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AirAsia Business Case Study: Strategy and Environment

AirAsia is one of the leading airlines firm of Malaysia that performed exceedingly well in conditions of its past investments and the profits that it made out of it after it's relaunch. It had been acquitted by an exclusive business owner Tony Fernandes when it was highly under debt. The unexpected changes in the revenue graph came up to the top soon when it released its first revenue right in seven weeks of its re-launch. The innovations in strategy and assets brought huge amount of income to the business in the next years. It invested sums on new and effective services and cut shorted various not essentially required expenses to reduce the overall cost. While using implementation of its successful LCC model, the whole business design of AirAsia was improved and it became first Flight Corporation to get no-cost, no-frill theory to lower the costs by 40-60% than its rivals. The results were quite beneficial as it released its first income as US$6 million in December, 2002.

The corporation continued expanding its business with the opening of three other hubs within Malaysia to have more talk about of market size on home air plane tickets in Malaysia. In addition, it invested in to have regional flights to its neighboring countries like Thailand and Indonesia using its collaboration with Thailand Shin Firm and Awair. This made AirAsia to get cheaper airlines to the neighboring countries. AirAsia soon surfaced as the most significant domestic airlines in Malaysia with the expectancies of over 18 million passengers in the entire year 2007. With its partnerships with various LCCs, the organization performed sufficiently because of its long-haul local services. Its joint endeavors with the LCCs like Australia's virgin blue, the corporation got a big share in the expanding market of Australia. Its market kept on expanding through the years with the commencement of its plane tickets to even the very far cities like London and also for close countries like India and China with the web income achieving over US$44 millions in the entire year 2008.

B] STRATEGIC POSTURE

The objective of the corporation is to provide high-quality but low cost flying services to all or any type of people. The corporation being a part of flight industry, it missions to be the first choice of the market by implementing its smart strategies and pointed business skills. As quoted by its owner Fernandes, he overtook the organization during its declining level as he advocated the correctness of time to enter the marketplace because of charter aircraft price and large quantity of skilled airplane staff. The business has been steady in after its goals and aims throughout in its performance before decade. The organization objectives were impressive and highly productive with its symbolic acquisition of its by Tony Fernandes, jv with Thailand Shin Organization, Awair, Singapore's Tiger Airways, etc to provide a broad vacation spot options for its customers at the right occasions when it was needed. The business enterprise model was reconstructed with no-frills, low cost providers ("LCC") which brought huge amount of income to them. The business goals were to get not only the quality customers however the quantity customers using its seats available in different schemes and at different charges for all kind of course of customers. These were constantly constant with each other to provide precisely what the customers wants and what actually can be handled. The functionality targets were always to decrease the economic fair of flights by either undertaking to get reduced fee from the passengers or providing effective routes on their behalf reducing their net costs on travel. In addition, it added various value-added services like online arranging, SMS arranging, and bookings through call centers, etc. AirAsia soon became the built in service provider from being truly a classic LCC product in its features to provide maximum attraction to its customers. The aims were also constant with the surroundings of the organization. Even during the hikes in the prices of petrol in mid-2008, the organization didn't let the fairs go that high which was quite helpful for the organization in conquering off its challengers.

The AirAsia chosen various cost-effective, customer-oriented and highly innovative strategies to condition its business model to reach its ultimate missions and aims. With its innovative low-fare, no-frills concept it highly reduced the cost of air solution such as insurance agencies just a solitary standard cabin, paid dishes instead of pre-paid free dishes, etc. The organization found efficient ways of reducing the costs on travel by the customers while extending its domestic and international business. Such as, the short-haul plane tickets took significantly less than four hours for travel which provided it opportunity of having the go back of the flights on the same day conserving lots of the expenses of the organization. The business also launched its long-hauled air services at the time when lots of the LCCs were reluctant for that. All of the strategies or mix of strategies were regularly aiming at little by little reaching the goals and the aims of the organization and strong with the changing inside and exterior environment.

The corporation adopted bold and active policies to achieve its objectives. The corporation first focused only on the domestic market and improved its business model to LCC. Then, slowly but surely and steadily organization broadened itself to first neighboring countries and then internationally over the continents. The missions, objectives, procedures and the strategies clearly reflect the business's goals to have success not only at local level but also the international level (KO, 2009).

EXTERNAL ENVIRONMENT:

A] NATURAL PHYSICAL ENVIRONMENT: SUSTAINABLE ISSUES

Opportunities: The physical environment across the corporation's site of business is climatically categorized as equatorial, being hot and humid throughout the year. The environment is favorably well enough to support the airfare take-off, getting and soaring. The physical location of Malaysia also favors the development of the organization as it is well connected to the seas and oceans therefore because of its long-haul regional services, the organization does not require to manage the permissions to mix the airbase of other countries. In this manner the encompassing physical environment of Malaysia provides good opportunities for AirAsia.

Threats: Arriving at the threats associated with the environment, the well interconnection of the united states to other continents through seas and oceans provides enough opportunities for the quest through ships and Cruzes too which anywhere indirectly can effects the market of AirAsia. The Malaysia, Thailand and Indonesia is also a susceptible area for tsunamis and earthquakes which could have an effect on any industry. The hot and humid environment also affects the working features of the staff.

These types of physical environments are also present in few other parts of the world and the same opportunities and risks are present there too.

B] SOCIETAL ENVIRONMENT:

Economy: The current economic climate of Malaysia is a newly industrialized and state-oriented market that plays a significant role in the success of AirAsia. The speedily growing current economic climate of the united states allows increasingly more customers to have the ability afford the airlines travel cost which makes a great deal in the expansion of a privately held airlines especially it was relaunched soon after the nation came out of the financial crisis of Asia in 1997.

Technological: The scientific progress in the domains of It and Communication have led the value-added services of the corporation to work effectively.

Political-legal: The politics condition of Malaysia acquired also been and only the corporation as its acquisition was highly welcomed by the Malaysian federal government and there have been no conflict between the corporation and the governance of the country till now.

Socio-cultural: The hospitality of the people with their own variety in food, fabric, etc and scenic beauty has always made Malaysia as a vacationer place for the travelers around the globe that has again demonstrated a benefiting factor for the corporation.

C] Process ENVIRONMENT

The makes like natural environment, external purchases, location of hubs, rivalry with competition, financial crisis, federal policies, etc will be the major forces that drive the professional competitions. These pushes vary from country to country as the overall economy; political, ethnical conditions are not the same for every country. The next forces are shown with their scores:

  • Threats for new entrants- Medium
  • Bargaining power of potential buyers- Low
  • Threats of swap products or services- High
  • Bargaining ability of company- Low
  • Rivalry among the competing firms- High
  • Relative power of unions, government authorities and special interest categories, etc. - High

The key factors in the immediate environment influence a lot to the corporation. The federal government policies make a decision the taxes, establishment of hubs, permissions of amount flights, etc. The commitment of the labor unions ensures the even functioning of any firm. The suppliers, providers, lenders always affect the quality of the assistance provided to the clients.

INTERNAL ENVIRONMENT

A] CORPORATE STRUCTURE

Following is just how as the organization structure of Air Asia at the moment (Organizational Composition, 2009):

The structure is really as we can easily see in a horizontal manner which means hierarchy is horizontal in the business. This is clearly something best for the company as connections with lower level employees gets easier for the above level of the employee or vice versa.

Structure can be compared with almost all of airline organizations as there is also the same horizontal hierarchy.

B] Commercial CULTURE

Corporate culture of the company is mainly base upon maximizing the value of shareholders. It also mainly is convinced in giving protection to the clients.

It is convinced in giving maximum satisfaction to the clients with leaders in the cost structure

It is convinced in transparency and development of human being capital.

Company is very much compatible with the employees and their diversities as it is providing employee satisfaction to all of its employees

The company is similar in the social prices like similar organizations as the majority of the organizations in the aviation sector possess the similar cultural values (Strategy, 2006).

C] CORPORATE RESOURCES-

1. MARKETING:

The current marketing objectives of the corporation are to get maximum amount of customers of most types by causing such schemes where everyone can be accommodated.

Its tagline "Now Everyone can fly" says the basic fundamental notion behind its marketing targets.

The organization effectively found the means of getting the most effective routes to match both its cost and customer's satisfaction.

The firm has kept on adding and modifying its features and value added services to provide maximum offerings to increase its sales. The business has also firmly stuck itself to LCC concepts.

The corporation has also recently declared the commencements of its flights to even far-off places like London.

The corporation hasn't only offered cheap seat tickets but also the services like travel cover, etc. The free tickets based on its indicate the client are another such offering.

All these are also dynamic and matching using its performance and availability of budgets.

The company has very well performed based on its market position and the positioning that it had started during its relaunch. The company has enough advertising and promotion in marketing through its promotion strategies. The fares of ticket will always be kept as low as possible despite of all types of problems approaching like price hikes of olive oil, etc. The business is even the sponsor of the famous Manchester United SOCCER TEAM and AT&T Williams Method one team to possess its world-wide advertising. The market size of the company is expanding with the release of its several multinational collaboration and establishment of the joint ventures in Indonesia, Thailand, Australia, etc. Besides, its most important product of flight tickets its other products include internet check-in services, Xpress boarding services, mileage programs, Citibank-Air Asia VISA OR MASTERCARD, etc. The business can earn for the same product easily from the developed region compared to that in developing region. This shows a tendency that the simply the marketing strategy of a company should cover every part of the society to be able to have maximum profit. This trend have been a fair impact on the success rate of your company and surely will maintain the near future too. The marketing of its products provides company massive benefits over its opponents.

The marketing strategies of the organization have beaten all its major competition both in conditions of gains and customer's satisfaction. The marketing managers have accepted these tools and ways to measure the performance of a product. Marketing is highly reliant upon the political and socio-economic conditions prevailing in a country and therefore same online marketing strategy cannot be applied for adjustments in all the countries. The marketing takes an overall accounts in every dimensions and hence the environmental sustainability needs to be a guiding element in marketing procedures.

2. Money:

Corporation's current financial objectives, strategies, policies and programs have been with high expectations of come back.

The corporation experienced to invest much on the purchase of plane tickets, managing the crew of your debt-ridden firm and optimize its scale in an exceedingly less time.

The financing has been obviously pointed out but under the limits of its earlier performance.

They have been exactly consistent with the aims, procedures and strategies of the corporation. The corporation's financing in the actions of setting up of hubs within and outside Malaysia with the collaboration of other companies helped them to gain several immediate or indirect benefits.

Its financial services like vacation products and all, charge for food as customer dreams, online and Text bookings, health care, etc have enough cash flow but in come back it got tremendous level of connection with the customer who would always like to stick to AirAsia for its services.

The smart funding policies of funding showed a development of financing the long-term goals and targets without reducing with the immediate ones can be a powerful way to earn maximum economical profits. Days gone by effects are already shown by the AirAsia and in future it is expected believe it or not. This analysis strongly supports corporation's former and pending tactical decisions. The financial success in terms of returns provides company with a competitive advantage.

The financial performance of the organization can be very well in comparison to others with the fact that out of several corporations based on LCC, it became number one in 2008. The gains were always high and when the MAS attempted to have a price conflict it had to undergo huge losses. The funding is quite versatile to the problem operating in various countries. The coping up of financing with global fund issue was also perfectly proved by the organization during the period of global tough economy.

Also, the money managers play an essential role in proper management as they are the ones who evaluate the success and acceptability of the strategies made and carried out.

3. Procedures AND LOGISTICS

The current service goals, strategies, policies and programs of the organization are not much not the same as those designed for the organization as a whole. They are designed for sales but with guaranteeing of its reputation and sustainability in the market. The services provided by the AirAsia are accurately meant for attaining its mission and objectives. They can be clearly mentioned and organized with the requirement on the market. Also, they have always been revolutionary and impressive in their individual approaches.

The cost effective and high quality services have capacities of not only getting the ultimate client satisfaction but also the favorably high earnings of profits. Although the company has now began to focus internationally but still it is not deviated from its primary goal of becoming the market leader of the local market. The purchasing is being handled on the very basis of its need. The other tips to be highlighted are vulnerable to surprising natural disasters, local or international hits, hikes in prices of the materials and the other issues.

4. HUMAN Learning resource MANAGEMENT

The corporation has also effectively maintained its human reference to advantage all. Even during its relaunch it didn't slice short the employees. It even noticed the opportunities in hiring the skilled professionals, personnel and other employees. Their goals and strategies were again consistent with the corporation's missions and objectives reaching the satisfaction for all those even its own employees. There was not even an individual considerable instance on clashes between employees and the very best managing employers. The policies straight away show they are simple, well stated, less reliant on the performance of the corporation and satisfactory for most of its employees. There have been less grievances, hits and lay-offs which have been a great reason behind success that is achieved by the corporation till now. The determination and commitment of the employees as effects of proper HRM can be proven by the example when Fernandes valued the staff's positive work ethic to overcome the financial issue of mid-2008.

5. INFORMATION TECHNOLOGY

The role of IT was another important factor involved with the successful AirAsia. The current targets and strategies of the organization regarding IT is to advertise its features and services, add the services to the catalog and solve various issues regarding the customer care with direct relationship with them. They are simply clearly defined with no reliance on budget or performance. They have been implemented for the better achievement of corporation's goals and aims.

Many of the worthiness added services are dealt with by IT by providing the travelers with the user interface for online scheduling, internet check-in service, cancellations, etc. The "Real 5 star" score was another exemplory case of this type. The IT enjoyed a very important role in supporting the professionals in taking the decisions and chooses the immediate strategy. The repository of the customer could be easily preserved, the grievances of the customer is speedily been able with the help of Information Technology. This examination emerges a craze that in this time of boom in IT sector, the correct use of IT is a must for any sort of business. This got a positive impact on the business style of AirAsia and surely with the extension of IT sector the positive impact clearly would be there.

STRATEGIC FACTORS

Four Important Internal Factors:

The marketing enhancements and its execution.

The smart fund regulations with the fixed priorities which should also be at the right time.

The proper use of available manpower, staying away from confrontation included in this for maximizing the correct functioning capacity for the corporation.

The reliable use of the resources like Information Technology, etc.

Four Important exterior Factors:

  1. The government guidelines and the romantic relationships with the federal government.
  2. The environment and the calamities that can unexpectedly occur.
  3. The economic, cultural and cultural factors of a country.
  4. Rivalry with other firms.

The current mission and targets can be justified in the light of available resources, problems and the environment and they are achieved and you will be achieved at an appreciating rate in the foreseeable future looking currently prospectus.

STRATEGIC ALTERNATIVES:

The firm can further go ahead with more effective use of IT.

The dual couch system can be integrated in domestic level too.

The corporation has enough widened and it can now open its chain to other South-east Parts of asia, where such strategies would be highly invited.

BUSINESS LEVEL STRATEGY ADOPTED BY AIRASIA

The business model of AirAsia is more developed and fairly ideal for other industries as well. While using perfectly placed goals, objective and stated strategy ensures the well functioning of the corporation. Foundation of the organization is based upon low priced, efficiency, activation of new markets and strong cash flow. Strategies focus on the concepts of ease, quality services at low cost, etc. As well as the vision is to continue to be lowest cost in the market.

The corporation began its business with just three aircraft in 2002 which grew to the quantity 72 in 2008. The corporation has enough level of popularity on the net and electronic multimedia. With its low priced and high quality services and the customer's satisfaction with the products of the organization, the organization has emerged out as a market leader on the market.

According to the porter's five forces model, overall cost advantage, federal government procedures, fulfillment of capital requirements, its proprietary products, value added services, and the value given to the supplier obviously shows that the strategies opted by the organization are well suited for it. The buyer's inclination to the substitute, moving over costs, and corporate and business stakes will be the obvious risks for the corporation. (Porter's Five Forces: A MODEL FOR INDUSTRY ANALYSIS)

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