Key Critical Success Factors Of Ryanair Management Essay

Key Critical achievement Factors Of Ryanair Management EssayRYANAIR- The Irish blue represent airline was founded in 1985 by the Ryan family as a sm every(prenominal) competitor to Irish issue airline Aer Lingus. As Ryanair walked on the same business mildew as that of its competitors. But this schema suck uped by Ryanair never turned start as a profitable angiotensin converting enzyme and took it nowhere. In 1990s, Ryanair transformed its strategy and beneath the drawship of Michael OLeary it decided to restructure and model itself after southwest Airlines, the successful US Carrier and because enter into British Isles, and then in to whole of Europe. (Johnson, et al, 2008).The move of effective resource planning and redesigning Ryanair under the leadership of Michael OLeary was the turning block for the airlines. The Mantra of maintaining slump be and No Frills worked wonders for Ryanair. Its effective resource planning and inwardness competency helped Ryanair to develop and grow throughout familys. Using regional and lower-ranking airdromes, non to charge customers for fuel surcharge, trim back operational and manipulation charges were on the main agenda on Ryanair. give inable to combination of all these activities Ryanair was able to maintain low approachs and frankincense earn shekels out of it.Ryanair go about many hurdles to pass on where it is today .Sudden rise in fuel court, compensations to passengers, aftermaths terrorist attacks, purlieual taxation schemes, fraught relationship with pilots and staff, sundry legal action and many more acted as potholes to Ryanairs smooth ride. But Michael OLeary who was called boththing from arrogant pig to messiah (Johnson, et al, 2008), balanced ein truth sector of the organisation and scripted the success diary of Ryanairs.As per ELFAA (European Low F argons Airline Association)2010 statistics, in the socio-economic class 2009, Ryanair topped the list with maximum exit of pa ssengers among its European low cost competitors. It covered 28.67% (i.e. 65.3m) passengers share among its ELFAA counterparts and move arounds over one hundred fifty destinations throughout Europe, and operates 1070 daily trajectorys over 1000 routes(Anon, 2010)KEY CRITICAL victory FACTORSLOW PRICESAs Ryanair operated in short-haul trips, it helped Ryanair to maintain low necks. Low pabulums helped to displace demand, particularly from carte conscious travellers who would have rather opted for either doer of transportation.The European Low gets Airline Association (ELFAA) announced that last year its members carried 162.5 million passengers, representing an 8.7% increase on the previous year(Anon, 2010).This showed that, let it be for waste or business, European consumers are chosing low fare airlines as it fork outs them beat Value for Money air services.POINT-TO-POINT MODELPoint to Point workFigure 1 head to point model(Source http//ostpxweb.dot.gov/aviation/airlin ebusinessmodel.htm )Ryanair operates in short-haul routes, which connects subaltern and regional airdromes of the travelling destination. Ryanair carries out its point-to-point operations on a unshakable and frequent basis which has helped airlines to snuff out the necessity of frills services to its customers, which becomes instead an necessary in long-haul routes. This point-to-point service helped Ryanair to serve non-stop and direct routes to its customers, and olibanum eliminate extra costs which are touchd in long-haul routes. It withal helped airlines to frankincense get its unit costs as aircrafts are utilised more. It helps in reducing operating costs, as flights are direct and does not enquire any connecting flights and further expenses involved in it.NO FRILLSAncillary r yetues are regarded by analysts as a lucrative source of revenue growing for Ryanair at high margins(Milmo and Griffiths, 2006)Ryanair believed in No Frills policy .There is withal no compli mentary food and drinkinstead this is sold on board(Anon, 2004).It make revenue by imposing charges on hotels, travel, excess baggage,flight change fees, in flight retail and other such(prenominal) facilities. This helped Ryanair to maximise its Ancillary revenue. charge focus on this No Frills policy, Airline chief Michael OLeary suggested that installing pay toilets would lower ticket costs and make flying, somehow, easier for all (POGATCHNIK, 2009). He believed this leave further help in generating ancillary revenue and thus get out further support in simplification on fares.CHOICES OF ROUTESAccording to Pitt and Brown(2001) at present, there is a clear gain in terms of the duration in which the air carriers apprise physically move customers from one point to the other, basically speaking there is actually tiny disparity in terms of the total journey duration when we allow for airport processes and procedures and thus comparing it with the judgment of conviction taken to reach to the deviance airport and to transfer from the arrival airport to the final destination. It was for the same motive that regional and secondary airports were majoritily connected by Ryanair as this helped in keeping the airport and handling cost low as compared to the main congested airports. Thus choices of routes was make by keeping Ryanairs Budget airline model in question as it strengthens the competitiveness of the airline.It also enabled to make quicker departures, and quicker flight turnovers.LOW OPERATING COSTSRyanair strategies and action plans had make it Europes biggest low fare carrier. As Ryanair operates in short-haul routes it aims at reducing aircraft equipment costs by victimization single type of aircrafts which later on upgraded to new generation aircrafts due(p) to stiff competiton and environmental needs and regulationspersonnel expenses by improving harvest-feastivity of its present staff by providing productivity-establish incentives, on-board sales incentives for flight attendants, amount of hours flown by pilot and the cabin crew within the set time limits, this motivated the staff to work for more hours.customer service costs by attaining competitive rates by signing multi-year contracts with third party contractors for aircraft and passenger handling, ticketing and other services.As Ryanair was the largest travel website in Europe and fifth nigh recognised website in Europe,thus net profit booking has immensely helped to reduce the customer service cost and also remove commission charges of the agents andairport access and handling costs which is the also the key competency of Ryanair.Intorduction of web-based check in and priority boarding helped Ryanair to enhance cost cutting in airport access charges. Also introduction of charges on report bags helped in step-down of baggages and saved costs and enhanced the performance and the speed of the aircraft.Ryanair unploughed its gos cost under look by solely o perating Boeings-737 jets and thus kept training, maintenance and operating costs under check(Anon, 2004).BRANDRyanair is a very well-positioned brand, You know exactly what it stands for not something you can say too much in the travel business( McGuinness, 2010). Imposing toilet fee, excess baggage restriction, charges on credit cards, allegations of overstressing of staffs,environmental issues, sundry legal actions and many other such issues provided notice Ryanair free of cost forwarding and thus promoted itself as lowest fare airlines in Europe.Ryanair fifth most searched website world huge, this show the potency of the its low cost carrier brand. (OConnell and Williams, 2005).TECHNOLOGYWeb based check-in helped in reduction of airport costs for the Ryanair. Officials at the no-frills Irish airline tell by lowering its airport costs they can pass th savings to passengers by lowering the fares further(Pugh, 2009). It saved check-in time and also reduce check-in staff costs a nd thus helps in maximizing profits.Ryanair fleet of 130 Boeing 737-800s, is the youngest fleet and emits someer gases than its older aircrafts( Chesshyre, 2007).This made Ryanair environment friendly and thus follow all environmental norms.STRATEGIC electrical capacityRESOURCESRyanair is a non-union operation having its headquarter in Dublin, Ireland(Box, 2007). Ryanair mainly carries out its operations from secondary and regional airports.In the year 2006 Ryanairs saw ontogenesis in its profession by 26% to 34.8 million passengers and even ancillary revenues grew by 36%, which was higher than passengers revenues.Ryanair had a fleet of around 100 new Boeing 737-800 aircraft, which was the youngest fleet having an average age of 2.4 years. These new aircrafts were environmental friendly and also consumed lesser fuel. Ryanairs stock was up by 12% in a year to 9.28euros per share.Ryanair manpower grew to 3500 employees.Ryanair being a brand in airline sector, made profits due to i ts adequate fund and resources.CORE COMPETENCESA core competence is a set of skills and technologies, which enables a company to achieve a particular benefit to customers(Hamel and Prahalad,1994). It would not compulsorily be product-specific,but represent a very unique and difficult-to -imitate practices, which certainly stands as a pillar for the upstandings competitiveness. It would not be generally an asset or a value that can be ascertainn in a firms balance sheet, it is a skill for doing things.initially Ryanair focused on customer service and also wanted to provide lower fares than its fellow airlines-British Air slipway and Aer Lingus(Gillen and Lall, 2004). In the 1990s Ryanair copied Southwest Ailrlines,US business model and chose a new way to establish itself as Low Fare Carrier Airline in Europe. Ryanair took the Southwest operational aptitude to the bordering step by providing no service-no food no jet ways no frequent flyer programme no refunds no travel agents no tickets no connects (Gillen and Lall, 2004). Ryanair mainly focussed on providing low cost, competent, regular connections and subsequently offering no other frills or supporting services(Kangis and OReilly, 2003). This policy helped Ryanair to generate revenue.Numerous possibilities for non-price differentiation exist focusing on features such as punctuality, high frequencies and timing of flights (Klophaus, 2005). Ryanair adopted point-to-point routes as the it is not retard by interlining passengers. Check-in is more faster because the point-to-point journey is simple than an interline one as choice is of regional and secondary airports. Boarding is rapid as seat choice is better for passengers who arrive early at the departure gate( Barrett, 2004). This also helped in maintaining high punctuality for Ryanair.Lower costs also stem from reduced complexity in activities (Gillen and Lall, 2004). Further Ryanair outsourced its activities as Outsourcing brings a flexibility to an air line in choosing between different suppliers of services such as aircraft maintenance, handling at airports, catering, and inflight magazines. Outsourcing brings flexibility to the company in choosing whether or not to renew contracts as they expire. In inflexible labour securities industrys securing efficiency gains from an inhouse labour force is likely to be more difficult and involve compensation for change( Barrett, 2004). By adopting outsourcing Ryanair has made its development much easier and has expanded quite uncompromisingly which has given it a initial mover benefit in negotiating with airports and allowed it to sign long-term contracts( Gillen and Lall, 2004)PORTFOLIO ANALYSISBCG MATRIXBoston Matrix draw(Sourcehttp//www.oup.com/elt/catalogue/teachersites/oald7/wotm/wotm_archive/boston_matrix?cc=global)The market share and the growth of market are the two contingent variables which determine the position of the firm. According to Seeger(1984) it is one of the simplest a nd most vivid concepts which consists of two impotant variables of the market i.e. market growth and market share.Ryanair fall under Cash Cows as it growing slowly even though its market share is high. It heavily targeted at maximising its market share and cash flow.As ryanair adopted no frills policy and outsourcing, the investments needed by it has to be low.Even though having high revenue Ryanair cannot expand its activities into other product lines, as its competitive advantage of low fare can be disturbed by certain small change in charges or taxes.VALUE range of mountainsThe purpose of the value- compass model is to assist companies to evaluate and take aim the optimum set of activities and methods of performing them to create the most value for the firm (McPhee, 2004). It incorporates both traditional business activities that provides continuous value to the organization and wide range of activities from modern strategic theory. Very Impotantly , expanded activites i.e Sup ply chain management, Product use,End of primary use,External networks, ensures that no potential strategic activity is slide by and no opportunity for enhancing value is ignored.INFRASTRUCTURE Minimum Corporate HQHRMLow Cost TrainingLimited staffManagement controlIn-housePerformance contractsTECHNOLGY DEVELOPMENT networkWeb informationIntegratedInternet salesPROCUREMENTDiscount on aircraftsAlliancesOutsourcedPrivateLow costLow cost suppliersAirport agreementsLow costNo frills dissipated turnaroundReliable serviceLow cost promotionsFree publicity due to controversiesInternet salesLimited resourcesHigh productivity inbound logisticsOperationsOutbound logistics trade and salesHigh productivityRYANAIR VALU CHAINRyanair has least infrastructure required for corporate HQ. HRM involves Low cost training, modified crew, control of management, in-house and performance contracts that is done by developing technologically such as internet and low tech marketing on internet sales(McPhee, 2004). The procurement of low cost training is done with discount from Boeing, exceptional crew procurement involved alliances which result in No frills and low cost operations, management control is outsourced for quicker turnaround and reliable services. Marketing and sales incurs very less expenses as there is more internet sales involvement with little promotion costs, free publicity through controversies and yield management. Performance contracts are low cost productivity based which utilizes the less available productive resourcesSTRENGTHSThe Mantra Ever decreasing costs .Point to point flights, No frill policy ,and innovative ancillary schemes led to growth in revenues and thus made Ryanair financially strong and successfulRyanair has a very strong Brand and reputation in the European market, which enables them to adopt aggressive pricing stratergy.Ryanair can credit much of its success to its tricksy chief executive, Michael OLeary, who has used a combination of Irish bla rney and curl bloody-minded effrontery to achieve growth for his airline(Anon, 2010). He readily faced all the hurdles that came in Ryanairs way and thus with his innovative vogue converted these controversies it into publicity for Ryanair.Ryanair has the youngest single aircraft Boeing 737-800 fleet which has high seat concentration and also helped in reduction of maintanace and training costsSecondary and regional airport approach helped Ryanair in maintaining operations in busiest aviation trade areas and thus reduce airport handling and flight turnover times.Web-based ticketing and check-in have been root foring people as it is time saving and also workable for them.Ryanair has a huge future because of the untapped market. Lower fares help Ryanair to attract customers who use non-aircraft modes for travelling longer distances.WEAKNESSCustomer relationship is very poor.Ryanairs operates from secondary and regional airports, which sometimes are very far onward from the actua l destination.Ryanair had weak employee relations.As Ryanair is a low cost fare carrier any new tax or charges effects its profits greatly.Ryanair is prone to bad controversial issue in the press, which gives a controvert picture about the Brand RyanairLEADERSHIPDeveloping Ryanair from the point of gag law to the top profit making low fare airline, handling all controversial issues and media, motivating and energising people, facing legal actions and competitors. There is little doubt that OLearys confrontational personality has ruffled more than a few feathers amongst his rivals (Anon, 2004). But for Michael OLeary, any criticisms of him or his airline were looked up as punch-drunk and completely pointless methods to divert Ryanair from its mission.All this is enough to prove that Michael was an in effect(p) and innovative leader with every quality which a modern leader must pursue in order to achieve goals.ConclusionRyanair by choosing a Low Cost Carrier Approach, have achieve d it through restraint of product design, simplicity of processes and simplicity of organization (Gillen And Lall, 2004). Thus we can see Ryanair have restructured the European markets competitive environment and made an impact on the worlds domestic airlines market, which was monoploised by huge airlines(OConnell and Williams, 2005).