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Internal & External Environment Analysis

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Adha Sapian

on 17 November 2014

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Transcript of Internal & External Environment Analysis

Air Asia Advertisement..
low cost airlines based in KL, Malaysia
operates scheduled domestic and international flights
Asia's largest low fares and no frills airlines
established - 1993. first operation on 18 Nov. 1996.
main based in LCCT at KLIA
Company Background
founder - Tony Fernandes
he proceeded to engineer the remarkable turnaround
turning a profit in 2002 and launching new routes from its hub in KLIA
undercutting former monopoly operator - Malaysia Airlines
Internal Environment
AirAsia's Strategy
Culture and Management Style
Internal & External Environment Analysis
mohd nur'adha bin mohd sapian
marketing strategic management
-focusing on low-cost, long-haul segment that to provide high-frequency and point-to-point networks. Cost efficiencies are derived from maintaining a simple aircraft fleet and a route network based on low-cost airports, without complex code-sharing and other legacy overheads that weigh down traditional airlines without compromising on safety. Guests continue to enjoy low fares, through cost savings that AirAsia pass on to their guests
To be the largest low cost airlines in Asia and serving 3 billion people who are currently underserved with poor connectivity and high fares.
• 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 levels

Key Strategies
Partnering w/ the world's most renowned maintenance providers and complying w/ the most world airlines operations.
Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity.
Providing guests w/ the choice of customizing services w/o compromising on quality and services
Making sure tht processes are as simple as possible
Applying the point-to-point network keeps operation simple and lower costs.
Safety First
High Aircraft Utilization
Low Fares, No Frills
Streamline Operation
Lean Distribution System
Offering a wide and innovative range of distribution channels to make booking and travelling easier.
Point-to-point Network
Performance Analysis
Operation - 6 elements
- A320. A single type offers economies in purchasing, maintenance, pilot training and aircraft utilization.
No-frills flights - Offering single class. Customer services are minimal as they not serving the complimentary meals and drinks.
Sales and marketing
- AirAsia engages in direct sales through its website and call center. As a result, it avoids paying commissions to travel agents.

- AirAsia achieved simplicity and cost economies by outsourcing those activities that can be undertaken more effectively and efficiently by the third parties.
Information technology
- AirAsia uses Navitair’s Open Skies computer reservation system (CRS), which links Web-based sales and inventory system which also links with AirAsia’s call center.
Human resource management
- A heavy emphasis is given to selecting applicants on the basis of their aptitude, then creating the environment and a system with develops employees and retains them.
Recent years, more competitors have been joining into the low cost carrier seem to push the movement of the industry toward maturity stage
AirAsia has been coming out with all sorts of way to make sure they stay at growth stage as much as they could.
maximize the “low-cost” strategies.
further controlled and reduced their operational cost by offering tight contract based with their employees
cut down additional services
flying to relatively shorter distance way
lowering down and tight controlled on the operational cost
No problem with the raise of the fuel price by striking it with their ultimate cost control mechanism.

As everyone can be see that the AirAsia’s corporate culture and management style reflect to the boss, Tony Fernandes’ own personality. He said that he came to the industry with no preconceptions but found it rigidly compartmentalized and dysfunctional. He wanted AirAsia to reflect his own unstuffy, open and cheerful personality. He is rarely seen without his baseball cap, open-neck shirt and jeans, and he is proud that the firm’s lack of hierarchy (very unusual in Asia) means anyone can rise to do anyone else’s job.
The Group prides itself on building a strong, team-oriented corporate culture
AirAsia motivates its employees by awarding bonuses based upon each employee’s contribution to AirAsia’s productivity, and expects to increase loyalty through its ESOS (employee share ownership scheme)
Encourages open communication which creates a dynamic working environment, and meets all its employees on a quarterly basis to review AirAsia’s results
Inculcates enthusiasm and commitment among staff by sponsoring numerous social events and providing a vibrant and friendly working environment
Strive to be honest and transparent in its relations with third parties
Fosters a non-discriminatory, meritocratic environment
Emphasize maintaining constant quality of service throughout all AirAsia’s operation
External Environment
• Low cost operations
• Fewer management level, effective, focused and aggressive management
• Simple proven business model that consistently delivers that lowest fares
• Penetrate and stimulate to potential markets
• Multi-skilled staffs means efficient and incentive workforce
• Single type fleet minimize maintenance fee and easy for pilot dispatch

Service resource is limited by lower costs
• Limited human resources could nnot handle irregular situation
• Government interference and regulation on airport deals and passenger compensation
• Non-central location of secondary airports
• Brand is vital for market position and developing it is always a challenge
• Heavy reliance on outsourcing
• New entrants to provide the price-sensitive services

• Long haul flight is an trial to get underdeveloped market share
• Differentiation from traditional LCC model by adding customer services or operation as full service with low fare
• Ongoing industry consolidation has opened up prospects for new routes and airport deals
• High fuel prices will squeeze out unprofitable competitors

• Full service airlines start out costs to compete
• Entrance of other LCCs
• High fuel price decreases yield
• Accident, terrorist attack, and a disaster and affect customer confidence
• Aviation regulation and government policy
• Increase in operation cost in producing value-added services
• System disruption due to heavily reliance on online sales

PEST Analysis

• Fares charged by Malaysia government were the lowest.

• Airline markets in ASEAN, India and China.
• Political uncertainty in India, Thailand and Indonesia.


• Gross Domestic Product (GDP) increase.
• AirAsia low cost strategies gaining attraction in the region.
• Oil price

• Economic reform “DoiMoi”


• Main sector Malaysia economy is the tourism
• AirAsia commits to “Safety First”
• Relaxed. “Employees before customers”.

• Towards increased transportation consumption
• Jain-vegetarian foods for India market
• Vietnam trained workforce, charges relief to airlines


• AirAsia provides the online service
• Introducing the GO holiday
• From Boeing 737 to Airbus A320

• USTDA – long-term effort to promote Indian aviation infrastructure
• Vietnam will become the world’s third fastest-growing market for international passengers and freight.

Poster’s Five Forces Analysis
New Entrants
– AirAsia’s LCC strategy sets barriers to new entrants.
Threat of Substitutes
– Moderate. Because customers prefer LCC rather than full service carriers or bus, train and ship.
– The more informed internet customers become, the more power they may have over AirAsia, especially if AirAsia is unable to maintain its low cost leadership position.
– Since AirAsia is the low cost leader, they may be able to force their suppliers to maintain or lower prices.
– AirAsia is in a guarded position against their current competitors.

Competitor Analysis
A. Thai Airways
• It operates domestic, regional and intercontinental flights.
• Its philosophy is to provide a full service to premium passengers while maintaining the highest standards of service to leisure travelers, who represent over 80% of the company’s total passenger transportation revenue.

– Thai Airways is an analyzer. It attempts to maintain a strong position in its core product markets but also seeks to expand into new-usually closely related-product markets. In order to compete with AirAsia, Thai Airways has its own product extension which is Nok Air that provides low cost carrier. They also is the first airline to install hospital-grade air-filter True HEPA, that capable of intercepting up to 99.999% of dust particles and micro-organisms on every flight. Other than that, it is the first carrier in Asia to fly commercial flights using bio fuels.

B. Singapore Airlines
• Is a global company dedicated to providing air transportation services of the highest quality and to maximizing returns for the benefits of its shareholders and employees.
• Primarily concerned with maintaining its differentiated position in the mature market.
• In order to compete with AirAsia, SIA introduced 2 budget airlines which are ValuAir and Tiger Airways.

– First to offer free headsets, a choice of meal and free drinks in Economy Class, in the 1970s.
First to introduce satellite-based inflight telephones in 1991.
First to involve comprehensive panel of world-renowned chefs, the International Culinary Panel, in developing inflight meals in 1998.
First to offer audio and video on demand (AVOD).
First to operate the world’s longest non-stop commercial flight between Singapore and Los Angeles in February 2004 and surpassing the record later that year with the non-stop service to New York, in June 2004.

Scope Operation Within The Competitors
Thats all from me...
Thank you..
Full transcript