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1 MODULE ASSIGNMENT COVER SHEET MATRICULATION NUMBER: 40455719__________________ Please ensure that you have removed your name from your assignment - don't forget to check both the header and the footer. Please do include your Matriculation Number, though. MODULE TITLE: HRM LEADING STRATEGIC DECISION MAKING _ MODULE NUMBER: HRM-11419 Part-A NAME OF MODULE LEADER: Dr Britta Heidl __________________ DATE OF SUBMISSION: August -20th 2010________________ DECLARATION I agree to work within Edinburgh Napier University's Academic Conduct Regulations 1 which require that any work that I submit is entirely my own 2. The regulations require me to use appropriate citations and references in order to acknowledge where I have used any materials from any sources. I am providing my student Matriculation Number (above) - in place of a signed declaration - in order to comply with Edinburgh Napier University's assessment procedures Abstract 1 These form part of the Student Disciplinary Regulations - A useful website on Academic Conduct requirements and how you can ensure that you meet them may be accessed through the Student Portal, via the Plagiarism icon. Please note that breaches of Student Disciplinary Regulations, such as Plagiarism and Collusion, may be investigated and penalised. 2 2 The world is changing rapidly and companies around the globe are becoming increasingly aware of novel business techniques. Organizations must account for limited resources and capabilities within their scope. SWOT (Strengths, Weakness, Opportunities, and Threats) analysis takes stock of the arsenal at the company's disposal and optimizes its performance in a competitive environment. This (depending on no. of authors) research provides tools for conducting a SWOT analysis in conjunction with VIRO framework for analyzing the capabilities and resources of Ray Air, an airline company. The following sources will be reviewed; a Case Study, Corporate Website and a 2019 Annual Report. The papers present a critical assessment of the VIRO framework along with other models for overcoming its limitations. This assignment will be critically discussing how SWOT (Strengths, Weakness, Opportunities, and Threats) is associated to VIRO (Valuable, Imitability, Rarity organization) can subsequently overcome its limitations using the Pestle model. Short Reflection 3 I could clearly recall about five years ago when taking part in a company's training, our group played a game called \"The Dessert King". In this game we were broken into five groups, the instructions we received was that each group was given 5 days to reach to the appointed target. With this quest we were given various resources to help us throughout quest. We received items like water tokens, maps, compass, large hats, and small food bags, along with shortcuts routes to the target. At the end of this safari journey some groups survived the rough terrains and some were vastly delayed. This was when was when I was exposed to importance of resource and capabilities management and practical experience of deploying it to create competitive advantage. Ryanair's Brief History Rayanair is an airline company from Ireland well known for their low air fares and their flight punctuality along with increase in frequency to destinations. Ryanair was founded 1984 by Christopher Rayan, Liam Lonergan (owner of Irish travel agent Club Travel) along with Tony Rayan founder of Guinness Peat Aviation. Later on the company's name was change to Ryanair. Rayanair Airlines is considered the largest European airline group with its parent being Buzz Lauda, Malta Air & Rayanair DAC. Q/A-1 RYANAIR VIRO ANALYSIS 4 A VIRO Framework assesses a company's capabilities which would be what a business does; this could be specializing in supply chain management or design supply. The VIRO Framework also inventory's a company resources like capital, equipment, skills and image. Capabilities for Ryanair include: Strong marketing strategy, for Ryanair this would be its brand name and prodigious reputation. Google search has this airline as one of the best airlines in the field. Over 90% of their booking is done on the internet establishing that this is the biggest European airline in the market. Very guest centric with high service levels and quick turnaround time. Lowest airfare and check in fees, missed departure fees and new cancellation options. Very strong, forceful, innovative leader Michael O' Leary that has led them towards brighter future with increase sales, profits, and development. Operates 2,500 flights, 149 million customers annually, over 1,800 routes, from 40 countries and 242 airports. Ryanair innovativeness on cost cutting has allowed the company the ability to cut flight fares. Ryanair was awarded by Air Transport magazine for the most profitable air carrier in the business in 2006, added with the number 1 airline with the highest number of passengers and flights 5 Resources for Ryanair include: Physical Resources: Fleet of 470 Boeing air 737-800, 189 Passenger capacity Premium seat available, Row1 extra leg room, Row 2 -5 Quick exit, Row 16-17 extra leg room. Human Resources include: 2700 employees Financial Resources: Emerging from shareholders, creditors, Rayan family and investors Intellectual Capital: This would be the pool of knowledge, experiences, abilities, along with talents found here at Ryanair. (\"Ryanair 2019 Annual Report,\" n.d.). 6 RYANAIR VIRO FRAMEWORK VALUABLE YES IMITATBLE YES RARE YES ORGANIZED NO VRIO framework helps an organization uncover and protect the resources and capabilities that give them a long term competitive advantage. It's put into play after creating a vision statement but before strategic planning process. Ryanair is an Irish budget airline that is known for its affordable flights around Europe. VRIO framework answers the question of Value, Imitability, Rarity and Organization. This analysis helps the organization to understand its resources, competitive edge, value proposition and its value in the market. Value determines whether the capability of the airline is strength or a weakness. Rayanair has value; it large fleet of 470 Boeing 737-800 carrying 173 passengers make good on value. It also has a large inventory of 2700 skillful employees (Human Capital) that also presents a wealth of human intellect. 7 Imitability determines factors that are easily imitable by other organizations that need to be considered. An organization factor includes the resources and functions offered by the airline. I would say Ryanair is difficult to imitate, this would be due to the large amounts of capital one would need along with gaining the capability in offering extremely low air rates. The question of Rarity analyzes the factors that are rare within the organization such as its capabilities and this helps the organization to develop sustainable competitive advantage in organization factor, it includes the resources and functions offered by the airline. The company's rarity is its ability to provide flights at low rates. Ryanair has been able to deliver higher charges of on time departure and faster turnaround times due to its operation from less congested airlines. Ryanair has taken advantage of inactive airports by landing on them and this increases punctuality and reduces costs. The low prizes have enabled the airline to attract millions of customers. The airline is the only one that has government subsidies and airport charge reduction and their airlines do not have that resource. This makes it rare and valuable. The company also has only one kind of plane, so all its staff are trained to handle only that kind of plane. This is cost efficient as it reduces the cost of staff training for different planes thereby building more capital which can be invested into other developments or special projects. I would say that Ryanair is not fully organized; the firm has strong financial health, so they have access to future potential growth. Some cities also give grants to Ryanair. The company also has young fleet of Boeing 737, this means reduced maintenance costs and also reduced possibility of failure. Rayanair could form better working 8 relationships with its employees and union officials in order to alleviate any future barriers. (\"Ryanair 2019 Annual Report,\"n.d.) RYANAIR SWOT ANALYSIS To compare to VIRO framework to SWOT determine limitations, thereby capitalizing on opportunities to protect and grow its capabilities and resources towards a much better competitive advantage. S INTERNAL STRENGTHS W INTERNAL WEAKNESSSES 1 Ryanair aggressive expansion plans could possibly create excessive airplane inventory in the near future creating dead inventory hence tying up cash which could be for daily transactions. 1 Ryanair cost base which allows them to compete and extend lowest rates within the airline market. 2 Ryanair engages in the European market which covers more than 200 destinations and 1,800 routes. 2 Labour relations along with the change in employee company compensation structure which can cause star employees to leave or reduce performance. (Employee morale) 3 Outstanding financial statements, hence good profits for shareholders. 3 Weak customer and employee relations. 4 Ryanair operates with short distance to distance strategy which allows them to be more efficient with flight schedules hence flight times. 4 Weak relationship with competitors. 5 Ryanair is very sustainable, being the cleanest and greenest airline in European Union. 5 O EXTERNAL OPPORTUNITIES 1 Potential to increase ancillary revenue through my Ryanair program. 1 Major fluctuation in fuel prices could affect company's cost model and profitability. 2 Potential on enhancing customer experience through their Always getting better campaign. 2 Staff shortage due to union strikes for unresolved negotiation. 3 Potential in declining charter flight segment 3 Possible increase on Irish tax cooperation. [42] T EXTERNAL THREATS 9 Q/A-2 The VRIO system is a key examination device intended to help associations on revealing and ensuring assets and capabilities that offer them a drawn out upper hand. The system ought to be placed into play after the production of a dream explanation, yet before the vital arranging process. The differentiation and preferences you recognize will decide how to move toward the commercial center and illuminate vital choices that shape the destiny of your company. VRIO is a shortening for a four-question system of significant worth, Valuable, Imitable, Rare and Organized, resources that must be obtained by one or not very countless administrations are regarded as exceptional, (Jurevicius, 2013). Rare and significant assets praise impermanent upper advantage. In situations when in excess of, hardly any organizations has the same asset or utilizing the capacity in the comparative state, indicates serious equality. This basically demonstrates that business can exploit indistinguishable assets to clone the same practices and no business can accomplish prevalent execution. These four sections are customarily drawn closer in the technique of a choice. (\"Introduction to the VRIO Framework: Resources: Get Lucidity,\" n.d.) Value: Do you offer an asset that includes an incentive for clients? Is it accurate to say that you are ready to abuse a chance or kill rivalry with an inner ability? First and leading resources must be valuable. Resources are valued when they permit a firm to device policies that improve a firm's effectiveness and efficacy by exploiting opportunities or by mitigating threats. 10 Irregularity: Do you control very little valuable things or capabilities (to hold do something)? Do you own something that is hard to see/hard to catch yet in demand? If the appropriate response is in fact, at the point a valuable thing is seen as important. Valuable things are furthermore important on the off chance that they help organizations to develop the client respect. This is decided by expanding separation or shrinking the cost of the item. The valuable things that can't meet this condition lead to bad result or effect. It is extremely important to constantly ( figure out the worth, amount, or quality of) the close gaps of the valuable things because of the fact that constantly changing inward or outside conditions can make them less significant or useless by any stretch of the imagination. Imitability: It is expensive to imitate your organization valuable possessions or ability (to hold or do something)? Is it hard to locate a (fair in amount, related to something else/properly sized compared to something else) substitute to deal with your offerings? Although significant and unusual valuable things may help organizations to take part in ways of doing things that different firms can't look (for) after since different firms do not have the important valuable things, it is no promise for long-term upper hand. It might give the central organization a first-mover advantage yet organizations will likely attempt to copy these valuable assets and capabilities. Another rule is valuable asset should meet is in this manner that they should be hard and ridiculously to copy or substitute. As pointed by RBV, valuable things. Organization: Does your organization have sorted out management frameworks, procedures, structures, and culture to gain by assets and capabilities? The assets 11 themselves don't make any preferred position for an organization if the organization isn't composed in approach to satisfactorily misuse these assets and catch the incentive from them. The central organization thus needs the ability to collect and arrange assets adequately. Instances of these authoritative segments incorporate an organization's proper detailing structure, key arranging and planning frameworks, the board control frameworks and pay arrangements. Strengths and Weakness The strength of the VRIO framework includes: It's a simple model to apply. The model assists a firm with identifying unused upper hands that you would then be able to change into a continued upper hand. VRIO discloses where your business is successive and where it's failing, too. The VRIO framework is comprehensive any resource/competence can be examined it's very absorbed on internal analysis lift a company's competitive positioning 12 The Weakness of the VRIO structure includes: It's hard to apply to littler firms and new businesses as they would not yet have enough assets or capacities to have the option to recognize any supported upper hand. The world wherein firms work is changing constantly. This implies it could be hard to state you've at any point accomplished an economical upper hand; all the better you can do is saying that you have an upper hand for a long time to come. The model doesn't think about inside components, for instance, how request in the commercial center is moving and evolving. It's a highly-repeatable process. It is time consuming It relies on a lot of subjective judgment Alternative of VRIO/ PESTLE MODEL Although the VRIO model is highly beneficial and leads to competitive advantage of firms and we have many examples of some very successful firms who have opted VRIO framework but still there are many limitations to this model which are also discussed above as one of the basic limitation is that is highly time consuming. This model doesn't not also incorporate all factors of environment which won't lead to maximum results. This limitation of this framework can be 13 eliminated by using PESTLE model which incorporates maximum external factors also which creates a huge impact on any firm's growth and success. Bibliography Gupta, S. (2020, June 03). How to use the VRIO framework (with example)? Retrieved from https://blog.usejournal.com/how-to-use-the-vrio-framework-with-example-794d25737d52 Introduction to the VRIO Framework: Resources: Get Lucidity. (n.d.). Retrieved from https://getlucidity.com/strategy-resources/introduction-to-the-vrio-framework Jurevicius, O. (2013, October 21). Is the VRIO Framework a Key to Competitive Advantage? Retrieved from https://strategicmanagementinsight.com/tools/vrio.html Ltd, A. A. (2019, March 18). Limitations Of The Resource Based View Management Essay. Retrieved from https://www.ukessays.com/essays/management/limitations-of-the-resourcebased-view-management-essay.php Mod, W. F., & Prince. (2019, August 28). SWOT Analysis: Benefits, Limitation, Example of SWOT Analysis. Retrieved from https://efinancemanagement.com/financialmanagement/swot-analysis Rachel Smith Consultant & Trader Joe's Loyalist. (2020, April 14). Explaining The VRIO Framework (With A Real-Life Example). Retrieved from https://www.clearpointstrategy.com/vrio-framework/ Ryanair 2019 Annual Report. (n.d.). Retrieved 2020, from https://investor.ryanair.com/wpcontent/uploads/2019/07/Ryanair-2019-Annual-Report.pdf Ulrich, N. S. (2014, August 01). Capitalizing on Capabilities. Retrieved from https://hbr.org/2004/06/capitalizing-on-capabilities 14 Njoya, E. T., & Niemeier, H. M. (2011). Do dedicated low-cost passenger terminals create competitive advantages for airports?. Research in Transportation Business & Management, 1(1), 55-61