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Case study on Ryanair...

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Q 15. Who are the Stakeholders? Can we develop a Stakeholder Map? Ans: A stakeholder is a party that has an interest in a company and can either affect or be affected by a business' operations and performance. The primary stakeholders in a typical corporation are its investors, employees, customers, and suppliers. However, with the increasing attention on corporate social responsibility, the concept has been extended to include communities, governments, and trade associations.

Types of Stakeholders’

Stakeholders can be divided into internal and external stakeholders: a) Internal Stakeholders such as shareholders / owners, managers, or employees b) External Stakeholders such as customers, suppliers, or government

Stakeholders of Ryan Air:

Suppliers:

1) The Ryans 2) Michael O'Leary 3) David Bonderman 4) Irish Air 5) Travel Agencies 6) Trade unions 7) Employees 8) EU 9) Airports

- Aircraft boing - Aviation Authority - Sec airport - Ancillary Service Provider

Yes, we can develop stakeholder map. Stakeholder mapping is the visual process of laying out all the stakeholders of a product, project, or idea on one map. The main benefit of a stakeholder map is to get a visual representation of all the people who can influence your project and how they are connected. After going through the Ryanair case study, I have tried to do stakeholder mapping as per the case.

Stakeholder Mapping:

Ryanair Stakeholder Mapping

Level of Interest High

Low

High

Ryan Family Michael O’Leary Employees

EU

Low

Irish Air Trade Union Airports

Travel Agencies

Power

Explanation: Ryans The founder of Ryanair is the family Ryan, who build up the airline company from a small fullservice carrier to the largest budget carrier nowadays. Obviously there expectations lie in maintaining their position as the largest low-fare airline company, but also keeping the costs under control. Since they changed their formula of transferring passengers on a low budget basis, they have been successful, not only in offering low fares, but also in lowering their costs and developing other activities like the ancillary services, which are quite profitable. Off cause the interest and power of the family is high. Michael O'Leary Who is head of the management team, has also shares in the airline company. Therefore, he is interested in a company that succeeds in making profits and continue to grow in order to maintain their position as the largest budget carrier. Selling shares will be profitable if the share will be high, which can only be achieved if Ryanair is profitable. Michael O'Leary has a high influence on policy within the company and is therefore considered to have a high power. David Bonderman Is the chairman of Ryanair and leader of the Irish Air, which has a share in Ryan Air. As the leader of Irish Air he has certain expectations and interests in Ryanair. He wants the airline company to be successful, and therefore is interested in the profitability of the company. The power of David Bonderman may be considered less high than Michael O'Leary. Irish Air This company provided equity and a loan to Ryanair in return for that, they received shares. Of cause this company has certain expectations about the company. They want the company to be profitable and make money out of the shares. Travel Agencies Travel agencies are not quite important to Ryanair, since they sell most of the tickets through their own distribution channel. Although for opening up new routes, it is necessary, or it might be good

idea to use the travel agencies, so that new potential customers might see the (new) destinations of Ryanair. Another reason why those travel agencies are important is the potential of their own distribution channel, due to system breakdowns, or whatever. Travel agencies itself are not that interested in Ryanair, because of the low profits, especially since they cut in the commission rates of travel agencies. So the expectations and interests of travel agencies are low and the power is quite low, since Ryanair still wants to use this form of distribution.

Trade Unions These unions are not recognized by Ryanair, which caused some stress between Ryanair and the government of Ireland and also the EU. If employees feel they are not treated well or are not satisfied with policies regarding any issues of Ryanair, then they should join Trade Unions. In the case of Ryanair every employee or at least the majority is satisfied with the employer. This means Trade Unions might be interested in Ryanair, but certainly has no power.

Employees Employees do have power, since Ryanair is well aware of the importance of employees. They need to be satisfied, otherwise they will not perform effectively. In order to keep them satisfied, they will have to seek for opportunities and solutions, to do so. EU The EU is quite important for Ryanair, since they are able to influence strategic decisions made by the carrier. This has to do with policy, which has a direct impact on the operating activities. Duty free shopping and the legislation in order to prevent airports from offering differential deals to different airline companies are two decisions that illustrates the power of the EU. Their interest in the company seems to be quite low, they don't have any expectations of the company. Airports Airports are interested in Ryanair, since they will bring lots of passengers to the airport and thus revenue. The airline company is well aware of that fact, and thus will be negotiating to pay low access fees. This was possible till the EU prepared a legislation that airports prevent to offer different deals to different airline carriers. This will result in less negotiating. From the point of view of Ryanair, it is clear, that airports don't have much power.

Q4. The attempt of Ryanair to forge relationships with Airports?  Until 2013, Ryanair reduced airport charges by avoiding congested main airports, choosing secondary and regional destinations, eager to increase passenger throughput.  It even opted for less expensive gate locations and outdoor boarding stairs rather than Jetways to reduce further cost.  As a part of it’s AGB programme, it added more primary airports to its route system.

 In September 2013, Ryanair made a ten-year growth agreement with Manchester Airports Group in relation to an expansion of capacity at Stansted in return for significant airport charge reductions for the incremental passenger volumes delivered.  In 2015, Ryanair confirmed it’s bidding for Gatwick slots to develop their capacity at London Airports. Q14. Is it possible to draw a Value Chain for Ryanair ? Or a Value System for the LCC Business? Ans: Yes, it’s possible to draw a value chain for Ryanair because it would bring some advantages to them by the following ways: 1.

Identify competitive advantage sources: By conducting the Value Chain Analysis, Ryanair Holdings plc can during the planning process, identify possible sources of competitive advantage. The firm/company is a collection of different activities that share relatedness to some extent. Ryanair Holdings plc cannot trade all activities in the external market. The Value Chain approach suggests that a company can consider these activities as economic rent sources. These activities can also act as barriers to new entrants or cause cost disadvantages to competitors.

2.

Identify complex inter-relationships and interdependencies: Ryanair Holdings plc can identify various internal and external linkages among activities through the value chain lens. The internal linkages are- interrelationships between activities within same organizational units and external linkages are between business units of same or different firms. Studying these interrelationships can help a company take benefit from coordination and joint optimization.

3.

Formulate effective firm-specific strategies Value Chain Analysis can be used in the competitive strategic decision-making process. However, choosing the right competitive strategy (cost leadership, differentiation or focus) requires knowledge of own and rivals’ cost structure and if Ryanair Holdings plc can formulate this then there will be no problem for them in the long run to survive....