Key dates
Distribution date: 15/09/2014
Submission date: 12/12/2014
Introduction
The aims of this assignment are to measure the outcome of students learning in terms of
knowledge acquired, understanding developed and skills or abilities gained in relation to achieve
the learning outcomes.
This assignment contains a real life scenario of a firm, which is already in the market for long and
practicing business under nearly perfect competitions.
You are expected to write an assignment analysing different factors which affects a business
organisation and what are their short term and long term effects. While doing so you need to take
in account the different Govt policies and their impact on the business.
Assignment criteria
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PASS CRITERIA
1.1 Identify the purposes of different types of organization (P1)
1.2 Describe the extent to which an organisation meets the objectives of different stakeholders
(P2)
1.3 Explain the responsibilities of an organisation and strategies employed to meet them (P3)
2.1 Explain how economic systems attempt to allocate resources effectively (P4)
2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities
(P5)
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of
a selected organization (P6)
3.1 Explain how market structures determine the pricing and output decisions of businesses (P7)
3.2 Illustrate the way in which market forces shape organisational responses using a range of
examples (P8)
3.3 Judge how the business and cultural environments shape the behaviour of a selected
organization (P9)
4.1 Discuss the significance of international trade to UK business organisations (P10)
4.2 Analyse the impact of global factors on UK business organisations (P11)
4.3 Evaluate the impact of policies of the European Union on UK business organizations (P12)
MERIT CREITEIA
M1: Identify and apply strategies to find appropriate solutions
M2: Select/design and apply appropriate methods/techniques
M3: Present and communicate appropriate findings
DISTINCTION CRITERIA
D1: Use critical reflection to evaluate own work and justify valid conclusion
D2: Take responsibility for managing and organising activities
D3: Demonstrate convergent/lateral/creative thinking.
Coursework Format:
Your coursework should include:
A title page,
Tables of content
Main body
o Task 1: to cover question 1
o Task 2: to cover question 2
o Task 3: to cover question 3
o Task 4: to cover question 4
Credit will be provided for those who will adopt an appropriate format and structure,
provide citation in the body of the report using Harvard Referencing System, produce
reference list that matches with the citations within the body.
Task 2
Q2 (a) Explain how economic systems attempt to allocate resources effectively (P4).
Q2(b). Assess the impact of fiscal and monetary policy on Ryanair and its activities in the UK
(P5).
Q2(c) Evaluate the impact of competition policy and other regulatory mechanisms on the activities
of Ryanair (P6).
Task 3:
Q3(a). Explain how market structures determine the pricing and output decisions of businesses
and Ryanair in particular (P7).
Q3(b). Illustrate the way in which market forces shape Ryanairs responses with at least 4 factual
examples (P8)
Q3(c). Judge how the business and cultural environments shape the behaviour of an organization
in context to Ryanair (P9).
Task 4:
Q4(a). Discuss the importance of international trade to UK business organizations including
Ryanair (P10).
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Q4(b). Analyse the impact of global factors on UK organizations including Ryanair (P11).
Q4(c). Evaluate the impact of policies of the European Union on UK business organizations and
Ryanair in particular (P12).
Grade Descriptors
Indicative characteristics
Contextualisation
Using the work of others without acknowledging source of information or inspiration. Even if the
words are changed or sentences are put in different order, the result is still plagiarism (Cortell
2003).
Collusion describes as the submission of work produced in collaboration for an assignment based
on the assessment of individual work. When one person shares his/her work with others who
submit part or all of it as their own work.
Extension and Late Submission
If you need an extension for a valid reason, you must request one using a coursework extension
request form available from the college. Please note that the lecturers do not have the authority to
extend the coursework deadlines and therefore do not ask them to award a coursework extension.
The completed form must be accompanied by evidence such as a medical certificate in the event
of you being sick.
Support materials
See the case study attached and refer to the student handbook.
HARVARD REFERENCING SYSTEM
We expect students to use the alphabetical or name-date method known as the HARVARD system.
There are two parts in this system:
1. Citation within text or body of the report:
In this the author's surname and year of publication are cited in the text, e.g. (Bond, 2004).
2. Reference List:
A reference list (of these citations) is included at the end of the assignment, in alphabetical
order by author. The reference list also includes additional details such as the title and
publisher.
A bibliography lists relevant items that you have used in the preparation of the assignment but not
cited in your text. A bibliography should also be in the Harvard style and the inclusion of such a
list shows that you have read widely beyond the items you have cited.
Examples of citation within text or body of the report:
1. Cormack (1994, p.32-33) states that................
2. ............ This view has been supported in the work of Cormack (1994, p.32-33).
3. Jones (1946) and Smith (1948) have both shown
4. Corporate Author:
1st citation: Royal College of Nursing (RCN), 2007
2nd citation: RCN, 2007
Examples of listings in reference list:
1. Books with one author:
Redman, P., 2006. Good essay writing: a social sciences guide. 3rd Ed. on: Open University in
assoc. with Sage.
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National electronic Library for Health. 2003. Can walking make you slimmer and healthier?
(Hitting the headlines article) [Online]. (Updated 16 Jan 2005) Available at:
http://www.nhs.uk.hth.walking [accessed 10 April 2005].
The title of a web page is normally the main heading on the page.
9. E-version of annual reports
Marks & Spencer, 2004. Annual report 2003-2004. [Online]. Available at: http://www-marks-andspencer.co.uk/corporate/annual2003/ [accessed 4 June 2005].
Case Study
Strategy of Ryanair
Overview of the Company
Ryanair started in year 1985 with only 57 staff members and with one 15 seater turboprop
plane from the south of east of Ireland to London-Gatwick which carried 5000 passengers on
one route (Harrison, 2002). In 1986, inspired from the story of David and Goliath the
company go after the big guys for a slice of the action and end up smashing the Aer Lingus
or British Airways high fare cartel on the Dublin-London route. The staff increased from
mere 57 to 120 staff members and the plane carried for about 82,000 passengers on two
routes. In 1989, the company employed 350 staff and their average maximum passengers
increased to 600,000. In 1990-1991, the company has 700,000 passengers.
However, despite of the increase of passengers, the company is not so good in managing cost
that the company has lose its money. A new management team is brought in to sort it out and
re-launch as a low fares or no frills airline, closely modelling the Southwest Airlines model
in the U.S. And in 1994, Ryanair bought its first Boeing 737 aircraft which carried over 1.5
million passengers. In 1995, Ryanair is the biggest passenger carrier on Dublin-London
route, the largest Irish airline on every route being operate and carried 2.25 million
passengers in the year (Harrison, 2002).
In 1997, the EU air transport deregulation allowed the airline for the first time to open up
new routes to Continental Europe with over 3 million passengers on 18 routes carried.
Ryanair launched services to Stockholm, Oslo, Paris and Brussels and took time out to float
Ryanair plc on Dublin and NASDAQ Stock exchanges. The company was awarded as Airline
of the Year in 1999 by the Irish Air Transport Users Committee.
In 2000, they announced the launch of 10 new European routes for the summer 2000 after
much deliberation and watching others burning money. The company has also jump onto
the internet with the launch of their new online booking site and in just 3 months the site is
taking over 50,000 bookings a week. By 2001 there are more than 1500 employees working
for Ryanair and more than 10 million passengers are carried to 56 cities in 13 European
countries. The company has opened Frankfurt-Hahn in 2002 as their second continental
European base and announce a long term partnership with Boeing which will see the
company acquiring up to 150 new Boeing 737-800 series aircraft over an eight year period
from 2002-2010.
The booking in their web accounts have increased to 94% which has probably has something
to do with opening another 26 routes. In year 2003, the company is characterised by rapid
expansion and the start the year by announcing that the company has ordered an additional
100 new Boeing 737-800 series aircraft to facilitate the rapid European growth plans
(Binggeli and Pompeo, 2002). They acquired Buss from KL M in April and re-launched 13
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buss routes in May. In February they opened their first base in Italy at Milan-Bergamo and
launched their Stockholm Skavsta base in Sweden with six new European routes. In all 60
new routes are added throughout 2003 to bring the company a total of 127 routes. By 2004,
the company is named as the most popular airline on the web by Google and they launched
their 10th and 11th bases in Rome Ciampino and Barcelona Girona and continue to add
more routes to their already extensive network. The company has also passed out British
Airways to become the UKs favourite airline in United Kingdom and throughout Europe
(Binggeli and Pompeo, 2002).
Critical Success Factors
Although the company had encountered different problems, specifically in line with its cost
structures, the company had been able to survive and grow in the marketplace. Ryanair
implement different marketing strategy to make the company survive in the competition and
to be able to gain competitive position in the airline market. It is said that the company was
regarded recently as the most punctual airline between Dublin and London. And because of
the strategy of the industry, Ryanair is now recognised as the second largest airline in United
Kingdom and Europes largest low-fares airline having a network of over 57 routes in 11
countries and served by a fleet of 31 Boeing 737-200 and -800 aircraft with over 1,400 staffs
and personnel.
In order to position itself in the marketplace the company continuously concentrates on
driving own its costs to offer the lowest fares possible and remain profitable. In addition,
Ryanair offer minimum standards of service and very low prices for point-to-point, short
haul flights. The goal of Ryanair is to meet the needs of travelling at the lowest price. The
Critical Success Factors (CSFs) are as follows in airline industry: the strategic focus of
having the lowest prices, being reliable within the marketplace, comfort and service and
frequency.
It is noted that low-cost companies concentrate on this first critical success factor by trying
to offer the lowest prices. Although Ryanair has eliminated extras such as in-flight meals,
advanced seat assignment, free drinks and other services, it still prioritises features which
remain important to its target market. Such features include frequent departures, advance
reservations, baggage handling and consistent on-time services.
Cost Reduction Strategy
To achieve its goal of having a competitive position in the airline market, Ryanair uses a cost
reduction strategy. Such cost reduction strategy relies on five main aspects like fleet
commonality, contracting out services, airport charges and route policies, managed staff
costs and productivity and managed marketing costs. In terms of fleet commonality, the
company used only one kind of plane which limits the cost for staff training, maintenance
services and facility of obtaining spares, facility in scheduling aircraft and crew assignment.
With their purchase of aircraft Boeing 737, Ryanair has been able to gain capacity and
reduces the average age of fleet which means savings on maintenance costs and avoiding the
fit of European Union-conform equipment on old feet.
The next factor under the cost reduction strategy of Ryanair is contracting out services. In
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this manner, aircraft handling, ticketing, handling and other functions are contracted out by
Ryanair to third parties. In addition, in order to limit their expenses engine and heavy
maintenance are also contracted out whereas the staff of Ryanair carries out routine
maintenance.
Another factor for the cost reduction strategy of the company is in terms of airport charges
and route policies. Herein, Ryanair has made judicious choice of dealing with secondary and
regional airports, where the traffic is not jammed and fees incomparably lower. Since
Ryanair, is a true windfall for such airports, the airline company has a bargaining power
which enables it getting favourable access fees. In addition, Ryanair provides only a point-topoint service, thus, it has no cost concerning connecting passengers. Moreover, the company
pays special focus to on-time departures because it means maximising aircraft utilisation.
Managing staff costs and productivity is another factor used for reducing the cost for
Ryanair. In this manner, the company pays its staff on modest salary but has set up a
performance related pay structure which urges employees to maximise the number of
sectors flown daily. This way, Ryanair both controls productivity and keeps staff costs down.
Lastly, managing marketing costs is another factor that makes the company reduces it costs.
Ryanair advertises mainly on it website with its logo Ryanair.com, the Low-Fare Airline.
In addition, it is also advertised in national and regional Irish and UK newspaper, on radio
and on television.
Porters Generic Strategy
Aside from it cost-reduction strategy, Ryan has also been able to use Porters generic
strategies to position itself in the marketplace. Accordingly, a company positions itself by
leveraging its strengths. Today, more and more people and organization are striving to be
recognized in the business arena. With this objective, these organizations had been able to
competently and effectively adapt to the situation in the market place by using generic
strategies that enhanced their competitiveness. There are five different generic strategies
that a business can choose.
These include cost leadership, differentiation, focused cost leadership and integrated cost
leadership/differentiation. Each generic strategy helps the company to establish and exploit
a competitive advantage within a particular competitive scope (Hitt, Ireland & Hoskisson
2003). By applying these strengths, three generic strategies are resulted: cost leadership,
differentiation and focus (Johnson & Scholes 1997). The strategies used by the company
include cost leadership, differentiation strategy and focused differentiation.
Cost leadership strategy is based upon a business organising and managing its value-adding
activities so as to be the lowest cost producer of a product within an industry (Campbell,
2002). Cost advantage may achieve in terms of how product or services is designed or in
terms of its quality. Differentiation strategy is based upon persuading customers that a
product is superior to that offered by competitors (Campbell, 2002). The value added by the
uniqueness of the product or services may allow the company to charge a premium price for
it. However, the danger associated with differentiation may include imitation by competitors
and changes in customer tastes.
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Focus-differentiation strategy is aimed at a segment of the market fro a product rather than
at the whole market or many markets (Campbell, 2002). The successful way using focus
strategy is to tailor a broad of product or service development strengths to a relatively
narrow market segment that they know very well. The risk may include imitation and
changes in the target segments. In the case of Ryanair, these three generic strategies had
been utilised. First, the company offers the lowest cost of fare than its competitors in the
airline. On the other hand, Ryanair has also become a focuser because it concentrated on a
narrow customer segment which include Irish and UK business people or travellers who
could not afro to fly major airlines.
The main goal of the company is to provide a no frills service with low fares designed to
stimulate demand. At the time, it did not aim to offer the lowest fare on the market.
However, the company expanded to continental Europe and had to focus on critical success
factors to survive. Nowadays, it can be said that Ryanair has shifted generic strategies to
become more of a cost-leader not only in terms of passenger volumes but being the lowest
cost operator in the airline industry.
Ryanair has restyled itself and shifted from a full service conventional airline to the first
European low fares, no frills carrier. In 1985, it provided scheduled passenger airline
services between Ireland and the UK. By the end of 1990 and despite a growth in passenger
volume, the company had experienced some trouble and had to dispose of five chief
executives, recording losses of IR20 million. Ryanair had to fight to survive and the new
management team, headed by Michael OLeary, decides to restyle the company on the model
of successful American Southwest Airlines.
Indeed, when one considers Porter's original framework, Ryanair's generic strategy used to
be unclear: it situated itself somewhere between a cost leader and a focuser, although we can
consider it was closer to a focuser. The problem with such niche strategies is that they
involve a number of risks, the most obvious being that the niche can get saturated and
competitors invade the segment. As long as Ryanair was the only European no frills airline,
it did not have to distinctly define its strategic position. It used to try and mix focus and cost
leadership and was muzzy about which one it wanted. But as soon as competitors started
blooming, it had to decide which strategy
it would stick to. This was the very strategy of Michael O'Leary: he decided to ruthlessly
pursue cost leadership. This strategy was a success and by 1997, Ryanair was floated on the
Dublin Stock Exchange and on NASDAQ.
Expansion strategy is another factor that enables Ryanair to position itself in the
marketplace. The company has been known to be an airline which launches new routes since
its operation begins. In addition, under the expansion strategy, company acquires Buzz in
February 26, 2003. Such acquisition enables Ryanair to gain immediate access to11 new
French regional airports and makes the company the largest airline operating at London
Stansted Airport. In addition, the company continues to expand by opening two new
Continental European bases with low-fare flights from Milan Bergamo and Stockholm. In
the year, 2003, the company has been able to launch 73 new routes and carry over 2 million
passengers in one month (July). In addition, the company website has been able to make the
company position itself in the global market.
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2.
Strategic Options
The case study has provided the problems and issues encountered by the Ryanair, in spite of
its strategies. One of the problems is in terms of handling customers or target market. In
addition, another problem is assuring quality service. In this manner, the strategic option
that can be used by the company for satisfying both internal and external customers and
marketing environment is the use of total quality management. The industrial competitions
in airline industry worldwide are at brisk, making companies in this field across the globe
search for extensive strategic management procedures that would keep them in on the
business world. The tasks of crafting, implementing, and executing company strategies are
the heart and soul of managing business enterprise. A companys strategy serves as the
game plan management and is use to stake out a market position, conduct its operations,
attract and please customers, compete successfully, and achieve organizational objectives.
Thus, TQM as a strategy is certainly appropriate for such situation.
Total Quality Management is a philosophy of management that is driven by the
constant attainment of customer satisfaction though the continuous improvement of all
organizational processes (Robbins, 1998). It is a management philosophy that seeks to
integrate all organizational functions such as marketing, finance, design, engineering,
production, customer service, and others to focus on meeting customer needs and
organizational objectives (Hashmi, 2000).
It is known that every organizations primary purpose is to stay in business, so that it can
promote the stability of the community, generate products and services that are useful to
customers, and provide setting for the satisfaction and growth of organization members.
From this perspective, it can be said that TQM strategy for achieving its normative
outcomes is rooted in four interlocked assumptions: quality, people, organizations, and the
role of the senior management (Wageman, 1995).
Total Quality Management is a planned procedure for satisfying internal and external
customers and suppliers by integrating the business environment, continuous improvement,
and come through with advancement, growth, and safeguarding the cycles while changing
organisational culture. Furthermore, TQM is an array of management system throughout
the organisation, geared to ensure that the organisation to continuously attain or surpass
customer requirements. TQM places strong focus on process measurement and controls as
means of continuous improvement (McNamara, 1999). Moreover, Total Quality
Management is infinitely variable and adaptable. Although originally applied to
manufacturing operations, and over the years only used in that area, TQM is now being
recognised as a standard management instrument, just as applicable in service and public
sector organisations like the airlines industries (Hashmi, 2004).
The Total Quality Management (TQM) philosophy of management is customer-oriented.
Hence, the airline operations must be developed in order to steadily deal with the
improvement of their operation through the ongoing participation of all employees in
problem solving efforts across functional and hierarchical boundaries. TQM incorporates
the concepts of service quality, process management, quality assertion, and quality
perfection. Consequently, the airline company must be able to control all transformation
processes with regards to their operations and services to better satisfy customer needs in the
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