Capacity Utilisation
Ryanair operates at very high levels of capacity
utilisation. Outline two consequences of operating at
very high levels of capacity utilisation to Ryanair
Reduction in the unit costs of each flight because the
fixed costs will be spread over more units of output.
This will allow Ryanair to reduce the price of each flight
Staff will be extremely busy. This can be seen in so much
that staff have complained that they are overworked and
as a result, labour turnover has increased by 18%
Exam Style Question
Do you think that reducing unit costs
should continue to be Ryanair’s main
operational target to maintain passenger
growth or should it focus on other
operational targets such as customer
service and quality (15 marks)
Definition
Operational targets are the key objectives of the operational
function of a business
One reason why I
believe that Ryanair
should continue to
focus on unit costs as
their main operational
target is
However, a reason for
focusing
on
other
operational
targets
such
as
customer
service is
because the market that Ryanair operates in is very
competitive and the demand for budget flights is price elastic.
Therefore, a focus on reducing unit costs allows Ryanair to
reduce the price of each flight in order to increase demand. The
result of this has seen huge growth in passenger numbers and
Ryanair being crowned the worlds favourite airline
Overall , I feel that
Good
Answer
because Ryanair is constantly receiving bad publicity in relation
to its service and is often voted the worlds least like airline due to
its poor conditions on board and low paid, overworked staff.
Focusing on customer service may allow them to improve their
reputation encouraging more passengers to fly with them.
although other operational targets are important, in the case of
Ryanair, reducing unit costs is the most significant. This is because of
the market they operate in. Passengers who use budget airlines
want the cheapest fare possible and in order to achieve this Ryanair
needs to reduce its unit costs especially given that demand is price
elastic. Improving customer service may increase passenger
numbers to a certain extent, but probably not as much as a price
reduction would.
Time for lunch
Welcome back
1) Which motivational theorist believed people were primarily motivated by pay?
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1) Which motivational theorist believed people were primarily motivated by pay?
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2) Last year, a business employed 2,000 staff and 48 were absent. What was the
rate of absenteeism?
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2) Last year, a business employed 2,000 staff and 48 were absent. What was the
rate of absenteeism?
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3) Increasing the depth of an employees job by increasing their responsibility is
called?
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3) Increasing the depth of an employees job by increasing their responsibility is
called?
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4) What is the name given to the way in which decisions are passed through an
organisation
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4) What is the name given to the way in which decisions are passed through an
organisation
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On the screen you will see images that provide clues to key terms
relating to the Buss 2 People section of the Spec. Can you get all 5?
Spoof clan torn
Span of Control
Pow Meter Men
Empowerment
Viin Tomato
Motivation
Odd One Out
Induction
Training
On the Job
Training
Off the Job
Training
Tall or Flat?
Tall
Increased empowerment/ delegation
Fewer layers of hierarchy make it easier and quicker to
respond to changes within the market and meet customer
needs
Higher management costs
Reduced horizontal communication within the business
Increased opportunities for promotion
Wide span of control
Longer chain of command can result in worsening
communication between senior management and staff
Narrow span of control means it is easier to co-ordinate
staff within the business
Increased workload for line managers can result in
increased stress and potentially lower morale
Improved motivation within the business
Flat
Please read
the short
case study
on Twitter
and there is
a video to
follow
Q1: The CEO of Twitter believes that effective recruitment is
the most important factor to improve the workforce and
competitiveness of Twitter
Outline 3 other factors that will be important when trying to
build an effective workforce
1
Training and Development
2
Motivational Techniques
3
The way the employees are managed
Q2: Examine TWO ways why Twitter has a
policy of external recruitment
One reason why twitter have a policy of external recruitment is because
Twitter operate in an extremely competitive market, competing against
other social media firms like Facebook. In order to remain competitive
twitter need fresh and innovative new ideas which can be gained via
recruiting externally
Another reason why twitter have a policy of external recruitment is
because
it gives twitter a much bigger pool of candidates to choose from.
Twitter is a growing business and therefore in order to grow and
develop it needs to recruit externally
Q3: How will effective recruitment enable twitter
to be more competitive? Outline two ways
1 Recruiting the right employees will help add value to the business via the
generation of new ideas. This is crucial in enabling twitter to be more
competitive due to the fast moving social media market that it operates in.
2 Recruiting the right employees will help keep twitters costs to a minimum.
This is because recruiting the wrong employees may result in increased
labour turnover and/ or absenteeism, both of which would increase costs
reducing twitters competitive position
Competitiveness is a key element of BUSS2 and
you need to be explain how the various functions
of a business can help a business to be more
competitive
Please read the
case study on page
22 which is all
about Doyles
fashion
Activity 6: Quick Calculations
The % difference in absenteeism
between 2011 and 2012
14.82% ( (302 – 263) / 263 x 100 )
The % difference in customer
complaints between 2011 and
2012
91.67% ( (46 – 24) / 24 x 100 )
Developing Application and Analysis
What is the significance to Doyles of the calculations?
Absenteeism
14.82% increase
Customer Complaints
91.67%
Increased absenteeism puts more
pressure on the staff within the store
meaning that customer service may
decline. Fewer staff within the store
may also lead to issues such as longer
queues at the tills
Customer complaints take time to deal
with and staff may already be
overworked due to the increase in
absenteeism. Also, it could lead to a
worsening reputation which would be
harmful given the level of competition
Linking pieces of data together help to contribute towards
GOOD application. Could the increase in absenteeism be
causing the increase in complaints?
Developing Application Further
Honda has noticed an increase in absenteeism within one of its
factories. How will this affect Honda?
An increase in absenteeism within Honda may affect production and the
overall productivity of the workforce which in turn may result in an
increase in unit costs affecting Hondas competitiveness
Here we can see that the same business
concept, absenteeism,can be applied
DIFFERENTLY to Honda
Consequences of high labour
turnover in Doyles
BOYS (Positive Consequences)
(1) New ideas can be brought into
the stores when new staff are
recruited
(2) Possible reduction in labour
costs if cheaper employees are
recruited
GIRLS (Negative Consequences)
(1)
Increased
recruitment,
selection and recruitment costs
(2) Reduction in customer service
whilst new employees are being
trained
Exam Style Question
Do you believe that John Doyle is right
when he claims that the benefits of
restructuring will only be realised in the
long term? Justify your view (15 marks)
One reason why I agree
with John that the
benefits
of
restructuring will only
be realised in the long
term is
in the short term, Doyles will incur a large increase in costs as many
of the management will be made redundant in order to change the
structure of the business. In addition to this, the restructuring will
also require a change in the design of most jobs which will result in
an increase in training costs. Once these costs have been covered,
Doyles will see significant long term benefits.
However, an argument
against Johns view that
the benefits will only
be realised in the long
term is
because Doyles will also see some significant short term benefits
as well. Part of the restructuring process will also see the sales
staff receiving financial incentives based on customer service and
sales targets. This should help reduce the amount of complaints
that has risen so dramatically over the last year
Overall , I believe that
although there will be some short term benefits, the majority of
the benefits of the restructuring will not be realised until the long
term. Restructuring the organisation will increase short term costs
dramatically and although financial incentives will benefit Doyles
in the short term, it will take a while longer for the true benefits
of restructuring, such as responding quicker to changes in the
market to be realised