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This report attempts to analyse the corporate communication strategies currently employed by Irish budget airline Ryanair with respect to the various communication frameworks in place, whilst focusing on both external and internal stakeholders. Finally an analysis of Ryanair's corporate culture and HRM strategy with respect to their influence upon employee's within the organisation.
Corporate communication distinguishes itself from other forms of communication such as management by the means in which it bases itself upon the organisation's corporate perspective, the stakeholders it addresses and the management activities within its scope (Cornelissen, 2005) According to Argenti & Foreman (2002) corporate communication can take the role of two forms; as a ‘function' which may be dispersed across an organisation, or as a ‘process' to reach all of its constituencies. An appropriate definition from Argenti (2002) avers Corporate Communication as “the corporation's voice and the images it projects of itself on a world stage populated by its various audiences; corporate reputation, corporate advertising and advocacy, employee communications, investor relations, government relations, media management and crisis communications”. A consequence of these characteristics is that they are complex in nature especially when referring to multi-national organisations (Cornelissen, 2005) such as Ryanair therefore effective communication strategies demand an integrated approach to communications management.
Successful communication strategies clearly identify the organisations differentiating factor, or the profile which it wants to portray to its stakeholder groups. In the case of Ryanair its differentiating factor is its ability to consistently offer “lowest cost scheduled airline tickets” (Hagele, 2006). Micheal O'Leary (CEO) says of his corporate strategy “ It's the oldest, simplest formula; Pile‘ em high and sell'em cheap...We want to be the Wal-Mart of the airline business. Nobody will beat us on price. EVER”. A powerful but contraversial message communicated by O'Leary, which as the paper will discuss later synonmous with Ryanairs communications strategies.
The objective of this paper is to identify what global communication framework/ s Ryanair are currently using; analysis of both internal and external corporate communication strategies and their subsequent impact with reference to engaging both internal and external stakeholders. Finally identification of Ryanair's corporate culture and its influence upon people within Ryanair.
The aim of this paper therefore after discussing the objectives is to decide whether the frameworks and communication strategies Ryanair use are effective in maintaining their position as the European low-cost budget airline for both internal and external stakeholders.
3. Communication strategy
Integrated Corporate Communication framework within Ryanair Corporate Communication as an integrated framework for managing communication (Cornelissen, 2005)
Ryanair holistically combines both marketing, advertising, technology and public relations practitioners together in an integrated communications framework model (Cornelissen, 2005) drawing upon management strategy, consumer behaviour and organizational theory (see appendix) to manage the company's reputation and maintain brand equity. Integrated communication is created at the corporate brand level for Ryanair with the goal of enhancing its positioning within the market as Europe's ‘lowest price airfares' whilst maintaining its competitive strategy. Unlike other organisations that have placed corporate communications managers into executive teams (Cornelissen, 2005) O'Leary does not follow this example, preferring instead to ‘council' its head of corporate communications Stephen MacNamara and head of marketing Dara Brady, and rather instead maintaining control over Ryanair's communication strategy in its entirety. O'Leary orchestrates Ryanair's communication strategy from the management team down with a hierarchical approach, enabling communication from a corporate strategic level which is reflected within its corporate culture.
What makes Ryanair such a success is its inherent ability to consistently communicate the same ‘offering' and its core strategy to stakeholders of ‘low price' regardless of the ‘landscape' it finds itself within. O' Leary is able to leverage negative publicity associated with an event or incident at Ryanair and exploit this free opportunity to promote greater exposure of the brand and re-iterate how successful they really are. For example by utilising existing media channels such as an internet bloggers page who has posted a negative blog regards Ryanair, the company's integrated communication framework enables a quick response from MacNamara who instead re-enforces how successful their business model is in providing the cheapest fares around. What makes Ryanair unique within the airline industry is their ability not to waiver from their strategy of low cost, even if this means the ‘customer is not always right' (O, Leary, 2007). This approach to communication strategy is strengthened by the ‘Input-Output' model of stakeholder management discussed later in the paper and shown in the appendix.
3.1. Internal Communications
The organisation defines itself as a low-cost airline; the consequence of this is that unlike other airlines that can pass on additional cost increases to the customer such as increasing fuel prices Ryanair are unable to do so. Therefore their communication frameworks revolve around low-cost channels such as face-to-face, traditional print media and a heavy emphasis on technology and web-based communications system such as the Ryanair intranet, enabling employees such as flight crew, maintenance and ground staff, amongst others to access critical information and maintain quality management. Ryanair attempts to communicate with its employee's (Annual Report, 2009) through a variety of communication channels; an internal staff newsletter called “The Limited Release” provides employees with up-to-date plans, issues and challenges within the aviation industry, where further daily news bulletins are broadcast on Ryanair's internal TV network.
Additionally the organisation's Employee Representative Committee (ERC) (one per department) liaises with Ryanair's European Works Council to provide guidance on current aviation issues pertinent to employees. Therefore using an integrated framework encompassing word-of- mouth, electronic channels, and periodical print media has enabled the organisation to minimise tangible costs. Only recently O'Leary was quoted in the media for criticising employee's for ‘stealing Ryanair's electricity' by charging their mobile phones! (ref).
3.2. External communications
As an entrepreneurial organisation Ryanair believes it possesses the right to play outside the box and follow its own path, challenging the status quo of corporate communication and pushing the aviation industry boundaries. As a result O'Leary, MacNamara and Grady follow an external communications strategy which more often or not is designed to provoke the audience rather than to attract (see appendix). What is consistent is Ryanair's approach which is synonymous with ‘old school' Public Relation strategy; in that it focuses on communicating the same message repeatedly; ‘low fares' through online, print and .... channels in an attempt to reinforce the notion of ‘good value' with consumers. However, whilst it can be argued that this strategy may seem archaic it actually proffers the advantage that Ryanair's positioning strategy is absolutely clear to its stakeholders; in that it's offering is ‘low priced airfares' and absolutely nothing else.
O'Leary has a reputation as a hard-nosed businessman choosing his words carefully but with the intent to cause as much controversy as possible which ultimately creates a paradox of both artistic creativity and destruction. ‘Screw the share price, this is a fare war” ...... “We bow down to nobody. We'll stuff every one of them in Europe, we won't be second or third and saying: "didn't we do well?... In business, honesty is a dirty word. People say the customer is always right, but you know what - they're not, sometimes they are wrong and they need to be told so” (Michael O' Leary, 2007) Using a provocative vocabulary ensures that during crisis management strategies in the event of negative publicity O'Leary is able to leverage as much exposure as possible for Ryanair which ultimately leaves the company at the forefront of consumer's minds. The most recent examples of these have been the (perhaps?) ‘faux-pas' of Ryanair employee responses back to online bloggers regards disagreements in online content complaints about customer service (see appendix)
3.2.2. Key stakeholders
According to (Johnson & Scholes, 2008), organisational stakeholders are those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn , the organisation depends. Furthermore (Wall & Rees, 2004) and (Johnson & Scholes, 2008) suggested that stakeholders are other societal groups who are affected by the activities of the firm and whom in turn, the organisation depends. This section identifies the major stakeholders of Ryan Air and how they are important to the firm however Ryanair's stakeholders encompass a wide range of groups which can be classified as both 1) societal 2) economic (organisational) with each group unique in their expectation as stakeholders of Ryanair. The former range from pressure groups, competitors, suppliers and customers, where for example customers are legally entitled to fair trading practices; differs from the latter (organizational) comprising of shareholders and employees, who are entitled to extra rights under the rule of corporate governance. The model which aligns most closely within Ryanair for both internal and external stakeholders, if O'Leary's approach to corporate communications is followed is the ‘Input-Output' model of strategic management (Cornelissen, 2005) (see appendix). This emphasises that power lies within the organisation, upon which other stakeholder groups are dependent in respect to their relationship with Ryanair; this is illustrated by O'Leary's clear disregard for stakeholder perception across all groups.
Employees within Ryanair are according to O'Leary ‘a cost' (2006) until they are able to contribute fully to the business, demonstrated by the corporate culture of reducing overheads by externally sourcing cabin crew and making new employees pay for their training with the organisation until fully qualified and an ‘asset' to the company. Further to this a compensations structure following the premise of ‘pay on the basis of transactions undertaken'; meaning sectors flown (Mayer, 2008) ensures that cabin crew absorb a lot of the cost impact to delayed flights creating an incentive through commission to market other Ryanair products. Further to this the absence of any trade union or regulatory body at the request of O' Leary ensures that whilst these stakeholders are ruled under ‘fair' corporate governance they are seen to be disposable commodities.
External Stakeholders -to complete
Unlike more conventional stakeholder models O'Leary does not apportion importance to external governmental or regulatory influences rather choosing instead to challenge them .i.e. the European Union over competition policy in 2006 (ref) and British airport accusations over ‘unfair charging practices' over recent years. This strengthens the notion that the ‘Input-Output' model of stakeholder management is correct; in reference to the power lying ‘within' Ryanair rather than with its stakeholders. However effective communication is a key success factor of this organisation is respect to its approach of its relationship with new airports. MacNamara uses a tactic which involves generating awareness of potential new routes by announcing instead the new jobs it will create and the anticipated increase in volume of passengers
Suppliers bargaining power for fuel is high, medium for aircraft and medium low for airports; sourcing, purchasing and procurement is done face-to-face negotiation like most b2b business.
3.2.3 Corporate Culture, brand, image and identity
Melewar (2006), corporate culture is impacted by history of the company, the founder of the organization and country of origin of the organization. There is link between corporate culture and corporate history because the interaction among the group can develop culture. Melewar (2006) stated that the founder of the company can affect the corporate culture
The corporate culture of Ryanair is very much influenced by O'Leary, strengthening the notion that the CEO can dictate the corporate culture of the airline. Schein (1992) posits culture to be “accumulated shared learning of a given group, covering behavioural, emotional and cognitive elements of a group member's total psychological functioning” addressing a shared understanding of culture; contrasting with Johnson and Scholes (2002) who aver that “the basic assumption and beliefs that are shared by members of an organisation, that operate unconsciously and define in a basic taken for-granted fashion an organisation's view of itself and its environment” addressing instead repeated behavioural patterns. When attempting to analyse Ryanair's corporate culture the former analogy becomes more prominent. Ryanair corporate culture is more focus as an airline company based in Ireland, representing the Irish culture: Organise, reliable, and kindly (Ryanair.com, 2009).
Balmer (1995), corporate brand refer to corporate reputation, corporate image and concern on perception. It focus on all internal and external stakeholders, and boarder mix than traditional marketing mix, and it require commitment from all staff, senior management as well as financial support. From Balmer (2001), the favorable corporate brand came from organizational identity. Ryanair brand core is the ‘low cost flights for all'. This brand core is applied to focus on the cost of Ryanair brand which is available at different levels for differents types of customers (Ryanair.com, 2009). It also emphasizes on the promise that the brand communicate to the stakeholders. Furthermore, the effectiveness of the communication depends on the gab between the performance and promise although in Ryanair we see more students, leisure people than business people. Nevertheless people from any background can afford to use the service.
Abratt (1989), Grunig (1993), and Van Riel (1995), there are three approached of corporate image which include psychology, graphic design and public relation. From Balmer (2001), the corporate image came from managing business identity. Moreover, corporate image related to immediate mental perception to the organization held by individual group.
Abratt (1989), Balmer (1998) Olin (1990) and Van Riel (1997), corporate identity focus on culture, strategy, structure, history, business activity and business scope. Corporate identity is the mix of elements which give the organization their distinctiveness. And the key questions are who are we, what are structure, strategy, business, reputation, performance, business and history. Ryanair corporate identity is based on ‘bleueness' (The corporate colour): meaning they are ‘up for it', ‘passionate', ‘sharp' ‘mad about safety' and ‘mad about cost'. Bleue is what make Ryanair different.
3.2.4 HRM Strategy -to complete
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Proposed Stakeholder model with Ryanair
Input - Output Model of Strategic Management (Cornelissen, 2005)
Ryanair's response to an Irish blogger Jason Roe who highlighted flaws over the website layout; rather than thanking Mr.Roe instead staff commented:
(source: ‘ Ryanair calls blogger lunatic'; The Telegraph, 25th February 2009)