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Strategic Management Airasia Strategic M
Strategic Management Airasia Strategic M
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. -----------------------------Page 5
11
Position and Action Evaluation (SPACE) Matrix, Quantitative Strategic Planning Matrix
(QSPM)
------------------------------------------------------------------------------------------------------------------Page 12
Airasia
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Step 1
Company Background
AirAsia was established in 1993 and began operations on 18 November 1996. AirAsia
Berhad is a Malaysian-based low-cost airline. AirAsia is Asia's largest low-fare, no-
frills airline and a pioneer of low-cost travel in Asia.AirAsia group operates scheduled
domestic and international flights to over 400 destinations spanning 25 countries. Its
main hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International
Airport (KLIA). Its affiliate airlines Thai AirAsia, Indonesia AirAsia, AirAsia
Philippines and AirAsia Japan have hubs in Suvarnabhumi Airport, Soekarno–Hatta
International Airport, Clark International Airport and Narita International Airport
respectively.
Airasia as the second Malaysian National Airline, provides a totally different type of
service in line with the nation’s aspirations to benefit all citizens and worldwide
travelers. Such service takes the form of a no frills – low airfares flight offering, 40%-
60% lower than what is currently offered in this part of Asia. Their vision is “Now
Everyone Can Fly” and their mission is to provide ‘Affordable Airfares’ without any
compromise to Flight Safety Standards.
The story of emergence of AirAsia is similar to Ryanair, since both carriers underwent
a remarkable transformation from a money-losing regional operator to a profitable,
low cost airline.
AirAsia’s business model. He invited Connor McCarthy, the former director of group
operation of Ryanair, to join the executive team.
What is mean by low cost airlines? A low cost airline generally has many features that
differentiate it from the traditional carriers. These features include ticketless travel,
online ticket sales, no international offices, no frequent flyer points, no free food and
beverages, no in flight magazines, no club lounges, use of secondary city airports. Not
all low cost airlines have these features, and not all airlines that have some these
features are low cost airlines. For example, Virgin Express is low cost airline, but still
offers complimentary coffee and in flight magazine, and they are based a Brussels
primary airport. In late 2001, AirAsia was re-launched in Malaysia as a trendy, no-
frills operation with three B737 aircraft as a low-fare, low-cost domestic airline.
Asia’s leading airline was established with the dream of making flying possible for
everyone. Since 2001, AirAsia has swiftly broken travel norms around the globe and
has risen to become the world’s best. With a route network that spans through more
than 20 countries, AirAsia continues to pave the way for low-cost aviation through
our innovative solutions, efficient processes and a passionate approach to business.
Together with our associate companies, AirAsia X, Thai AirAsia and Indonesia
AirAsia, AirAsia is set to take low-cost flying to an all new destinations.
AirAsia’s Vision:
To be established as the leading low-cost carrier in the Asian region.
AirAsia’s Mission:
1. To be the best company to work for whereby employees are treated as part of a big
family
1. Create a globally recognized ASEAN brand
2. To attain the lowest cost so that everyone can fl y with AirAsia
4. Maintain the highest quality product, embracing technology to reduce cost and
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AirAsia’s objective:
• Aims to carry 70 million passengers a year, within six years starting from 2014.
• Turn the low-cost carrier terminal at the KL International Airport into the regional
hub for budget travel.
• Plans to introduce more routes, add frequencies and develop the existing ones.
Existing Strategies
Safety First: Partnering with the world’s most renowned maintenance provider
and complying with the world airlines operation
High Aircraft Utilization: Implementing the region fastest turnaround time at only
25 minutes, assuring lower cost and higher productivity
Low fare, no frills: Providing guest with the choice of customizing services
without compromising on quality and services
Point to point Network: Applying the point to point network to keep operation
simple and lower cost
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Critical Success Factors Weight Rating Score Rating Score Rating Score
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As the Matrix shows Airasia has the best financial position. The South Asia has the
best market share. The Malaysia has the best price competitiveness.
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develop with Microsoft for new promotion), brand building exercise (with
over 3 million hits per month and the most widely surfed booking engine in
the world) as well keep the cost low by enabling direct purchase of ticket by
consumer thus saving on airlines agent fees
5 Get mane awards such as “World’s Best Airlines” for the second year,
6 Asia Pacific’s Best Marketing Campaign (mktg). It shows AirAsia have good
image and performance since it got so many awards
7 The customer can pay their booking ticket by credit card over phone
(operation).
8 Good marketing campaign such as making a year deal with Manchester
United, one of the English Football Club and recently had programmed at
television “Travelog Asia”. This is one of the examples of good marketing
strategy.
9 The current ratio is increase from 1.3 times to 1.47 times. It will make the
company less risk.
10 AirAsia has very strong management team with strong links with
government and airlines industry leader. This is partly contributed by the
diverse background of the executive management team that consist of
industry expert and ex-top government officials.
11 Increasing the profit 1061 million on year 2010 (fin)
Weakness
1, AirAsia receive a lot complaint from customer on their service. Examples of
complaint are around flight delays, being charged of things and not able to
change flight or get a refund if customer not make it. Good customer service
and management is critically especially when competition is getting intense.
2, The facilities at the airport (mgt). There has limited chairs at waiting area.
3, The waiting period between check in and depart is too long (sometimes it takes
around 2 hours for international departure)
4, Apply autocratic management (mgt). They only considered opinion from top
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management to make them decision without asking from the other worker
opinion.
5, Rely on debt to much since ratio for year 2010 is 73.15%. It is more than half
its capital gets from borrower. It is risk of the company.
6,The average collection period is quite high which 76 days. It means the
companies have to wait until 76 days to collect from borrower.
7, There are no maintenance, repair and overhaul facility operation. Thus AirAsia
cannot maintain its own planes. With an increasing this is a competitive
advantage.
8,No frills operation. They only provide the transportations services. The
customer has make pre-order for their heavy meal such as nasi lemak during
their tickets. If not, they only can buy the chip and beverages.
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Strengths
1. Low cost for all passengers
It is suitable with their tagline ‘Everyone can fly’
mean to giving opportunity to all people to flight
with the lowest possible fare and making them can
flight even they only have less money
2. Has many destinations
Route network of AirAsia has more than 20
countries, for example United Kingdom, Iran, China,
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Opportunities SO
1. Asia’s middle income growth (soc) 1. Add new facilities to attract people for using
2. Applying technology advances in airlines industry AirAsia for going to vacation (S1 & S2, O1)
(techno) For example e-ticketing, it is easy for people 2. Improve new technology for making people more
who are busy with their work and no time to walk in to convince using this airplane (S3,O2)(Market
the counter for booking ticket penetration)
3. Economic in good condition (econ) 3. Increase destination all over the world (S2, O3,
The change of lifestyle of the customer (soc) O4)
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4.Political connection between home countries with 4. Improve management for increase marketing
other country (pol) strategies to attract people (S4,S5 & O5)
5.Limited substitutes for airplanes (substitutes) 5. Increase website service to make people easy to
make transaction (S3,O2)
Threats ST
1.Price of oil increasing (econ) 1. Do research and development (R&D) to find other
2. The culture of passengers is different (soc) alternative to reducing in use oil (S1,S6 & T1)
3. Certain rate like airport departure, security charges 2. Hire new stewardess for different culture to make
and landing charges are beyond the control of airlines passenger feel comfortable using this service (S2,T2)
operator (pol) 3. Deal with supplier for cheaper in maintenance cost
This is a threat to all airlines especially low cost (S1, S6 & T4) (Backward Integrations)
airlines that tries to keep their cost as lower as possible
4. Supplier of airlines is limited (supplier)
Power of supplier is high as there are limited
(availability of) supplier (only Boeing and Airbus), the
switching cost is high (i.e. airplanes and their
maintenance are costly) and there are few substitutes
airplanes
5. Natural disaster (demo)
For example is flood, tsunami, and earthquake at
certain place will influence the business of airlines
Weaknesses
1. AirAsia receive a lot complaint from customer on
their service. Examples of complaint are around
flight delays, being charged for a lot of things and
not able to change flight or get a refund if customer
could not make it. Good customer service and
management is critical especially when competition
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is getting intense
2. The facilities at the airport. There has limited
chairs at waiting area
3. The waiting period between check in and depart is
too long (operation). It takes around 2 hours for
international departure
4. Apply autocratic management. They only
considered opinion from top management to make
the decision without asking from the other worker
opinion
5. No MRO (maintenance, repair, overhaul) facility
(operation). Thus AirAsian cannot maintain its own
planes. With an increasing fleet this is a competitive
advantage.
Opportunities WO
1. Asia’s middle income growth (soc) 1. Improve existing facilities in airport (W2,O1 &
2. Applying technology advances in airlines industry O2)
(techno) For example e-ticketing, it is easy for people 2. Target on middle – income customer by affordable
who are busy with their work and no time to walk in to price (W1, O1 & O3) (Market Penetration)
the counter for booking ticket 3. Improve management in service such as
3. Economic in good condition (econ) prediction in time (W1, O2)
4.Political connection between home countries with
other country (pol)
5.Limited substitutes for airplanes (substitutes)
Threats WT
1. Price of oil increasing (econ) 1. Manage wisely the waiting period in order our
2. The culture of passengers is different (soc) passenger come from anywhere (W3, T3)
3.Certain rate like airport departure, security charges 2. Efficiently manage the compliant from passenger
and landing charges are beyond the control of airlines to avoid external threat (W1, T2) (Retrenchment)
operator.
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6 The consumer can pay their booking by credit card over 0.03 - - 2 0.06
phone
7 Good marketing campaign 0.04 2 0.08 3 0.12
-Such as making a year deal with Manchester United
8 The current ratio is increase from 1.3 times to 1.47 times 0.07 3 0.21 3 0.21
(fin)
From 1 unit or current liabilities can be covered by 1.47
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The fare for Jakarta-Johor Bahru trip cost Rp 100,000 (RM 88.88 one
way). And charge Rp 150,000 for a Bandung-Kuala Lumpur flight, and
Rp300,000 for a Surabaya-Kuala Lumpur trip, whereas a Jakarta-Kuala
Lumpur air ticket from Malaysia Airlines available at travel agents cost Rp
1.4 million. Meanwhile, LionAir on the same route, charged Rp 1.05
million. The cost fare provided by AirAsia help it open the Indonesia
market.
c. Political connection
AirAsia hold 49% of the Thai AirAsia with 1% being held by a Thai
individual. The remaining 50% is held by Shin Corp. which is owned by
the family of Thailand’s Prime Minister, Thaksin Shinawatra. Shin Corp.
has financial strength, synergy in information technology and
telecommunications, which support AirAsia internet and mobile phone
bookings. Shin corp. allows subscribers of the Shin mobile phone flagship,
advance information service, being able to reserve tickets through its
short-messaging services (SMS). AirAsiA with its politically powerful
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backer may well grow up to bite. This helps it open the Thailand market.
a. Issue of IPO
b. Political connections
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AirAsia with its politically powerful backer may well grow up to bite.
Marketing Development
AirAsia, Asia’s leading low cost carrier, recently partnered with Yahoo! Mobile for its
very first mobile campaign. The goal was to encourage interaction with users and
increase the overall awareness of AirAsia and its promotions throughout Asia. Aimed
at generating and maintaining top-of-mind awareness with their reach, Yahoo’s mobile
marketing and advertising solutions provided a key advantage for AirAsia. The
campaign saw tremendous success across seven target markets including Malaysia,
Singapore, Thailand, Indonesia, Philippines, Taiwan, and Hong Kong, AirAsia
became the first company on Yahoo Mobile in Malaysia and the success of the
campaign showed how mobile marketing could help brands successfully
communicate with the rapidly growing mobile consumer base.
2. STRUCTURE
The company must be the divisional structure based on geographic area such as
Indonesia, Filipina, Thailand, and other destinations of airlines because this will
make the company more focus on its geographical area of airlines performance.
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3. SYSTEM
The company must be come out with new management information system within
company for effectively disseminate any important information to staff and top
management of the company. Any complaint or problems could be managing
efficiently by doing this system.
4. STYLE
Maintaining its current style of promotion must be based on its present current
tagline “Low Cost Carrier”. For that can the company can obtain loyalty from their
customer and maintaining high revenue.
5. SHARED VALUE
Concern more towards its shareholders by increase of dividend payments to them to
get full support and loyalty towards the company. They will feel it is worth it to
invest in the company and definitely drag others investors to invest.
6. STAFF
Provide development training to all staff for always maintain its services that have
been provided to customers. Staff should always know the current development and
changes which are the company made.
7. SKILL
The company should look out more to employ expertise in term of develop its
operational system and also marketing strategies. This is because nowadays
customers tend to be attracted with implementation of mass marketing by using
latest technology devices.
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STRATEGY 1: Enter the new geographical area such as Africa, United Arab
Emirates (UAE).
1. Advantage
It will increase the number of sales of AirAsia and also makes more profit for
the company
It also can build the customer preference to use AirAsia services for reach
their destination
2. Disadvantage
It has high risk whether the AirAsia airline will be accepted or not at the new
places
Uncertainty of demand of consumers towards the company new location
since the other airline company offered to that location before AirAsia enter
1. Advantages
Offer an additional location that hard to reach to the customer to need to go
there in fast, indirectly can increase the AirAsia profit and sales
Increase customer loyalty towards AirAsia for providing them chance to go
hard reach location with low cost rate
2. Disadvanteges
AirAsia incurred higher risk in case if there has no demand towards the
service and it will affect the number of sales and profit of the company
AirAsia has high expenses due to buy the new airplane such as Fokker, hire
additional employees to fulfill the service.
Step 12 Conclusion
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In conclusion, the AirAsia Company has a good performance after it launches the new
strategy which is the cost carrier in Asia for airline industry. Nowadays AirAsia is
such a well known and establish company in airlines industry and conquer the Asia
market. Clearly state vision and mission of the company helps the company to set a
proper conduct and action to achieve the two important things.
In the two recommendation, it actually based on these two strategies which are market
development and market penetration. The recommend that AirAsia should open new
operation in the new geographical area that have never been reached before by the
AirAsia company such as the Africa and United Arab Emirates in order to enlarge its
current market share in airlines industry. By doing this hopefully can increase the
company’s revenue or sales by attracting more consumers using AirAsia services.
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