Internal Audit of Ryanair

Topics: Airline, Low-cost carrier, Strategic management Pages: 5 (1463 words) Published: July 26, 2011
This paper is to examine the key potential drivers within the present internal environment. Several models would be applied to support the answer and they are Stakeholder Power/Interest Matrix, Cultural Web, Resource audit, Value Chain, and threshold and core competences. With using Ryanair as an industrial example, this essay would talk about how important strengths and weaknesses are to be used in designing strategy.

Ryanair was founded in 1985 by Tony Ryan who already died in 2007. It was originally a full service airline and turned into a low-cost carrier in 1990s. Ryanair used a series of cost-cutting policies to attain to the target as its mission statement (Ryanair Annual Report, 1999):

“Ryanair will become Europe’s most profitable, lowest cost scheduled airline by providing its low fares/no frills service in all markets in which it operates to the benefits of our passengers, people and shareholders”

Ryanair is now the largest low-cost carrier in Europe and is controlled mainly by the chief executive officer, Michael O’Leary. The following would be the further explanation of the key potential drivers within its current internal environment.

Figure [ 1 ] Stakeholder power/interest matrix adapted from Mendelow (1986)

Stakeholder mapping help identify stakeholder expectations and power and help in understanding political priorities. (Mendelow, 1986 cited in Johnson et al, 2011)

The mapping shows Michael O’Leary and David Bonderman are the main facilitators of the strategies. Their power and interest in Ryanair is so large to be the key player to influence the strategies. EU and BAA this kind of official authority could possibly be the blocker of the strategies as they are the rule setter. Ryanair’s strategies should follow their regulations. In addition, customers’ expectation should be most considered since they have highest expectation on Ryanair’s performance. Manager could thus realize which internal or external stakeholders are needed to be more considered when they carry out a new strategy. Meanwhile, the purpose of a new strategy should be designed to satisfy the stakeholders.

Figure [ 2 ] Cultural web adapted from Johnson et al (2011)

Cultural web shows the behavioral, physical and symbolic manifestations of a culture. (Johnson et al, 2011) It centers the paradigm associated with six surrounding components which are story, symbol, power structures, organizational structures, control system, and rituals and routine.

The cultural shows all the historical culture of Ryanair and managers can thus realize the current environment. It is mainly reflecting its reliance on the top level as well as that Ryanair target so much on “low cost” and “high efficiency”. The paradigm largely remind the managers of the missions of Ryanair when they are thinking of a new strategy.

Organization culture

Figure [ 3 ] Value chain adapted from Porter (1985)

The value chain describes the categories of activities within an organization which, together, create a product or service. (Johnson et al, 2011) It helps the manager understand that its best value would be found in the operatio. Basically customers who usually fly with Ryanair would mostly be interested in its low-fare ticket so, as a low-cost carrier, Ryanair mainly add value to its product through packaging in the cheapest way. Simultaneously, Ryanair keeps other primary activities common to its competitors so it will not be outperformed easily.

Additionally, human resource and procurement would be th

e most value-adding supporting activities of Ryanair. Through long-term outsourcing some of the operations such as baggage handling, car hiring, insurance and etc. to the third parties, and contracting with suppliers so as to get certain discounted price, Ryanair could lower the cost of its operation and supported hardware. Constantly, Ryanair further cut its operational cost by recruiting limited staff and offering low-cost training....
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