Air Asia situation analysis:

SWOT ANALYSIS:

(Fig: 17)

STRENGTH

 Strong management team with strong links with

government and airline industry leaders:

The company is consisted of strong management team having qualified industry experts and
ex top government officials all contributing towards the effective strategies formulation and
execution. The association with government and industry leader is another major strength of
AirAsia that it enjoys. For example in Thai AirAsia, 50% stake is hold by the Shin Corp. this
provided AirAsia the chance to capture a sizeable Thailand market. In addition to this, the
association with the Airbus made it able for AirAsia to get a reasonable discount for
purchases
of aircrafts that are more fuel efficient than Boeing 737 planes that are used by other
competitors.

 Well established brand in Asia Pacific:

As being the low-cost leader the brand is very well established in Asian region making

it affordable for all types customers from lower class to top class. The brand is extensively
advertised in all over the targeted regions. The advertisements and promotions are very
friendly, sharing the latest information on AirAsia. The sponsorship with Manchester United
(famous football team) is another smart move in this regard.

 Effective Utilization of Information Technology:

The effective utilization of IT have straightforwardly contributed to its promotional exercises

(email alerts and desktop gadget which was mutually created with Microsoft for new
advancements), brand building activities (with over 3 million hits per month and on the
foremost widely surfed booking engines within the world) as well keep the low cost by
providing customers with direct purchases that results in saving airline agent fees.

 Low-Cost Leader:

As being the low- cost leader company maintains its lower operating cost as a result of no
frills, online reservation systems and quick check ins. With its lower cost it has the ability to
target those customers who are using no air modes such as Bus, Trains and cars for traveling.

WEAKNESS

 Huge amount of Investment and Operational Costs:

Large amount of investment is needed to purchase the planes and huge operational costs are
needed for implementing advanced technologies. Another important factor in this regard is
the increasing fuel prices that also result in increased operational costs.

 A lot of complaints received by AirAsia from customer related to in

efficient service:

AirAsia receives various complaints from customers regarding to inefficient service these
include flight delays complaints, not getting refunds, being not able to change the flights.

 The lack of maintenance and repairing facility:

The company does not have its own maintenance and repairing facility and therefore it has to
outsource these operations.

Brands extensive dependency on outsourcing various operations such as maintenance and

repairing.
Government regulations and inferences on passengers’ compensations and airport deals.

OPPORTUNITIES

 Growing Middle class:

As being the low-cost carrier, growing middle class provide with a large market for AirAsia
that results in higher market shares. There-fore a massive opportunity is associated with
Asian middle class for AirAsia.

 The opportunity to join hands with other low-cost airline leaders:

The company has the opportunity to partnership with other airline leaders that will help it in
lowering more its cost and boosting its sales.

 Increased Revenue:

Asia will have the opportunity to advance Malaysian tourism, which will result in increasing
company’s revenue. This is due to AirAsia good government and citizen relationship of
Malaysia. Moreover, Air Asia have contract with Malaysia within the ‘Cuti-Cuti Malaysia’
and the complete client that relate to the ‘Cuti-Cuti Malaysia’ will advance the Air Asia fly
(UK Essays,2018).

THREATS

 Some of the charges are beyond of the control of company such

as airport departures, security charges and landing charges:

Almost all airline companies suffer from this threat. For example all customers that depart
from Singapore pay SGD21 in Changi Airport Singapore.

 Declining Profit Margins:

Many competitors are attracted by the declining AirAsia profit margins. In this regard mostly
competitors are about to create a subsidiary to directly compete with AirAsia.

 Increased Fuel Costs and Labour Cost:

AirAsia suffers from the increased fuel and labour costs threat. Increased fuel prices is the
major barrier in low cost production.

TOWS Analysis:

It is a structured planning method that assists companies in determining strategic alternatives

by examining external opportunities and threats and how they compare to existing strengths
and weaknesses. This analysis could help managers of the company to develop four types of
strategies which are Strength-Opportunities (SO) strategies, h-Weakness-Opportunities
(W0) strategies, Strength-threats (ST) strategies, Weakness-threats (WT) strategies.

SO strategies:

SO strategies use a firm’s internal strengths to take advantage of external opportunities.

All managers would like their organizations to be in a position where internal strengths
can be used to take advantage of external trends and events.

WO strategies: WO strategies aim at improving internal weaknesses by taking

advantage of external opportunities. Sometimes key internal opportunities exist, but a
firm has internal weaknesses may prevent it from exploiting those opportunities. ST
strategies ST strategies use a firm’s strengths to avoid or reduce the impact of external
threats.

WT strategies: WT strategies are defensive tactics directed at reducing internal

weakness and avoiding environmental threats.