Airasia_Management

UNIVERSITI TEKNOLOGI MARA FAKULTI KEJURUTERAAN ELEKTRIK INDIVIDUAL ASSIGNMENT MGT 456 (BUSINESS ORGANIZATIONS AND MANAGEMENT) NAME | MUHAMMAD AIZZAD BIN MUSHAIMI | MATRIX NO | 2007283846 | PROGRAM | EE220 | GROUP | EEB7ES | INTRODUCTION: This study was intended to analyze the management strategy on a budget airline based in Malaysia, Air Asia which aims to identify its potential future market segments. The study also explore on how current information systems strategy adopted by the Air Asia, in which could help the company to strengthen its position as a leading low cost airline and effective new market segment help their mission practically. BACKGROUND OF COMPANY: Air Asia Bhd is a Malaysian low-cost airline. It operates scheduled domestic and international flights and is Asia's largest low-fare, no-frills airline. Air Asia is a pioneer of low-cost flights in Asia, and was also the first airline in the region to implement fully ticketless travel. Its main base is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai Air Asia and  Indonesia Air Asia have hubs at Suvarnabhumi Airport,  Thailand and Soekarno-Hatta International Airport,Indonesia, respectively. Air Asia's registered office is in Petaling Jaya, Selangor while its head office is on the grounds of Kuala Lumpur International Airport in Sepang, Selangor. Air Asia is one of the businesses that have successfully adopted cost leadership through operational effectiveness and efficiency. The cost advantages have enabled Air Asia to become the Asia’s leading low fare airline. Established on 12 December 2001, Air Asia has been such a big phenomenon in airline industry especially in Asia. By using a simple but strong slogan “Now Everyone Can Fly”, Air Asia has successfully positioned itself in customers’ mind. Its net profit for the second quarter ending 31 December 2004 was reported RM 44.4 million, a 323% increase over the previous quarter (Air Asia, 2005). Air Asia creates values through the following vision and mission: 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 FINDINGS: Management Strategy  Air Asia’s goal is to establish itself as a leading low-cost carrier in Asia. The principle components of Air Asia’s strategy are as follows: | Maximize Shareholders’ ValueAir Asia creates profit by expanding business reach within Asia. On 27 December 2006, Air Asia's CEO Tony Fernandez unveiled a five-year plan to further enhance its presence in Asia. In the plan, Air Asia will strengthen and enhance its route network by connecting all the existing cities in the region and expanding further into Indochina, Indonesia, Southern China (Kun Ming, Xiamen, Shenzhen) and India. Besides that, Air Asia also expands routes and network via a prudent calculated manner. On 27 September 2008, have on its list 106 new routes to be added to its current list of 60 over the next few years. The number of old routes discontinued has not been publicly disclosed. Air Asia also invests and enhance brand to raising investors' returns. Air Asia announced a three-year partnership with the British Formula One team AT&T Williams. The airline brand is displayed on the helmets of Nico Rosberg and Alexander Wurz, and on the bargeboards and nose of the cars. | | Safety Air Asia company never compromise safety. The aircraft maintenance engineers and pilots of Air Asia hold the same professional license as issued by the same Civil Aviation Authority. The flight attendants also have to go through the same training as the other airline crews in the full fledge airlines. Air Asia also ensures the security of all the staff and guests. Besides, this low cost airline company also always comply with every regulations in order to maintain highest standards. | | | | Focus On Customers’ Needs  Air Asia stimulates demand by offering the lowest fares. Air Asia focused on ensuring a competitive cost structure as its main business strategy. With the average fare being 40-60 % lower than its full-service competitor, Air Asia has been able to achieve strong market stimulation in the domestic Malaysian air market. On the other hand, the operating cost of the company is also dropped drastically. Beside that, Air Asia focuses on comprehensive distribution channel for example Internet bookings and ticketless travel allowed it to lower the distribution cost. They also develop various products and services while maintaining simplicity | | Operational Excellence  Air Asia Academy instills the best discipline and passion into its trainees. Even during initial selection process, Air Asia recruiters look for individuals who have a lot of passion in the job and of course those who are proud to be associated with the world’s best low cost airline. All Air Asia’s staff are contributors. Air Asia Academy instills the best discipline and passion into its trainees. Even during initial selection process, Air Asia recruiters look for individuals who have a lot of passion in the job and of course those who are proud to be associated with the world’s best low cost airline. | | Management Transparency Air Asia used the transparency method in order to making decision. These methods basically reduce the management operation cost and also enhance the speed in making decision. Besides that, this method also give high accessibility to media such as internet, television, radio and newspaper. | CONCLUSIONS: The competition among airplane industries is very tough. Each of airplanes company in the world trying to conduct some strategies to compete with another competitor in their industry. To compete with their competitor in the business environment, a company needs to make a strategy to achieve their long terms objective and can be successful for doing their business. The strategic management becomes important due to the following reason such as globalization to survival their business. Air Asia need to consider about their strategic management. The first reason is because the airline industry is a unique and complex industry. The second reason is the strategy that Air Asia need is not just how to reduce cost and make the operational activities running effectively. But, Air Asia needs to come out with the strategy that can make competitive position that the company performs different activities from rivals or performing similar activities in different ways to achieve their business successfully. The current issues in Air Asia Company are more focused in the competition of the cost among an airplane industry. Air Asia as an industry company which is more focusing in the low cost carrier airplane industry need to consider to make the lowest possible cost to compete with the other competitors in their airplane industry. RECOMMENDATION: To succeed in the increasing competitive marketplace, Air Asia needed necessary to be reached out globally by looking into three factors, namely cost leadership, focus, and differentiation, and marketing positioning in making towards develop a new marketing mix strategy. a) Cost Leadership Air Asia generates significant cost savings by sending information via Internet, rather than by post or fax. It could use its Web site to publish in a cost-effective way, which public domain information such as product brochures, vacant seats, contact details and other important information. The company saves on the cost of running ‘bricks and mortar’ outlets and could reach national markets without having to develop a physical distribution network. Most important was the company could save on customer service costs by enabling customers to serve themselves. b) Focus Air Asia successfully adopted focus strategies by having developed a very efficient and fully computerized system for its customers to book the air tickets through its website. The E-Commerce infrastructure developed by the company allowed collection and central storage of sales and marketing data. Air Asia used these data to enable collection to drive decision support tools for planning and marketing. c) Differentiation E-ticketing or online booking was the issue of a booking code at the conclusion online transition that replaced the traditional airline ticket. It offered the company a chance to make considerable savings in both trade. Secondly, it was very attractive to customers, who may benefit from a service offer both technologically advanced and of high intrinsic value. REFERRENCES: 1. http://www.airasia.com (Air Asia Corporate Website) 2. http://www.statistics.gov.my (Department of Statistics, Malaysia) 3. http://www.singstat.gov.my (Singapore Statistics Department)