Otd With Ryanair

Part I: Case study

Introduction

This assignment aims to apply the organisation theories of modernist perspective to the case study, Ryanair, the famous low-cost airline, who has dominant leadership of Chief Executive Officer, Mr. Michael O’Leary. In the first part of this assignment concerning with current form and structure of Ryanair after the leading of Mr. O’Leary. In the second part will analyse the challenges of this company in the future. Moreover, by the growth trend of the company that possibly impact to the interesting managing method and operations with clearly vision of cost reduction or low cost as much as possible.

Current form and structure of Ryanair.

Ryanair is founded by Dr. Tony Ryan and had started in 1985 with a very limited service; one flight per day from Ireland to London. However, the company grew rapidly from 1986 to 1990 with the low price strategy to compete with the major rivals namely Aer Lingus and British Airways. Referring Euromonitor (2000), claimed that Ryanair is the largest budget airlines by its 44 % market share in 1999, moreover, from the case study, in 2004, there are 2300 outsourcing employees working directly to Ryanair, which shows the enlargement of the organization size. In addition, there is a business growth trend that Ryanair will enlarge the services and numbers of customers in the future, which proves from the gradually increasing numbers of passengers that has served in year 2001 at 21,372,091 and at then end of the year 2006 at 47,707,604 (Rayanair.com, 2007).

By the entering of Mr. Michael O’Leary as the CEO in 1991, the objective of business operation to obtain cost reduction and maintain low cost as no-frills budget airline is obviously shown: ”By his own admission, Mr O'Leary had no great vision for Ryanair other than to make money” (The Economists, 2007) . However, in the view of modernist, according to the theory of Mechanistic and Organic Systems by Burns and Stalker (1961) defined the characteristic of Organic organisation that “Network, Presumed Community of Interest”, meanwhile the Mechanistic one is “Hierarchic, Contractual”. Then, “Model for human relationships” (Hatch, 2006), which imply to organisation form, is like to be hierarchy because the policies are dictated form the managements and the orders will pass through the working level not directly from the management to the operators. In addition, based on Mintzberg’s structure on fives, it shows that Ryanair developed the structure from Simple structure to the Machine bureaucracy (Hatch, 2006): from the entrepreneurial firm to the public limited company, who has stock trading in the US stock exchange market. The structure development has shown from the increased number of departments and staffs, which the responsibilities and authorisation of each section clearly distinguishes itself from the others by aim of performance’s improvement.

However, the employee union seems invisible to the managements, but, from the case study, it claimed that the top management liked to do activities with the staffs. From this the ignorance to the union, it is possibly viewed as the postmodernist’s perspective that defined one of organisation’s characteristics includes communicative distortion (Hatch, 2006). Therefore, from McShane and Glinow (2007) mentioned that in each organisational hierarchy has the span of control, which is defined as “numbers of subordinate to directly report to the superior that relates to the structure of the organisation”. For Ryanair, the organisation structure seems to be flat but possibly with centralisation, which seen from the dictation of the policies. Moreover, it possibly be implied to the formalisation (Ibid., 2007), because of the company’s growth as mentioned above. Then, the decision and order should made from managements, which followed by operating staffs.

However, about the formalisation and standardisation such as the routine job, as mentioned above concerning the vision of Mr. O’Leary to operate cost controlling of Ryanair, most of the employees are recruiting by outsourcing, in order to reduce the complication in interviewing the candidates and increase the equality of competition, which in the modernist views as Martha Feldman mentioned that “Routines are created and then endless re-created because people do not reproduce actions and behaviours in the exactly the same way every time they engage in them” (Hatch, 2006). For example, crews and pilots, from the company’s website, it indicates that crews will be recruited by associated recruiters and will directly be employed by the company after 6 months. On the other hand, in term of services, Ryanair that offers to every passengers and employees in each level are almost the same such as the wheel chair case. It proved that there is not any exemption for any special condition such as the disable or senior passenger from the others who pay the same ticket fee rate (case study, 2004).

In the facet of technology, as modernists consider technology as tools to “convert raw material inputs into finished outputs regardless of whether these outputs are products or services” (Hatch, 2006), as same as Ryanair, there is only “Service technology” not any customers’ database to add value in customers relationship, there are only online reservation and call centre for ticket reservation and comment collection. Furthermore, about routine job as mentioned above, if technology could perform the services or jobs in the same level as staff could. The company may consider implementing self вЂ" service programs for customers, which may implicate to the reorganisation structure to be flatter: it may require less Human resources and more high-technology for long term cost reduction, which may cause conflict or depress from staffs in later time.

The principal challenges for Ryanair in the future

Currently, the dominance of Ryanair is the leader of the organisation, Mr. Michael O’Leary. By his tough characteristic, he strongly leads the direction of operation of the Ryanair with only one particular focus, which is cost saving or Low cost. In the modernist perspective as expressed above, it is obviously shown that leadership from the management is playing the important role in the organisation. Therefore, if this norm is continuously running on, the organisation is leaning on the leader. It could be the case that the next generation