In the last 10 years the rate of the air traffic passenger grows annually in a huge rate. In 2018, the demand is increased to the rate of 8%, in 2019 it lowers to 6% rate. After almost a decade the growth of the airlines industry suddenly faces a bump in their business (Thomas and Thomas, 2015). A number of difficulties are faced by the airlines industry and that are the sluggish economic growth and the hike in the price of the jet fuel. Despite having these difficulties the numbers of passengers are increasing and for that reason the financial performance of the airlines will increase by 2030. In the aviation industry the local airlines and the low fare business models will help the middle class people to afford the fare of the airlines more smoothly (Madar, 2018). This reason projected the airlines industry to increase the growth. In Africa and in Latin America the airline industry is growing. The business income of aviation industry increases from 8.3 billion US dollars to 33.8 billion US dollars, so overall the total gross income of the airlines industry ultimately growing (Piludis et al., 2018). The small companies Easyjet and Ryanair have mainly eaten the industry rather than the big airlines group. In the year 2017 Ryanair airlines loaded 109.7 million people in Europe and it is the second highest leading airlines in the Europe. It is believed that the growth in passengers aviated 4.7 percent between the years 2017 and 2036. In this assignment mainly the case of Ryanair Airlines industry is discussed.
Advise the Board of Ryanair as to whether Ryanair should diversify. If yes what should they diversify into, a) a related industry or b) an unrelated industry. You must support your answer with justification
Based on the scenario of the case study, the airline industry, Ryanair is seen to be encountering an uncertain future. The founder of the airline company Mr O’Leary for the aim of having increased customers has decided to reduce the fares. Moreover, he has decided to reduce the costs related to various services in order to gain increasing number of customers on-board. This includes charging customers for checking in online or for placing bags in the clasp along with charging customers looking forward to select seats. This cost cutting approach enabled the airline company in gaining huge customer base. Concisely, this approach turned out to be popular as well as profitable model for the company, which led the company gain more customers, which amount to 130 million customers within the year of 2017-2018 from 120 million passengers in the former year. Hence on the basis of the case study, it can be said that the company has been able to increase its customers by 10 million, thereby providing insight into the fact that the customer strength of the airline company. Henceforth, by analyzing the customer strength of the airline company, Ryanair, it can be said that the company is earning a huge profit by drawing more customers. Concisely, it can be stated that the customer strength of the company has led to its enhancement due to their orientation towards looking after customer satisfaction. Therefore, by evaluating the prevailing customer strength of the company, it can be stated that the company does not have the need to diversify into a related or unrelated industry.
Despite of the increasing number of customer strength, the airline company, Ryanair has been seen to encounter a major setback due to increasing employee dissatisfaction. The founder of the company, Mr. O’Leary considers his employees as the biggest cost who does not contribute much for the enhancement of the company. Based on the opinion of Leder (2016), it can be said that the success of an organization is largely based on the productivity of the employees. This is due to the fact that employee satisfaction plays an effective role in the enhancement of a company by providing more effective services for the enhancement of employee satisfaction (Wheatley, 2017). The company has not taken enough initiatives for enhancing the satisfaction of the employees. The company has not taken resort to proficient policies for increasing motivation as well satisfaction of the employees.
The founder of the company failed to realize the significance of the employees due to which, he even referred to them as “lazy bastards.” As per the case study, the company policies are not that considerate of the employees due to which, the cabin crew even called for a plethora of strikes, which resulted in the cancellation of over hundreds of air travels. This in turn resulted in the increasing displeasure of the customers who even went to Civil Aviation Authority for the purpose of taking legal action for closing the company. The aviation company did not even refund the cancellation fees to the customers. The principal reason behind this is that the employees including the pilots were extremely unsatisfied with the unpredictable working hours, minimal period to rest along with paying for the food, water as well as uniforms.
By analyzing the current situation, it can be said that the airline company, Ryanair needs to switch to an unrelated industry. The biggest setback encountered by the company is that despite having a larger customer base, the airline company is unable to garner huge profit due to increasing employee dissatisfaction, which resulted in increasing strikes, which in turn resulted in cancellation of plethora of flights. In the context of an airline company, it can be said that with employee dissatisfaction, an airline company may lose its business due to the fact that without the crew members the flights will not be able to take off, which in turn will lead to cancellation of a series of flights. Concisely, employee dissatisfaction in airline industry may lead to the devastation of an entire aviation or airline company. However, as per the opinion of Platis and Zoulias, (2017), the same cannot be said for unrelated sectors, which includes retail sector. In terms of retail sectors, despite of increasing employee satisfaction, the companies do not have the risk of losing its entire business. The companies are more likely to come up with effective policies, which will lead to employee satisfaction (Wolter et al., 2019).
The employees at Ryanair are unable to sustain in the company and therefore due to improper situation in the company, the employees are unable to retain in Ryanair. Thus it is highly recommended for the company to diversify into related areas of operation to expand their scope in the market. In the unrelated industry, the company can easily diversify into sectors that can be profitable for the sector as well for the employees to sustain in the company with better prospect and scope. The company needs to be spread across unrelated industry and therefore needs to identify its scope in the vast market. In spreading to the unrelated industry, the company has a higher scope of gaining greater rate of competitive advantage in the market. Thus in order to sustain the employees in the company and to reach higher limits and attain greater objectives, the company can easily retail its competitive advantage in the market. Hence, it is advisable for Ryanair to spread to unrelated industry and practice diversification within its internal operations and functions (Barakat et al., 2016). Through diversification of Ryanair, it is advised that they can attain greater scope and earn better competitive market advantage (Vlacsekova and Mura, 2017).
Ryanair cultural aspects can be presented by the support of cultural models that has been helping the organization. This can be presented by the help of surface manifestations that deals with the visibility of the cultural aspects on the grounds of the organization. The values can be imposed by the help of presenting effective evaluation that comes up in the form of describing the human behavioural approaches that depicts the positive directions on the part of the organization. On the other hand, this has been précised that implication of cultural aspects helps the organization to gain positive results in terms of tackling the issues of the organization (Piludis et al., 2018).
Similarly, the organizations have been into the subject of basic assumptions that will be dealing with the presence of basic assumptions. This can be presented through the help of description that helps to reflect the better power culture that deals with the projection of low morale and high level of staff turnover. This can be projected through the support of higher authority management that deals with projection better collaboration of tasks and activities that come up in the form of further development (Caputo et al., 2019). Thus, it can be suggested cultural aspect helps to deal with the better quality on the grounds of the organization.
The collaboration of cultural aspects will enable the organization to deal with positive results that tends to provide the tasks in an efficient manner. The projection of risk taking factors can be related to the part of extensiveness of the cultural approaches that helps to gain positive impact on the organization. On the other hand, the organization functioning has been channelized that helps the Ryanair to gain positive results (Wilts, 2019). The cultural projects can be presented by the help of leadership skills. The cultural manifestations have been depicted by the support of Schein’s model, Harrison and Stokes. This helps to deal the Ryanair comes up with good quality of relationship within the employees and managers.
The presence of leadership model can be presented by the help of developing technique that centre rounds the involvement of low-cost leadership model. In terms of projecting the efficient involvement of model that deals with the present scenario of corporate aspects of the organization and this can be presented by the help of effective role model. The collaboration of leadership model implements the propagation based on the enhancements on the part of productivity of the organization (Rex et al., 2019). The interrogation of stakeholders will be helping the organization to deal with the projection of advancements on the quality of the work provided by the organization. These deals with the projection of further betterment hat can be implementing through the support of low cost leadership model. Thus, it can be stated that interrogation of leadership models will be helping the organization to come up with better results.
O'Leary, who once took on the top position in the year 1994, has consistently been known for his rough demeanor, he once called Ryanair's clients numbskulls. In any case, in light of yesterday's outcomes, would you be able to gain from O'Leary's irregular authority style which he was famous off.
O'Leary has kept up that the main thing to clients is a decent arrangement and you can never be excessively fair. He took to the Twitter sphere and said we are not keen on being your companion. We need your cash and we need your bum on our seat. This Marmite way to deal with clients does not appear to have marked the association's fortunes incomes rose to a decent level, for example and O'Leary has been resolute concerning why that is. The undisputed verification of the 30 years of Ryanair's prosperity has been that, when you put a lower admission facing each other administration improvement known to man, the lower passage wins.
Regardless of whether you locate his forthright mentality reviving or ludicrous, nobody could blame O'Leary for avoiding cycle a point as he gets directly to it. Cost-cutting served the business well for quite a long time, yet a few misfortunes provoked him to revaluate. Talking yesterday, he suddenly nitty gritty the company's sensitive uninhibitedly volt face: we have been tuning in to our clients over the most recent couple of years. I think this being more pleasant to them is extremely another and winning procedure for me and Ryanair.
While a portion of O'Leary's announcements have stunned, he has demonstrated an uncanny capacity to utilize his open persona to propel Ryanair's image. Once O'Leary told the BBC that one thing he had taken a gander at before, and are taking a gander at once more, was the probability of possibly putting a coin opening on the can entryway, with the goal that individuals may really need to spend a pound to spend a penny in future. The resulting clamour did little to gouge the carrier's notoriety for giving a really no nonsense administration. What's more, when Ryanair reported in August that it would offer a business class administration, it ostensibly didn't have to depend on a costly publicizing effort to get the word out. The evident incongruity was most likely enough.
However in spite of the funniness of O'Leary's mediations the entertainer David Mitchell is one of his numerous fans, the Irishman is as yet a business one-off, and his method of working was most probably not going to work in less vivid organizations as his ways of approach was different from others and most importantly he knew his approach well than anyone. Resisting all standard way of thinking on great administration, for instance, he once said that he had paid around multiple times more than the normal Ryanair representative, and he felt that hole ought to be more extensive. Not an astute thing to state in banking, maybe.
The alternative strategies that are implemented by the company of Ryanair have been distinguished to establish its competitive advantage in the market through application of certain alternative strategies (Caputo and Borbely, 2016). These strategies are implemented by the company of Ryanair to develop significant strategies through implementing different improvements and to expand its situation and purpose in the company. The primary areas of their strategic improvements include various strategies that are used to identify the strategic implementation of charging lower fares from the customers. This provides a class apart from customer service, generating frequent number of flights on the routes that are short and accessible, strategic management of customer relationship through proper implementation of customer safety and security, ancillary services are enhanced for operating the results effectively to develop proper strategies to maintain competitiveness in the market.
Charging Lower Fares from the Customers:
The airline has formulated definite strategies in the market to identify the specific areas of charging lower fares and charges of Airline Company. By charging such lower fares, the company has been able to determine specific strategies. The provision of lower fares in the company business of Ryanair has been implemented through the strategic implementation of services in the company to provide higher rate of advantage to their customers. Thus through implementing lower fares and charges, the customers is more loyal to the company and hence they can be more engaged to the company operations and functionality.
Providing a Class Apart Customer Service:
The airline of Ryanair has been highly applicable in comprehending the basis in which they formulate their services towards the relevant customers (Caputo et al., 2019). The customers are important assets in the company of Ryanair and hence it is relevant to provide a class apart service to their customers. The airline has been highly trained in maintaining their services and opportunities to the customers through maintaining of their safety and security on flight and also taking care of their health while on board.
Generating Frequent Number of Flights on the Routes that are short and Accessible: The airline has been highly operating its services and is trying to augment its services effectively to identify the higher generation of flights (Graham, 2016). The flights are being operated at a higher rate through succession of more number of flights on shorter routes. Thus the flights are accessible at a higher rate on shorter routes, thereby generating higher number of flights on a single route, generating more profit.
Strategic Management of Customer Relationship: The strategic management of the customer relationship is extremely crucial in Ryanair airline. The airline has been highly crucial in understanding the basis in which the company has used strategies to formulate relevant aspects of customer management (Grant, 2017).Hence the company has formulated significant strategies to maintain and identify their ways of enriching their relationship with the customers.
From the whole assignment it can be concluded that the airlines industry faces a challenge in their industry and it has an uncertain future. Despite of having these problems the number of passengers increases due to the huge availability of the local airlines and the cheap price of the air tickets. For this reason ultimately the airlines industry started to get profit. This Ryanair Airlines is getting a reasonable amount of profit. For maintaining this profit rate Ryanair airlines must take some steps. The board of directors of this particular company should discuss a suitable plan for their profit. Mr O’Leary have taken some steps already. To compete with the other airlines industry he cut the cost of the air tickets so that more and more passengers can buy the air tickets but some other questions need to be solved. The attitude of Mr. O’Leary who is the boss of this particular airline does not behave in a well manner with the employees of Ryanair airlines and the passengers also. Mr. O’leary assumed as the main man behind this airline but if he does not give attention to these small problems it will be hard to maintain the profit rate of this particular industry. If he properly addresses these minor problems and tries to solve with proper care then the growth of the Ryanair industry cannot be stopped in this complex and decreasing economy situation of the airlines.