ryanair management theory
MOL subsequently brought back a business model based on Southwest Airline’s “low-fares/no-frills” template, though in a somewhat sharper form (e.g., charging for soft drinks). 15: 5-9 Bennet, N. Ketchen, DJ & Schultz, EB. (Lyall, 2009), his originality in problem solving certifies by implementing fees for airport check-in, online-check in and getting people to carry their own bags to the flight to reduce operating costs. A leader who demonstrates this type of leadership seems to have an over-bearing control and tends to take less risk. According to Huttinger (2006) “many countries perceived the airlines as a state institution and their reason for existence as a fulfilment of public needs (p.229). The emergent school was influenced by the work of Mintzberg (1979, 1983) and argues for the management’s inability to manage uncertainty in the course of realising its corporate goals. (2004) ‘Leaders of the new Europe: Business stars chart a course for the profits of the future’, Financial Times, 20 April 2004, Größler, A. Year 3. For MOL to be an effective leader it is necessary that he alter his style of leadership by moving on to other leadership quadrants in the situational leadership model by empowering, delegating and trusting his employees more. An extensive strategic management analysis has been developed referring to the various operational activities of the above firm at the level that they influence the performance of the firm in the international market. The second section outlines the core competence theory developed by Prahalad and Hamel (1990). (2000) ‘In Defence of Strategy as Design’. The Board’s primary focus is on strategy formulation, policy and control. The above model appears to be very simplistic and the theory had created doubts amongst experts. Always tried to be better and different. Looking at the model it is certain that MOL demonstrate the ‘Telling Style’ approach with high amounts of task behaviour, telling subordinates what, when and how to do, but with little relationship behaviour. 3.1 Equity Theory. (Kangis & O’Reilly, 2003 cited in O’Sullivan & Gunnigle 2008, p. 257). Ryanair’s successful strategic management position is reflected in the optimisation of its internal processes offering value to customers whilst eliminating waste. (Hersey, P. & Blanchard, K. (1988) cited in Huczynski & Buchanan, 2007, p. 713). Ryanair Holdings plc, Europe’s largest airline group, is the parent company of Buzz, Lauda, Malta Air & Ryanair DAC. (Lazarus, 2003 cited in Power, Whelan, & Davies, p.3). This was the type of management that changed civil aviation in the last 20 years. (O’Sullivan, & Gunnigle, 2008). 32, No. Ansoff, H.I. No plagiarism, guaranteed! Wood (2004) and Boru (2006) argue that even though this cost leadership strategy has proven effective, nevertheless, it has been difficult for Ryanair to maintain it without influencing the quality of service offered to customers. (McKenna, 2006). Ryanair continues to innovate and change both front and back ends of its business. If you need assistance with writing your essay, our professional essay writing service is here to help! (Ryanair Annual Report, 2009). As a result, Ryanair has achieved strong control on cost and has become one of the leading low cost flights globally (Nwagbara, 2011). This trend has given rise to the Transformational and Charismatic leadership. Such understanding is embedded onto the employees. However, MOL lacks to be an effective charismatic leader as he is not sensitive to employee needs. Thus, it is required that the report is evaluated on an academic basis to understand fundamentals of leadership and its applications. (Box, & Byus, 2007). Malighetti, et al (2010) argue that the growth behind the LCC market is underpinned by the consumers’ increasing interest in using airplanes not as a luxurious mode of transportation but as an opportunity for travelling to new destinations at a minimum cost. Ryanair’s business model thus managed to turn one of the major cost centers into a competitive advantage. All work is written to order. This theory assumes an exchange-based and leader-controlled relationship. However, this essay also argued that perceptions of value need to be reconsidered by Ryanair. A criticism that is expressed against Ryanair, and in contrast to its effort to increase levels of efficiency, concerns the absence of unions that may exercise resistance to the management’s growing demands. Datamonitor also reports “various lawsuits, claims, and legal proceedings, arising in the ordinary course of its business. The union hypothesized the reason for above being when the cabin crew works for an average of 18 months without being moved up an incremental scale and Ryanair management can ask them to leave without a pension scheme since they are young. market portion, repute, client trueness ) . ... Strategic Management, 6th Edition – Hitt, Ireland and Hoskisson 3. As for the type of leadership style adopted at the company of Westway Sports Centre it can be argued that new CEO of the company adopts a similar ‘telling style’ approach as MOL with the company employees and seen more of a rigid, authoritative person and has a ‘hands on approach’ toward the organisation. Such hidden costs generated a negative image for the company’s low cost reputation. 61-78, Prahalad, C. K. and Hamel, G. (1990) ‘The Core Competence of the Corporation’, Harvard Business Review, Vol.68, Issue 3. pp. “Ryanair is an Irish-owned airline that was established in 1985 by the Ryan family to compete with Aer Lingus and British Airways on the Ireland-U.K. routes. Ryanair management, in order to keep focused on the cost-cutting and low-cost airline leadership’s goals, adopts a strict control over its employees and this could lead to the assumption (Shay Cody, 2005) that, according to the management, the employees present the typical features of Theory X. Management Theory for Michael O'Leary Michael O’Leary is the abrasive chief executive of Europe’s largest low-cost airline Ryanair . For the purpose of this report, the focus is on the research conducted by Stogdill, 1974. According to Strategic Direction (2007a, 2007b, 2007c) the emerging opportunities developing from deregulation were followed by the SouthWest business model in the USA. However, the type of style that adopted will also depend on the followers willingness to perform the task, which is shown from the ‘readiness continuum’ as the figure below. This perspective states that the leader is able to alter his or style to fit the context. Ryanair’s ability to utilise its resources whilst maintaining a cost leadership strategy results from the combination between the employees’ knowledge and the utilisation of its resources. Management students are often made to research and write about the management styles of companies that are currently in the news either because of their success As the Trait theory claims that leadership qualities are inherited, it provides some truthness behind this theory when analysed MOL’s family background, particularly his father, Timothy O’Leary’s (TOL). O’Sullivan, M and Gunnigle, P. (2009) ‘Bearing all the Hallmarks of Oppression. (Holmes, & Ryan, 2008).Moreover, he had offered advertisers the opportunity to paint the exteriors of the planes and intend to offer in-flight gambling and mobile phones in the near future. PDF | On Jun 19, 2018, Raouf Sakhizada published Does cost leadership strategy still work for Ryanair? This core competency remains difficult to copy by competitors because it resides within their existing work ethic and cultural values of employees that has matured over time. qualities. Porter, M. E. (1987) ‘From competitive advantage to corporate strategy’. Ryanair’s successful strategic management position is reflected in the optimisation of its internal processes … (Adair, 1990 cited in Mckenna, 2006, p. 407). This section argues that Ryanair’s core competencies concern not only the efficient utilisation of its tangible resources (e.g. MOL’s ‘focus on completing the task trait is visible when he mentioned, that he is looking to step down within next two or three years, after he has accomplished in taking control of the Irish national carrier Aer Lingus. The first part of the essay provides a brief overview of the company and the industry in which it operates. However, a core competency developed by Ryanair is the development of an organisational structure where the corporate culture allows them to take initiatives which are then institutionalised. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. In fact his successor may require the above soft skills to be developed in order to become an effective leader with a more people orientation to enable the employees to follow. This was eminent as Ryanair is highly task orientated, concentrating on cost cutting and improving labour productivity. Such barriers are created because of the tacit knowledge (e.g. The lowest level of employees are expected to fulfill their physiological needs, hence are rewarded lesser. According to Größler (2007) core competencies represent “a firm’s capabilities created by the complex interaction of its resources combined with implicit or explicit knowledge about the effective combination of these resources” (p.252). Looking for a flexible role? The Core Competence of the Corporation, HBR, May–June 1990 – C.K. This is known as the contingency theory or the situational leadership. All work is written to order. Our academic experts are ready and waiting to assist with any writing project you may have. The distinctive features that are unique to such service/product differentiate the company’s competitive power (Porter, 1996). Ryanair operates in the low cost carriers (LCC) industry and experienced success since the launch of its operations. In 1986, inspired from the story of the company go after the big guys for a slice of the action and end up smashing the or British Airways high fare cartel on the Dublin-London route. Mintel (2007) argues that in order for Ryanair to increase its revenues, it tends to engage in making incremental increases on costs that remain hidden to consumers. (Hall … It flew 57 Million passengers and had revenues of €2.9 Mln and a net profit of €105 Mln. Info: 3830 words (15 pages) Essay In the 20th century inspirational leadership qualities tend to be important. This can be done by placing greater importance on the customers’ perceptions of satisfaction rather than just promoting the selling of low cost tickets. Moreover, this model focuses mostly on the relationship between subordinates and superiors and discounts the structure, politics or culture. Mintzberg (1983) argues that the role of strategic management is to adjust a firm’s intentions according to the shifting conditions of the environment. Gillen and Lall (2004) argue that “a faster turn improves utilization of all factors of production such as aircraft, gates, ground equipment and labour” (p.44). Support activities 1. This model was not only copied but also extended by companies like Ryanair and Easy Jet in Europe (Barrett, 2004). Delays result to high maintenance costs in servicing aircrafts (Barrett, 2004). Therefore, it is possible to assume that management of staff is conducted as in Theory X. The Board of Ryanair is responsible for the leadership, strategic direction and oversight of management of the Group. Top management at Ryanair puts enormous efforts into keeping unions out of the company. Carrying 154m guests p.a. Head office staff’s supply their own pens and do not charge their mobile phones at work. New York: The Free Press. John Hurley (Chief Technology Officer) John Hurley was appointed Ryanair’s Chief Technology Officer in September 2014. Based on these frameworks it will be argued whether Michael O’Leary can be considered as an effective leader. Do you have a 2:1 degree or higher? Since the website has high website traffic its partners are able to reach out to Ryanair’s huge client base and are prepared to pay good commissions to the firm for this privilege. Such a process is dynamic and not static, which means that the firm is in a continuing process of identifying and strengthening its core competencies over time (Goold, 1996). London: Prentice Hall, pp.833-852. The passenger was awarded £1,336 in compensation from Ryanair, as the UK based Disability Commission said it may launch a class action against the airline on behalf of 35 other passengers” (p.834). His dogged unrepentant style was a winning strategy for an The above style was somewhat different to the style adopted by the recently departed CEO of Westway Sports Centre where he adopted a more of a ‘hand off approach’ towards work and was seen as a very relaxing and fun loving person. Today’s brands are inextricably linked to the leader’s image. Management Theory for Michael O'Leary Michael O’Leary is the abrasive chief executive of Europe’s largest low-cost airline Ryanair . The creation of new routes is subject to the company’s core competencies for sustaining its cost-leadership strategy whilst expanding the destinations offered. 11, Spring 2011 208 In the modern age of enterprise culture, fierce competition and strategic leadership for profitability in the marketplace, Ryanair has structured its leadership and business model to address ‘‘the issues of what constitutes an entrepreneurial approach to the management of organisations’’ (Sadler-Smith, 2003: 47) … Year 3 of AGB saw the continuation of our Always Getting Better customer charter and a host of new improvements to our services. In particular, by avoiding a hub-and-spoke service, creating short haul journeys, scrapping the traditional system of ticket production and seat reservation and in-flight meals, the company was able to increase the number of journeys whilst reducing costs. Secondly, they provide information to other team members as well as their reporting managers. Ryanair has a number of affiliates such as Hertz car rental, Acumus insurance and booking.com all of whom are advertised readily on the Ryanair website. By following Taylor’s scientific management theory, Ryanair focussed on increasing the speed and effectiveness of services by proper division of labour and by appropriate reinforcement of disciplines. Decisional Roles. MOL is certainly good at building successful teams and he is purely responsible for changing the company structure in a fast paced environment. The business model change of Ryanair is a good example of how change can be explained using the Adaptive Cycle theory. In this section four different contemporary views on motivation will be discussed these motivation theories can help managers understand how to motivate their staff. A complementary dimension to the utilisation of resources is the creation of new destinations. Cost became a differentiating factor in the way consumers made their purchasing choices on travel (Pitfield, 2008). (Hall … 2010). Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. (Goodwin, Woffard & Whittington, 2001; Tichy & Devanna, 1986; Yammarino & Dublinsky, 1994, cited in Mckenna, 2006, p. 408), Transformational leaders’ pursue high standards, take calculated risks, challenge and change the existing company structure. Issue 6. pp. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. One of the union officials of the IALPA (Irish Air Line Pilot Association) had mentioned the training of the cabin crew is completed they are recruited by an agency and not by Ryanair. Human Resource management Ryanair employed Michael O'Leary to be CEO. Ryanair management adopts a strict control over its employees, using often threats of cutting down retributions or firing in order to stimulate employees‟ action (Bamber et al., 2009). At the other extreme, confident and able followers with high maturity. 10 pp. The style portrays a leader who remains quiet as long as the subordinates perform. Much of the information about MOL and Ryanair were gathered by depending on the secondary data such as press articles, corporate annual reports, electronic journal articles about Ryanair or low cost leadership etc. Ryanair will likely not engage in long haul routes for the near future, there is enough runway for growth in Europe taking share from flag carriers ceding routes and the economics are just really not as good as short haul (you might the same price for an aeroplane on long haul but earn much less than you do on short haul constantly churning passengers on and off). Operation Ryanair placed resources to strengthen its core business such as satellite television, Internet service and arcade game, so the passengers can enjoy the trip. Such costs, in turn, can result in reducing the number of destinations offered in the first place. Englewood Cliffs, NJ: Prentice Hall. (eire.com, 2003). MOL’s insensitivity to the environment was visible with his harsh critic towards the Irish government, officials at Aer Lingus and airline authority. Today’s brands are inextricably linked to the leader’s image. The vertical axis focuses on the ‘supportive behaviour’ or the amount of social backup a leader gives to subordinates. According to Prahalad and Hamel (1990) it can be argued that Ryanair’s business model remains difficult to copy by competitors because the synergies created are subject to the employees’ knowledge and experience. According to Entrepreneurship theories, the removal of regulatory barriers creates opportunities to different reallocation of resources that can lead to changes in market equilibrium. According to Conger & Kanungo’s 1998 model MOL demonstrates Charisma. Ryanair Rooms expanded to 5 partners, and we rolled Ryanair Holidays out right across our network. Such conditions cannot be known a priori but only realised at the time of their development (Mintzberg, et al (1998). (Wormwell, L, 2009). The analysis has been done by using some major theories such as macro analysis, balance score card, double loop learning of Ryanair. Leaders shape cultures so should we really be surprised to hear of the problems Ryanair are facing at the moment. Figure 4: Comparative fare levels (same booking date and approximate departure times, Source: O’Higgins in Johnson G, Scholes, K, Whittington, R. (2008, p.839). Leadership Review, Kravis Leadership Review, Claremont McKenna College, Vol. Ryanair’s leadership style was used to test the various leadership theories used in this study to show that O’Leary is a transformational leader. Not only are refunds never paid out, even if a passenger’s travel plans are disrupted by the death of a grandparent, but the bereaved customer is told to … for having the temerity to ask” (Boru, 2006, p.50). It restructured and sent its current Chief Executive, MOL, to Dallas to meet Southwest Airline executives. By developing a set of core competencies, Ryanair has been able to develop a strong market position while transporting millions of customers every year. Gillen and Lall (2004) argue that Ryanair has instilled an improvement-making strategy that resides in its corporate culture. Moreover, from Figure 2 it can be noted that the competition between the LCC remains fierce. This means, that employees can take real-time initiatives which are then evaluated and implemented by the management on the organisation as a whole (Leavy, 2003). Das Kabinenpersonal bei Ryanair trotzt dem Regime der Angst. TOL never used to accept criticism of either of his business or his product. (2003) Assessing your strategic alternative from both a market position and core competence perspective’, Strategy and Leadership, Vol.31, No.6, pp.29-35, pp.29-35, Lidtka, J. (1998), 'An Examination of Factors Associated with the Integration of Human Resource management and Strategic Decision making', Human Resource Management 37 (1). No plagiarism, guaranteed! He has transferred a small carrier operating from one plane out of Waterford airport 25 years ago to a world’s largest in terms of international flights. It also launched six new routes to the Greek holiday destinations of Kos, Rhodes and Volos” (p.6). Dobruszkes (2009) argues that efforts towards deregulating the industry by the EU allowed airline firms to introduce changes in their way of operation. We're here to answer any questions you have about our services. This statement contradicts when looked at the current business and its environment that Ryanair is in. Source: in Johnson G, Scholes, K, Whittington, R. (2008, p.842). The paper shows how efficiency at Ryanair enabled it to adopt pricing that its competitors could not match, kept its employees satisfied with high wages and allowed it to record an enviable high performance that made it Europe's most profitable airline. VAT Registration No: 842417633. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. The pilots must pay over 25k euros to undertake the training, and during training they are not paid. (Kangis & O’Reilly, 2003 cited in O’Sullivan & Gunnigle 2008, p. 257). (Ryanair Annual Report, 2009, p.10). The airline was shortly thereafter renamed "Ryanair” and began operations in 1985. The difference in volume is evidence of the consumers’ growth and changing travel needs. (Ryanair Annual Report, 2009). The intent of this study is to use relevant leading theories in dealingss to Michael O’Leary ( here on MOL ) and Ryanair and analyse and review the leading of MOL and attempts in change overing Ryanair to a profitable entity. The third section discusses the application of the strategic theory to Ryanair. Company re-launched itself under the new model and became a public company in 1997.” (O’Sullivan & Gunnigle, 2009, p. 256). He posses leadership qualities identified in the Trait theory, he also acts as a Transactional leader as well as a Transformational leader. The Ryanair Business Strategy is one of operational excellence. The paper explains Frederick Taylor's principle of scientific management and how it aims to increase productivity and improve employee wages. Therefore, it is possible to assume that management of staff is conducted as in Theory X. (1984) Implanting Strategic Management. (Ruddock, 2008). The management is responsible for the development of the necessary regulations, policies and procedures that can accommodate initiatives (Barrett, 2004). (Ryanair Annual Report, 2009). Though Ryanair doesn’t have a formal vision, MOL has publicly claimed to become the second largest airline in the world within the next 5 years, ranked only behind their mentor South West Airline. This means that Ryanair needs to develop a different approach to its cost leadership strategy by introducing modifications to its model. This theory assumes that abilities and leadership characteristics were inherited. Company Registration No: 4964706. According to Ansof (1984) strategic management can be defined as “a systematic approach to a major and increasingly important responsibility of general management: to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises.” (p. xv) According to Raduan, et al. Company Profile. The aim of this assignment is to explore Ryanair’s strategic management practices through the theory of core competencies developed by Prahalad and Hamel (1990). It is difficult to find a set of prominent traits common to effective leaders. The author thanks the Editor Prof Del Giudice and the anonymous reviewers for their insightful comments. Porter, M. E. (1985) Competitive advantage. The manager is also a decision-maker. It is an Irish company headquartered in Dublin and has about 1000 routes, 40 bases and about 200 aircraft. Therefore, it can be concluded that the shared values and culture are significant players in motivating employees to achieve the strategic direction set forth by top management. Basically he should build a relationship. Datamonitor (2010) argues that “in January 2010, the company introduced 25 new routes to/from Alicante, Barcelona Reus, Barcelona Girona, Bratislava, Bristol, Cork, East Midlands, London Stansted, Milan Bergamo, and Pescara. Ryanair is a strong believer of outsourcing. TOL was a businessman and was able to set up many businesses in different industries, good at property development. This theory is viewed as an in-ward looking and self-satisfied feeling, where it is most suitable for a culture that runs smoothly in conditions of equilibrium.