Obtain support from the board of directors, because an organization's total quality efforts must begin at the very top and begin with the board of directors. One method of obtaining their support is to conduct a quality survey among them that such questions could include:
Has an estimate been made of the cost of poor quality?
What measures using to judge quality?
What are current performance levels?
How does your quality of customer satisfaction compare with your competitors?
Prepare an action plan and answers to these and other questions will Provide valuable insights into the existing corporate culture and indicate the organization's readiness for adopting quality. An action plan based on the survey feedback should formulate by the top management and communicated at every board meeting.
Vision and mission statement and develop a vision or mission statement if the organization does not have one already. The key to the initial adoption of quality is continuous communication of the vision within a comprehensive communication plan.
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Train senior management in quality, because organization with successful Quality cultures start by training and educating senior management, followed by all employees that the establishment of quality teams is a top priority.
Establish a top-level quality committee, because an essential Ingredient for success is a senior quality committee, which provides leadership in Quality and stimulates cultural change. This should be chaired by the CEO and comprise The entire senior management team and the individual responsible for quality. Depending on the size and structure of the organization, these committees can establish Within operating divisions, functional group or by geography. The responsibilities of a senior quality committee can include (Feghhi farahmand, 2004, 398):
Establishing strategic quality goals
Sanctioning quality improvement teams
Reviewing key indicators of quality
Estimating the cost of poor quality
Ensuring adequate training of employees
Recognizing and rewarding individual and team efforts
Conduct a customer satisfaction survey that it sponsored by the top management to send a clear message throughout the organization that quality linked to Customer satisfaction. The senior executives should then present the results to all Employees that detailed strategies for improving customer satisfaction can devised and communicated.
Set goals for quality and customer satisfaction. The results of the Customer satisfaction survey lead the senior management to establishing a set of quality Goals.
A personal mission or a business mission statement deals with questions like,
"Why are we here?",
"Why do we exist?",
"Why do we get up each day and do what we do?",
"What is it that we get paid for?"
"What function does the organization perform? For whom? How?"
A business firm cannot have values, beliefs or a mission outside of the people who makeup that business. Therefore, especially for small closely held businesses, it's important that each principle in the business write their own personal mission statement first, then come together as a group or team to develop a mission statement for the business.
A vision is a statement of what or how you would like things to be. A picture of the future you're working to create, what you want to be when you grow up, what you want your business to become.
Without a vision of where you're going how can you develop a plan to get there and how will you know when you've arrived? Without a vision of where we would like to be, we can continue hiking various trails through life, climbing mountain after mountain, only to discover each time that we've arrived somewhere we really don't want to be.
Nothing was ever created without a vision. It guides us, gives us direction and
purpose, and can serve as a powerful motivator for those around us and ourselves.
In order to truly guide and motivate a vision must:
Be aligned with the core values of both the individuals and the firm business.
Always on Time
Marked to Standard
Be effectively communicated to and accepted by everyone involved in the firm.
Goals & Objectives
Goals and objectives create the bite size pieces, the road map and manageable stepping stones to achieve the mission, make the vision a reality, and navigate the course we have set for our business, or for ourselves.
Mission and Vision of the Ryanair:
"Ryanair does not publish a formal vision or mission statement, but in accordance with Jack Welch's advice, "Strategy, then, is simply finding the big aha and setting a broad direction..." Michael O'Leary's broad direction, communicated in public statements, is to simply continue to be the largest Low Cost Leader in the European airline industry and to carry 73 million passengers in the fiscal year 2010/11. Implementing this vision is a function of many individual tactics, including an absolute dedication to low cost performance in every element of the value chain, quick gate turnarounds, nonunion operations, performance-based incentive compensation plans, standardization on one type of aircraft, and flying (in most cases) to secondary airports, which provides significant savings for Ryanair."
Critically evaluate the use of classic and contemporary models in developing business strategies and plans.
A tool used by organizations to help the firm establish its Strengths, Weaknesses, Opportunities and Threats (SWOT). A SWOT analysis is used as a framework to help the firm develop its overall corporate, marketing, or product strategies. Strengths and Weaknesses are internal factors which are controllable by the organization. Opportunities & threats are external factors which are uncontrollable by the organization.
PEST Analysis is a useful tool for understanding the "big picture" of the environment in which you are operating, and the opportunities and threats that lie within it. By understanding your environment, you can take advantage of the opportunities and minimize the threats. PEST is a mnemonic standing for Political, Economic, Social and Technological. These headings are used firstly to brainstorm the characteristics of a country or region and, from this, draw conclusions as to the significant forces of change operating within it.
The first step in using the BCG Growth-Share Matrix is identifying the organization's strategic business units (SBUs). A strategic business unit is a significant organization segment that is analyzed to develop organizational strategy aimed at generating future business or revenue.
In larger organizations, an SBU could be a company division, a single product, or a complete product line.
External Analysis, Ryanair Porter's Five forces
The main characteristics of the low cost airlines companies are reducing their cost as minimum as they can without compromising their customer service. It may be just one-side of them is their low fares.
One of the main strategies in Ryanair airline is no frills such as free food or any air-mile promotions. They prefer only Boeing 737-800 aircraft and their aircrafts seat density is very high. The bookings of the airlines are made through internet so there are no sales commissions and they earn huge amount.
Bargaining Power of Customers
As Ryanair is mainly low cost airline, therefore their customers are highly price sensitive especially during the recession times so it will be very easy for customers to change their airlines. In this era customer's knowledge about cost of service is highly and Ryan air does not provide customer loyalty but the bargaining power of customer is very low .Still Ryan air is able to maintain the cheapest airline in all Europe destinations.
As there are lots of barriers to the entry and the capital invested in this sector is very high so you should always take the flight authorizations. It is also very difficult to be new in airline industry as it will be hard to find the suitable airports for flights. It will also be difficult to take a place in current competition. Ryan air will not be affected by any threats by new entrants. Even the existing companies are changing their strategy or reducing their tickets price it won't affect Ryan air (Lufthansa).
Threat of Substitutes
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One of the main threats of substitutes for Ryanair is Brand loyalty. As there is no brand loyalty for the customers then customers can switch to another airline without any hesitations and there will be no switching cost for the customers. So Ryanair has to overcome these types of threats by maintaining their brand loyalty to their customers.
As the market is highly competitive, Ryan air's advantages can be copied. In Europe it had been seen that there is an agreement made between Ryan air and Easyjet that not to compete head to head. However if any company decide to compete on the same basis as Ryanair it will be highly crucial for Ryanair. This will make Ryan air with heavy pressure on prices, margins, and hence lead to profitability.
Ryanair VALUE CHAIN Analysis:
Minimum Corporate HQ
Marketing and sales
Low cost training
Low cost suppliers
Low cost promotions
Critically evaluate internal and external environmental factors of your organisation and their impact and influence on business management and planning activities. In addition to this also explain how organisation responds to environmental factors when making strategic decisions and plans.
Ryanair Swot analysis:
Brand name (25+ years)
Low airport charges
No hub and spoke
LCC market share can double
Open skies agreement
Launch of new routes
Increase in entrepreneurial activities
Secondary airports too far away
Week employee relations
Increase in low fare airlines
Price sensitive customers
External Analysis, Ryanair PEST analysis:
Political (low impact)
Economical (low impact)
Social (High impact)
Changing consumer demographics
Fluctuating consumer preferences
Technological (High impact)
Supply chain software's programs
Outline and critically evaluate strategies that your company has selected to be successful.
Ryanair's low fares are designed to stimulate demand, particularly from fare-conscious leisure and business travelers who might otherwise have used alternative forms of transportation or would not have traveled at all. Ryanair sells seats on a one-way basis, thus eliminating minimum stay requirements from all travel on Ryanair scheduled services, regardless of fare.
Ryanair's strategy is to deliver the best customer service performance in its peer group. According to reports by the Association of European Airlines and the airlines' own published statistics, Ryanair has achieved better punctuality, fewer lost bags and fewer cancellations than all of the rest of its peer grouping in Europe.
Frequent Point-to-Point Flights on Short-Haul Routes
Ryanair provides frequent point-to-point service on short-haul routes to secondary and regional airports in and around major population centers and travel destinations. In the fiscal year ended March 31, 2004, Ryanair flew an average of approximately 1.83 round-trips per route per day with an average route length of 491 miles and an average flight duration of approximately 1.2 hours. Short-haul routes allow Ryanair to offer frequent service, while eliminating the necessity to provide "frill" services otherwise expected by customers on longer flights. Point-to-point flying (as opposed to hub-andspoke service) allows Ryanair to offer direct, non-stop routes and avoid the costs of providing through service for connecting passengers, including baggage transfer and transit passenger assistance costs.
Low Operating Costs
Management believes that Ryanair's operating costs are among the lowest of any European scheduled passenger airline. Ryanair strives to reduce or control four of the primary expenses involved in running a major scheduled airline:
customer service costs
airport access and handling costs
Future Strategy and Recommendations
Strategic Human Resource Management
Ryanair, have sacrified its services and processes because of the commitment to low- cost airfare. As a potential source of competitive advantage, human resources are not seen that is the company does not seem to value its customers. It is believed that the company's human resources are the source of competitive advantages therefore human resources or the company's people are one source of sustainable competitive advantage. As we know in this era of fast changing environment the technological innovations and other strategies can be copied there human resources will bring sustainable competitive advantages.
Marketing Plan Strategies
In order to provide good customer services such as providing discounted flights and value promotion the firm should has a detailed plan for its strategic moves in the market to keep the competitive advantage at a stable mode within its competitors and will need to focus more on the core competencies that allow Ryanair to practically and wisely designs suitable airline operations within the bracket of their marketing network services in a market standard-based perspective. Ryanair should not stop to change their marketing plans or rejuvenate from time to time, they should be goal oriented in order to re-invent the performance process upon the upgrading of rules and regulations mandated by the state. In order to renew revenue generation Ryanair need to overcome the lack of product differentiation.
In order to be defined as an independent profit centres it is then recommended that Ryanair should outsources as many non-core functions as possible which can abandon peripheral services such as catering or ground handling services.
Based on the above analysis, it is highly recommended that Ryanair should consider the expansion in to haul markets - specially the transatlantic routes which accounts for more than 60% of world's air travel. Therefore moving in to this new haul market which has low fare strategy along with added service options. And also by introducing complementary goods and services through its web sites, the company can utilize its existing business as this will allow company to reduce its cost base per unit of customers.
Conduct systematic examination of influences of corporate governance requirements on business management and planning activities.
Corporate Social Responsibility of Ryanair
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 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.
Systematically analyse the potential impact of emerging global issues on strategic management activities.
The CEO of Europe's largest airline Ryanair has called global warming "bullshit" and "horseshit" in an interview with the Irish Independent.
Controversial Ryanair boss Michael O'Leary has risked the wrath of environmentalists by denying that climate change exists. In an outspoken interview the airline's chief executive said that if temperatures are rising it has nothing to do with man-made carbon emissions.
And in a foul-mouth rant he said that claims by scientists over global warming were 'horsesh**' and were only used to attract more funding for research.
His controversial comments, made in an interview with the Independent, are just the latest in a long line of outrageous public pronouncements which appear designed to attract maximum exposure for Ryanair's boss.
He said that changes in temperature over time were nothing to do with carbon emissions.
Critically evaluate the impact of stakeholders' interest on strategic business activities.
Stakeholders of Ryanair
Ancillary service Providers
Ryanair Stakeholders Mapping
Level of Interest
The founder of Ryanair is the family Ryan, who build up the airline company from a small full- service carrier to the largest budget carrier nowadays. Obviously there expectations lie in maintaining their position as the largest low-fare airline company, but also keeping the costs under control. Since they changed their formula of transferring passengers on a low budget basis, they have been successful, not only in offering low fares, but also in lowering their costs and developing other activities like the ancillary services, which are quite profitable. Off cause the interest and power of the family is high.
Who is head of the management team, has also shares in the airline company. Therefore he is interested in a company that succeeds in making profits and continue to grow in order to maintain their position as the largest budget carrier. Selling shares will be profitable if the share will be high, which can only be achieved if Ryanair is profitable. Michael O'Leary has a high influence on policy within the company and is therefore considered to have a high power.
Is the chairman of Ryanair and leader of the Irish Air, which has a share in Ryan Air. As the leader of Irish Air he has certain expectations and interests in Ryanair. He wants the airline company to be successful, and therefore is interested in the profitability of the company. The power of David Bonderman may be considered less high than Michael O'Leary.
This company provided equity and a loan to Ryanair in return for that, they received shares. Of cause this company has certain expectations about the company. They want the company to be profitable and make money out of the shares.
Travel agencies are not quite important to Ryanair, since they sell most of the tickets through there own distribution channel. Although for opening up new routes, it is necessary, or it might be good idea to use the travel agencies, so that new potential customers might see the (new) destinations of Ryanair. Another reason why those travel agencies are important is the potential of their own distribution channel, due to system breakdowns, or whatever. Travel agencies itself are not that interested in Ryanair, because of the low profits, especially since they cut in the commission rates of travel agencies. So the expectations and interests of travel agencies are low and the power is quite low, since Ryanair still wants to use this form of distribution.
These unions are not recognised by Ryanair, which caused some stress between Ryanair and the government of Ireland and also the EU. If employees feel they are not treated well or are not satisfied with policies regarding any issues of Ryanair, then they should join Trade Unions. In the case of Ryanair every employee or at least the majority is satisfied with the employer. This means Trade Unions might be interested in Ryanair, but certainly has no power.
Employees do have power, since Ryanair is well aware of the importance of employees. They need to be satisfied, otherwise they will not perform effectively. In order to keep them satisfied, they will have to seek for opportunities and solutions, to do so.
The EU is quite important for Ryanair, since they are able to influence strategic decisions made by the carrier. This has to do with policy, which has a direct impact on the operating activities. Duty free shopping and the legislation in order to prevent airports from offering differential deals to different airline companies are two decisions that illustrates the power of the EU. Their interest in the company seems to be quite low, they don't have any expectations of the company.
Airports are interested in Ryanair, since they will bring lots of passengers to the airport and thus revenue. The airline company is well aware of that fact, and thus will be negotiating to pay low access fees. This was possible till the EU prepared a legislation that airports prevents to offer different deals to different airline carriers. This will result in less negotiating. From the point of view of Ryanair it is clear, that airports don't have much power.