Air Asia Strategic Management PDF

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Executive Summary Air Asia Airline was synonymous with their catchphrase, "Everyone Can Fly," and it is allowing flying probable for all segments of society, from the middle class to the upper class. It has also been ranked the top low-cost airline globally. Air Asia should be capable of competing with competitors via implementing some strategies to maintain its low-cost carrier status. Air Asia Company has its own vision plus mission. This helps each employee who works at the company to be recognized for achieving targets in line with the company's vision and mission. Air Asia is always prepared to face any operational problems, including the current Covid-19 pandemic, and it develops strategies and plans to address each one. Using the organization's strategy-formulation analytical structure, I have identified the strategic tools, which are SWOT analysis, internal and external environment of the company, and VRIO analysis to evaluate Air Asia Company's strengths, weaknesses, opportunities, as well as threats, so that Air Asia may detect differentiation and persistent competitive advantage.

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Contents Executive Summary.....................................................................................................................................2 AirAsia Strategic Management....................................................................................................................5 Introduction.............................................................................................................................................5 Industry Overview...............................................................................................................................5 Company Background..........................................................................................................................5 AirAsia Strategic Thinking....................................................................................................................6 Micro-

Environment Analysis...................................................................................................................7

Pestle Analysis.........................................................................................................................................7 Political environment...........................................................................................................................7 Economic environment........................................................................................................................7 Social environment..............................................................................................................................8 Technological environment..................................................................................................................8 Environmental factors..........................................................................................................................8 Legal environment...............................................................................................................................9 Porter’s five forces framework.................................................................................................................9 Bargaining power of suppliers.............................................................................................................9 Bargaining power of buyers...............................................................................................................10 The threat of new entrants................................................................................................................10 Rivalry among existing firms..............................................................................................................10 Threat of substitutes..........................................................................................................................10 Strategic Capabilities.................................................................................................................................11 Vision Statement...................................................................................................................................11 Mission Statement.................................................................................................................................11 SWOT Analysis.......................................................................................................................................11 Strengths...........................................................................................................................................11 Weaknesses.......................................................................................................................................12 Opportunities....................................................................................................................................12 Threats...............................................................................................................................................12 AirAsia VRIO Analysis.............................................................................................................................13 Valuable.............................................................................................................................................13 Rare...................................................................................................................................................13

Strategic Management 4 Costly to Imitate................................................................................................................................14 Organization capability and competences to make the Most of Resources.......................................14 Strategic Initiatives....................................................................................................................................15 Recommendations.................................................................................................................................15 Use of E-Commerce...........................................................................................................................15 Aggressive promotion campaign in developing markets....................................................................16 Market segment development strategy.............................................................................................16 International expansion strategy.......................................................................................................16 Retrenchment strategy......................................................................................................................16 Strategy choice......................................................................................................................................17 Conclusion.................................................................................................................................................17 References.................................................................................................................................................19

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AirAsia Strategic Management Introduction Industry Overview Malaysia's airline business has a critical part in building the Malaysian economy, as well as promoting the hospitality, tourism, as well as trade industries. Malaysia's airline sector is still in its early stages of development (Aprilia et al., 2020, p. 436). Despite being hit by the Covid-19 pandemic, the company has made significant attempts to flourish. The Malaysian airline sector is divided into two categories: passenger and cargo airlines. AirAsia, Malaysia Airline System Berhad, Malindo Air, as well as Firefly are some of Malaysia's commercial airline companies (Wu et al., 2020). Nevertheless, Malaysia's cargo airline consists of only three companies: Transmile Air Services, MAS Cargo, as well as Athena Air Services. Company Background Back in the year 1900, Thai National Airlines was the only airline operating in Bangkok's major routes to Chiang Mai, offering non-stop flights (Fickry et al 2020, p. 12). However, in the year 1993, AirAsia came into the picture to connect Asia like no other airline company. AirAsia is centered in Malaysia as well as offers passenger transportation, as well as freight plus courier services. At the Skytrax World Airline Awards, it was crowned the "Unsurpassed Low-Cost Airline Company" in the industry for the ninth year in a row. Its theme, "Now Everyone Can Fly," presented a new meaning of cheap travel. Air Asia began with only two Boeing 737-300 series planes and solely point-to-point operations (Athirah, 2015). It now links more than one hundred and sixty-five local and international destinations across twenty-five countries. The company is always coming up with new ways to deliver low-cost transportation. With time,

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AirAsia has been able to gain a good reputation and is one of the most preferred airline organizations. The company contains five major operational hubs based in Indonesia, Singapore, Malaysia, Thailand, Japan, as well as Singapore (Aprilia et al., 437). As a result, AirAsia has been able to interfere with travel norms meant for Asian countries and is referred to as the Pioneer of low-cost travel in Asia.

Source (https://economictimes.indiatimes.com/topic/AirAsia-Malaysia ) AirAsia Strategic Thinking AirAsia's overall approach is focused on the no-frills, low-fare idea. In Asia, the corporation might be considered a pioneer in the field of air travel. The organization implemented a no-frills, low-fare approach by delivering costs that were approximately half of what competitors were charging (Adler et al., 2017, p. 319). The company provides low-cost flights but no complimentary entertainment or meals. Apart from being Asia's first no-frills, low-cost airline, it was also the first within the country to implement a free seating policy as well as eliminate the requirement for written tickets during travel, long before rivals followed suit. The organization has always sought to incorporate innovations that allow clients to purchase tickets and reserve seats within the most efficient manner possible (Wahlquist, 2016). The process was made more

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straightforward by the use of an easy-to-use webpage and other choices for purchasing tickets, which contributed to client satisfaction (Wu et al., 2020). As a result, aiming for innovations in all aspects of the airline's operations might be considered the first element of AirAsia Company's strategy. Micro-Environment Analysis Pestle Analysis Political environment It is tough for AirAsia Company to fly outside Malaysia due to bilateral agreements. Beside, receiving charges is also a significant influencing aspect in the pricing of low-cost flights. Because bilateral air protection agreements tightly regulate the aviation market, the low-cost airline business in Southeast Asia has remained underdeveloped (Yashodha et al., 2016, p. 11164). Furthermore, violence has an important effect on airline functions. Air Asia does not fly in distant places where there is a huge danger of violence, and it functions with extensive carefulness in regions where violence is prominent but not prevalent (Holmes, 2015). Economic environment Despite stiff competition that AirAsia Company is facing from Malaysian Airlines (MAS), AirAsia's low-cost carriers, which charge lower seat tickets as well as limited in-flight services, are gaining popularity in the society (Fickry et al., 2020, p. 13). Besides, the aviation industry has been struck hard by the economic downturn, mostly during this Covid-19 pandemic period. However, as this market slows, more individuals will want to take advantage of its low-cost seat tickets (Wu et al., 2020). Another regulative aspect is the price of oil has affected the company’s

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economic environment. When the price of essential oils skyrockets, it becomes extremely tough for the company to maintain procedure costs under control. Social environment AirAsia Company has succeeded to incorporate workers who comprehend numerous languages, predominantly Asian dialects, to serve its customers through higher service in the best times possible (Suzhen, 2020). Besides, for a long-haul flight, passengers are reluctant to onboard a nofrills carrier (Reddy et al., 2021, p. 42). Furthermore, the rise of the aviation sector is aided by increasingly global society, tourists, as well as a diverse spectrum of educated individuals and this has helped the company to attract customers from different social backgrounds. Technological environment AirAsia Company provides an online service that incorporates air ticketing with car rental, hotel reservations, as well as travel insurance. This has helped the company to attract more customers who can now conduct online services at their comfort areas (Athirah, 2015). Besides, AirAsia Company has forced internet booking facilities to make sure prices are in check. AirAsia Company has also lately unveiled GO Holiday Break, the airline's online package through which friends can reserve vacation packages online instantaneously. Additionally, AirAsia has purchased an A320 to replace the Boeing 737 (Adapa & Roy, 2017. P. 67). The improved energy consumption and increased volume of the Airbus A320 result in improved reliability and performance. Environmental factors

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The Severe Acute Respiratory Symptoms (SARS) outbreak has made visitors afraid to fly. AirAsia pledges to put "Safety First," to conform to all regulatory bodies, establish and enforce continually high standards, and safeguard its employees' safety plus friends (Wu et al., 2020). Besides, the covid-19 pandemic outbreak has also affected the company’s operations. The no frills services are in place to improve airport and airline cooperation, which helps to reduce overall airport expenses. Environmental sustainability and energy efficiency are major concerns for the airline business. Air pollution may be significantly reduced by limiting one's carbon footprint (Alsalhi et al., 2020, p. 3152). Besides, natural calamities, such as the 2015 Nepal earthquake and the Indonesian volcano eruption, have had a significant influence on the airline operations. Legal environment Because Air Asia works in numerous regions across Asia, it must follow to the innumerable guidelines in each region in order to ensure smooth operations. Therefore, AirAsia Company must certify that the several employment laws in these regions are obeyed (Febrin et al., 2020, p. 178). Furthermore, staff primarily funded by airlines to function in numerous sections is compensated following the laws of those regions. Porter’s five forces framework Bargaining power of suppliers Reliant on the switching costs linked with varying airplanes, the bargaining power of the AirAsia aircraft suppliers vary. Therefore, this indicates that the bargaining power of suppliers is surges when buying new-fangled airplanes and reduced when acquiring second-hand airplanes (Wu et

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al., 2020). When buying new planes, suppliers have more negotiating power, whereas when buying used jets, they have less. Bargaining power of buyers Purchasers in the airline industry include travelers, visiting relatives plus friends, as well as business travelers. Besides, AirAsia’s customers are not able to organize plus coordinate, hence, have low bargaining power (Chong, 2021). In terms of cargo transportation, bargaining power increases concerning the increase in cargo. The threat of new entrants Liberalization plus deregulation trends have enabled new entrants in the airline Malaysia business more easily notwithstanding the high expenses linked with startup plus functioning (Murugan, 2017, p. 187). Therefore, due to an upsurge in low-budget air travel connected with deregulation within the company, there has been an increase in entry of competitors, thus high competition. Rivalry among existing firms There has been a quick arrival of low-cost transporters, although Asia and the neighbors are in a tough competition to excel together with well-developed airlines. Besides, firms have resulted in differentiation as well as cost leadership to survive the competition (Aprilia et al., 2020, p. 439). Thus, competition makes contention in prevailing companies very high hence affecting AirAsia Company. Threat of substitutes

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The threat of alternatives for the airline sector is moderate because, aside from rail, ship, as well as bus transit, there is no perfect replacement for freight services. Besides, this is owing to the Asian state's geographical area in compared to the United States plus the United Kingdom, which makes using other modes of transportation time consuming (Athirah, 2017). The threat of substitutes for the airline industry is intermediate compared to other transportation modes, thus indicating that substitutes for alternate methods of transport are fairly low. Strategic Capabilities Vision Statement AirAsia creates value through its vision of becoming Asia's largest low-cost carrier, representing the 3 billion individuals who are currently under resourced due to poor interconnection as well as high fares. Mission Statement AirAsia's mission is to be the best place to work, where workers are treated like members of a big family. Construct an ASEAN brand that is well-known around the world, to achieve the lowest possible cost so everybody can fly with AirAsia and maintain the highest standard of performance while encompassing technology to cut on costs and improve levels of service (Fickry et al., 2020, p. 14). SWOT Analysis Strengths One of the key strengths of AirAsia is that the company contains five major operational hubs based in Indonesia, Singapore, Malaysia, Thailand, Japan, as well as Singapore. Besides, it

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operates as a low-cost airline leader in the Asian industry. Another key strength is that the company's positioning is consistent and delivers on its promise of affordability (Rohaizad et al., 2021, p. 13). Additionally, AirAsia Company contains an approximate of three hundred aircrafts Weaknesses Due to fluctuations in the price of fuel as well as service costs, it has been a major challenge for Air Asia Company to maintain their low costs on flights. Similarly, AirAsia Company is operating in a highly competitive industry; with companies servicing many routes not only in Asia but also the rest of the world and this has posed a major weakness for the company to sustain the competition mostly during this Covid-19 pandemic (Rohaizad et al, 2021, p. 14). Additionally, AirAsia Company does not have its MRO facility. Opportunities One of the main opportunities existing in AirAsia Company is that the company can invest in merging with other low-cost airlines. Similarly, the introduction of more flights for busy as well as popular destinations across the world has opened more opportunities for AirAsia Company to expand its operations (Adapa & Roy 2017, p. 69). Additionally, India prefers budget airlines and hence increased traffic from India. This indicates a match in the target requirements. Threats Fuel prices are increasing from time to time and this has posed a major threat to AirAsia Company. Besides, government costs plus charges that the company doesn't have a mandate over may cause adverse losses soon (Alsalhi et al., 2020, p. 3154). Operational costs and dynamic management in the company, it has looked challenging to control low-cost flights.

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