Business Report on Manchester Airport PLC.

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 Business Report on Manchester Airport PLC


Contents

1.0 Introduction

2.0 Terms of Reference

3.0 Procedure

4.0 Findings

        4.1 The ownership of the business

        4.2 Business Objectives

4.3 Organisational Functions

4.4 Organisational Structure, Culture and Management Style

4.5 The impact of ICT on the internal and external communications of the business

4.6 Operations and quality

5.0 Conclusions

6.0 Recommendations

Introduction

Terms of reference

Procedure

  1. Introduction

Manchester Airport is managed by Manchester airport (PLC) and owned by 10 , it was in 1934 that the Manchester city airport approve the building of approved the building of Ringway Airport (original), which was opened in 1938 with the completion of the original terminal.

The airport flies to 175 destinations worldwide and is used by more than 300 tour operators and 90 airlines.

These are the Councils who own Manchester Airport  

The Council of the City of Manchester - 55%


The Borough Council of Bolton - 5%


The Borough Council of Bury - 5%


The Oldham Borough Council - 5%


The Rochdale Borough Council - 5%


The Council of the City of Salford - 5%


The Metropolitan Borough Council of Stockport - 5%


The Tameside Metropolitan Borough Council - 5%


The Trafford Borough Council - 5%


The Wigan Borough Council - 5%

  1. Terms of Reference

I have to produce a business report of Manchester Airport.

My business report will contain the objectives, organisational structure, culture and communication channels that operate within the business.

 An examination of how all these factors interrelate in a way that can affect the success of the business.

An explanation of how quality assurance and control systems help the business to add value to its products,

Consideration of alternative methods of quality, assurance and control.

 

Consideration of how well the business is meeting its objectives.

An explanation of the impact of ICT upon the internal and external communications of the business.

3.0 Procedure

To carry out this investigation and to be able to produce this report, I have used primary and secondary research.

The secondary research involved reading books, getting information of the internet, resource packs and annual reports.

I will use a bibliography to hold these details which will be at the end of the report.

Primary research has involved going to Manchester Airport, touring, interviews with key personnel also a presentation by the management.

4.0 Findings

4.1 The ownership of the business

The ownership of a business is very important because it determines, who owns the business, its use of profits, its legal liabilities, including whether it has limited or unlimited liability, its access to different sources of finance.

Manchester Airport is a public limited company (PLC) this means that the company is incorporated, its shareholders/owners have limited liability, and it is able to raise finance by selling shares to the public. A PLC operates to make a profit.

But Manchester Airport is a unique PLC because the shares are not sold to the public the council’s own them, the councils are reluctant to give up control of the business:

The Council of the City of Manchester - 55%
The Borough Council of Bolton - 5%
The Borough Council of Bury - 5%
The Oldham Borough Council - 5%
The Rochdale Borough Council - 5%
The Council of the City of Salford - 5%
The Metropolitan Borough Council of Stockport - 5%
The Tameside Metropolitan Borough Council - 5%
The Trafford Borough Council - 5%
The Wigan Borough Council - 5%

This means they have control over the company, as it is publicly owned it is in the public not the private sector, until recently it could not borrow money without government consent, and can’t even take out a bank overdraft, Manchester airport is independent and controls its own destiny. It can invest and buy anything it likes but at its own risk. The councils have there own board and chief executive, and each company has its own board and Managing directors.

The group is structured into a holding and five trading companies forming a family of business:

Manchester Airport Division 
This Company represents the historic and continuing heart of the Group's business - the successful operation and development of Manchester Airport.

 

Manchester Airport Aviation Services
This Company brings together all the major services that are essential to Manchester Airport's operation. It is charged with running ground and baggage handling, passenger transfer services, aviation security, the fire service, engineering and car parks business.

Manchester Airport Ventures 
This Company combines the former commercial ventures arm of Manchester Airport which operated on-site advertising space activities, airport petrol stations, photography, design and print business, and the training and motor transport activities that were previously part of the Manchester Airport structure.

Manchester Airport Developments 
Maximising the immense potential for development opportunities generated directly and indirectly by the Group, the core activity of this company will relate to Manchester, where the opportunities include on-site developments such as remote car parks, remote check in facilities etc. It is also responsible for the cost effective management of the capital programme for all four airports in the Group.

Regional Airports
This covers the other airports in the group - Bournemouth, Nottingham East Midlands, and Humberside; as with the other companies in the Group, the Regional Airports business is dedicated to providing and developing high quality airport facilities to the benefit of airlines and their passengers in each of the regions

 

To become a PLC Manchester Airport must:

Have an issued share capital of at least £50,000 (this is to stop a PLC setting up with insufficient capital)

Have a memorandum and articles of association

Publish an annual report and audited accounts

Ensure that its shares are freely transferable.

 

Manchester Airport doesn’t rely on its own profits, it provides facilities and services such as terminals, runways and security and works closely with service partners (private sector) they bring there own investments and management expertise and provide all additional services that the Airport needs. This is what makes Manchester airport successful all the risks and rewards are shared between the public and private sectors.

Benefits of being a PLC

Incorporation 

The business has a separate legal identity from the shareholders who own the business. This means

  • That all actions taken by the airport are the actions of the company not the individual
  • The continuity and legal position of the company is unaffected by the death, retirement or withdrawal of a shareholder

Shareholders enjoy limited liability This means:

  • The owners only risk losing the amount they have invested in the business, should the business become insolvent and unable to pay its debts.

Access to funds PLC’s are able to raise very large amounts of risk capital by selling shares in the company to the public. This is the main advantage.

  • Most businesses become plc’s when they wish to raise enormous amounts of money quickly and cheaply when they want to expand and diversify, particularly if like Manchester Airport, they operate in tough, international markets. This is why share’s, or equities are called risk capital, because there always in danger of loss as well as gain.
  • If a company has a good track record raising money this way is cheaper and easier than borrowing from banks

Greater prestige and publicity There is considerable status and prestige attached to being a listed plc, which means that a business can attract a large amount of hopeful, free and favourable publicity.

Disadvantages (Constraints)

Expensive A great deal of legal paperwork and documentation has to be lodged with the Registrar of Companies in order to receive a Certificate of incorporation e.g. Memorandum

Greater costs in administering and running the business A plc is under a greater obligation to disclose information about its activities. The company is legally obliged to pay for audited accounts to be published each year. This may provide sensitive and valuable information to competitors

 

Manchester Airport’s business aim is

‘To maximize the profitable growth of its airport-related and other businesses in a manner that brings sustainable economics, financial and social benefits to the North West region’

 

4.2 Business Objectives

Organisations exist to produce products, goods or services, they have to meet customer’s requirements there wants or needs. To do this they take inputs their resources, and releasing outputs to their environment.  The aim of the process is to combine/convert these inputs to add value, Creating a relationship in where the organisation meets there own objectives by satisfying the customers.

The objectives are the specific outcomes that an organisation wants to achieve by carrying out its activities, having a central role in management, planning, and organising the organisation.

Organisations are unique, and they set themselves objectives these include:

  • Surviving
  • Making a profit
  • Increasing sales
  • Providing services
  • Producing quality products
  • High quality service
  • Developing a skilled workforce

The objectives set are determined by factors such as the interest of the owners, environmental constraints, internal such as capabilities and resources, external the power and influence of other stakeholders, type size of the organisation.

Objectives have several functions:

  • They enable the overall aims of the organisation to be broken down into clear statements of what action needs to be taken.
  • They provide a focus for all activities
  • They provide targets for both individual and group achievement
  • They facility the control of the performance
  • They provide basis for evaluating how successfully plans are being implemented

        

     uppliers                                                 ustomers        

Men
     +
services
Machinery                                                  - pollution/noise
Materials

Money

Management information

The Hierarchy of Objectives

Most large businesses have a hierarchy of objectives, both qualitative and quantitative, that cascade down through the organisation, and are supportive and consistent of each other

  •  At the top is the mission.  This is often set out in a political document known as a mission statement that details the organisation’s raison d’etre, or basic function in society i.e. what business are we in?

Mission statements can be unifying, driving force for an organisation, giving it a sense of direction and purpose, but sometimes can be vague and bland.

A mission statement needs to be unique, brief and inspirational, and will cover the organisation’s purpose/strategy/policies/standards of behaviour/ and values.

It operates as a guide, and sets corporate aims and objectives.

  • Below this comes the functional objective. These are known as secondary objectives, and relate to a department, and will include most team objectives. These are operational and are medium term.

  • Individual objectives. These relate to particular people, and to their work. These are operational, involving largely short term activates over one year

The pursuit of the mission and collective or corporate objectives is a central reason for an organisation’s existence, and directly and vitally affect its survival and prosperity.

All objectives should relate to the core objectives of the organisation as a whole.  To be effective they need to be SMART

Singular / Specific

Measurable

Achievable / Aspirational / Agreed

Relevant / Realistic

Time-bounded

The Objectives of Manchester Airport

The vision / mission statement is down to a primary objective “maximising profitable growth”, whilst “minimising its negative impact on the environment” and then to all the secondary or supporting objectives, which if achieved, will help the company achieve its primary objectives.  

There mission is to be the best airport in the world and their vision for the future is of an airport that is part of the region’s sustainable transport network, providing high standards of service for all their customers, whether they are travelling for pleasure or business. They will do this by working with service partners to offer a combination of choice, value for money, efficiency, and quality to all their passengers.

The fundamental business purpose of Manchester Airport Group PLC is to maximise the profitable growth of its airport-related and other businesses in a +manner that brings sustainable economic, financial and social benefits to the North West region and to minimise its negative impact on the environment.  The airport’s first aim then is to survive and make a profit, profits are needed to pay interest, service loans and run the airport on a day-to-day basis; finance future growth; and pay dividends.

Manchester Airport wants to increase the number of passengers who use the airport.  It has the basic infrastructure and potential to support growth in passenger numbers to 40 million by 2015. It can manage this growth broadly within the boundaries of its current site by prioritising the use of land for essential activities and moving non-essential activities away from the site. It will make the most of new technology and speed up passenger processing both on site and away from the site. It is already developing a ground transport interchange on site to improve access to Manchester Airport, and will consider ways of integrating transport connections to the Airport alongside passenger processing facilities.

Its strategy is also aimed at major growth in our network of scheduled international destinations. This will include new destinations and added frequencies to provide the region with the best possible quality of service at competitive fares. The airport places great emphasis on the development of ground and air feeder services, and on the provision of first class transfer facilities, so that it maximises its hubbing capability.

The airport also pursues new business opportunities, where it has particular skills and a competitive advantage, and where it can make these profitable.

Its vision includes working with others. This means its customers, service partners and employees. It also means the local community, as well as regional bodies and national bodies that have an interest in what it does. It will also work in partnership with other companies and organisations, where appropriate, and where there is added value to be gained.

Its overriding concern will be the safe and sustainable operation and development of Manchester Airport.

Manchester Airport objectives include:

Delivering consistent, high quality facilities and services to all its customers to ensure that they stay loyal, keep coming back for more, and act as ambassadors for the airport, telling others about their good experiences and recommending the airport to their friends and acquaintances.  Customers are after a positive experience, free from hassle and delay.

Operating a safe and healthy environment for its employees and customers

Attracting more airlines and expanding the network i.e. flying more routes to more destinations.

Expanding the infrastructure and capacity of the airport i.e. more runways and terminals

Expanding the ground transport interchange

Expanding the cargo centre – a major source of profits.

Developing and retaining a skilled and motivated workforce.

Serving the community and caring for the environment (has charitable, non-profit objectives)

By being the centre of an expanding and highly successful intermodal transport hub, the airport has become the largest single generator of economic activity in the North West, generating inward investment from business, tourism etc.  

4.3 Organisational Functions

This section deals with The Value Chain, where I will explain Porters concept of the value chain and added value, Functions at Manchester Airport, where I will be identifying and summarising the role of the key functions performed at Manchester airport, Combining the functions, where I will explain how it is important for a business like Manchester Airport to co-ordinate the work of the different functions so that it runs effectively, integrating the functions where  I will explain how in a modern organisation there is far more integration of functions than ever before, how effective the functions are, where I will explain that the functions of a business will only operate as well as the management of the business will allow them to.

4.31 The value chain

This diagram explains Porters concept of the value chain and added value.  The aim of this process is to add value, creating value for its customers by meeting their needs, and creating value for the company by generating sales and profits.

The idea of the value chain is based on the process view of organisations idea of seeing a manufacturing organisation as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the gaining and use of resources - money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.

According to Porter (1985), the primary activities are:

  1. Inbound Logistics - involve relationships with suppliers and include all the activities required to receive, store, and disseminate inputs.
  2. Operations - are all the activities required to transform inputs into outputs (products and services).
  3. Outbound Logistics - include all the activities required to collect, store, and distribute the output.
  4. Marketing and Sales - activities inform buyers about products and services induce buyers to purchase them, and facilitate their purchase.
  5. Service - includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered.
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Secondary activities are:

  1. Procurement - is the acquisition of inputs, or resources, for the firm.
  2. Human Resource management - consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.
  3. Technological Development - pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs.
  4. Infrastructure - serves the company's needs and ties its various parts together, it consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance ...

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