As a factor of influence, Air Asia engaged in training programs for its employees and company wide in ensuring it meets these standards and possesses the knowledge and skills to do so in terms of its human resources. AirAsia’s mission: • A low cost airline carrier that offers five-star service with 95% of on-time performance. Although it may have been a brilliant strategy when they first started with Malaysia as their only hub and few planes to maintain, they now have hubs even in Malaysia, Thailand and Indonesia with over 100 planes currently owned and many more to be received in the coming years. Internal and external environment analysis including Value Chain Analysis, PESTL Analysis, Porter's Five Forces, etc.. With fluctuations in fuel costs and increase in service costs, the airlines find it immensely challenging to … Many full service airlines are creating low cost subsidiary to compete directly with AirAsia. Also, AirAsia have gradually received alot of complaints from customers on their services. How about receiving a customized one? Green issues have also been a concern for Air Asia, it tow it aircraft to a general boarding area, saving the huge amount of electricity used to operate an aero bridge while minimizing taxiing time, which significantly reduces fuel burn. The political context of globalization though is a main consideration for Air Asia but it is diffuse and spread over other factors as discussed subsequently. Secondly, the management team is also very good in their strategic formulation and execution. As their ticket booking are transacted through internet, Air Asia is concerned about the consumer privacy right. Now customize the name of a clipboard to store your clips. In other words, the vision statement is like a road map leading the route to a company intends to take in developing and strengthening its business. 2.5 External Analysis 2.6 Internal Analysis 2.7 Competitive Advantage Analysis 12 15 19 3. 1.0 Executive Summary This study examines the extensive strategic analysis of AirAsia Berhad that has enabled it to sustain its competitive advantage as Asia’s leading low cost carrier (LCC). Another problem is that most budget airlines are subsidiaries of major airline carrier, therefore they have more financial backing and also more fleets of airplanes to cover more airports. Strategic analysis -Air asia case study 1. For Air Asia, it is subject to intense regulatory scrutiny by Environmental Protection. See our Privacy Policy and User Agreement for details. By James, Jordan, Joshua and Sasha Recommendation AIR ASIA X STRATEGIC ANALYSIS -Differentiate offering by expanding range of ancillary products -Differentiate with fold-flat seating - Increase appeal to wider market - Capture greater proportion of the market Recommendation Airasia Strategic Management Report. Based on their slogan “Now Everyone Can Fly” have fulfilled the wants for those passengers who choose to fly with low cost airlines especially students, those family with lower income and low income earners. Page 1 Microeconomics & Strategy Case study: AirAsia 2. Secondly, is the “ASEAN Open Skies” agreement that has been reached. As an air operator, Asia concerned is the air worthiness of it airplane. Introduction 1.1 Purpose 1.2 Scope 1.3 Method 1.4 Background 4 5 5 5 5 5 2. Company Background and analysis of AirAsia This report conducts an analysis of AirAsia, the world’s Lowest Cost Airline. Now AirAsia is the most successful budget air operator. The strategy that they have formulated at the beginnings was a clever blend of proven strategies by other low cost airlines is US and Europe. Legal Legal considerations are again more a concern directly for Air Asia in terms of the regulatory. Secondly, other countries’ governments might also ponder to invest in AirAsia into their country and turn the subsidiary into state ownership. Air Asia has addressed this with providing training in adapting to the new work culture. It also explains the threats of new entrants and already existing firms. Air Asia’s local presence in few countries such as Indonesia and Thailand have successfully “elevated” the brand to become a regional brand beyond just Malaysia. This benefit the general consumer whereby it provide them with choice that better fitted the consumer needs. AirAsia is a reputed and leading Asian based airline company, which is headquartered in Malaysia by a government-owned corporation named DRB-Hicom. As an air operator, Air Asia core business is air transportation. The Strategic Analysis of Air Asia, can be done with the help of Michael Porter’s five forces. This will lead to an unrealistic price war and might fluctuate the cost of travelling around the region. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The regulation of airline in some parts of Asia inhibits competition to take place which results to the government being manipulative and restrictive to its growth leading to limited alternatives for Asian people to only have few choices in air travel. Clipping is a handy way to collect important slides you want to go back to later. However Air Asia’s existence as an independent private airlines company can be attributed to changes in the political environment of Malaysia privatization plan under the prevailing economic ideology of the time which saw a large number of public utility companies privatized and/or broken up into smaller and more efficient companies. This study examines the extensive strategic analysis of AirAsia Berhad that has enabled it to sustain its competitive advantage as Asia’s leading low cost carrier (LCC). Such problems would hamper the chances of AirAsia investing into new markets and also slows down the growth of the cooperation. Secondly, the “ASEAN Open Skies” allows unlimited flights among ASEAN’s regional air carriers beginning December 2008. This is clearly known as it has very strong links with the governements and airline industry leaders. However, there will be also some reduction in overall travel especially by casual or budget travellers. STRATEGIC ANALYSIS OF AIRASIA THE BEST LOW-COST CARRIER AIRLINES IN THE WORLD ASSIGNMENT FOR MICROECONOMICS FACULTY OF ECONOMICS AND BUSINESS NATIONAL UNIVERSITY OF MALAYSIA BY: IWAN BUDHIARTA P-46048 MALAYSIA – 2009 I. However, airline accidents and the liquidation of major airline carriers has countered this monopolisation. Being the best in the industry and the top digital brand in Asia, AirAsia now flies to over 70 destinations in 19 countries. Air itself was a spin off from a government run company HRB – Hicomm Berhad it was verge into liquidation when Tony Fernandez bought it and turnaround it into profit running company. By operating the low cost principle, AirAsia Berhad aim to maximize their sales and minimize their operating cost. But after several years later, the government allowed FireFly to operate from the old Subang Airport. Fourthly, AirAsia is also known to be a low cost leader in Asia. Alliance with Galileo GDS that enables travel agents rom around the world to check flight details and make bookings have also contributed to their string brand name. By being a cost leader in the budget airlines industry also make competition in AirAsia’s favour. Other political decision that played a significant role in Air Asia performance is the open Airspace policy. Just first version of strategic analysis in Airasia case. Conclusion Reference List Appendix Air Asia Financial Report 2009 21 22 24 24 MGMT8700: Strategic Management 3 Strategic Analysis of AirAsia 20442396 …show more content… Daft (1997) states that failure to do so may result in unsatisfied stakeholders withdrawing their support, leading to serious implications for the organization. For example, their partnership with other service providers such as hotels and hostels, car rental firms, hospitals, Citibank has created a very unique image among travellers. An analysis of the External Environment would be done so as to facilitate a direct comparison between the generic elements where AirAsia has been founded in. An example would be taken with Malaysian government, where government owned companies are more concentrated around the country, therefore AirAsia expansion to venture into the intra-market would be less welcomed by the government as they are confronted by a predicament the growth of an a budget airline cooperation rather than the growth of the state-owned Malaysian Airlines. Firstly, it is the ever increasing oil prices. Looks like you’ve clipped this slide to already. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Furthermore, the global crisis has limited new entrants from the industry due to its high costs of manufacturing and also the advance technology of aerospace engineering AirAsia’s buyers’ power are relatively high, due to being a cost leader in the industry. And most importantly, users’ perception that budget airlines may compromise safety to keep costs low may also affect them attracting more customers. Some of the key weaknesses of Air Asia are: Sustaining costs: Air Asia is a low-cost airline and thus it is critical that the airlines keep its operating costs as low as possible. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines and achieves an average aircraft utilization rate of 13 hours a day. This is partly contributed by the diverse background of the executive management teams which consists of industry experts and ex-top government officials. This has been as a result of processes of globalization opening up more markets and bringing more competition for the company. Air Asia Strategic Analysis - Free download as Word Doc (.doc / .docx) or read online for free. The report then would delve into an internal analysis whereby the Porter’s 5 Forces would reiterate the direct forces that would affect the Airline Industry and subsequently, AirAsia itself. Air Asia does have some influence in the way business is done in this new world. Do governments pose a significant obstacle to the expansion of low-fare airlines in Asia? They need to have a better assessment on the Airbus or Boeing capacities, taking consideration on how long it would take to deliver their order. This would include their brand name, landing rights and land timings. But being a low cost leader, AirAsia an upper hand because its cost will be still the lowest among all the regional airlines. Scribd is the world's largest social reading and publishing site. Opportunities It can be seen that there are about 2 major events that are taking place now or going to take place in less than 6 months from now. Furthermore, certain areas are dangerous to travel by land, especially on the Thai-Cambodia border, therefore travellers would like to travel across borders safely. Hence the desire to provide the promised lowest value will be impacted. AirAsia was found in 1993 and it started its operations from 18 Nov 1996. Case study: AirAsia. Page 2 Contents Microeconomics and Strategy Market structure and industry analysis 3. If you continue browsing the site, you agree to the use of cookies on this website. Keywords: airasia vision, airasia company goal. By using the Internet, AirAsia will have a wider market to grab hold onto and also more streams of revenues across the region to take from. Collectively, the population of Asian middle class will be reaching 700 million by the end of 2010. Threats Firstly, it would involve certain rates like airport departure, security charges and landing charges which would be beyond the control of airline operators and this would thus be a threat, especially to low cost airlines which tries to keep their cost as low as possible. For example, Shin Corp holds a 50% stake in Thai AirAsia. Strategy works as a driver in a firm in achieving goals and objectives (Carpenter and Sanders, 2009). Their business success/failure is dependence on their air plane availability. In the first case, he increasing oil price at the first glance may appear like a threat for AirAsia. Asia is also a vast region with big areas to cover with, therefore travelling without consuming large amounts of time makes threats of substitutes relatively low. What Is the Macro Environment in Business Analysis? The study. Air Asia use these technology to it advantages as it virtually reaches it potential customer from all part of the world As the ticket sales are through the internet, the payments of the transaction are through the Banks via web based. Page 1 It describes the internal affection of the industry with elaborating competitive rivalry amongst the firms in the industry to the bargaining power of customers and suppliers. As a result, the strategic analysis will involve the PESTLE analysis, Porter’s five forces, value chain analysis and the SWOT analysis (Porter, 2012). Low travel cost means travelling from Singapore to Kuala Lumpur not only more cost effective than a coach ride, but it also saves large number of hours travelling by air. It creates a new demand in way consumer commute in this globalised world. It initially operated in Malaysia and currently operates in over 25 countries (Ricart and Wang 2005). Air Asia does not have its own maintenance, repair and Weakness overhaul (MRO) facility (Palansamy, Y,2015) 2. 2. Some of the political decision that impact Air Asia was their application for the use of old Subang Airport as their hub was turn down by the government. Welcome to the world of case studies that can bring you high grades! Sociological Linked to the economic factors above social changes have significantly impacted Air Asia in relation to changing demographics in terms of the customers it targets. MISSION To be the best company to work for whereby employees are treated as part of a big family Create a globally recognized ASEAN brand To attain the lowest cost so that everyone can fly with Air Asia Maintain the highest quality product, embracing technology to reduce cost and enhance service levels. For example, the typical complaints would be of flight delays, being charged for a lot of things and not able to change flight or get a refund if customers could not make it. This has helped AirAsia to open up and capture a sizeable market in Thailand. We use cookies to give you the best experience possible. Lastly, the threat of new entrants is currently high at the moment, with. AirAsia Strategic Management. 6 Effective Content Marketing Strategies You May Have Overlooked, Market Analysis Definition (With Explanation and Examples). Thirdly, AirAsia is a brand name which is very well established in Asia Pacific.Besides the normal print media advertising ; promotions, AirAsia’s top management also capitalised on promotions through news by being very “media friendly” and freely sharing the latest information on Air Asia as well as the airline industry. The airline operates on 388 routes, 152 destinations in 22 countries. Strategic Analysis is considered to be a relevant part of any organization and any firm which is involved in the dynamic business environment will be required to ens Strategic Analysis on AirAsia - Free download as Word Doc (.doc), PDF File (.pdf), Text File (.txt) or read online for free. Single class of sitting capacities allows Air Asia in achieving 79% of load factor throughout their last financial year 2010, thus attaining the lowest fuel burn per passenger. An example would be India, where the government would buy a share of certain cooperation and turn it state-owned, and driving potential investors out of the country. Host Country Political and Legal Environment Affect of Airasia. An example would include Singapore Airlines which created Tiger Airways. You can change your ad preferences anytime. SWOT analysis of Airasia Strengths Firstly, Air Asia has indeed a strong management team. See our User Agreement and Privacy Policy. Therefore Air Asia pledges to be responsible on gathering and protecting it consumer privacy, even though it does not create legal right to the customers. However, with AirAsia’s success stories and more major carriers opening up more subsidiaries, it will be n no time the budget airline industry be saturated with new entrants. With it success as an air operator, more company see that there are potential for them to have the slice of the market hence more new low-cost operator was established by the traditional air operator to compete with Air Asia. Weaknesses in the SWOT analysis of Air Asia. As such the customer’s see an opportunity to travel to the destination served by Air Asia with a low cost is possible. This would create a larger market and a huge ooportunity for all low costing airlines in the region, including AirAsia. With their strong working relationship with Airbus, they managed to get big discount for aircraft purchase which is also more fuel efficient compared to Boeing 737 planes which is being used by many other airline. Therefore, AirAsia have to ensure proper and continuous maintenance of the planes which will also help to keep the overall costs low. By continuing we’ll assume you board with our, Strategic Management Report: L’Occitane En Provence, Project Report on Strategic Management on Sanofi Aventis, The Role of Strategic Groups in Understanding Strategic Human Resource Management, How to secure financing as a small business owner, How to Make a Business Plan for Any Business, 7 Crucial Macro Environment Factors to Include in Your Analysis, Macro Environment Examples in the Real World. Thus, AirAsia has a great opportunity to capture some of the existing customers of full service and other low cost airline’s customers. Also, with AirAsia’s profit margin of 30%, it has already attracted many competitors. This will definitely increase the competition among the regional airlines. Would you like to get a custom case study? Air Asia: Case study on Growth, Diversification and Low cost Strtegy, Tronics pest and porters -jennifervuhuong.com, How to find hotels in non-touristic places, 3 key factors to be a great facilitator -Jen, Travelling and working abroad - Ielts topic -Jen, No public clipboards found for this slide. The company has 20000 employees. This had a positive impact on the business model of AirAsia and surely with the expansion of IT sector the positive impact obviously would be there. Yes. Introduction. Acasestudy.com © 2007-2019 All rights reserved. Macro environment will be analyzed through P.E.S.T analysis and Porter ‘s five forces, while for micro environment will be analyzed through Value Chain Analysis to execute S.W.O.T analysis. Air Asia: Strategic management report Intoduction Air Asia was founded in 1993 and has since grown to be one of the biggest airlines in the world. Findings 2.1 Stakeholder Analysis 2.2 Strategic Transformation 2.3 Core Foundation 2.3.1 Mission 2.3.2 Values 6 6 8 9 9 10 2.4 Strategic Intent This paper will examine the results of the strategic actions of AirAsia in the Malaysian domestic airline market. This is clearly known as it has very strong links with the governements and airline industry leaders. Marketing Mix 7 Ps’ of Air Asia; SWOT Analysis of Air Asia; Strategic Priorities for the Coming Year; Introduction to the Research of Air Asia. PESTEL Analysis  for Air Asia Political In the early setup of Air Asia, Malaysia political influence could also affect the HR Policies of the company whereby the recruitment and selection of staff do not necessarily be based on merits but also on the racial composition. With the inheritance of employing some of the staff from former employees of other full-service airlines, the challenge that the some staff will carried along is their old habits/norms that were in still with them. We Will Write a Custom Case Study SpecificallyFor You For Only $13.90/page! Strategic Analysis of AirAsia 20442396 Contents Executive Summary 1. AirAsia Strategic Analysis A young Asian brand gone global, AirAsia is the World’s Best Low-Cost Carrier and the Airline of the Year for 2009 & 2010. Airasia Vision and Mission Statement Analysis. However, more budget airlines are appearing. Economic Air Asia has been significantly impacted upon by changing externalities in the economic environment. A vision is practically involves thinking strategically about the future direction of a company. Explain your answers? However, with the “first mover” advantage as well as its strengths in management, strategy formulation, strategy execution, strong brand and “low-cost” culture among its workforce, this agreement can be seen as more of an opportunity. Most customers would want to fly around the region with the lowest cost possible. -----------------------------Page 5 Step 3 Identify the organization’s external opportunities and … Lastly, their excellent utilization of IT have successfully contributed to their promotional activites; such as email alerts and desktop widgets which was jointly developed with Microsoft, as well as being able to keep costs low by enabling direct purchase of tickets by customers therefore saving on airline agent fees. About Air Asia : Air Asia is the leading low cost carrier of Asia. In order Air Asia to be able to provide low cost air the travel, they reduce their operation cost through the sale of ticket by booking through Internet. This study uses content analysis of the crisis communication strategies used by AirAsia and Malaysia Airlines in their respective aircraft accidents on December 28, 2014 and March 8, 2014. Also, there may be an alternative opportunity to partner with other low costing airlines such as Vigin to tap into their existing strengths or competitive advantages. There are possibilities of some potential customer might be lost due to this technology hiccup. AirAsia has the strength to lay down the rules and framework in the industry for business and operational suitability. If you continue browsing the site, you agree to the use of cookies on this website. Environmental AirAsia and it subsidiaries need to take cognisance of environmental factors. [email protected] 804-506-0782 350 5th Ave, New York, NY 10118, USA. com and purchase tickets from there. This study uncovers Air Asia strategic analysis by scanning the impact of micro and macro environment. Hence Air Asia has to ensure that all it air plane was given the approval to operate. Whether the elements of the strategy are consistent and aligned with the strategic position. The links with Manchaster United and AT;T Williams Formula One team have further boosted their image to a greater extend beyond just the this region. AirAsia is a Malaysian low cost airline. Strategic Management: Airasia Strategic Management Content Step 1 Identify the firm’s existing vision, mission, objectives, and strategies.-------------------Page1 Step 2 Develop vision and mission statements for the organization. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. This analysis emerges a trend that in this era of boom in IT sector, the appropriate use of IT is a must for any kind of business. Thus is is a copetitive disadvantage nt to have its own mainteance facility. With the help of AirAsia Academy, AirAsia has successfully created a workforce which is veryflexible and high committed and very critical in making AirAsia the lowest cost airline in Asia. Any civil aviation authorities of the country ban their legal right to operate from their air space/airport will impact on their business operation. Search Search When it comes to product and brand management, building a strong brand is one of the pivotal goals and the impact of such on corporate success is that it brings about realization of higher long-term and short-term returns to the company (Davis, 2002a, b; Keller, 2002). Air Asia operates with the world’s lowest unit cost of US$0.023/ASK and a passenger breakeven load factor of 52%. They are Ryanair’s operational strategy, Southwest’s people strategy and Easyjet’s branding strategy . Weaknesses are used to refer to areas where the business or the brand needs improvement. For example, Singapore’s Changi Airport charges S$20 for every person who departs from Singapore. 1. Here, at ACaseStudy.com, we deliver professionally written papers, and the best grades for you from your professors are guaranteed! It dictates the route and the airport for it could operate. 1. Aside from competition with the arrival of more new air operator, with their success Air Asia benefitted from it where availability of fund through financial institution willingness in providing financial investment to the Air Asia. Furthermore, air tickets are not difficult to purchase; a user only has to have a login account with airasia. Porter Five Forces Model In an article by AirFinance Journal, it is understood that suppliers’ power for Air Asia is high as AirAsia can only choose from two aerospace giants; Airbus and Boeing to purchase its fleet of planes. Krisflyer, Jetstar and Tiger Airways makes competition very vigorous around the region. 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