Corporate Social Responsibility And Ryanair Business Essay
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This section of the report analyses the reputation of Ryanair as regards corporate social responsibility (CSR) issues in the environment in which the airline operates and also the role of the operation function of Ryanair in addressing CSR issues.
Corporate social responsibility (CSR)
CSR is the serious consideration of a company's impact over the company's environment. (CSR) refers to the responsibility that business organizations have and which is creating a healthy and prosperous society. Business organizations cannot work alone in an environment because their activities have impact on consumers and in return these consumers constitute the environment in which the business organization exists.
Business activity impacts on the lives of people in many ways, ranging from the creation of a safe and clean environment, through clean and careful production, to the creation of jobs, and opportunities for all members of the community. The term CSR can be traced to back to Bowen (1953) cited in Panwar et al (2006) as "an obligation to pursue those policies, to make those decisions, or to follow those desirable lines of actions in terms of the objectives and value of our society". According to European commission, CSR is the act of companies acting voluntarily and also achieving social and environmental objectives during the course of their daily business operations i.e. production of goods and services (European Commission, 2009). Corporate Social Responsibility is of increasing importance in the corporate world ranging from voluntary contributions and good employer practices to ethical investments and internal management objectives (Frame, 2005). Cramer (2006) has identified seven CSR policies which include- Employees, Environment, Human Rights, Governance, Chain Responsibility, Transparency and Responsibility and Product Responsibility which Business organizations should apply in their business activities or operations.
Ryanair and CSR issues:
CSR benefits companies in terms of their profitability by increasing it and also deriving maximum benefit to the society in which such companies exist. Business organizations that plans to establish itself in terms of having competitive advantage amongst its competitors should have a good CSR to the society or community in which its exist(European Commission, 2009).
Ryanair airline has a bad reputation when it comes to CSR issues. Ryanair is at the bottom 10 of an "ethical ranking" of 581 companies and the rating is based on conditions such as environmental performance of the airline, corporate social responsibility of the company and information provided to consumers. The ranking of the airline was compiled by Geneva-based Covalence, and it measures qualitative data on 45 criteria and they include labor standards of the company, waste management policy of Ryan air, social utility and human rights policy (McDonald, 2010). Ryanair airline was ranked 575, and the airline claims its "reputation index", was distributed by Thomson Reuters, Bloomberg and Capital IQ and that it simply shows "a barometer of how multinationals are perceived in the ethical field" (McDonald, 2010).
The airline has series of issues involving posting misleading information on its website such as the Ryan air misleading green claim by saying the airline industry contributes just 2 percent of carbon dioxide emissions and according to ASA the claim breached rules on truthfulness because it didn't explain that it was based on global rather than UK emissions. Airlines are calculated to contribute 5.5 percent to the emissions of the UK. (Ryan air criticized for misleading green claims, 2007) and also sometimes in 2008 the airline had to take off its website due to the fact that there were misleading price list in the website although the airline claimed the website was taken off because of the airline's increasing the site's capacity (Businessrespect, 2008).
Another CSR issues facing Ryan air is social responsibility. The company's policy or view on customer care according to Michael O'Leary, cited in Slack, N., et al (2004) "we guarantee to give you the lowest fare. You get a safe flight. You get a normally on time flight. That's the package. We don't and won't, give you anything more. Are we going to say sorry for our lack of customer service? Absolutely not. If the plane is cancelled, will we put you up in a hotel overnight? Absolutely not If a plan is delayed will we give you a voucher for a restaurant? Absolutely not" this statement shows that the airline is just basically consigned about making profit and not the welfare of its customers and this show that the airline lacks social responsibility. There are also allegations that the airline extorts customers by charging them for the use of toilet when on board, making payment for paying online and as well as boarding luggage on board. (BBC panorama documentary 2010) All these questions the quality of service and social responsibility of the airline to its customers.
Ryanair's operation functions on CSR issues:
Ryanair has promised it customers cheap rate and the airline as continued to cut down cost and so far so good the charges of the airline is reasonably low compared to most of its other competitors. Due to Ryanair customer policy of not having to book passenger in a hotel or paying for meals in restaurants Ryanair management will rather avoid such situations by making sure the aircraft would always be on time and avoid cancelling of flights.
The airline has history of aggressive responses to criticisms over misleading adverts, environmental impact or poor customer service and these means Ryanair would react to any criticism on its CSR issues either by avoiding similar issues in the nearest feature or by trying to justify the company's stances on such issues.
Ryanair is defined by the goals of the airline which is trying to be the cheapest airline amongst its various competitors. The airline has achieve this to an extent by aligning the companies resources and competencies such as fleets of Boeing 737-800 aircraft and the ability to incur low cost in their business operations to the company's strategy which can be regarded as "cost leadership" business strategy based on porter's generic strategy (porter, 1985). Although customers prefer no-frills airline operator simply because they cut costs to a minimum but this strategy does not give room for luxury or comfort on the part of the customers. Ryanair's main aim is carrying passengers to various destinations at a cheap price but passengers requiring certain comfort or luxury would have to pay extra charges for instance usage of toilet onboard, snacks and drinks on board as well as carrying luggage onboard all attracts extra charges .
Ryanair has competitive advantage in the airline industry due to its strategies, but the airline is tag with bad reputation in terms of its corporate social responsibility to its customers who constitute the environment of the airline. The airline needs to work on improving its CSR issues in other to continue maintaining its competitive advantage through its operating function such as disseminating information properly, adopting reasonable policies on customer care in terms of unforeseen circumstances and lastly improvement on social responsibility in terms of environmental performance.
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