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IBSM FINAL

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by

建杰 潘

on 2 January 2014

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Transcript of IBSM FINAL

459 million
1
2
3
4
8TH
Thank You
for Your Attention
Q & A
1
IBSM -
Final Presentation
Aviation industry
49933003 Jimmy
49933004 Anna
49933005 Jeff
49933007 Amy
49933008 Elaine
49933018 Kelly
49933028 Joyce
49933031 Andrew
49933040 Sandy
Professor Luan
Introduction
Outline
AirAsia
Southwest
Spring
Conclusion
The entry barrier

:
high
The brand equity
:
high
Switching costs
:
high
Capital requirements
:
high
The ability to control access
:
low
Learning curve
:
high

Buyer concentration to firm concentration ratio
:
low
Buyer volume
:
middle
Buyer switching costs relative to firm switching costs
:
low
Buyer information availability
:
high
The degree of bargaining leverage/backward integrate
:
low
Availability of existing substitute products
:
high
Buyer price sensitivity
:
high

Buyer propensity to substitute
:
middle
Relative price performance of substitute
:
low
Buyer switching costs
:
low

In the degree of differentiation of raw material inputs :
low

Supplier concentration :
high
The degree of bargaining leverage/forward integrate :
low

The number of existing competitors:
high
Industry growth rate:
low
Exit barriers :
high
Brand equity :
low
The demand of advertising :
middle

AirAsia
SouthWest
Spring
IT system
Outsourcing
Service
Aircraft Models
Common
1. Have their
own IT systems
2. Use
single type

of aircrafts
3. Do not provide
meals service
4. They just set up
single class
and offer
unified seats


>>> raise the amount of passenger load.
5.
Aspects of hauling luggage
6. The mode of flight are all
point-to-point
7.
Shorten boarding time
to increase flights of aircrafts

The doldrums' environment make development of low-cost airlines in future very promising.
corporate philosophy: “Now Everyone Can Fly.”
one of the award winning and largest low fare airlines in the Asia
AirAsia operates over 400 flights daily from hubs located in Malaysia, Thailand, and Indonesia

Financial Information
2008
2009
2010
2012
496 million
350 million
183 million
604 million
Net Profit
Net Profit Margin:

12.3%

37%

Every year: increasing the size of the company,
the number of passengers carried growing steadily

Business Model
SAS
Five-force
Analysis

Key Partners
Key Activities
Key Resources
Value Proposition
Customer Relationships
Customer Segments
Channels
Revenue Streams
Cost Structure
Airbus(aircraft provider)
Outsourcing maintenance by third parties
Provide low-cost carrier model(LCC)
IT system
Multi-skilled employees
Low price

Cost reduction

Conveniene
Call center
Web-based booking system
Direct sales by website and calls center
Niche market
Price-sensitive customers
Cost-driven
Cost down
Cost leadership strategy
Quick turnaround of planes makes Airasia can get higher seat load factors
Limited service
Point-to-point network
YMS and APS
Achieved simplicity
and cost economies
High Utilization
Value Chain
Dilemma
Successfully enter the Indian market
The lots orders of planes make airports crowded and the competition between low-cost airlines become much fiercer.

Other Competitors

Suggestions
If Airasia wants to expand in a rapid way and reduce its competitors…
Integrate!!!
ADVANTAGES
Promote the concentration of the industries.
Reduce the competitors in the market.
Raise the market shares.
Become bigger and stronger to compete with other competitors.

won’t cause destruction to both sides
Not only reduces the competitors,
but also make itself stronger to compete other emerging airlines
1971, Established by Rollin King and Herb Kelleher and Set the headquarter in Texas.
1979, Set automates in ten airports
1995, the first airline company using the non-ticket system


From 1973, Southwest Airlines keep profits steadily and have the 86 million every average year

Financial
Information
2010
2011
2012
178 million
421 million
Net income
Net Profit decline 55% because of the fuel cost rising at the first quarter
Get stable profit and the load factor increase every year
Business Model
Key Partners
Key Activities
Key Resources
Value Proposition
Customer Relationships
Customer Segments
Channels
Revenue Streams
Cost Structure
1.Boeing
2.IT industry
3.Car rental
Company
4.Hotel
1.Flight operation
2.Customer Service
1.Air Plane
2.IT system
3.Employee
Affordable price
Intense flight
Convenient way to buy ticket
Extra service

1.Website
2.Adertising
3.Facebook , Twitter
Websites

1.Price-sensitive
2.Time-sensitive
1.Lower operation cost
2.Reduce human cost
1.Air ticket Revenue
2.Additional Service
3. Commission

Value Chain
SAS
Dilemma
Fuel cost raised in 2011
Ticket price increase 39%
Not promoting their low ticket price
Suggestions
Suggestions
Short
Term
Long
Term
1.Lower the price slightly to cater to their
main customers
2.Try to strategic alliance to provide more
services
3.Keep the brand image

Developing the long haul market
1.Merger with other airline
companies
2. Increase the point-to point
network
3. Duplicate their advantage of cost-
leadership


one of the first civil aviation group in China.
the second civil aviation which have the international air route.
The chairman is Wang chang whua.
2005, the first plan of Spring airline took off.
“ making everybody both can take the plan”

SAS
Value Chain
Spring airline continuously make the profit in 2006-2008:
In 2005 occur
losses
in sales.
In 2006, profitability over
20 million
dollars.
In 2007, total operating income reached
1.23 billion
dollars.
In 2008, revenue increased to
1.62 billion
.

Financial Information
Spring Airlines is always still able to achieve profitability

In December 2008, Spring Airlines’ will cost 20 billion in human resources.

Spring Airlines has a powerful parent company

Key Partners
Key Activities
Key Resources
Value Proposition
Customer Relationships
Customer Segments
Channels
Revenue Streams
Cost Structure
Spring Tour
reducing services
single type aircraft
limited baggage
Owned distribution and DOC
low selling cost
E-ticket
Controlling the cost
Single type aircraft
Owned distribution and DOC
Everyone can be able to fly

Grass - roots airlines
Member system
Facebook
Shuttle bus
Official website
Early paid the ticket, customer can choose the seat
Official website Seat Control & Sales System
Ticket site at airport
Three customer's segment
Mantissa Pricing
Pricing differences
Airbus A320
Online order system
Own distribution & departure control
Business Model
Ticket's Price
The in-flight marketing activities called "air-mall"
Dilemma
6.7% of the total amount
less operating experience and small scale

Civil aviation administration of china (CAAC)

high investment, high risk and low revenue
the financing pressure is high
Full transcript