STI College Sta.

Mesa

STI Academic Center, P. Sanchez Street Corner Pat Antonio Street,

Sta. Mesa, Manila, 1035 Metro Manila

In Partial Fulfillment of the Requirements in the subject Strategic Management

Submitted by:

Atienza, Belson

Aquino, Rose Ann

Cruz, Mary Joy

Encarnacion, Cerina Fe

Gabat, Trixie Mae

Villa, Mariz Nicole

Submitted to:

Melrose Adobas, MBA

3rd year – BS Tourism Management

S.Y. 2022 – 2023

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 TABLE OF CONTENTS

I. Company Background……………………………………………………………………..…3

II. Internal Environment ………………………………………………………………………10

III. External Environment …………………………………………………………………….12

IV. References…………………...…………………………………………………………….. 14

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 I. COMPANY BACKGROUND

Capital A Berhad (MYX: 5099), also known as AirAsia (stylized as airasia), is a Malaysian
multinational low-cost airline based near Kuala Lumpur. It is Malaysia's largest airline in terms of
fleet size and destinations. AirAsia operates scheduled domestic and international flights to over
165 destinations in 25 countries from its main base at Kuala Lumpur International Airport (KLIA)
in Sepang, Selangor, Malaysia. AirAsia Cambodia, Thai AirAsia, Indonesia AirAsia, and
Philippines AirAsia all have bases in Phnom Penh, Bangkok-Don Mueang, Jakarta-Soekarno-
Hatta, and Manila-Ninoy Aquino, respectively, while AirAsia X focuses on long-haul routes. The
registered office and headquarters of AirAsia are located at Kuala Lumpur International Airport.

AirAsia was founded in 1993 as a full-service airline and began operations on November
18, 1996. DRB-HICOM, a government-owned conglomerate, founded it. Former Time Warner
(now known as WarnerMedia) executive Tony Fernandes and Kamarudin Meranun's company
Tune Air Sdn Bhd purchased the heavily indebted airline on September 5, 2001, for the token sum
of one ringgit (about US$0.26 at the time), with MYR 40 million (US$10.5 million) in debts. On
December 8, 2001, Tune Air officially took over AirAsia. The partners turned the company
around, and AirAsia announced a rebranding and relaunch as a low-cost airline on January 15,
2002. In 2002, it turned a profit and launched new routes from its Kuala Lumpur hub, undercutting
former monopoly operator Malaysia Airlines with promotional fares as low as MYR 10 (US$2.63).
AirAsia established a second hub at Senai International Airport in Johor Bahru in 2003. In
December 2003 and February 2004, international flights to Phuket and Bangkok were launched,
respectively.

The airline was described as a "pioneer" of low-cost travel in Asia by The New York Times
in 2007. It has also been named the world's best low-cost carrier for 13 years in a row by Skytrax
in international travel and airline awards, including the most recent award for 2022.

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AIR ASIA FIRST CATALOG

People from all backgrounds can work in a welcoming, positive, respectful, and enjoyable
environment thanks to AirAsia. According to skills and performance, they elevate and reward their
employees. All of the AirAsia employees put in a lot of effort to develop a shared purpose and
vision. The respective domestic and international locations are served by AirAsia flights that arrive
and depart the Philippines. Whenever the local and national governments give their approval,
AirAsia will add more destinations and frequency to existing routes. The business offers
transportation services for people and goods in both domestic and foreign markets. The business
offers airline network operations, a travel and leisure business platform, insurance and financial
assistance, logistics services, lifestyle and entertainment options, as well as other services through
its partnered businesses. The company offers courier companies, coffee shops, and charter flights
as ancillary services.

AIR ASIA WORLDWIDE EXPANSION

Fernandes unveiled a five-year plan to expand AirAsia's presence in Asia at the end of
2006. AirAsia proposed expanding its route network by connecting all of its existing regional
destinations and expanding into Vietnam, Indonesia, Southern China (Kunming, Xiamen,
Shenzhen), and India. The plan called for a focus on developing its Bangkok and Jakarta hubs
through its sister companies, Thai AirAsia and Indonesia AirAsia. AirAsia carried 13.9 million
passengers in 2007, up from 5.7 million in 2006. This was due to increased frequency and the
addition of new routes.

AirAsia and Malaysia Airlines agreed to form an alliance through a share swap in August
2011. This would have reduced competition and assisted Malaysia Airlines in returning to
profitability. The agreement, however, was terminated in 2012.

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 AirAsia would continue its Asian regional expansion, launching Philippines AirAsia in
2012 and AirAsia India in 2014. It failed to establish a new affiliate in China in 2017. Since 2005,
plans have been made to enter the Vietnam market by establishing an affiliate airline of its own;
however, after four attempts, AirAsia has abandoned its plan to establish its own airline in
Vietnam.

AirAsia proposed changing its corporate name to Capital A on January 3, 2022, subject to
shareholder approval. The proposed name has been approved by the Malaysian Companies
Commission (SSM) and will be reserved by the company on December 28, 2021. The company
changed its name from AirAsia Group Bhd to Capital A Bhd on January 28, 2022, to reflect the
expansion of its business portfolio beyond the core budget airline. However, its airline division
continued to operate under the AirAsia brand.

VISION

AirAsia's vision is "To be the largest low-cost airline in Asia, serving the 3 billion people
who are currently underserved with poor connectivity and high fares.” As a result, AirAsia used
to sell low-cost airline tickets to help more passengers. Because more people can now pay for
airfare, AirAsia's revenue has increased and the company has grown to be widely recognized.
Furthermore, whenever a company aims to grow its business and has a powerful yet reliable
standing in a specific field, it will easily guide more individuals to recognize AirAsia. In other
words, it will provide its customers with a strong brand identity while also serving as a threat.

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 AirAsia.
 Maintain the highest quality product, embracing technology to reduce cost and enhance
service level.

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The values and goals of AirAsia are outlined in the company's mission statement, which is a public
document. It also states the reason for the organization's existence while emphasizing the goods
and services it provides. The mission statement also specifies the organization's operational goals
for AirAsia, the methods the business employs to meet those goals, the target clientele, and the
geographical area in which the business operates.

OBJECTIVES

The main objective of AirAsia is to be a leading low cost airline in the region. This
objective is achieved by maximizing shareholders’ value, placing importance on safety, focusing
on customers’ needs, operational excellences and management transparency (AirAsia, 2003)

To continuously launching new routes is a very good strategy that would create more value
for their customers, distribution of services is very important in every organization, when new
routes are launched, they would meet more customers' needs and also increase their customer base,
thereby creating more productivity, the more customers a company serves, the more money they
make, and of course the company would grow the most.

POLICY

AirAsia has written detailed safety policies and procedures that are adhered to strictly. The
company is always looking for ways to get better, keeping an eye out for potential safety lapses
and violations, and reporting any such occurrences through the appropriate channels. They won't
take any actions that seriously affect AirAsia's safety.

AirAsia strictly prohibits the use of drugs and activities related to drugs. Keep drugs out of the
workplace! Also, refrain from using violence; instead, resolve conflicts amicably by following the
correct procedures and showing respect for everyone else in the workplace.

By adhering to policies and procedures that protect against theft, loss, and wastage, as well
as unsafe or unauthorized use, AirAsia makes proper and effective use of these resources. The
business won't put AirAsia's operations at unnecessary financial and operational risk, nor will it
obstruct or interfere with their present or possible ability to conduct business.

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 When handling potentially sensitive information, whether it relates to staff members,
visitors, or others, they will exercise caution and adhere to all laws and regulations. AirAsia only
processes the data that is necessary for business operations, effective customer service, pertinent
commercial endeavors, and effective management of human resources.

To make sure that they achieve their objectives and strategies, AirAsia has strong internal
controls. These security mechanisms need to be effective and pose manageable risks. Assets,
whether physical or not, are protected and put to good use. They have a responsibility to guarantee
that financial information is accurate, timely, and compliant with rules, regulations, and policies.

CORPORATE SOCIAL RESPONSIBILITY

- THE ECONOMIC PILLAR (PROFIT)

AirAsia aspires to be the lowest-cost short-haul airline in every Asian market it serves,
delivering strong organic growth by offering the lowest fares at a profit. Air Asia, Asia's leading
airline, was founded with the goal of making flying accessible to everyone. Since 2001, AirAsia
has quickly broken travel norms all over the world, rising to become the world's best. Air Asia was
named the World's Best Low Cost Airline in Skytrax's annual World Airline Survey for five years
in a row in 2009, 2010, 2011, 2012, and 2013, and was ranked fifth among the most recognized
and admired airlines in the Asia Pacific Top 1000 Brands 2008.

As demand for international air travel remains high, the company is optimistic about the
near-term upward fare trend. While we anticipate some rationalization, we do not expect the fare
trend to fall below pre-pandemic levels. As we rise to meet the ever-increasing demand for flights,
we are meticulous in ensuring that aircraft in the Company's fleet are operational within the
specified timeline and that all safety requirements are met. We are also in various stages of
engagement with third-party aircraft lessors for the addition of additional aircraft to its fleet. We
expect to have a total of 17 active and operational A330s in our fleet by 2024."

THE ENVIRONMENTAL PILLAR (PLANET)

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 By joining the International Civil Aviation Organization's Carbon Offset and Reduction
Scheme for International Aviation (CORSIA), AirAsia made its first strides toward a net-zero
future (ICAO). They expanded their waste treatment actions to recycle both onboard and ground-
produced waste materials in addition to publishing their flight-generated carbon emissions. Gain
knowledge further about AirAsia's carbon tracking solutions, which include information on not
only the company's flight emissions but also its offices' utility usage and recycling practices.

Continuous improvement is ingrained in the DNA of AirAsia, and nowhere is this more
true than in improving our operational effectiveness to cut down on fuel usage. Learn about a few
of the continuous navigational and flight optimization projects that, among other things, have
enabled us to reduce flight times by an average of 2.25 minutes, saving more than 80 kg of fuel
and more than 250 kg of CO2 emissions per flight.

THE SOCIAL PILLAR (PEOPLE)

AirAsia's vision is to be Asia's largest low-cost airline, serving the 3 billion people who
are currently underserved due to poor connectivity and high fares. AirAsia has established a
reputation as a company that prioritizes customer satisfaction.

AirAsia takes part in numerous price-based promotions. To generate buzz, cheap flight
tickets are distributed based on demand through promotional schemes. Aside from that, AirAsia
uses popular promotional methods such as social media advertising, print advertisements, and
simple but effective billboard advertising.

AirAsia's mission is to provide high-quality, low-cost flying services to all types of

passengers. In order to achieve this goal, AirAsia began offering the lowest airfares at a profit in
2007 under the tagline "Now Everyone Can Fly." AirAsia's advertising and promotional efforts
are thus directed toward this initiative, and the airline is visibly prominent in the increasingly
competitive and crowded market, allowing the airline to cut through clutter and differentiate itself
from other leading low-cost carriers as well as Malaysia Airlines.

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 AirAsia enhances the concept of emotional appeal and creates advanced emotional
attachment by promoting social media campaigns centered on the concept of emotional by sharing
video stories of their employees' and customers' experiences with the airline.

CORPORATE GOVERNANCE

The Risk Management Department hired an outside specialist to do a review of the Group's
risks of bribery or corruption. The consultant's report identified 21 points of improvement and 21
gaps, which were gradually fixed throughout 2020. The Board of Directors absolute intolerance
for any kind of bribery or corruption at AirAsia reflects the Group's position on both issues. Anti-
Bribery & Corruption (ABAC) Policy, which all Allstars, including distributors, suppliers, and
advisors, are obligated to review and acknowledge, serves as additional support for this.

All new hires must complete both online and in-person Code of Conduct preparation as of
2018. The AirAsia Workday system, which sends notices to each Allstar, now includes the ABAC
Policy.

Allstars, Directors, and other stakeholders are encouraged by AirAsia to use their
whistleblowing channels to voice any genuine or justified concerns they may have. Their
complaints will be thoroughly investigated, and AirAsia will make sure that the whistleblowers
suffer no negative consequences.

The viability of AirAsia's business also depends on having sound growth management
plans. Their Strategy & Growth Department, which collaborates with numerous important
stakeholders to create the Group's Redbook, is in charge of this. To create plans, targets, budgets,
and KPIs for each purpose within the Group, this Redbook provides specific direction and a
standardization structure, methodology, and process.

To promote ongoing operational efficiency, AirAsia implemented CEKAP in 2019, which

provides Allstars with Continual Improvement Tools to promote straightforward yet effective
working methods across the Group.

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 In 2020, the slowdown offered a chance to add more Allstars to the CEKAP platform. As
of December 2020, they had trained over 2,100 Allstars, up from 300 in 2019.

Reintroducing the Red Radar system to compile formerly manual risk registers was one of
the Risk Management Department's 2020 priorities. 90% of the information from mechanical risk
registers has already been transferred to Red Radar, which supports the business continuity plan
for the AirAsia Group (BCP). The BCP identifies the potential risks brought on by the rejection of
any of the risk compliance areas and registers the people, processes, and critical systems involved
in risk management in every department.

II. INTERNAL ENVIRONMENT

The environment that directly affects the organization is the internal environment. Internal
to determine the strengths and weaknesses of the Air Asia business through
culture and view based on resources.

CORE COMPETENCIES

Low-cost and reasonable airfares are one of Air Asia's primary competencies. Always use
AirAsia provides customers who choose Air Asia as their mode of transportation a discounted
pricing. It is in keeping with the motto "Everyone Can Fly." Air Asia also provides cellphones and
the internet. Services as check-in and reservation channels. People are gravitating toward the new
these days. A technical setting. As a result, Air Asia makes it simple for customers to book and
check the any time, everywhere mobile access to the flight schedule. A cheap, no-frills service is
another skill. Airline that serves passengers of all income levels and has a wide regional network
in Asia.

DISTINCTIVE COMPETENCY

Low-cost airline Air Asia has a reputation for providing five-star service where anybody can fly.

COMPETITIVE ADVANTAGE

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 The three elements that provide Air Asia a competitive edge in offering the cheap
Cost carriers are the strategic choice to use a specific type of aircraft, and Air Asia
people who are effective and skilled, as well as management. The method of employing
one kind of aircraft can reduce costs by 50% while simultaneously shortening the learning curve.
Also, as Air Asia uses a single type of training program, training time can be cut, thus lowering
costs. Aircraft. The collaboration between Air Asia management and staff is the second key. The
Air Asia management constantly encourages and supports staff in their job and creative endeavors.
Here is because employees won't be as driven to work hard without management's support.
Performance of Air Asia as a result of its formation. So, it can be said that synergies are crucial.
And it is difficult for competitors to copy. The final aspect is Air Asia's productivity and
competence. Employees. The techniques, guidelines, and recommendations developed by the Staff
members contributed to Air Asia's success by producing goods at minimal cost. It was the key.
Something is difficult for competitors to copy, like the notion of "the one type of aircraft concept."

NO-FRILLS FLIGHTS - OFFERING SINGLE CLASS.

Given that they don't provide free meals and drinks, customer service is poor. Marketing
and sales – AirAsia uses its call center and website to do direct sales. As a result, it spares the
travel industry commissions.

ORGANIZATIONAL CULTURE
A pattern of behavior that an organization has developed as it learns to deal with its problem
of external adaptation and internal integration and that has worked well enough to be considered
valid and to be passed down to a new member as the proper way to perceive, feel, and think is
referred to as organizational culture.

AIRASIA PRODUCT STRATEGY

One of the most successful low-cost airlines in Asia is AirAsia. It is a global airline that
started out in Malaysia and has now expanded to encompass nations all across Asia, including
Thailand and India. Its affordable air services make up the core of its product strategy. With regular
flights, secure point-to-point connectivity, and professional facilities that adhere to industry
standards, AirAsia concentrates on making its customers comfortable.

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RESOURCES AND CAPABILITIES OF AIRASIA

Airasia is able to offer low-cost flights to customers because to insurance against low fuel
prices, cost reductions through single aircraft operations, and fuel and energy management
technologies. Other competitors could simply acquire this talent since it is not exclusive. As a
result, it promotes competitive parity.

III. EXTERNAL ENVIRONMENT

MODEL

Air Asia was founded in 1996 as Malaysia's second airline. It had been beset by problems
initially and failed to make profits. The company was founded as a full-service regional airline,
offering cheaper fares than the leading competitors in Malaysian airlines. Competitive Situation
According to the competitive situation in Malaysia, Air Asia had plans to expand their market
outside the region. They participated in several joint ventures. These included: Thai Asia,
Indonesia Air Asia, and Air Asia X. The government favored them by endorsing Air Asia X. The
government built the first low-cost terminal in Kuala Lumpur International Airport in March 2006.
Air Asia was causing competitive ripples, making Asia's largest carriers-Singapore Airlines
announce a low-fare subsidiary. Singapore Airlines Deputy chairman, Lim Chin Beng, registered
“value Air” intending to operate as Singapore's third airline. Thai Airways International also
announced its LFA (Low Fare Airlines) as a joint venture with another company. This provoked
the Sri Lankan government to launch two low-cost airlines: Air South Asia and Mihin Lanka. Only
Mihin Lanka succeeded in operating.

BARGAINING POWER OF SUPPLIERS

Power of suppliers affects the industry because there must be someone who will play the
role of a supplier. In the airline industry, airbus and Boeing are the only major two suppliers.
Nevertheless, the economic crisis in the world has reduced the upgrading of planes. Recently, Air
Asia has placed a large demand of airbus for their company. This will enhance the management of
passenger traffic and create a good name and reputation for the company.

BARGAINING POWER OF BUYERS

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 The airline industry market is fully saturated and major airlines are competing for the same
customers. This aspect ends up strengthening the buyers’ power. Air Asia has maintained its low
cost of travelling, and this has reduced their customers bargaining power. The company should do
more advertisements for their services and low-price travelling costs to give them an advantage
with the buyers or customers.

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

The availability of substitutes is low for international airlines. The threats are low because
air travel is the only means to move across long distance destinations. The threat becomes high in
national level because travelers may opt to use train, buses, and personal vehicle. Air Asia: have
made their low-cost fare for travelers to afford travelling through airplanes.

THREAT OF NEW ENTRANTS

Because the airline industry requires significant investments to maintain new ko

businesses viable and long-term authority of the airline to draw customers, the threat of new
entrants might be viewed as low threat. Although established businesses have a lot of opportunity
to address new risks by investing their resources in the tools to counter new enterprises, new
entrants have few chances to pose a challenge to such well-known firms as AirAsia. Also, as
experience and trust are important factors in the airline industry, clients frequently select reputable
airlines. For AirAsia's overseas flights, the threat of substitute goods or services can be regarded
as being relatively low.

RIVALRY AMONG EXISTING COMPETITORS

The intensity of competitive rivalry can be considered the main threat to AirAsia as the
competitiveness of the airline industry is high. Malaysian Airlines is considered the main
competitor of AirAsia at the domestic market, as the company tries to attract the customers of
AirAsia by launching loyalty programs. Short-haul flights of AirAsia are also vulnerable to the
impact of rivalry with Malaysian Airlines. However, AirAsia appears to be rather successful in
dealing with the competitors, as it is recognized as one of the best companies offering low-cost
flights, and its success is rather difficult to be repeated.

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Anonymous. (n.d) About Us. Air Asia.

Retrieved from

AirAsia. (2023,April 3). In Wikipedia.

Retrieved from https://en.wikipedia.org/wiki/AirAsia

Curran A. (2021, January 14) AirAsia Wants Half Of Its Revenue To Come From Outside Flights.

Retrived from https://simpleflying.com/airasia-50-percent-non-flying-revenue/

Busuttil S. (2016, November 26) How on earth does Air Asia actually make its money?

Retrieved from https://karryon.com.au/knowledge/how-does-a-budget-airline-like-air-asia-

actually-make-its-money/

Anonymous. (n.d). Sustainability.

Retrieved from https://newsroom.airasia.com/sustainability#gsc.tab=0

GlobalData. (2023) London. Business Strategy Report.

Retrieved from https://www.globaldata.com/company-profile/airasia-group-

berhad/#:~:text=The%20company%20through%20its%20partnered,%2C%20cafes%2C%20and%
20charter%20flights.

Capital A. (2022) Code of Business Conduct.

Retrieved from https://www.capitala.com/business_conduct.html

Owler (2013, April 12) AirAsia competitors and Alternatives

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 Retrieved from https://www.owler.com/company/airasia/competitors

Anonymous (n.d.). Book your flight ticket and secure your best deals today!: AirAsia Korea. airasia.

Retrieved from https://www.airasia.com/en/gb

Anonymous (n.d.). The internal and external factors which affected AirAsia's. Bartleby.

Retrieved from https://www.bartleby.com/essay/The-Internal-and-External-Factors-Which-

Affected-F3DSTKE36ZYA

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