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Task 1- Background- AirAsia Berhad

Malaysian low-cost airline headquartered in Kuala Lumpur, Malaysia.


named as the world's best low-cost airline
a pioneer of low-cost travel in Asia.
AirAsia group operates scheduled domestic and international flights to 100 destinations
spanning 22 countries.
main hub:Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA).
Its affiliate airlines

Thai AirAsia,
Indonesia AirAsia,
Philippines AirAsia,
AirAsia Japan and
AirAsia Zest

have hubs in

Don Mueang International Airport,


SoekarnoHatta International Airport,
Clark International Airport,
Narita International Airport,
Ninoy Aquino International Airport and
Mactan-Cebu International Airport respectively.

AirAsia's registered office is in Petaling Jaya, Selangor while its head office is at Kuala
Lumpur International Airport.

Vision
To be the largest low cost airline in Asia and serving the 3
billion people who are currently underserved with poor
connectivity and high fares.
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 Air
Asia
Maintain the highest quality product, embracing technology
to reduce cost and enhance service levels
The key to delivering low fares is to consistently keeping cost
low. Attaining low cost requires high efficiency in every part
of the business and maintaining simplicity. Therefore every
system process must incorporate the best industry
practices.

SWOT Analysis
- structured planning method
-to determine the situation faced by organisation

Internal Analysis
Strength
: Unique resources that the organisation has
AirAsia
- cheap air tickets cause they sacrificed in other sectors
such as
there is no free in flight meal
luggage weight limit
- provide low cost courier
- Popular/ good reputation Tony Fernades
- Unique selling proposition- Everyone can fly
- Larger Fleet size as compared to other airlines

Weakness
: Areas/activities which the organisation does
not do well or resources it needs but does not
possess.

- Low On Time Performance


- Frequent flight delayed.
o Based on measurement performed by international
agency of airline statistics Air Asia, On Time Performance
(OTP) is below 80%
o In some Subsidiary as low as 69%.

External Analysis
Opportunities
: Positive trends in external
environmental factors
- Frequent-flyer program
The airline has signed an agreement to start
ajoint venturewith financial services
firmTune Moneyto launch a programme
called "BIG".
Under this programme it will issue loyalty
points to AirAsia customers and third-party
merchants.
- Holidays around the corner

Threat
: Negative trends in external environmental
factors
-The Malaysia Competition Commission (MyCC) has ruled in its

proposed decision that MAS& AirAsias 2011 collaboration


agreement violated the Competition Act 2010, and fined
each company RM10mil.
- A lot of budget airlines in the business E.g. (Malaysia)
AirAsia
Firefly
Malindo Air
- Lion Air to set up budget carrier in Malaysia
- Airbus wins landmark order worth US$20bil from Lion Air, a
challenger to AirAsia

Competitive Strategy
-Quality
- Sustaining

Quality as a competitive
advantage
Customers and continues
improvement
Satisfy customers need for quality
May result an advantage that cannot
be taken away

Current problems faced by


customers
Food
Too little selection of foods
High price for foods
Price
Its not a low cost flight ,a lot of addition to fares such
as baggage fees,seat selection fees,meal fees.
Every service is charged in the flight
- Rent of blanket
- Rent for blindfold
Seats are cramped
Tarnish AirAsias goal, to be the leading low cost carrier

Solutions in the future


Balance seats between business
class and economy class
Provide full information to customers
about the fees that is required to be
paid
Do not charge customers with a low
price flight fees but a high price in
service

Sustaining competitive
advantage
Enables the organisation to keep its
edge despite competitors' actions or
evolutionary changes
Air Asia charges flight for a low price.

Advantages
Definitely improve the quality of the
airlines
Increase chances to be the leading
company for airlines

Disadvantages
High maintenance cost
Some planes will not be available
due to servicing for improvementcausing competitive advantage to
decline

Corporate strategies
One that determines what
businesses a company is in or wants
to be in and what it wants to do with
those businesses.
Growth strategy
Stability strategy
Renewal strategy

Growth strategy
Used when an organization wants to expands
the number of markets served
Concentration, vertical integration, horizontal
integration or diversification
Growth through concentration
Focuses on its primary line of business
Increase number of products or services
offered
Increase number of seats and baggages
allowed

Vertical integration
Backward or forward or both
Backward
Gain control of its inputs by becoming
its own supplier-Owns its own
airplane factory
Forward
Organization becomes its own
distributor and able to control
outputs
Open its own airport under AirAsia.

Horizontal integration
Company grows by combining with
other organization in the same
industry
AirAsia joins up with MAS to compete
with other international Air Flights.
Goals like this, to improve the
countrys economy

Diversification
Related or unrelated
Merging with forms in different but
related industries(related)
Air Asia acquire food companies that is
required for making pre-made food
for flights.It is cheaper to own the
food company than to do a
partnership

Unrelated diversification
Company grows by merging with or
acquiring firms in different and
unrelated industries.

Advantages
Boost the companies peformance
In the long term,maintence cost will
be reduced

Disadvantages
Required a long period of time to
achive the strategy
Before strategy is achive,cost of
maintainence is high.

Stability strategies
An organization continues to do what
it is currently doing.
Not recomemded because companies
need to look for strategies to
compete in rapidly growing market.

Renewal strategies
A corporate strategy designed to
address declining performance.
Retrenchment and turnaround
strategy

Retrenchment strategy
A short-run renewal strategy. For
minor performanced problem.
Cutting on unprofitable routes (to
India or Europe)

Turnaround strategy
A renewal strategy for situations
when the organisations performance
problems are more serious.
Cooperating with other airlines (Air
Canada, Virgin Air) to stay ahead
from competitors
Handing of rural routes to firefly
because of lack of suitable
equipments