate at international level and serve different global markets (Townsend, Yeniyurt & Talay 2009, p. 540).
Almost all industries customers have similar trends towards global market. Food and beverage marketers are also affected by this and due to this different global food and beverage items are available in each country (Hartungi 2006, p.730). This is also the case with oil and petroleum industry as all countries does not have similar resources. Some of the countries have effective resources and this in turn is encouraging them to serve the need of different global markets and attain huge profit and growth (Puig, Marques & Ghauri 2009, p. 693).
In this environment of increased globalisation there are also some industries for whom it is critical to globalise as otherwise they would not be able to maintain their position and survival in the long run (Marquardt 2007). In this concern, one of the substantial industries is manufacturing industry. Manufacturing industry is an industry in which manufacturing is done and products are developed that almost all of us use in our daily life. If this industry has to survive it has to improve its production and operations strategies that cannot be done with traditional modes of manufacturing (Puig, Marques & Ghauri 2009, p. 694). By globalizing this industry can take advantages of different means and advanced technologies.
Previously, in India or other developing countries, manufacturing was done with the help of traditional methods but now as it has entered different global markets; it has also become able in making use of advanced manufacturing methods. In this way, it can be said that globalisation is critical for almost all industries to maintain their survival in the long-run.
Conclusion and Recommendations
With the help of above discussion, it can be said that free market conditions serve organizations with different advantages as well as limitations. Ryanair also attained different advantages with free market conditions like expansion to different European countries and continents and as well as limitation like increased competition, high threat of new entrants (Ryanair’s Competitive Advantage 2009). All these threats can be handled effectively, if appropriate strategies like enterprise driven organisation is created and developed. By developing an enterprise-culture a firm can easily resolve its different operations and change management related issues as done by Ryanair (Graham & Nafukho 2007, p. 129).
In addition to an enterprise-driven organization, a firm can also attain advantages with the help of globalisation and entering different global markets. In present, it has become critical to attain success and long-term survival that can only be done with the help of globalisation (Cheng & Mittelhammer 2008, p. 860). Ryanair has also attained several advantages by entering different global markets and due to this only; the company has become able in maintaining its leading position in industry and air travel market (Hartungi 2006, p.730). With the considerations of free market conditions, enterprise-driven organisation and globalisation a firm can easily attain assured success as attained by Ryanair.
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