1.0 Introduction
Our group will be outlining the internal issues faced by Ryanair such as inappropriate advertisement published by Ryanair, poor customer service, inconvenience airport location, poor incentives system and management style of Ryanair. So we will discuss these issues and provide some of the recommendations/actions to overcome the problem. Moreover, we will also outline the external issues that faced by Ryanair and do further recommendations/actions to solve the problem. There are few external issues faced by Ryanair such as political issues, environmental issues, social issues, technological issues, economical issues and legal issue.
The external issues that Ryanair facing is included fuel price changes, improved high speed railway systems, increasing low cost new entrants, compensation to passengers and strengthen legislation. So we will discuss these issues further and apply it to the knowledge that we are learnt before. In addition, we will outline the strengths, weaknesses, opportunities and threats of Ryanair to understand the current position of the company. Besides that, we will use the financial analysis to evaluate the company’s financial performance. We are able to identify the leadership style that Ryanair is practicing from the case as well. Lastly, Ryanair could consider the recommendation/actions suggest by our consulting firm in order to help to improved the performance level, enhance the relationships between employees. 2.0 Internal
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2.1 Ryanair’s inappropriate advertisement
Ryanair receives complaint that its advertisements are against the Advertising Standards Authority (ASA).
The contents of advertisement are inappropriate because it causes mispresentation of facts. The reputation of Ryanair is affected by this advertisement issue (Refer to Appendix 3, SWOT analysis, Weaknesses).
2.2 Poor customer service
Ryanair receives complaint that it has poor customer service. This is because its service areas are reduced and Ryanair will only provide the certain area of service if extra fee is paid by the customers. For example, Ryanair will charge extra fee for online check-in fee, new delay/cancellation fee, meals and luggage. Therefore, this causes dissatisfaction of customer about the services. In addition, Ryanair practices low-cost strategy which will minimize its maintenance costs and staff training cost. Therefore, the staffs do not have sufficient training and quality of staffs will be affected. This will cause the cases of missing bags and cancellations of flight increase (Refer to Appendix 3, SWOT analysis, Weaknesses).
2.3 Poor incentive system and management style
Ryanair’s human resource department had introduces productivity-based incentives to its pilots but it restricts their flight hours. This causes the pilots become unhappy and unmotivated because their salary and incentive are lower than other airline staff due to the restriction of flight hours. This will then damage the relationship among the company and pilots and company’s position will be affected. Furthermore, Ryanair’s CEO, Micheal O’Leary is very aggressive and this gives customers a bad impression. He will also provide inappropriate suggestions for the operation of the company and cause the company’s image affected (Refer to Appendix 3, SWOT analysis, Weaknesses).
2.4 Inconvenient airport location
Although Ryanair’s secondary and regional airports can help Ryanair to achieve cost saving, however its airports can be a long distance from main cities of the countries which will create inconvenience for its customers (Refer to Appendix 3, SWOT analysis, Weaknesses).
3.0 Recommendations of internal issues
The Business plan on Customer Service Essay
Excellence in customer service is the objective of all organisations wishing to be successful. However, there is often a gap between customer expectations and management perceptions of customer expectations. Organisations often fail to get close to their customers and correctly read their expectations. Customers expect certain things when they walk into a business, and those with the highest level ...
3.1 Extend ancillary product ranges
As the ancillary revenues per booked passenger have slightly decreased from year 2009 to 2010, Ryanair should adopt some strategies in order to push up its ancillary products. Firstly, Ryanair could extend its ancillary product
ranges to serve its passengers by not just constraint in providing related items. Ryanair could find more potential companies to supply the ancillary products other than the existing companies. By providing more choices of ancillary products to satisfy its customers would definitely increase its ancillary revenues. Besides that, Ryanair should adopt marketing strategy to attract passengers to purchase its ancillary products. Ryanair can provide price promotion by giving discounted prices for certain ancillary products in certain period in order to attract purchasers. Ryanair should improve its website design by giving its passenger a better ambience and enhance their experience when shop their ancillary products.
3.2 improve customer service (refer to Appendix 2, Value Chain Analysis, Service) The perception of poor customer service about Ryanair from passengers and observers would definitely affect Ryanair’s reputation and image. So, Ryanair should make some changes to improve its customer services. Ryanair should provide adequate staff training for its employees so that its staffs are highly skills and competences to provide good customer services and better handle customer complaints. Ryanair can use its website to interact with its customers to handle their enquiries and problems. For example, Ryanair can provide online chat or forum for their customers. By improving customer services for customers, this will increase Ryanair’s operating costs. Therefore, Ryanair should continue to find other ways to reduce operating costs in order to maintain their low cost structure as the company adopted cost leadership strategic. 3.3 Market development
Ryanair should adopt market development strategy by expanding its routes to more countries to attract more passengers. Ryanair must search for future potential and viable route to expand its company. By offering more routes to passengers, it will help Ryanair to generate more profits.
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3.4 Have better communication with employees
Ryanair should properly handle its labor issues in order to avoid deterioration in their relationships with Ryanair and affect the company’s position. Ryanair must communicate well with their employees (pilots) and negotiate with their employee union. Ryanair should seek compromise with the union in order to create a win-win situation for both sides by agreeing with the flight-hours and the incentives. When Ryanair and employees union interested are aligned, union’s support for the Ryanair can definitely strengthen the company operation.
3.5 Transformation of management style (refer to Appendix 2, Value Chain Analysis, Human Resource Management) Mr. O’Leary who is the current CEO of Ryanair had successfully transform Ryanair and make it the leading of low fares airlines. However, there are some criticisms of Mr. O’Leary from public about his aggressive management style and his outlandish recommendations for Ryanair. This would create a bad impression for himself and the company as a whole. Mr. O’Leary should change his style in order to give the public a better image. When come to the succession planning because of Mr. O’Leary Ryaniar contract may terminate soon, Ryanair should select a CEO which has better management style with highly competences and to lead the management and company to a better future.
3.6 Strategic alliances
Ryanair currently does not engaged in any strategic alliance with other airlines. So, Ryanair can consider adopting alliances strategy. For example, Ryanair can join one world alliance to become a member of this alliance to enhance its network while providing base load demand from fellow one world members. This membership can improve Ryanair brand awareness among the public and enhances the load factors through additional partner traffic. By adopting this alliance, Ryanair can achieve cost saving because of the economies of scale and access to partner’s expertise and capabilities. 4.0 Strengths & Weaknesses of Ryanair
Strengths (Refer to Appendix 3, SWOT analysis, Strengths)
Ryanair provides low fares to attract price-conscious customers. Customers are willing to choose Ryanair because they can reduce their spending. In this case, Ryanair is also the first step mover into this low fare model in Europe and this makes Ryanair has competitive advantage over its competitors. Besides, Ryanair has low operating cost because it has negotiated with suppliers when buying new fleet of aircrafts. Ryanair also has faster turnaround than other competitors which will also help the company to cut cost. Moreover, Ryanair utilizes the benefits of Internet. It
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provides convenience for customers because they can purchase tickets and check-in through Internet. Internet also enables Ryanair to update its information anytime with minimal cost. It is very time-saving and cost-saving by adopting this IT system.
Furthermore, Ryanair emphasizes much on the safety of aircraft. There is no flight crew or passenger fatality in 25 years of operation. Ryanair also uses younger and modern fleets that contribute to less pollution, noise, fuel use and maintenance costs. This could also increase the reputation and image of Ryanair because it is environmentally friendly (refer to Appendix 1, Resource Based View, Distinctive Resources).
Furthermore, Ryanair provides ancillary services which can increase its revenue with the car rentals, hotel bookings or baggage charges. Therefore, Ryanair could earn further revenue other than the airline service. Besides, Ryanair is very ethical in conducting its business. It complies with all the regulations and laws in every country it operates. Ryanair will not seek advantage through unethical and illegal business practices. Besides, Ryanair has focused criteria for its growth. It has an explicit plan to be based on. In this case, Ryanair is able to response and overcome to the challenges it faces such as increasing fuel price and decreased economic growth. Weaknesses (Refer to Appendix 3, SWOT analysis, Weaknesses)
Ryanair’s advertisements are claimed to be inappropriate because they are against the Advertising Standards Authority (ASA).
This will affect the reputation and image of Ryanair. Besides, Ryanair is claimed that it has poor customer service. This is because its service areas have been reduced and Ryanair will only provide the certain area of service if extra fee is paid by the customers. This has caused the dissatisfaction among its customers. In addition, Ryanair has poor incentive system and management style. The incentive system is claimed to be poor due to the restriction of flight hours is practiced and made Ryanair’s pilots have lower incentives if compared with other airline companies. Besides, the aggressiveness behavior of Ryanair’s CEO, Micheal O’Leary has given customers a bad impression about the company. Furthermore, Ryanair’s airports are quite a long distance from main cities of the countries, this will create inconvenient for its customers.
The Business plan on Analysis of Ryanair
... as the 2010 Iceland Volcano which caused 14,000 Ryanair flights cancelled. Costs of the 2010 Iceland disruption to the global ... Therefore the airline’s low cost model delivers increased revenue and passenger growth as customers seek cheaper flights and benefit from price ... hours and do not charge fuel surcharge (Ryanair.co.uk, 2010). Operations: Ryanair have lower unit costs as part of its operation ...
5.0 External
5.1 Fuel price changes
For airline industry, there would be two main ingredients of an airline’s profitability are the number of passengers and the cost of flight fuel. When the fuel price increase, the operating cost of Ryanair would also increase and this would push the price of flight ticket inevitably increase and at the end will affect the company growth and profitability. Based on the case study, it mentions that the fuel price had increased and represented 34.1 percent of its total operating expenses in 2010. As the main ingredients of airlines profitability, this situation had badly affected Ryanair due to the reason they are running for low fare prices. In addition, there is a limited ability for Ryanair to pass the fuel surcharges on passengers. Thus, in order to minimize loss, Ryanair solved the rising fuel price issue through engaged in fuel hedging which Ryanair made advance purchases of fuel at a fixed price for future delivery to protect against the shock of anticipated rises in price. 5.2 Improved high speed railway systems
From the case study, we notice that Ryanair is also facing competition from extensive ground transportation such as the high-speed rail systems in Europe and sea transportation which travel to where Ryanair travel between Britain, Ireland, and continental Europe as well as Morocco. From the survey on secondary resources, the European high speed train network is steadily growing and aiming to become serious competition for aviation. The new faster service provided by ground and sea transportation would lure passengers away from airline service including Ryanair. In the survey article, 79 percent of passengers would choose trains over planes if high-speed rail options existed and this would cost Ryanair loss demand. The reasons that passengers prefer high speed railway systems than airplane are they could avoid the hassles of long lines, airport security, baggage or luggage fees and taxes. In another word, high speed railway offer better service than air flights on cost of ticket, time taken to reach destiny and lower CO2 emission. (Refer to Appendix 5)
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5.3 Increasing low cost new entrants
According to the case study, it stated the European airline industry is highly competitive with a number of low-fare. This shows that Ryanair would also face the competition of low cost new entrants. The low-fare companies mentioned in case study are the EasyJet, Air Berlin, and Germanwings while the traditional would be the British Airways, Lufthansa, Air France and Monarch Airlines and Titan Airways of Charter Flights. In 2008, the EU-U.S. Open Skies Agreement (OSA) took effect and allows U.S. carriers to offer services in intra-EU market. For information, the OSA is another form of deregulation agreement between U.S. and Europe that could affect Ryanair’s position in airline business in future. Due to the reason, it allows EU-based airlines to fly from any city in EU to any city in US, vice versa. Ryanair believes that Open Skies Agreement (OSA) and state-owned competitors that are supported by subsidies and state aids had encourage and increased the competition of aviation industry.
5.4 Strengthen legislation
Environmental concerns on greenhouse from carbon emissions continue to raise the public and political agenda worldwide, especially in Europe, with ever greater focus on the impact of aviation. From the secondary resources, we found out that as the failure of controlling carbon emissions, it would impact human health and economic badly. Hence the airline industries should pay environmental taxes for the contributions to global warming. Hence, in January 2012, the European Union released a new legislation and takes effect immediately named European Union’s emission trading scheme which means Airlines Company have to pay for the carbon dioxide they emit which the EU airports are forced to buy CO2 allowances. This is a very costly legislation and would cost Airline Company counting billions expenses.
5.5 Compensation to passengers
In 2005, the Department of Transportation (DOT) enacted new legislation, EU 261 regulation that establishes common rules on compensation and assistance to passengers in the event of denied boarding, flight cancellation or long delay of flights. Ryanair is being forced to pay compensations to passengers for the event mentioned above and they also have to cover the other costs in situation that are beyond their control as well such as air traffic control strikes and failure of clearing snow from runways. Ryanair would have to pay €250 per passenger for the inconveniences caused by the flight and also have to reroute and refund ticket with providing meal, accommodation and amenities to the passengers. Ryanair had took action on this matter by charging a £2 levy per passenger per flight as compensation claims to cover the cost of future compensation claims for the flight delays and cancellations due to natural disaster such as volvanic ash, heavy snow and ATC strikes. It had resulted that Ryanair still stands to earn up to £62 million per year after deducted the paid out compensation” 6.0 Recommendations of external issues
6.1 Trimming down seat size and weight
Although the fuel hedging had solved the issues in short term but the fuel price is still unstable and expected to increase in future. So, we would suggest Ryanair to reduce fuel costs in long term by trimming down the seat sizes and weight for the short haul flights to boost capacity at the same time. They may replace the old seats with the lighter “slim-line” models to squeeze more profit from each flight. By using the slimmer seats, Ryanair may able to add more seats on each plane by placing the seats one inch closer to each other without sacrificing customer’s comfort. When the seats increase, the number of passengers increase, the costs per flight reduced. While the long haul flight and VIP passengers or first class passengers seats are not encourage to do so.
6.2 Careful Planning and Execution of Flight
Other than that, Ryanair may also reduce fuel consumption through careful planning and execution of the flight. For instance, select the most appropriate altitude considering winds and engine performance and select the best route to fly. Considering the winds and distance, both will make a hug difference in total fuel consumption. Flying the aircraft in a most effective method, at the right speeds, and using the best route and profiles of airplane will also help to save fuel.
6.3 Rapid expansions and new routes in Europe and other regions As the amount of tourists and businessmen traveling to EU had been increasing years by years and Ryanair can takes a greater advantage from this. Therefore, we recommend that Ryanair could expand and open new routes in Europe and other regions. In order to stay ahead of the competitions and to restate its positions as Europe’s leading low-fare airline, Ryanair must do research on future viable routes before the competitors. Once routes had been identified, Ryanair must establish their existence, become the first-movers and built customer loyalty. 6.4 Reduce carbon dioxide (CO2) emission
Carbon dioxide are a part of collection of gases that would negatively impact our air and increase the greenhouse effect and the greenhouse gases could directly influence our environment cause extreme weather changes, increase of global temperature, loss of ecosystems and possible to affect health of human. According to a survey result done by TotalTravel.com, it shows that nowadays people are more concern on go green concept. In the survey, the question asked is as below “Would you give up air travel to reduce greenhouse gas emission and your contribution towards global warming?” In the result, there is 35 percent of the respondents said that they would look for carbon off-set which means they would prefer low emission carrier. (Refer to Appendix 6).
Therefore, Ryanair should go green and reduce carbon dioxide (CO2) emission in order to gain a higher reputation, brand image, save cost and earn customer loyalty at the same time. 7.0 Opportunities & threats of Ryanair
8.0 Leadership
According to textbook Kreitner / Kinicki (2010), leadership is a process whereby a person influences others to achieve a common goal and occurs at multiple levels in an organization. A leader is an important person and plays an important role in an organization because they are the people who coordinate, motivate and provide directions to employees. From the survey, our consulting firm found out that there are some criticisms of Mr. O’Leary from public about his aggressive management style and his outlandish recommendations for Ryanair. For example, he suggests that to replace one of the pilots with a computer and to have standing passengers on aircraft which can be considered a not logic suggestion and it is cannot be work. This would create a bad impression for himself and the company as a whole. Besides that, Mr. O’Leary is using autocratic leadership style in the management of peoples. Autocratic leader always make decisions alone without consulting their team members.
This style can be demoralizing, and it can lead to high levels of absenteeism and staff turnover. Mr. O’Leary should change his style in order to give the public a better image. When come to the succession planning because of Mr. O’Leary Ryanair contract may terminate soon, Ryanair should select a CEO which has better management style with highly competences and to lead the management and company to a better future. So, our consulting firm would like to recommend that Mr. O’Leary may try to change the autocratic leadership style to transformational leadership style. Because its helps to motivate employees and enhance productivity and efficiency through communication and high visibility. It can also help to achieve the company goal together within the organization and there might be increasing in performance level as well.
9.0 Financial performance
The table of calculation for the ratios can (Refer to Appendix 8).
Liquidity ratios
Year 2010
Year 2011
Current Ratio
Current assets
Current liabilities
3063.4
1549.6 = 1.977
3477.6
1827 = 1.903
current ratio is used to measure the liquidity of a company. There is a decreasing trend in the current ratio from 1.977 times in Year 2010 drop to 1.903 times in Year 2011. Ryanair should adopt more efficient management practices in order to improve the liquidity position of the business. By the way, Ryanair having a current ratio within 1.5 to 2.0 times is good for the company. It can be explained that Ryanair has enough cash to be able to pay all the debts.
Year 2010
Year 2011
Quick Ratio
Current assets-Inventory
Current liabilities
3063.4 – 2.5
1549.6 = 1.975
3477.6 – 2.7
1827 = 1.902
Quick ratio is used to measure the ability of a company to meet its short-term financial liabilities. There is a decreasing trend in the quick ratio from 1.975 times in Year 2010 drop to 1.902 times in Year 2011. It can show that Ryanair might paying bills too quickly or collecting receivable too slowly. So, Ryanair have to be aware in this situation and have a better time management while paying bills/collecting receivable.
Leverage ratios
Year 2010
Year 2011
Debt-to-total-assets ratio
Total debt
Total assets
4714.8
7563.4 = 0.623
5642.1
8596 = 0.656
Debt-to-total-assets ratio is the indicator of measure the financial leverage of a company. We can know that the percentage of total assets that were financed by creditors from this ratio. There is a rising debt-to-total-assets ratio from 0.623 in Year 2010 to 0.656 in Year 2011. The higher the debt-to-total-assets ratio, it indicates Ryanair having more leverage and more risk.
Year 2010
Year 2011
Debt-to-equity ratio
Total debt
Total stockholders’ equity
4718.8
2848.6 = 1.657
5642.1
2953.9 = 1.91
Debt-to-equity ratio is measure the relationship between the capital contributed by creditors and shareholders. Ryanair has an increasing trend of debt-to-equity ratio from 1.657 in Year 2010 to 1.91 in Year 2011. Ryanair should be aware on this rising debt-to-equity ratio because the percentage of assets of a business that are financed by creditor is increasing.
Activity ratios
Year 2010
Year 2011
Accounts receivable turnover
Annual credit sales
Account receivable
2988.1
44.3 = 67.45
3629.5
50.6 = 71.72
Accounts receivable turnover is measure the efficiencies of a company in collecting its credit sales. From the calculation above, we can know that the accounts receivable turnover is increasing from 67.45 in Year 2010 to 71.72 in Year 2011. So, Ryanair has a good management in collecting payment from trade receivables and also raising sales as well.
Year 2010
Year 2011
Average collection period
Account receivable
Total sales/365 days
44.3
2988.1/365= 5 days
50.6
3629.5/365= 5 days
Average collection period is calculated to identify the average number days to collect the payment from receivables such as clients and customers. Ryanair has a short collection period which is 5 days in Year 2010 and Year 2011 can be considered a good management in collecting payment from receivables. Ryanair have to practicing this good management to achieve the goal.
Profitability ratios
Year 2010
Year 2011
Net profit margin
Net income
Sales
318.8
2988.1 = 0.11
400.7
3629.5 = 0.11
Net profit margin is an indicator that determines how much actual profit is made from each sale earned of the company. It can also identify how well the company controls its cost and how efficient the company is. Ryanair has a same net profit margin in Year 2010 and Year 2011. This can be explained that there is no improvement or decline in performance level.
Year 2010
Year 2011
Return on total assets (ROA)
Net income
Total assets x 100
318.8
7563.4 x 100 = 4.2%
400.7
8596 x 100 = 4.7%
Return on total assets (ROA) is to identify the relationships between profit and total assets. It is also an indicator that to determine how efficient management is using the total assets to generate profit. ROA increasing from 4.2% in Year 2010 to 4.7% in Year 2011 which can shows that Ryanair is making money and the profitability is increasing as well.
Profitability ratios (contd)
Year 2010
Year 2011
Return on equity (ROE)
Net income
Total stockholders’ equity x 100
318.8
2848.6 x 100 = 11.2%
400.7
2953.9 x 100 = 13.6%
Return on equity (ROE) measures how much the shareholders earned for their investment in the company. ROE increasing from 11.2% in Year 2010 to 13.6% in Year 2011 which can shows that Ryanair has a good management in generating income on new investment. It is a favorable trend of Ryanair.
10.0 Conclusion
From the survey we found out that, there are a lot of issues faced by Ryanair currently which is directly influence the performance of the company. So, our consulting firm would like to suggest some of the recommendations to overcome the problems. It is important for Ryanair to do some of the changes to increase the performance level. Next, the internal issues faced by Ryanair such as inappropriate advertisement published by Ryanair, poor customer service, inconvenience airport location, poor incentives system and management style of Ryanair. So we will provide some of the recommendations/actions to overcome the problems such as extend ancillary product ranges, improve customer service, market development, have better communication with employees, transformation of management style and strategic alliances with others airline.
On the other hand, the external issues that Ryanair facing is included fuel price changes, improved high speed railway systems, increasing low cost new entrants, compensation to passengers and strengthen legislation. So we will provide some of the recommendations/actions to overcome the problems such as trimming down seat size and weight, careful planning and execution of flight, reduce carbon dioxide (CO2) emission and rapid expansions and new routes in Europe and other regions. Moreover, the leadership styles of management have to do some changes in order to help the company improved the performance level. Ryanair should select a CEO which has better management style with highly competences and to lead the management and company to a better future. In conclusion, Ryanair could consider the recommendation/actions suggest by our consulting firm in order to help to improved the performance level, enhance the relationships between employees.
Appendix 1
Ryanair’s Resource Based View (RBV)
Threshold capabilities
Threshold resources
Threshold competences
Flights
Headquarter buildings in Dublin
Duty-paid products Ryanair holds in inventory
Fuel
Employees of Ryanair such as pilots, technical expertise and air-attendant Cash rich
Distinctive capabilities
Distinctive resources
Distinctive competences
Ryanair’s brand recognition and reputation
Intellectual capital of employees such as skills, knowledge and abilities
Customer loyalty
Investor’s confidence
Appendix 2
Ryanair’s Value Chain Analysis (VCA)
Primary activities
i. Inbound logistics
Low-cost deals
Stock control such as fuel, food and drinks
Flight route selections
ii. Operations
No frills airline
Point-to-point flights
Standard model plane
Young fleet
Facilities such as satellite television, Internet service and arcade game are provided
iii. Outbound logistics
Integrated system is used to enhance the efficiency of service Ryanair’s flights are very punctual
Quick turnaround
iv. Marketing and sales
Low cost promotion
Internet sales
Yield management
Free publicity
v. Service
High productivity of employees
Reliable service
Budgeted service is provided
Secondary activities
i. General administration
Headquarter is at Dublin Airport in Ireland
Operates in 27 countries
More than 8000 employees today
ii. Human resource management
Micheal O’Leary (CEO of Ryanair)
Recruiting method
Training is provided
iii. Research, technology and system development
Online booking system
More enhanced communication between the fleet and the control centre High technology fleet is invented
Appendix 3
Ryanair’s SWOT analysis
Strengths:
Low-cost strategy
Cost control
Utilize the benefit of IT
Safety is emphasized
Ancillary services are extended
Ethical behavior
Explicit plan for growth
Good corporate governance
Weaknesses:
Ryanair’s inappropriate advertisement
Poor customer service
Poor incentive system and management style
Inconvenient airport location
Opportunities:
Expansion of open route in other region
Introduce new planes that have larger capacity
Improve advertising space on website and planes in order to get more revenue International Airline collaboration
Low cost flights on long haul as a new market
Opportunities by EU enlargement
Threats:
Fuel price changes
Improved high speed railway system
Increased low cost new entrants
Compensation to passengers
Strengthen legislation
Appendix 4
Prioritization of SWOT analysis
Strength:
Low-cost strategy
Ryanair provides low fares to attract price-conscious customers. Customers are willing to choose Ryanair because they can reduce their spending. Ryanair is the first step mover into this low fare model in Europe and this makes Ryanair has competitive advantage over its competitors. Weakness:
Ryanair’s inappropriate advertisement
Ryanair receives complaint that its advertisements are against the Advertising Standards Authority (ASA).
The contents of advertisement are inappropriate because it causes mispresentation of facts. The reputation of Ryanair is affected by this advertisement issue. Opportunity:
Threat
Appendix 5
PESTEL Analysis
Politic
Political issues are concerned with the role of government, and this factor is one of the key drivers Ryanair should take into consideration. Including elements such as tax policies, changes in trade restriction and tariffs, and the stability of governments. Economic
Elements such as interest rates, inflation rates, levels of disposable income, unemployment rates, and the general growth or decline of the economy. Example: Being one low cost airline, the weakness to cost factors like fuel price puts Ryanair faced with various economic challenges when making strategies. Social
Include trends in demographics such as population size, age, and ethnic mix, as well as cultural trends such as attitudes and consumer activities. Technology
Technological factors include changes in the rate of new product development, increases in automation, and advancements in service industry delivery. Example: The high-speed railways system had affect the profitability of Ryanair which it lure away the passenger from Ryanair. Environmental
Environmental factors include natural disasters and weather patterns. Example: Ryanair added two euro levy on passenger to cover natural disasters costs. Legal
Including laws involving issues such as employment, health and safety, discrimination, and antitrust. Example: The strengthen legistration of EU 261 and European Union’s emissions trading scheme had increased the cost of production of Ryanair. Appendix 6
Comparison of time, cost and carbon dioxide emission between high-speed railway and airplane.
Appendix 7
Survery result of TotalTravel.com on air travel and carbon dioxide emission.
Appendix 8
Financial Performance
Year 2011
Year 2010
Liquidity ratios:
Current ratio
Current assets
Current liabilities
Quick ratio
Current assets-Inventory
Current liabilities
3477.6
1827 = 1.903
3477.6 – 2.7
1827 = 1.902
3063.4
1549.6 = 1.977
3063.4 – 2.5
1549.6 = 1.975
Leverage ratios:
Debt-to-total-assets ratio
Total debt
Total assets
Debt-to-equity ratio
Total debt
Total stockholders’ equity
5642.1
8596 = 0.656
5642.1
2953.9 = 1.91
4714.8
7563.4 = 0.623
4718.8
2848.6 = 1.657
Activity ratios:
Accounts receivable turnover
Annual credit sales
Account receivable
Average collection period
Account receivable
Total sales/365 days
3629.5
50.6 = 71.72
50.6
3629.5/365= 5 days
2988.1
44.3 = 67.45
44.3
2988.1/365= 5 days
Year 2011
Year 2010
Profitability ratios:
Net profit margin
Net income
Sales
Return on total assets (ROA)
Net income
Total assets x 100
Return on equity (ROE)
Net income
Total stockholders’ equity x 100
400.7
3629.5 = 0.11
400.7
8596 x 100 = 0.047
400.7
2953.9 x 100 = 0.136
318.8
2988.1 = 0.11
318.8
7563.4 x 100 = 0.042
318.8
2848.6 x 100 = 0.112
Appendix
References
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Dinuk Anthony, 2014, ‘Ryanair Case Study’, viewed 10 March 2014,
Eli, 2010, ‘High Speed Train VS Airplane’, viewed 10 March 2014,
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Felix sobatka, 2013, ‘Ryanair Plc.’, viewed 10 March 2014,
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