Programme

Cohort

BSc (Hons) Accounting

with Business

BACB/08/FT

BSc (Hons) Management BMAN/08/FT

Examinations for 2009 2010 Semester II
/ 2010 Semester I
MODULE: E-BUSINESS
MODULE CODE: MMIS 2304
Duration: 2 Hours
Reading time: 15 Minutes

Instructions to Candidates:
1.

This paper consists of Sections A and B

2.

Section A is compulsory

3.

Answer only three questions from Section B

4.

Start each question on a fresh page

5.

This paper carries a total mark of 100

This question paper contains 5 questions and 8 pages.

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SECTION A: COMPULSORY
Read the case study and answer Question 1 below:
___________________________________________________________________

CASE STUDY: ICT-DEPLOYMENT AT THE LOW-COST CARRIER

RYANAIR, IRELAND
Abstract
The innovative use of information technology for online booking, e-ticketing and
internal communications coupled with relentless improvements in cost containment,
operating efficiencies, route system expansion and scheduling enables Ryanair to
achieve increased passenger traffic and report the best customer service
performance in its peer group class. The stated goal of doubling revenue targets and
traffic volumes to 70 million, by 2012 depends on continued growth in ancillary
revenues and technology adoption in line with the other business strategies to be
adopted over the period.

Background
Ryanair is Europes first and largest low fares airline. It operates scheduled
passenger services on 346 short-haul, point-to-point air-routes across 22 European
countries. Originally established in 1985 by Dr Tony Ryan, founder of Guinness Peat
Aviation, an aircraft leasing company, Ryanair first introduced its low-fares
operations under a new management team in 1995 by copying the Southwest
Airlines (www.southwest.com) model of favouring secondary airports, direct booking,
no frills, low fares, and a single aircraft type for the entire fleet.

Ryanair has achieved annual increases in passenger traffic each year since 1995.
Projections are for 35 million passengers in 2006, increasing to an estimated 42
million in 2007. Ryanairs objective is to double passenger volumes and revenue by
2012. It currently (July 2006) operates a fleet of 107 Boeing 737-800s and will buy
142 more of these aircraft over the next 6 years. The 2012 scheduled fleet
complement of 269 aircraft is geared to provide the seat capacity to reach the 70
million passengers target.

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Given the large number of low cost airlines now operating in Europe, Ryanairs goals
are very aggressive and effectively assume that Europe is still in the early stages of
low fare development. Ryanair recognises the potential for cost containment and
operating efficiencies to be derived from appropriate investments in technologyenabled smart e-business activities. This study outlines the currently evolving ebusiness capabilities in place to address these growth areas and achieve the sought
for doubling targets.

e-Business activities
Online booking via the internet commenced in earnest after the launch of the
www.Ryanair.com website in 2000. Over 98% of the 27.5 million passenger seats in
2005 were sold via the internet. This percentage figure is consistent year on year,
and is expected to continue at this high level. The remaining 2% is also important as
it includes walk-up passengers who generally pay higher fares than average.
Ryanair discounted fares are capacity controlled in that a specific number of seats
are allocated on each flight to each fare category leading up to flight time. Therefore
Ryanair does not overbook flights and generally tends to reserve a certain capacity
of flights for such walk-up passengers.

The online booking system gives Ryanair the capability to introduce innovative
practices to ensure that the individual customer has greater control over their fare
costs. A recent such example relates to baggage charges. Passengers with checked
in luggage must pay 3.50 (2.50) per bag, per one way flight if pre-booked on
website at the time of reservation or via a Ryanair call centre up to 4 hours prior to
scheduled flight departure. They pay 7.00 (5.00) per one way flight per bag
presented un-booked at the airport. As a result of these changes, it is asserted that
the 25% of Ryanair's passengers who presently travel with just hand luggage
effectively no longer cross subsidise passengers travelling with checked-in luggage.

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Officially launched on the Dublin-Cork commuter run prior to the 2006 St Patricks
Day (17th March) holiday weekend, and since extended to all routes from Shannon
and Cork Airports and on all European routes from Dublin, Ryanairs e-Ticketing
CheckNGo service enables passengers to check-in online within three days prior to
the proposed flight and up to 4 hours before take-off. The procedure has been
approved by the air-travel security authorities. Using a pre-printed e-boarding card
from their home or office computers, passengers can avoid the airport check-in desk
and go directly to the security gates with a maximum of one piece of hand baggage.
There, security staffs scan a bar code printed on the ticket - to eliminate possibility of
duplication and multiple uses of the ticket - before passengers can proceed to the
various departure gates where they can also avail of priority boarding.

Encouraging passengers to travel with less checked-in luggage, also means faster
queues for those who check-in at the airport desk. Ryanair estimates that between
40 to 50% of its passengers will ultimately use online check-in. This will enable them
to reduce the number of check-in desks and other airport handling facilities. The
savings in handling cost are being used to offset other additional costs. The current
process is not yet completely streamlined from the passenger perspective. easyJet
for instance allows passengers to print off their boarding passes at the time of
booking. Ryanair passengers have to log-in again a short time before travel.

As Ryanair expanded across Europe, documentation and internal communications

overheads increased. In particular, managing operational information became more
complex. Therefore, in addition to their well known customer facing web pages,
Ryanair has implemented a web-based internal communications system used by
flight crews, maintenance and ground staff. This supports critical back office systems
and internal quality management. For instance, a record is kept of the various
components in each aircraft and a tickler schedule for their maintenance and/or
replacement. Likewise training records, scheduled courses and assurance of the
awareness of changes (record of individual access to the files) in critical operational
information is logged. These mandatory recording features can also be used to
generate exception reports for attention of the staff and managers concerned. The
intranet system has also saved on tangible costs, including paper and printing costs.
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Ryanair drives more sales and increased revenue via the dynamic packaging of
flights with discounted hotel rooms and bottom of the range car rentals. In addition
after selecting their flights, all travellers are strongly encouraged via the online
payment process to take out travel insurance. Another option provided via Ryanairs
homepage at present is to click through to another suppliers web site such as
activitybreaks.com to buy their products.

The Ryanair approach can be characterised by spartan simplicity and a micro-focus

on the cost base. The adoption of e-ticketing and internal e-business systems has
enabled this low cost carrier to keep operational running costs well in-check, and will
remain an essential element of their operations and strategies.

Achieving the revenue, and hence profit targets, will depend on additional income
from increasing the number of passengers (airfares, onboard purchases) and, more
importantly, through parallel service bundling with related insurance brokerages and
tourism principals at destinations such as car rental companies and hotels. This is
already an important contributor to risk management and revenue respectively. Such
revenues continue to grow at a faster rate than passenger volumes. For the financial
year ended March 31, 2005 their share accounted for 16% of total revenues,
compared to15% for the previous year. Other ancillary sales include onboard
catering. This, however, currently averages little more than 1.30 per passenger. At
present, scratch cards are sold so it is possible that, at some future stage, online
gambling would be introduced. It is likely that any increased revenue from gambling
would be achieved by players being drawn to facilities which would be made
available via the well known Ryanair website.

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The customer service quality facts are clear: the US Department of Transportation
ranks airlines on three criteria, on-time arrivals, baggage handling, and customer
complaints. Ryanair is consistently the European leader on all three measures. In
addition due to the minimal in-house administration costs afforded by the public
online booking systems, Ryanairs low-cost-flights business marketing model
includes frequent give-away flights as well: 23% of its tickets were given away in
2005, and half of all flights are slated to be free (i.e. not including taxes and landing
charges) within the next four years. As spokesman Peter Sherrard stated, When
demand is low, we give away empty seats and find that passengers are buying our
on-board food and drinks products, rent cars through us and purchase hotel
accommodation. Its much better for us to have people feeding into the revenue that
way, even though they are travelling for free.
References
Research for this case study was conducted by Henry J F Ryan, Lios Geal Consultants, on behalf of
e-Business W@tch. Sources and references used:
Information provided by Peter Sherrard and Lorna Farran, Ryanair Communications in April
2006.
Desk research, company website www.Ryanair.com, annual reports and press clippings.

QUESTION 1: (25 Marks)

(a) What type of e-Business model is being used by Ryanair?
(9 marks)

(b) What are the competitive advantages Ryanair gained through its e-Business
strategies?
(10 marks)

(c) Explain how e-CRM may help to attract more customers for this company?
(6 marks)

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SECTION B: ANSWER ANY THREE QUESTIONS

QUESTION 2: (25 MARKS)

(a) In Community Marketing, what are the dynamics of community formation?
(8 marks)
(b) Describe five common payment system used in e-Business. (12 marks)

(c) What are the advantages of e-Marketing?

(5 marks)

QUESTION 3: (25 MARKS)

(a) With the help of appropriate examples, describe Porters five forces model for
e-Business companies.

(15 marks)

(b) Explain briefly two measures organisations may adopt to ensure consumer
trust in e-Business.

(c) List five benefits of e-Business to organisations.

(5 marks)

(5 marks)

QUESTION 4: (25 MARKS)

(a) Describe briefly five main features of an effective e-Business website.
(15 marks)

(b) Explain the terms intranet and extranet, and their importance in an eBusiness company.

(c) Describe briefly two online advertising methods.

(5 marks)

(5 marks)

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QUESTION 5: (25 MARKS)

(a) Describe briefly five strategies for success in e-Business.

(15 marks)

(b) List five measures to ensure security in e-Business.

(5 marks)

(c) Explain the term m-Commerce. Describe three areas where m-Commerce
can be applied.

(5 marks)

***END OF QUESTION PAPER***

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