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JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY

SCHOOL OF HUMAN RESOURCE AND DEVELOPMENT

Course: Master in Business Administration

Unit Title: Innovation and Change Management

Unit Code: HCBA 3111

A case study assignment meant to add knowledge to the scholarly world and guide JKUAT
students in their innovation and change management gain more knowledge. N/B: The idea
of this work originated from a friend who is doing her masters in change management and
therefore it was wise for us to come up with such a piece for scholars. This work has also
been presented legally by a masters student at JKUAT with no victimization or any
plagiarism allegations. It was allowed according to the professional laws of scholarly work.

For information: contact Martin Otundo Richard (PhD Fellow)

martingotundo@gmail.com:+254721246744

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Task:

You have been provided with two Case Studies (Rynair Case Study and Apple Case Study) as a
separate cover.

You are required to study both the case studies to form the platform of responding to the
Assignment. Additional relevant reading from various sources of literature concerning the two
case studies in particular and Innovation and Change Management in general is mandatory to
enable adequate response to the assignment.

The assignment is premised on critical comparative analysis on the various themes of interest
espoused in the assignment.

Required:

Critically evaluate and analyze each case study and give a response as guided and informed as
follows:

1. Based on the Porter‘s Five Forces model comprehensively analyze on a comparative basis
each of the two case studies;

(a) Determine the competitiveness of the respective organizations in the case study with respect
to the changing business environment.

(b) The evolving core- competences for each organization within respective industries to remain
relevant in the market

(c) Compare and contrast the sustainability of the competences cited in (a) and (b) above
motivating remedies for any limitations that are apparent respectively for each organization in
the two case studies.

2. On the basis of applicable change management models depicted in the two case studies and on
a comparative basis;

(a) Motivate the effectiveness based on identified strategies to cope with the named key drivers
of change respectively for the two case studies.

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(b) Suggest a comprehensive change management framework that can be used as a blueprint to
transform the respective organizations to sustain leadership in their respective industries

(c) Discuss the pros and cons of remaining a market leader for each of the two organizations
given the dynamic business environment
3. Illustrate how the following have been applied comparatively in the two case studies basing on
identified focus of change in the competitive environment:
(a) Theories of Change Management
(b) Approaches to Change Management
(c) Leadership theories of change management

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1.0 Competitiveness of Each Case Study Based on Porter’s Five Forces Model
1.1 A Case Study of Apple
The Five Forces model as explained by Michael Porter aims to examine five key forces of
competition within a given industry. The main force examined by Porter's model is the level of
competition within an industry. A person could even argue that Porter's model is essentially an
analysis of the competitiveness or non-competitiveness of an industry. The other four forces
considered in Porter's model all impact the level of competition. They include the threat of new
entrants to the marketplace, the threat of consumers opting for substitute products, the bargaining
power of suppliers within the industry, and the bargaining power of buyers or consumers within
the industry's marketplace.

Established in 1976, Apple has been through low times. For example, in 2001, Apple sales fell
33% to $5.4 billion from $8 billion. The company reported an operating loss of some 6% of
turnover (pg.5). However, under the leadership of Steve Jobs, the company has succeeded to
become an industry leader. Based on this Five Forces analysis, Apple continues to address
competition and the bargaining power of buyers, which are among the most significant external
factors impacting the firm.

From the case study, it can be argued that Apple‘s Five Forces analysis, based on Porter‘s model,
shows the following strengths or intensities of external factors in the industry environment:
1. Competitive rivalry or competition (strong force)
2. Bargaining power of buyers or customers (strong force)
3. Bargaining power of suppliers (weak force)
4. Threat of substitutes or substitution (weak force)
5. Threat of new entrants or new entry (moderate force

In relation to Competitive Rivalry or Competition with Apple (labeled as a Strong Force), it can
be argued that Apple faces strong force of competitive rivalry or competition in the market. In
Apple‘s case, this influence is based on the following external factors: High aggressiveness of
firms (strong force); and Low switching cost (strong force). For example, in 2001, Desk top sales
had been hammered, unit sales of the PowerMac had fallen by 35% and those of the iMac by

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45% due to cut throat competition from other ICT companies like Lenovo, HP etc. Also, as the
company moved in a series of evolutions in the launch of the iPod, other companies like
Microsoft launched similar products like the Zune (pg.8). However, Steve Jobs seemed to have
realized this and embarked on rapid innovation (coming up with products that had better storage
capacity, mix of music and games), aggressive advertising (At the turn of the millennium, Apple
identified four key market segments within the customer profile, Business, Creative
professionals, Education, and ―high-end‖ consumers pg 5) , and no imitation (the company in
2001 chose to come up with the iPod that completely became more popular and new products
than Sony and Walkman).

It can be argued that previously Apple experienced the challenge that accompanies customer‘s
bargaining power that could lead to the losses experienced in 2001 since similar products like the
desktop, CDs and many more had many players in the field and substitutes could easily be
reached by customers. However, the discovery and Launch of the iPod left many companies like
Sony and Walkman with no better sales since Apple had launched a product that was more
appealing to customers, simple, portable, advanced etc. ―Music on the move‖ had been pioneered
by Sony with the Walkman and the Discman but the digital age beckoned (pg 7). This is
supported by the idea that iPod was guided by Key success factors (KSFs) in the market that
were identified as design, size, capacity, battery life, software and download facility (pg. 8). The
better product hit the market and it was the trend of portable music with better storage and
downloads; leaving the customers with no much bargaining powers that always are associated
with losses.

Another strategy that has placed Apple better in the world markets than its rivals is the
bargaining power of Apple‘s suppliers that is considered a weak force in this case study. Apple
experiences the weak force of the bargaining power of suppliers. This component of Porter‘s
Five Forces analysis model indicates the influence of suppliers in imposing their demands. This
means that when a company has its suppliers impose their demands, there is a more likelihood of
getting production enabling materials at high prices; leading to increased production costs and
losses. In Apple‘s case, suppliers have a weak bargaining power based on the following external
factors: High number of suppliers (weak force); and High overall supply (weak force). From the

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literature available in other sources, Apple has less than 200 suppliers of components for its
products and the company has more options because there are many suppliers around the world.
This condition makes individual suppliers weak in imposing their demands on firms like Apple.
In relation, there is a high level of supply for most components of Apple products. Thus, this part
of the Five Forces analysis shows that Apple has an advantage over the bargaining power of
suppliers.

From the case study, the threat of substitution is weak in affecting Apple‘s business. This
component of Porter‘s Five Forces analysis model determines the strength of substitute products
in attracting customers. In Apple‘s case, substitutes exert a weak force based on the following
external factors: High availability of substitutes (moderate force); and Low performance of
substitutes (weak force). Substitutes to Apple products are readily available in the market. For
example, people can easily use Zune launched by Microsoft instead of the iPhone. However,
these substitutes have low performance because they have limited features. Many customers
would rather use Apple products because of their advanced features (In November 2006
Microsoft launched the Zune, five years after the iPod launch. How well had Apple prepared for
the Microsoft response? The product differentiation and price point proliferation prior to the
arrival of the Zune generated a width and depth of product offer which would make competitive
entry difficult and make it easy to defend the position of market leader. Pg.20). Thus, substitution
has a weak force in impacting Apple‘s business.

In this case study, Apple enjoys the advantage of experiencing moderate force of the threat of
new entrants. This component of Porter‘s Five Forces analysis model indicates the effect and
possibility of new competitors entering the market. In Apple‘s case, new entrants exert a
moderate force based on the following external factors: High capital requirements (weak force);
High cost of brand development (weak force); and Capacity of potential new entrants (strong
force). Establishing a business to compete against firms like Apple requires high capitalization.
Also, it is considerable costly to develop a strong brand to compete against large firms like
Apple. These factors make new entrants weak. For example, the major new entrant that
competed to some extent with Apple‘s iPod was the Zune of Microsoft that only lasted between
2006 and 2008 unlike Apple‘s iPod that underwent modifications to control the giant market due

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to its originality. From our case study, it is shown that, ‗the initial launch went well. Zune was off to
a quick start, grabbing 9 percent of the U.S. digital music player market in its first week of sales,
taking the No. 2 spot from SanDisk but later on lost in the giant market due to Apple‘s better
products.‘
1.2 A Case Study of Ryanair
Porter's five forces analysis is a framework for analyzing the level of competition within an
industry and business strategy development. Five forces include: Threat of new entrants; Threat
of substitutes; Bargaining power of customers; Bargaining power of suppliers; and Industry
rivalry.

In the case study of Ryanair, it can be argued that the company moderately benefits from weak
Bargaining power of suppliers. Boeing has been traditionally Ryanair‘s main supplier. The main
suppliers are the aircraft manufacturers. Currently, the top 2 manufacturers in the world are
Boeing & Airbus. In this industry, the inputs are significantly standardized. Airline firms only
seem to differentiate with amenities. The planes are very similar. A few manufacturers are
currently focusing on producing eco-friendly aircraft. Ryanir has long-term contracts with its
suppliers (Boeing) that lasts between 15 to 20 years. Based on this, the bargaining power of
suppliers has a low threat as well.

Another strategy that Ryanair has been associated with is better bargaining power of the
customers. Ryanair customers enjoy high bargaining power because switching to another airline
is simple and not associated with additional expenses. However, it has to be mentioned that only
for Ryanair has been indicated as an airline company that has offered the cheapest rates for its
customers; more specifically the leisure customers. EasyJet and Ryanair became the biggest low-
cost airlines in Europe. Ryanair had the advantage of age and experience as it had been set up ten
years before easyJet pg. 1.

The company enjoys better markets against threat of substitute products and services.
Nevertheless, substitute services for airline industry in general and Ryanair in particular include
railway networks, sea transports, coach transport, as well as, car rental firms. However, ―usually,
train, bus or ferry tickets are more expensive than Ryanair‘s flight tickets‖ due to the chosen

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strategy of Ryanair that relies on cheap prices as the main source of competitive advantage. The
threat of main substitute, trains are occasionally addressed by Ryanair in a proactive manner
through providing price comparison prices of Ryanair services with train services on the
company website and other sources. Nevertheless, it is fair to state that the threat of substitute
products and services for Ryanair is insignificant compared to many other industries in the
marketplace.

The threat of new entrants is low for Ryanair due to the significant entry barriers associated with
entering airline sector that include economies of scale, capital requirements, access to
distribution channels etc. For example, being the oldest low-cost carrier in Europe, Ryanair had
some advantages over its competitors more specifically the EasyJet. For one thing, it had the
advantage of experience, and secondly, its brand enjoyed good recognition pg.7.

Ryanair is seen as one company that has mastered the concept of Rivalry among Existing
Players. For example, it waged price wars against the giant airlines like the BA and won. The
company also used publicity to remain on top. Ryanair had a publicity program, which, though
sometimes unconventional, nearly always achieved its aim. The ‗attack‘ on easyJet was one of
the typical publicity exercises of Ryanair. Ryanair also often released ads comparing its prices to
competitors‘ prices. In 2001, it was involved in a controversy with BA for claiming through an
ad that BA‘s fares were five times higher than those of Ryanair pg 7. This boosted its sales and
put it higher than the rivals.
1.3 The Evolving Core- Competences for Each Organization within Respective Industries
to Remain Relevant In the Market
1.3.1 A Case Study of Apple
From the case study, apple has been developing new products that have better features and easy
to use by its customers so as to outdo their rivals. This worked well when the company shifted
from the desktop and taught of the iPod that could integrate the music element (pg3). This later
evolved over time till the time the company launched an iPhone; unlike its competitors like Sony
(Walkman), Microsoft et al. In the case study, it is argued that, the launch of the iPhone was the
logical extension of the improvement process. Introducing connectivity, with a digital camera

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(3.0) and a video camera (3GS) to music on the move. The iPad followed with greater
connectivity and access to apps developing better cameras and video in the process.

Apple has been able to reduce the losses that could be brought about due to overwhelming
powers of the customers to bargain. This has been achieved by Apple‘s power to design better
products that have better features and easy to use; making customers to access little substitutes in
the market. It is indicated that, iPod was guided by Key success factors (KSFs) in the market
identified as design, size, capacity, battery life, software and download facility (pg. 8). The
continuous innovations and discoveries by the company are still giving the customers much more
satisfaction and limited options for substitutes (Constant improvement driving the Key Success
Factors Gemba Kaizen strategy application).

Apple has been fitting in the market profits by sticking to only 200 suppliers. When suppliers are
not very many, a company is able to control their bargaining powers and increase profits. Also,
the company has been empowering its employees to develop some software and even hardware
that could in one way or the other supplied from outside. This way, the company is able to
reduce the losses and inconveniences that could be coming from the suppliers.

The company seems to have understood the effects the substitutes could bring to the market. It
has managed to handle this by coming up with unique products, launching them regularly
without fear of overshadowing, improving on the existing ones and insists on no imitations. For
example, when Zune was launched, Jobs accused Microsoft of specializing in third hand
products that don‘t last. This came true when the Zune did not make major gains of profits
beyond the 9% mark between 2006 and 2008.

Apple has a well informed and prepared employees full of innovative ideas to have the company
give products that are better placed over their new rivals. For example, in page 14, it is indicated
that, in 2001, Apple reviewed the options for extension of the product offer eschewing the digital
and video camera market at the time. Apple chose music, the launch of the iPod, music on the
move and 1000 tunes in your pocket. It is a classic case study in Strategic Management. The four
dimensions of RMA, RMS, RFS and RES brought into play, with examples of leadership,

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organization, marketing, pricing strategy, product development and much more. Constant
improvement is ―one infinite loop‖.

1.3.2 A Case Study of Ryanair

Ryanair seems to understand the advantages it stands to gain from weak suppliers bargaining
powers by ensuring that it gets all of its aircrafts from the Boeing. Ryanair has been in various
partnerships with various companies that could look like they offer them basic supplying services like
substitute cars and many more. The airline for example has entered into a partnership with Boeing
for the purchase of about 150 new aircraft over the next eight years (until 2008). Ryanair entered
into partnerships and agreements with car rental companies and hotels so that it could earn
commissions by selling these products to passengers. All these activities are aimed at having the
company performs better.

Ryanair has been on the move to reduce customers bargaining powers by ensuring that they get
travels at the lowest rates ever in Europe. This is supported by the case study‘s information that
Ryanair follows a strategy of cost focus. The airline serves a class of flyers who look for
functional and efficient service rather than luxury. Initially, it did not aim to satisfy all segments
of the market. The airline‘s operational policies supported its strategy of cost focus.

Ryanair has perfected on the trends of being on top by minimizing the effects felt by substitutes
like the electrified trains. This has been achieved by the company‘s focus on simple fleet,
secondary airports, no freebies and many more that have reduced the cost of flights as compared
to these substitutes.

The company has been on the move to ensure that it comes with new strategies that don‘t allow
the new entrants to displace it from the market. This has been achieved through prices reduction
and timely departures (In terms of price ,Ryanair had a distinct advantage over easyJet; easyJet‘s
fares were almost 60-70 percent higher than those of Ryanair. Ryanair‘s lowest fare, on flights
between Glasgow‘s Prestwick and London‘s Stansted was $71, round-trip, while easyJet‘s
round-trip flight between Glasgow International and London‘s Luton was $123. Ryanair‘s

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average fares in 2002 were 30% cheaper than easyJet, and its unit costs were 80% less. Ryanair
also had a better punctuality record than easyJet, taking off and landing on time more often than
its rival).

Ryanair is the mother of controversial publicity in Europe. Its attacks on rivals like BA and
easyJet, has boosted its image and since then the company gets known. It is also known for its
aggressive marketing nature through online ticketing and agency customization. After
Ryanair.com was launched in 2000, a large number of tickets began to be booked online pg 5.
This has always given the company a marginal advantage.
1.4 Comparing and Contrasting the Sustainability of the Competences
The concept of competition countering is sustainable in apple since the company doesn‘t only
rest in massive innovations but the company has always invested in products that give the
customers value for their money unlike their competitors. In 2001, Apple sales fell by a third and
the company reported an operating loss of $350 million 6% of sales. It was in that year the
concept of the Mac as the digital hub for consumer products emerged – the iPod was launched.
Since then Apple sales have increased from $5 billion to over $100 billion last year and profits
have soared to $34 billion. Over this time, the company has followed the strategy of the digital
hub moving along the Golden Staircase with constant product improvement and enlargement of
the product offer. In the first quarter of this financial year [2012] revenues increased by over
60%. Since launch the company has sold over 330 million iPods, 180 million iPhones and over
55 million iPads. Over 575 million digital devices sold. This shows that the strategy adopted by
the company is very strategy.

On the other hand, Ryanair Company has shown that its competition in the market has been
favorable and it still maintains and controls the market base. However, the entry of many airline
like easyJet and many more have also tried to engage on price wars by offering similar prices
with almost similar services. The airline therefore needs to come up with strategies that can take
care of all the passengers like the business class and not leisure passengers only. Also it has to
come up with better products that integrate both innovation and creativity to take care of the
undecided passengers.

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There is the concept of sustainable control of customers‘ bargaining power in both cases
(Ryanair and Apple). In the apple case, the company has been on a continuous movement lane
towards launching batter and better products that outdo their competitor. The launch of iPod and
its evolution to the launch of the iPhone that has better performance, long lasting battery and sold
at affordable price has made the customers stick to the product. From the statistics it can be
predicted that the company will still continue to gain profits and command a large global market.
This is similar to Ryanair that has managed to command a large market in Europe by offering
cheap rates to its customers and being specific in the target market, routes and partnerships.

Boeing has been and is still the major supplier to Ryanair. Boeing aircraft are sold to Ryanair
Company at better agreed terms and in most cases the company has gained more discounts from
supplies made by Boeing. The anticipation of the company moving to Airbus manufacturers for
some more aircraft is good and may give it more advantage that can see the Boeing have its
control and decisions imposing be reduced. However, the issue of reduced supplier control is
sustainable since the company has maintained a long business ties with Boeing that has even
been supplying aircrafts to Ryanair over long contractual periods of time. In relation to Apple,
the company has managed to minimize the number of suppliers who serve it to only 200 in the
world concept who offer various supply products. The company‘s strategy is sustainable since it
enters better and long-term contracts with the selected suppliers; limiting them the opportunity to
impose rules too. However, the two case studies indicate that the companies are limited in
choices in regard to suppliers‘ management because their products require specific suppliers and
therefore they should capitalize in suppliers‘ management for better operations in the future.

When it comes to the threats from the new entrants, the two companies have sustainable
strategies of taming them. For example, Apple has been innovative, creative and customer
focused in the evolution of its technology launched throughout. The future lies in this strategy of
more innovation and more future market controls unlike the new entrants who depend on
copying and imitations. For example, in the case study it is noted that, having created a vision of
the ―digital hub‖, the product offer (apple products) has been extended to provide a ―Golden
Staircase‖ to fulfill mission and strategy. In time the hub will yield to cloud, with 100 million
cloud users already, the transfer is well underway. 575 million digital devices sold, 585,000 apps

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available on the App store, 25 billion Apps downloaded, 100 million iCloud users registered,
over 10 billion songs sold, the digital strategy secured. This has similar occurrence to Ryanair
that is always coming up with strategies that reduce costs for its operations and make profits to
the maximum unlike its new entrants‘ threats like the easyJet.

Finally, the concept of substitute goods and services don‘t seem to be a big threat to these
companies since they have devised sustainable measures that include the continuous
improvement (Gemba Kaizen) for apple and continuous market prices reduction plus publicity
for the case of Ryanair.
2.0 Applicable Change Management Models Depicted In the Two Case Studies
2.1 Effectiveness Based on Identified Strategies by Apple
Change management is a structured approach to transitioning individuals and organizations from
a current state to a future state. From the case study, it can be argued that, Apple has mastered
this concept that so many managers and organizations have failed to do. Unlike many other
companies, Apple has managed to build a following of users, introduced new concepts and new
technologies, and have gained nearly complete adoption of changes.

Some of the change management models the company has adopted since it made massive losses
in 2001 include:
2.1.1 Introduce new features slowly

Apple follows their own release cycle. They don‘t release any feature or function pre-maturely
just to beat out their competition or to catch up with the industry. Apple isn‘t a perfect company
and they do make mistakes. However, in general, they release features only when they are ready.
For example, when the first iPhone was released, the App Store was not yet a function. They
wanted a fully tested environment before releasing it to the general users. Updates and changes
happen often, couple times a year. Unlike Windows where version releases take years, Apple‘s
iOS changes functions often but slightly. This is entirely intertwined in their policy of applying
the continuous improvement strategy as spelled by Gemba Kaizen that has worked well for the
company unlike the Microsoft and other tech companies.

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2.1.2 Not being caught up in fads

When their competitors were releasing larger screens, all types of functionality, all in one
devices with everything including the kitchen sink, Apple was releasing features slowly. Apple
released 3G when it was ready. Apple still refuses to release a larger screen while everyone else
is rushing out to have the biggest screens. Apple doesn‘t claim to have 8 megapixel cameras
when it knows that average users don‘t even use all those pixels. Apple builds systems for the
general population, not niche groups. Apple believes in giving the best to its customers across
the globe and at all times maintain them by launching a product that whose time and
perfectionism have been achieved. This is achieved in its launch of the iPod, iPhone, iPad 3 etc.

2.1.3 Making design and user experience a priority

A number of apple products grow from simple to greater versions with special features that make
customers identify themselves with Apple. For example, the evolution of the iPod, iPhone and
many more are an example of a strategy that has put the company in continuous production and
being on the move. According to the studies, the iOS for example has grown slowly from version
1.0 to the current version 4.0. Each release include very subtle and very minute changes. As
users adopt the system, Apple is slowly introducing the users to a common system that works
across all its devices: iPods, iPhones, Apple TV, and soon Macs. Notice how these devices don‘t
come with extensive user manuals. It doesn‘t require instructions. A well designed operating
system and applications should be so intuitive that a user can pick it up and simply use it.

2.1.4 Prioritization of the company strategy


The Company is committed to bringing the best personal computing, portable digital music and
mobile communication experience to consumers, students, educators, businesses, and
government agencies through its innovative hardware, software, peripherals, services, and
internet offerings. The Company‘s business strategy leverages its unique ability to design and
develop its own operating system, hardware, application software, and services to provide its
customers new products and solutions with superior ease-of-use, seamless integration, and
innovative industrial design. The Company believes continual investment in research and

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development is critical to the development and enhancement of innovative products and
technologies.

Other strategies adapted by apple that have placed it in a better position to manage change
include: Market Segmentation; Multi Channel Retailing; Strategic Alliances; consistent strategy;
and marketing policy.

2.2 Effectiveness Based on Identified Strategies by Ryanair

From the case study, the company has adopted a number of change management models that
have placed in top among the giant airlines like the British Airways (BA) and many more. This
includes:

2.2.1 Low cost concept


Stimulates demand, particularly from fare conscious leisure and business travelers who might
otherwise have used substitutes of Transportation. Ryanair sets fares on the basis of the demand
for particular flights. How has this been achieved? From the case study, this is through
maintaining focus on cost-containment, and Maximizing ancillary revenue.

2.2.2 Low Operating Costs concept


Ryanair strives to reduce or control four of their primary expenses: Aircraft equipment/Fuel
Personnel productivity; Customer service costs; Airport access and handling costs. The case
study has shown that in the airline there is NO FRILLS STRATEGY.

2.2.3 Customer Service concept


Deliver the best customer service performance in the low-budget airline Industry. Ryanair has
achieved better punctuality, fewer lost bags and fewer cancellations than all of the rest of its peer
grouping in Europe. How did it achieve this from the case study? Ryanair achieves this by
focusing strongly on the execution of these services and by operating from uncongested airports.

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2.2.4 Frequent Point-to-Point Flights on Short-Haul Routes
Frequent point-to-point service on short-haul routes to secondary and regional airports has been
central action. Short flights plus frequent service equated to eliminating the necessity to provide
―frill‖ services. Non-stop routes and avoid the costs of connecting passengers, baggage transfer,
transit passenger etc has been effective in the company.

2.2.5 Focused Criteria for Growth.


Additional routes from the U.K. or Ireland to other locations in continental Europe/USA
Increasing the frequency of service on its existing routes. Starting new domestic routes within
EU countries; establishing more new bases in continental Europe.

2.2.6 Taking Advantage of the Internet


In January 2000, Ryanair launched new reservation system: Flightspeed Make and pay for
confirmed reservations in real time through Ryanair‘s Ryanair.com website. Ryanair has heavily
promoted its website through newspaper, radio and television advertising (96% of all
reservations online).

2.3 Comprehensive Change Management Framework


Leadership can be defined as ―creating a vision that others want to be a part of, creating a
positive environment where great things can happen, and developing people to reach their full
potential‖ (Arneson, 2011).

Implications of leadership and personality of the leader in the formation of organisational culture
is immense in a way that actions and behaviour of the leader is often emulated by employees in
lower management ranks. Therefore, organisational leaders usually set the culture within their
organisation through their communication skills, work ethics, methods and general behaviour.

Equally, attempts to promote any type of culture within an organisation tend to be ineffective if
leader of the organisation does not exercise elements of the culture on a daily basis in an
extensive manner. Harrison‘s Model of Culture (1972) specifies the nature and amount of
influence of leader in four different forms of organisational culture.

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Based on the case study of Apple, According to Harrison‘s Model of Culture (1972) Apple
organisational culture when Steve Jobs was in charge can be classified as a power culture.
Accordingly, Steve Jobs had concentrated most of the decision making powers at his hands,
constantly challenging subordinates for better performance, and criticising employees blatantly
and undiplomatically if their performances did not meet his expectations. Moreover, described as
―antithesis of servant leadership model‖, Steve Jobs was famous for pressurising teams and
individuals to better performance and creating a corporate culture of high level of performance
where A list employees would thrive, however B list employees, comprising the majority of
workforce, would be subjected to unnecessary level of stress.

According to Harrison‘s Model of Culture (1972) the power culture has both advantages, as well
as, disadvantages. High level of success achieved by Apple in the global marketplace was
contributed by the fact that advantages of power culture came into the play that is associated with
visionary leadership of Steve Jobs, as well as, his creativity, intuition, self-confidence and
overall competence as a leader. In other words, Steve Jobs unique personality and leadership
style has created a power culture within Harrison‘s Model of Culture (1972) framework and this
power culture has contributed to Apple becoming the most valuable company in the world by
market capitalisation.

Despite the fact that Job‘s power culture strategy worked well for Apple, time has changed and
thus the company needs to: move from power culture to a task culture (Among all of these
alternatives adoption of a task culture represents the most appropriate choice for Apple because
this type of culture offers the advantages of a greater level of freedom and flexibility for
employees, decision making with an increased level of speed, and creation of room for employee
creativity and innovation); New Apple CEO needs to play in integral role in the promotion of a
task culture (As it has been established in this case study, an organisational leader plays a
crucial role in determination of the organisational culture in many ways); and Innovativeness
and creativity culture at Apple should be preserved at all costs (It is important to understand that
creativity and innovativeness has served as the core of business strategy for Apple during Steve

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Jobs era and these important elements of Apple corporate culture should be preserved in the
future.)

In relation to Ryanair‘s case study, the student recommends a number of radical operations that
should be carried to enable it maintain its leading position. This includes:
a). Strengthening the SO strategy
Ryanair should definitely proceed with its plan to open up 146 routes in year 2010 according to
its five years plan. Expanding further in the market pursue the goal to achieve economies of scale
that provide a guarantee to offer the lowest price in the airline industry. Moreover, Ryanair
should make use of the strengths as its young, commonality aircraft fleet and start to promote a
Greening-image. Besides, more revenue can be generated by increasing cross-selling over the
website.
b). Strengthening the ST strategy
Ryanair should keep buying the newest aircraft models from Boing as supplier. That will allow
Ryanair to minimise its emission costs that will lead to competitive prices. Especially, in time of
increased competition Ryanair should promote the greening image. In times of an economics
downturn Ryanair can even allow to raise the prices as the competition is forced to do the same
and Ryanair possesses a wide price difference of 89% compared to its competitors.
c). Strengthen the WO strategy
In order to counteract against the bad public image because of controversial advertisement and
poor customer service Ryanair should try to look for a dialogue with labour unions and its
customers. The successful dialogues with the labour unions should be promoted in marketing
channels. Furthermore, Ryanair‘s website should be equipped with a feedback area for customers
complaints. The complaints must be constantly reviewed and responded.
d). Strengthening the WT Strategy
Ryanair should definitely pay attention to its public image. The poor customer service and safety
issues can scare away customers. All problems concerning safety must be eliminated. In order to
decrease the pressure from employees more staff should be hired.

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2.4 The Pros and Cons of Remaining a Market Leader by Apple and Ryanair
Apple has been a giant company in the technology industry for a long time now. There are a
number of pros that have placed the company in such a position for this entire long. Some of the
pros that have steered Apple to be where it is today as per the case study enclosed include:

Apple is a big company and it cannot be destroyed. Yes, AAPL stock may crash into a deep
correction, however, the company cannot be "killed" easily. This is evident when the company
made losses in the early millennium (2001) and managed to bounce back pg 1 (In 2001, Apple
sales fell 33% to $5.4 billion from $8 billion).

Apple's products are high quality products - while it does not lead in innovations it still leads in
the quality of its products. This is indicated in its products starting from the iPod, iPhone and
many more. Digital hub, Icloud hub etc are other product of its own.

Apple company has a lot of cash and it has intellectual and financial resources practically to do
anything. From the case study, Apple employees the best employees, empowers them and has
continuously invested in innovation based research.

Apple has a huge base of loyal customers. There is a big aura around Apple's products. Even
Apple creates something worthless, it may sell it to its loyalist without a lot of troubles.

Apple has one of the best marketing team on the market. This team knows how and when to
spread rumors and how to create a lot of noise around nothing. The team also has well structured
distribution and market segments, multi-channel retailing, brand development and product
extension, strategic alliances etc.

Cons
A number of cons based on the case study and other available literature can be outlines as
follwos:
a). Steve Jobs: If you read Walter Isaacson‘s biography, Steve Jobs, you‘ll realize his amazing
creative genius. And a key was his constant insistence on building products that were ―insanely‖

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great. Losing such a key leader has been a problem for other great companies. It takes over a
decade for a company to get back on track after losing such a figure. (With all due respect, the
current company's management does not have a vision for the company's future. With loss of
Steve Jobs the company lost it. The company may need new management, new leaders who can
look into the future).

b). Home Invasion: To keep up its growth rate, Apple needs to dominate the home market. To
this end, the company has plans to launch a next-generation TV, phone and laptop. But this
won‘t be an easy market to crack, even for Apple. The sales cycle for digital products can be
years — even if there is whiz-bang technology involved. Also the company relies on sale of
specific products only; a disadvantage in this fast changing economy (Most of the Apple profit
relies heavily on the iPhone sales).

c).Other issues: Will the price be low enough for its new products launch? From the case study
and the information available in the internet, Apple sells its products at a relatively higher prices
compared to other competing companies like Microsoft, Dell, HP etc (Apple's products are quite
expensive and depend on the average consumer's welfare greatly).

d).Failure: It seems that Apple never makes a mistake. But in the tech world, this can‘t forever.
So, yes, Apple will eventually release a bad product.

e). Main focus of the company is around iPod/iPhone gadgets which are useless without iPhone:
iWatch, earbuds and etc. It looks like the Apple is trying to squeeze everything possible from
iPhone and does not move in a new direction. The company seems to be following one specific
trend in the production and management of its products.

In relation to Ryanair, a number of pros and cons have been attached to its standout in the world
market.
Pros
The pros can be analysed using the Evaluation of Michael O‘Leary‘s Leadership that is seen as
the mother of Ryanair‘s success. This includes:

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a). Strong Leadership style
From the case study and literature available, O‘Leary has an energetic, motivating leadership
style. Former employees are praising his leadership style and he received a the European
Businessman Award from the magazine Fortune.
b). Innovation abilities
O‘Leary persuades Ryanair to adopt the strategy model of Southwest Airlines even though the
majority of the management team was not willing to do so. He was the inventor of charges for
online check-in.
c). Skilful Promoter
O‘Leary was able to bring Ryanair to the customers by doing provoking stunts and curious
advertisement. He always managed to attract the attention of the media and was able to put the
company Ryanair on the first page in the news.
d).Maintaining Core Competencies and effective and Organizational Culture
Over the years, O‘Leary managed to build a low-cost culture amongst Ryanair workforce. The
corporate culture determines how Ryanair operates and conducts its business.
e). Developing Human and Social Capital
Social capabilities are O‘Leary‘s disadvantage. As he is totally focussed to squeeze out
everything out of the available resource, e.g. the employees, to lower costs and offer the lowest
price, he forgets about the social component. If he and the company want to survive they need to
start developing closer relationships without exploiting all the resources. Ryanair has to manage
to move away from an autocratic leadership style and transfer to a democratic one.

In a nutshell summary, from the above, the obvious pros of the company are:
Price. They certainly very difficult to beat on pricing. This is why, despite the online forums
like I hate Ryanair, they are one of the most frequented airlines. The website boasts frequent
seasonal deals that allow you to fly to major cities across Europe for mere euros.
Convenience. They used to be really inconvenient with airports located in the middle of
nowhere but now they work with more airports and they have a lot of shuttle bus services that
run frequently to the destination city centers, and at very fair prices.
Choice. Ryanair services a lot of countries and major cities in Europe. It is now easier than ever
to travel around Europe affordably thanks to ryanair and similar providors like easyjet.

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The cons are:
Weight allowance. They have been known to charge on an overage as little as one kilo. ONE
KILO. If you choose to fly with Ryanair, please be aware of your baggage weight and
dimensions. They have no mercy, and it makes sense. If every passenger was one kilo over, that
could be a burden for the staff and the storage space.
Flight take-off times. Ryanair flight guarantee the most on-time flights…but this concerns on-
time arriving. It is not uncommon for take-off time to be a several minutes past the original time
listed on your reservation. Don‘t plan on that and miss your flight, but be aware you may be
standing in line to board for more than you originally expected. The good news is that you can
usually count on arriving on time, with trumpet effects to match upon landing.
Food and snacks. Bring your own. Ryanair is a no frills airline for a reason. And the snacks and
food offered on board is costly and can be unsatisfying in certain cases. Best to bring your own
snacks and drink on board so you don‘t arrive on an empty stomach (or an empty wallet) while
trying to pass through customs and baggage claim.

3.0 Applications of Theories of Change Management by Apple and Ryainair


Basically, there are three main theories of change management in organisations that have taken
some central position in the change implementation in the two case studies. The main theories
are: Kurt Lewin‘s Three Phase Model; McKinsey‘s 7-S Model; and Kotter‘s Eight Step Model.

Kurt Lewin’s Three Phase Model

Lewin, a German-American psychologist, pioneered social psychology and the fundamentals of


change management quite some time ago, and in doing so, he developed the Lewin model.
Lewin‘s model is a concept of repeating cycles of three phases. The first is the thaw phase,
where you try to overcome resistance to change. Then, you implement the changes through
training and education, and finally, you refreeze them, which means that you finalize the changes
and make them policy. The theory is practical to Apple since the company when it faced losses
in 2001, Steve Jobs tried to come up with new ideas (In the end, as Jobs said: We chose music,
we all love music pg 1). The idea first looked crazy and a number of employees could not see
much sense in this. However with time, the employees bought the idea since jobs had developed

22
a culture of results, later the ipod was developed, hit the best sales, abandoned as more
discoveries were made to the point of having the iphone and other related digital hub and icloud
hub.

Equally, Ryanair has faced similar cases in development. Intially, the airline‘s CEO was faced
with a number of challenges that both came from the internal environment and external
environment. In the case study, it is noted that, Ryanair went through a few turbulent years of
operation, but soon it managed to refocus itself successfully as a low-cost no-frills carrier,
capturing a large share of the market for air services between England and Ireland. By the late
1990s, it was the largest low-cost airline in Europe. However, it was overtaken by easyJet when
the latter took over Go, the low-cost subsidiary of British Airways (BA), to gain a larger market
and a bigger combined fleet. However, the airline managed to come up with strategies that made
it acceptable in the market beating large companies like BA and later on adjusting from its initial
traditions due to the entry of threats like easyjet by buying new planes and discovering new
routes and further slashing its prices sustainably.

McKinsey’s 7-S Model

This one‘s got less of an order and more of a faceted holistic structure where you can organize
the aspects you need to address in any order that works for your approach. Each of the facets
begins with an S, including shared value, strategy, structure, systems, style, staff and skills. This
model is very open ended and really presents itself as a template outright. From this case study, it
can be argued that, Apple‘s organizational culture is a key factor in the company‘s success. A
company‘s organizational culture determines capabilities in supporting changes, new policies
and new strategies. In Apple‘s case, employees are effectively developed and integrated into an
organizational culture that facilitates rapid innovation. Such innovation is observable in terms of
products like the iPod, iPhone, iPad, and today‘s Apple Watch. While the company‘s
organizational culture generally contributes to business strengths, it also imposes limits and
challenges to the firm. Nonetheless, Apple has been gradually fine-tuning its organizational
culture to properly match the dynamics of its business environment. Apple‘s organizational
culture is effective in supporting the firm‘s leadership because of key features that fit the

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business. In Apple‘s case study it can argued that, the following characteristics are the most
significant in its organizational culture: Top-notch excellence; Creativity; Innovation; Secrecy;
and Moderate combativeness.

On the other hand, in case of the cultural web of the Ryanair following assessment can be made.
Stories& myths: The stories were being told about the Michael O‘Leary that he is an
economical person. This generated the less costly culture within the organization; Symbols: The
initial slogan of Ryanair was the low fares which is a symbol of recognition of Ryanair in the
world. It helped the organization to thrive as a cost leader in the industry; Power Structures:
Michael O‘Leary was selected as the boss within the organization and power is concentrated to
his position; Organizational structures: It is the main pillar of any organization in which the
employees were appreciated and empowered to reduce the cost; Control: The head of the
organization, Michael O‘Leary performs all the control functions, from advertisement to the
negotiations for new aircrafts; Rituals and Routines: There should be a less time consumption
to perform chores of daily routine. Online check in system have proved to be a time saving
technique which was the need of hour. The online check in system has brought ease to the
customers and a € 50 million profit annually to the Ryanair.; and The Paradigm: With the
advent of the self-sustaining & self-enforcing culture and history a general low cost culture have
been introduced in the Ryanair.

Kotter’s Eight Step Model

John Kotter‘s model is an eight step process that goes as follows:


Establish and drive up urgency for needing change, build a team dedicated to change, create
vision and goals for change, communicate change needs, empower staff to implement changes
themselves, create short term goals, maintain persistence, and finally, refreezing a la Lewin, by
making changes permanent.

Apple has applied this theory by first developing a sense of urgency: During Apple‘s thirty years
of existence, Steve Jobs has established several changes because of competitive opportunities. In
the 1980s Macintosh development era, Jobs created a race to market. The Lisa team had started

24
work on their product years before the Macintosh team had started their project. Steve Jobs
made a bet that his team which featured the Macintosh would be the first to market. Then it
developed a clear vision; Apple was created on a vision that Steve Jobs, Steve Wozniak had in
1976 in a garage. Their vision was to create computers that the average consumer could use
without possessing the technical knowledge or skills. Computers at the time were only limited to
a certain market niche and the average homemaker or sales clerk were not a part of this niche.
Apple founders saw that their technology could bring enrichment into the lives of people. These
computers would be affordable yet different enough to stand apart from all the other computers
sold on the market. This was followed by Forming a Powerful Guiding Coalition: Apple‘s
internal coalition of executives and leaders are much harder to ascertain; the company is known
for its secrecy. Certainly, tight groups of people have formed around the various shared visions
of products. Early on, Jobs ―organized Apple office as a circle of work areas around a central
foyer. Communicating the Vision was the next step taken by Apple (Initially, communicating the
vision to other Apple employees was not hard because the organization was founded on a
vision.) etc.

Ryanair line can be said to have also adopted this theory in managing change. This can be seen
in cases where: Establishing a sense of urgency was carried out by management (In the summer
of 2003, Michael O‘Leary (O‘Leary), the CEO of Ryanair, one of the oldest and most successful
low-cost airlines of Europe, outfitted himself in combat gear and led a small army of Ryanair‘s
employees to Luton airport, the base of rival easyJet). Forming a powerful guiding coalition (the
company partnered with other strong airplane company supplies-Boeing; also Ryanair entered
into partnerships and agreements with car rental companies and hotels so that it could earn
commissions by selling these products to passengers. These commissions bridged the gap
between the airline‘s cost and profit, which allowed it to sell its tickets for very low prices.).
Creating a vision (Ryanair was set up to offer low-cost no-frills services between Ireland and
London.); Communicating a vision (organisational structure of top to bottom communication;
also it had a publicity program); Empower others to act on the vision (employees were given the
best and were paid relatively higher than those of other flight companies); Planning for and
creating short-term wins (fully capacity policies and quick profits; Consolidating improvements
and producing still more change (use of one manufacturer, routes and sourcing travel car

25
companies; and Institutionalizing new approaches (coming up with new policies to buy new
aero planes that were almost 5 years old and exploring new routes).

3.1 Approaches to Change Management applied by Apple and Ryanair


Apple can be said to have integrated a number of models, theories and actions in managing
change. This includes: The application of Gemba Kaizen strategy and introduction of products
slowly. Gemba believes in continuous improvement and Steve Job‘s ideas seem to have evolved
from the original desktop computer to the development of a music device (iPod) that underwent
a lot of continuous improvement. The Ipod evolved until it gave birth to iphone and other digital
platforms that place the company at a better competitive edge. Also the company understood the
policy of introducing products to the market at a given intervals.

Apple has mastered and used the concept of originality and not being caught up in fads. The
company develops its software; it does research on the products that can give the customers
better services at reduced prices. It never imitates like Steve claims that Microsoft believes in
third hand good after copying apple and launching the Zune. Apple doesn‘t imitate nor release a
product to the market when it feels that it is not worth releasing. It doesn‘t belief in mistakes as
other companies do.

Also Steve jobs realized the importance of employing the best people for the job, hiring other
better employees from other companies and maintaining best ideas. Sharing and brainstorming
and better communication are some of the factors that put the company to its position today.
Training and research were at all times emphasized by the company for best results.

The company had well-structured marketing outlets with the major 25 outlets being created in
the first 2001. Market segmentation, retail outlets, customer focus and customer confidence
acquisition are part of the strategies used to gain the markets by apple. The company also used
less and less agencies in distributing its products; reducing the cost of sales thus enabling the
customers to access better market deals. This also reduced the effects of customers‘ bargaining
powers; thus minimizing the chances of losses.

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In a nutshell summary, Ryanair Company‘s business model can be defined as three pronged i.e.
customer focused, owning markets and cost reduction. These three characteristics are exhibited
by the company with the following features: low fares; high frequency flights; point to point
service; no free meals or drinks on board; no seat assignment; short-haul flights; and flights to
secondary airports

The use of internet for exaple has a high penetration within EU and especially within the UK.
According to the latest official figures from the Office of National Statistics (ONS) (2007)
indicate that subscriptions to the internet has grown more than 50% from 15 million in 2000 to
35 million in 2006. It has also been estimated that 60% of the population in UK use internet in
their daily lives. This shows the growing importance of the medium and therefore e-commerce
was found to be a strategically aligned phenomenon for RyanAir to use for reservation and
distribution of its tickets. Over 90% of all seats on RyanAir flights are sold through ryanair.com
and affiliate websites, making the airline one of Europe's biggest internet retailers. Ticket-less
travel has also helped the company to reduce its costs. RyanAir passengers receive emails
containing their travel details when they book seats on the company's flights online. Ticket-less
travel helps to reduce RyanAir's costs as it eliminates the cost of issuing, distributing, processing
and reconciling millions of tickets each year. Other ways in which RyanAir reduces costs include
not serving meals to passengers on its flights and undertaking paperless back-office operations
due to the company's state of the art ERP system.

Besides, the company Ryanair had a publicity program, which, though sometimes
unconventional, nearly always achieved its aim. The company had a well-structured organisation
culture that portrayed the CEO as an economist; meaning that the company employees
understood him as someone who cared very much about the profits and many more. This went
down to its strategy of using alternative airports to cut costs, avoid unpaid for expenses like
snacks and drinks in the plane, used one supplier for its Boeing airplanes, used few employees
and many more.

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3.3 Leadership Theories of Change Management Applied By Apple and Ryanair

From this case study, it can be argued that, Jobs founded Apple and developed the company
subsequently. Following his ouster and upon his return as CEO, Jobs began rebuilding Apple that
was on the verge of collapse. Jobs transformed Apple from a struggling unit into one of the most
successful and profitable companies in the world. His vision to build "insanely great" products
made Apple a market leader in the technology industry. Jobs was considered the architect of
major shifts in the music, the smartphone, and the PC industry. He focused heavily on innovation
and combined his technical vision with the expectations of customers to create products that
became a benchmark for the industry such as the Mac, the iPod, the iPhone, and the iPad. The
case describes how Apple was strongly associated with its leader Jobs and also discusses his
leadership style. According to industry observers, Jobs was a visionary leader who had the ability
to perceive opportunities, see the invisible, and think differently.

Therefore, it can be argued that Steve was one of the leaders who strongly understood the theory
of organisational culture and cultural performance. Far better than most leaders, Jobs intuitively
understood the power of cultural influence in sustaining the strategic capabilities implicit in his
perpetual vision of creating, as he put it, ―an enduring company where people were motivated to
make great products...a company that will stand for something a generation or two from now.‖
It‘s hard to argue with that aspiration; time will tell whether Apple makes it happen.

Also, jobs can be said to have used the servant leader. He was too often he was the antithesis of
the ―servant leader‖ model popularized in the 1990s (the giving, caring organizational mentor
who in many ways contrasted with the hero model of a century prior). He was intensely focused
when committed, confident enough to take risky leaps, and charismatic enough to enlist legions
of employees and customers in the relentless pursuit of his aspirations.

He illustrated the Great Man theory popular in the mid-19th century, with its heroic leaders
whose decisions and sheer force of will determined the world‘s course. Steve Jobs was certainly
a willful and driven leader, and the products and services he directed his companies to develop

28
and commercialize changed the way many of us live, as well as the course of a diverse set of
industries, including computing, publishing, movies, music, and mobile telephony.

Apple can be said to have used Transformational Leadership. Steve Jobs believed in new
products, he believed in something that can bring music to people, something that can make life
better to its customers. He always introduced new ideas which he sold well to the employees
who later transformed them in products that were highly bough by their clients (ipod,iphone etc).
He is credited for leading and developing others; Showing genuine concern for others‘ well-
being and developing; coaching and mentors staffing etc.

In relation to Ryanair case study, it can be concluded that Michael O'Leary is an effective leader.
He posses leadership qualities identified in the Trait theory, he also acts as a Transactional leader
as well as a Transformational leader. He has transferred a small carrier operating from one plane
out of Waterford airport 25 years ago to a world's largest in terms of international flights. MOL
seems to adopt a 'Telling style' approach, which may not be suitable when dealing with head
office employees. His personality is known for his thick skinned aggression, outrageous public
statement and implacable belief that short-haul airline passengers will endure every imaginable
indignity as long as the flights are on time and tickets are cheap. MOL is seen as a charismatic
leader. However, he is certainly not an effective charismatic leader due to his insensitivity
towards employees and environment. Actually he is an authoritative leader, transformational
leaders, etc.

Literature in the website indicates that, RyanAir leadership tends to be based on position,
authority and seniority as commitment is highly associated with loyalty and as far as
transformational leadership is concerned.

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