Business and Performance Analysis of Ryanair
Business and Performance Analysis of Ryanair
Ryanair is an airline company in Ireland. It was founded in 1985 by the Ryan family. At its inception, the company started with a capital of €1 and 25 employees (Ryanair, 2019). Today, Ryanair is one of the best airline companies in Europe. It operates in Europe and other parts of North Africa. It is one of the best airline companies in Europe. Over the years, the company has developed a good customer base (Worldatlas, 2019). According to the company’s report, many international passengers consider flying with Ryanair than other airline providers in the region.
Question 1: The Company’s capability
In an organizational context, capability refers to what the company can do and how it is doing it. In most cases a company’s capability enables it to secure a good competitive advantage in the market. Many companies tend to compete for better market share than their competitors. Many companies have different capabilities as far as resources and performances are concerned. Resources refer to the assets and other things that the company owns. Such things determine the capability of the company. In this regard, a company with a strong asset base is considered to be more secure that a company which has many liabilities. Both financial and operational performance also determines the capability of the company.
The first capability of Ryanair is strong resource base. The company has many resources as compared to other neighboring airline companies. Since 1985, the company has shown a tremendous growth in terms of assets. In the early years, the company started operation with a 15 seater aircraft. The company had few aircrafts as well as a low customer base. Today the company has many aircrafts that has a passenger capacity of up to 186. Additionally, the company also expects other aircrafts in the spring of this year. The company has a good number of aircrafts and staff. Therefore, provided that these two factors are present, Ryanair has rapidly increased its annual income over the years.
On average, the company handles over 130 million customers in an annual basis. According to statistics, this value varies to even a higher value. This is an indication that the company has a strong customer base. In the period between 2007 and 2008, the company handled a total of 50,913,723 passengers. Consequently, the company handled 130 million passengers in the period between 2017 and 2018. Mathematically, this represented an increase of 55.33 % over one decade. The company has showed a systematic increase in the number of passengers in every year. Notably, Ryanair has a capability of handling many customers than its competitors. Therefore, many passengers prefer this company.
In addition, the company manages over 2000 flight per day. The company is capable of manages such a large number of flights in a single day due to some important reasons. In the traditional society, airline travelling was perceived to be more expensive than other means of transport. Today, some people also have the same notion. Ryanair offers affordable prices to their customers hence attracting many people. For instance, they offer relatively cheap prices as low as £47. Therefore, this has helped the airline industry to look cheap in the eyes of the passengers. In the long run, this aspect has improved the number of customers.
Another capability of Ryanair is that it operates from more than 215 airports in 37 countries. In this regard, the company has 86 bases across Europe. Due to these facts, Ryanair is one of the best airline companies in Europe. Availability of qualified and competent staff has enabled the company to effective manage all the bases and airports. In the contemporary world, the airline industry has employed a good number of people. The increase in the number of passengers has rapidly led to an increase in employment opportunities. In the early 1980s, the company used to employ short pilots who were not more than 5ft. 2Inch so that they could fit on the then smaller cabin of the aircrafts. Currently, the company hires and trains pilots more frequently. For instance, the company recruited more than 1,100 pilots in 2018. This is one of the best success stories the market.
Another strong capability of the company is sustainability. The company is solemnly concerned with the environment (Ryanair, 2019). It has partnered with different organizations which ensure a healthy environment. Moreover, Ryanair has a good strategy of adapting to the new changes. Examples of these changes are technological improvements. These technological changes have helped the company to reduce the emission of CO2. For this to be effective, the company launched a voluntary donation towards environmental protection. The donation process strategically such that every passenger is given the opportunity to give at the end of the booking process. This has enabled the company to sustain the assistance it has been giving different companies such as First Climate and Renature Monchique. Generally, the airline industry has helped in reducing environmental pollution.
Question 2: Stakeholder theory
Stake holder theory was first developed by Dr. Edward Freeman in the early century. He pointed out that the success of the company lies on the satisfaction of all its stakeholders. The company should aim at satisfying the needs of those who are interested in the company. The first stakeholders in an organization are the customers. The customers are also the main reason why most organizations are in operation. Therefore, many companies aim at satisfying their customers’ needs. Such needs are not only internal but also external. Internal needs would involve the activities that revolve within the services offered by the organization. On the other hand, external needs would involve other activities in the community. Therefore, Ryanair ensures that their customers are satisfied. The company encourages the customers through the application of lower charges and good services.
The company is concerned about the society in which it operates. It carries on Community Social Responsibility to ensure that the company gives back to the society. Ideally, the community is also stakeholders. Therefore, the company should ensure that community is satisfied. The company has many partners since its objective is to help the community. Ryanair supports a program by the name ISPCC ChildLine. In this case, the company has organized different fund raising activities towards this program. The program is aimed at helping children and the young people in the society. The aspect of Community Social Responsibility is one of the key factors in addressing external stakeholders. Although this program does not help the customers directly, it boosts the name of the company.
The government is also another stakeholder in the business. Ryanair does not operate under a perfectly competitive market structure. Therefore, the company experiences the government intervention in the market. The government ensures smooth running of the organization through the provision of relevant laws and services. The government can also affect company operations in such a way that the regulations might not be favorable to the company. Brexit is one of the important aspects of government involvement in business (Brakman et al., 2018). Notably, the UK government decided to withdraw itself from the European Unions. This exit has caused a lot of discussions across the world. The most crucial part of the exit is that it is going to affect the operations of businesses in the UK. Many companies are likely to lose customers as well as potential investors. For instance, this exit will lead to lose of voting rights by the non-United Kingdom shareholders in Ryanair. This is in accordance with Article 41 (J) of Ryanair’s memorandum of association.
Investors are also major stakeholders in the company. Investors refer to shareholders who buy shares of the company in expectation of profits inform of dividends. Investors tend to invest in a less risky company. Ideally, shareholders’ equity is the most important source of funds for listed companies. Ryanair is a listed company in the stock markets in Europe. Therefore, the company gets its funds from shareholders. A company that is financed with debt capital is likely to go bankrupt. This is due to the high leverage ratio that is brought about by more debt as opposed to equity capital. The company’s management should ensure that the investors’ rights are not infringed.
The company’s report indicates that it handles many international passengers than the local citizens. The company’s customers not only come from Europe but also from other countries across the world. Therefore, the company strives to make them satisfied. Since customers are the main stakeholders at Ryanair, the company developed a strategy to protect the environment in different parts of the world. Notably, the company’s environmental protection partners operate in different countries. The first partner, First Climate operates in Uganda by helping Kampala residents with a form of energy that does not emit CO2. Renature Monchique operates in Portugal whereas the Irish Whale and Dolphin operates in Europe. This is an indication that the company focuses on a large number of customers around the world through environmental condition. In addition, the company complies with the EU’s environmental policies. The company is strongly committed in ensuring that the environment is secure. On that note, it targets a reduction of aviation emissions by 50 % in 2030 as compared to 2005 levels.
Question 3: Theoretical framework on organizational culture
Organization culture refers to how the company articulates its activities. In most cases, organization portrays different cultures to avoid competition in the market. The main reason towards organization culture is to ensure that the company operates according to its own norms and beliefs. Such beliefs form the culture of the organization. Additionally, organization cultures vary from one industry to another.
Robert E. Quinn and Kim S. Cameron of the University of Michigan formulated four types of organizational cultures. According to them, these were the most common cultures portrayed by different across the world. They studied the behavior of different organizations before coming up with these types of organizational cultures (Tipster, 2013). The first organization culture is clan oriented. In this type of culture, the organization aims at doing things together or even in a family-like manner. The main focus is to achieve the organizational goals. The second organizational culture is hierarchy oriented. The organizations which employ this type of culture aim at doing things in the right manner. In these organizations, the management controls the organization’s activities by focusing on efficiency and effectiveness.
Robert and Cameron also pointed out that some organizations are market oriented. They found that organizations which portray this type of organizational culture tend to focus on getting the job done. Such organizations focus on the achievement of organizational goals in a good and efficient way. For these companies to achieve their objectives, they also focus on competition. These companies employ different strategies to control competition to pave the way towards achieving the organizational goals. Moreover, they also found that some organizations employ adhocracy. Adhocracy oriented companies aim at ensuring that things are done faster. Such organizations focus on the value of time. Therefore, they focus on risk-taking and innovations towards the achievement of organizational goals.
According to these four organizational cultures, I would conclude that Ryanair is market oriented. Since the establishment of the company in 1985, it has been aiming at gaining a good competitive advantage in the market. This is evident through the company’s idea of penetrating into different regions in search of customers. Over the years, the company’s traffic has shown a rapid increase. In 2015 to 2016, the company’s traffic grew by 18 % to 106.4 million customers. Consequently, the company’s average fare fell to €46 during the same period. In 2016 to 2017, the company’s traffic grew by 13 % to 120 million customers. In the same period, the company’s average fare fell to €41. Ideally, Ryanair aims to achieve a good market share than its competitors. Therefore, the company employs effective strategies which attract customers to the company. One of these strategies is offering good services to the customers. Furthermore, the company uses ‘Know Your Customer’ strategy to ensure that their customers are satisfied.
Another aspect of market orientation is the employment of skilled personnel. According to 2019 statistics, the company had a 17, 500 skilled professionals. These professionals are trained on the new technologies to ensure that the company conforms to the changes in the market. Ryanair’s chief pilot said that the company recruits and trains pilots on a weekly basis. The company focuses on aviation technology to ensure that their pilots are well-equipped with the relevant skills. The pilots are supposed to have the knowledge of the new aircrafts. For instance, the company is expecting some new Boeing aircrafts before the end of this year. These aircrafts will help the company in meeting the new market demands. These demands include speed and capacity. The new Boeing aircrafts tend to have a higher speed than the other aircrafts owned by the company. Additionally, the new aircrafts have a large passenger capacity. Therefore, the company is prepared to meet the market changes. Ryanair employs these strategies to prevent competition from its competitors such as Wizz Air.
In 2014, Ryanair launched a program by the name ‘Always Getting Better’. This program aimed at improving customer services in the organization (AGB, 2018). As a result of this program, the company focused on the customers from different regions. Therefore, the company developed an effective website and an app. These technological advancements made the work easier for the customers. Through the app and the websites, customers could now book planes at any time regardless of their location. The passengers do not need to appear physically at the airport to book a flight. The customers can also follow the new developments of the company through the news section in the website. The company also updated its contact in the website and app for easy consultation. Generally, ‘Always Getting Better’ program has immensely improved the company’s customer service. Ideally, the organization is market oriented.
Question 4: Recommendation of a strategy
A strategy involves a course of action that is taken towards the achievement of certain goals. In an organizational context, a strategy is developed towards the achievement of organizational goals. A good strategy results to its intended purpose but a bad strategy may cause problems in the organization. Ryanair Company is an example of companies which show a good improvement every year. These improvements increase the company’s capital base as well as annual earnings. Ryanair needs to employ specific strategies which are capable of improving its development trends. Increment in the number of customers in every year is one of the good trends shown by the company. Therefore, the strategy should aim at maintaining or increasing this trend to a higher level.
The first strategy that Ryanair should apply is strictly focusing on the customers. Ideally, focusing on the customers can easily lead to an increase in the company’s traffic growth. Notably, customers are the main stakeholders thus the company should ensure that they are satisfied. In this case, the first approach is to identify the market segmentations. Ryanair deals with both international and local passengers. The market can be segmented as local and international. The segmentation should be accompanied by approaches to reaching the targeted audience. In other words, Ryanair should focus on an advanced advertisement policy towards improvement of customer base.
In the contemporary world, technology is used in many industries. As far as marketing of a company is concerned, Integrated Marketing Communications is used to reach a large audience at a given time (Blakeman, 2018). Integrated marketing communication involves the uses of the new social media platforms as an avenue of advertisement. Social media platforms such as Facebook and Twitter can be used to reach many people regardless of their location. Currently, Ryanair uses Twitter to advertise its service. For future development of the company, it should be aggressive in terms of advertisement. This can be done by ensuring that the company advertises on all social media platforms including LinkedIn and Google+.
The main advantage of advertisement is that it enables a company to secure a strong customer base. In the long run, the company will have a good competitive advantage. Advertisement also promotes the company by showcasing its services to the public. Ryanair should develop a strong advertisement team towards the improvement of the company’s customer growth rate per year.
In conclusion, Ryanair is one of the best companies in Europe. The company operates from over 215 airports within 37 countries. Additionally, the company controls over 2000 flights per day having 86 bases across Europe. The company has good capabilities which act as its strength in the market. These facts have enabled the company to report good financial and operational performance since its establishment. Its main focus is to have a clean environment in terms of emissions. By focusing on its main stakeholders and the use of good customer strategies, Ryanair has boosted its customer base since 1985.
References
AGB. (2018). Always Getting Better. Retrieved at https://www.ryanair.com/gb/en/useful-info/about-ryanair/always-getting-better
Blakeman, R. (2018).Integrated marketing communication: creative strategy from idea to implementation. Rowman and Littlefield.
Brakman, S., Garretsen, H., & Kohl, T. (2018). Consequences of Brexit and options for a ‘Global Britain’. Papers in Regional Science 97 (1), 55-72.
Tipster, T. (2013). 4 Types of Organizational Culture. Retrieved at https://www.artsfwd.org/4-types-org-culture/
Ryanair. (2019). History of Ryanair. Retrieved at https://corporate.ryanair.com/about-us/history-of-ryanair/
Ryanair. (2019). Environment: 2019 Partners. Retrieved at https://corporate.ryanair.com/environment/
Worldatlas. (2019).The largest Airlines in Europe. Retrieved at https://www.worldatlas.com/articles/which-are-the-largest-airlines-in-europe.html