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Operations processes differ in their four Vs. Discuss the 4Vs and explain where Ryanair is positioned on these 4Vs (high or low). How are the 4 Vs related to the costs of operation at Ryanair?

Operations processes differ in their four Vs. Discuss the 4Vs and explain where Ryanair is positioned on these 4Vs (high or low). How are the 4 Vs related to the costs of operation at Ryanair?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Operations processes differ in their four Vs. Discuss the 4Vs and explain where Ryanair is positioned on these 4Vs (high or low). How are the 4 Vs related to the costs of operation at Ryanair?

Operations strategy at Ryanair The two most important attributes of any operations strategy are first that it aligns operations activities with the strategy of the whole organization, and second that it gives clear guidance. Here is an example of a business which meet this criteria. Ryanair is today Europe's largest low-cost airline (LCAS) and whatever else can be said about its strategy, it does not suffer from any lack of clarity. It has grown by offering low-cost basic services and has devised an operations strategy which is in line with its market position. The efficiency of the airline's operations supports its low-cost market position. Turnaround time at airports is kept to a minimum. This is achieved partly because there are no meals to be loaded onto the aircraft and partly through improved employee productivity. All the aircraft in the fleet are identical, giving savings through standardization of parts, maintenance and servicing. It also means large orders to a single aircraft supplier and therefore the opportunity to negotiate prices down. Also, because the company often uses secondary airports, landing and service fees are much lower. Finally, the cost of selling its services is reduced where possible. Ryanair has developed its own low-cost internet booking service. In addition, the day-to-day experiences of the company's operations managers can also modify and refine these strategic decisions. For example, Ryanair changed its baggage handling contractors at Stansted Airport in the UK after problems with misdirecting customers' luggage. The company's policy on customer service is also clear. "We patterned Ryanair after Southwest Airlines, the most consistently profitable airline in the US,' says Michael O'Leary, Ryanair's Chief Executive. 'Southwest founder Herb Kelleher created a formula for success that works by flying only one type of airplane – the 737, using smaller airports, providing no-frills service on-board, selling tickets directly to customers and offering passengers the lowest fares in the market. We have adapted his model for our marketplace and are now setting the low-fare standard for Europe. Our customer service,' says O'Leary, 'is about the most well defined in the world. We guarantee to give you the lowest air fare. You get a safe flight. You get a normally on-time flight. That's the package. We don't, and won't, give you anything more. Are we going to say sorry for our lack of customer service? Absolutely not. If a plane is cancelled, will we put you up in a hotel overnight? Absolutely not. If a plane is delayed, will we give you a voucher for a restaurant? Absolutely not.
Transcribed Image Text:Operations strategy at Ryanair The two most important attributes of any operations strategy are first that it aligns operations activities with the strategy of the whole organization, and second that it gives clear guidance. Here is an example of a business which meet this criteria. Ryanair is today Europe's largest low-cost airline (LCAS) and whatever else can be said about its strategy, it does not suffer from any lack of clarity. It has grown by offering low-cost basic services and has devised an operations strategy which is in line with its market position. The efficiency of the airline's operations supports its low-cost market position. Turnaround time at airports is kept to a minimum. This is achieved partly because there are no meals to be loaded onto the aircraft and partly through improved employee productivity. All the aircraft in the fleet are identical, giving savings through standardization of parts, maintenance and servicing. It also means large orders to a single aircraft supplier and therefore the opportunity to negotiate prices down. Also, because the company often uses secondary airports, landing and service fees are much lower. Finally, the cost of selling its services is reduced where possible. Ryanair has developed its own low-cost internet booking service. In addition, the day-to-day experiences of the company's operations managers can also modify and refine these strategic decisions. For example, Ryanair changed its baggage handling contractors at Stansted Airport in the UK after problems with misdirecting customers' luggage. The company's policy on customer service is also clear. "We patterned Ryanair after Southwest Airlines, the most consistently profitable airline in the US,' says Michael O'Leary, Ryanair's Chief Executive. 'Southwest founder Herb Kelleher created a formula for success that works by flying only one type of airplane – the 737, using smaller airports, providing no-frills service on-board, selling tickets directly to customers and offering passengers the lowest fares in the market. We have adapted his model for our marketplace and are now setting the low-fare standard for Europe. Our customer service,' says O'Leary, 'is about the most well defined in the world. We guarantee to give you the lowest air fare. You get a safe flight. You get a normally on-time flight. That's the package. We don't, and won't, give you anything more. Are we going to say sorry for our lack of customer service? Absolutely not. If a plane is cancelled, will we put you up in a hotel overnight? Absolutely not. If a plane is delayed, will we give you a voucher for a restaurant? Absolutely not.
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