Strategic_Management_Project_of_Airasia_Bhd

EXECUTIVE SUMMARY AirAsia is well known company for airlines industry especially in all over Asia and being one of the market leaders in that industry. In order to maintain its brand which is famous with low cost carrier and to be consumers’ preference to choose using its services offered, AirAsia must be able to complete with competitors and new entrance by doing some sort of strategies. AirAsia has very clear vision and mission of the company and this enable each members of the company work hard to fulfill the vision and mission which has been declare and must achieve in future for both sort term and long term. But, AirAsia never escape from the problems in term of its operation and this must be solved by come out with new strategies and proper planning to cope with that problems. According to internal and external evaluation of the AirAsia show that the company is getting above 2.5 score for both of evaluation. This explained that AirAsia does not affect by any external and internal factors which mean it is good sign for the company. By look into external and internal factors the company would be also able to identify what kind of strategies and planning that the company should take in future. Then after identification and evaluation of external and internal factors, the company can go further steps with doing matrix evaluation. There are five matrix which are TOWS, space, Boston Consulting Group (BCG), Grand, Internal-External and competitive profile matrix. Most of the matrix evaluation shows that the company is in aggressive strategy level and further analysis shows that the AirAsia must do several strategies which connected with the company’s operation. The analysis of SWOT and strategic planning come out with the two important strategies that must be taken by the AirAsia in order to develop its performance of company in future. The two important strategies are market penetration and market development. These two strategies classified under aggressive strategies and commonly used to boost or increase sales of company’s services and automatically increase revenue too. Although both of these strategy have their own advantages and disadvantages, it is believed that both is the best strategy for the company to take in future based on analysis done towards the company itself. 1. BACKGROUND Airasia as the second Malaysian National Airline, provides a totally different type of service in line with the nation’s aspirations to benefit all citizens and worldwide travelers. Such service takes the form of a no frills – low airfares flight offering, 40%-60% lower than what is currently offered in this part of Asia. Their vision is “Now Everyone Can Fly” and their mission is to provide ‘Affordable Airfares’ without any compromise to Flight Safety Standards. The story of emergence of AirAsia is similar to Ryanair, since both carriers underwent a remarkable transformation from a money-losing regional operator to a profitable, low cost airline. AirAsia was initially launched in 1996 as a full-service regional airline offering slightly cheaper fares than its main competitor, Malaysia Airlines. Before 2001, Airasia fail to either sufficiently stimulate the market or attract enough passengers from Malaysia Airlines to establish its own niche market. The turnaround point of AirAsia is in 2001, while it was up to sale and bought by Tony Fernandes. Tony Fernandes then enrolled some of the lending low-cost airline experts to restructure AirAsia’s business model. He invited Connor McCarthy, the former director of group operation of Ryanair, to join the executive team. What is mean by low cost airlines' A low cost airline generally has many features that differentiate it from the traditional carriers. These features include ticketless travel, online ticket sales, no international offices, no frequent flyer points, no free food and beverages, no in flight magazines, no club lounges, use of secondary city airports. Not all low cost airlines have these features, and not all airlines that have some these features are low cost airlines. For example, Virgin Express is low cost airline, but still offers complimentary coffee and in flight magazine, and they are based a Brussels primary airport. In late 2001, AirAsia was re-launched in Malaysia as a trendy, no-frills operation with three B737 aircraft as a low-fare, low-cost domestic airline. Asia’s leading airline was established with the dream of making flying possible for everyone. Since 2001, AirAsia has swiftly broken travel norms around the globe and has risen to become the world’s best. With a route network that spans through more than 20 countries, AirAsia continues to pave the way for low-cost aviation through our innovative solutions, efficient processes and a passionate approach to business. Together with our associate companies, AirAsia X, Thai AirAsia and Indonesia AirAsia, AirAsia is set to take low-cost flying to an all new destinations. AirAsia X Focusing on the low-cost, long-haul segment – AirAsia X was established in 2007 to provide high-frequency and point-to-point networks to the long-houl business. AirAsia X’s 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 saving that we pass on to our guests. AirAsia X’s efficient and reliable operations are fully licensed and monitored by Malaysian and international regulators, and adhere to full international standards. AirAsia X is committed in offering X-citing low fares, X-emplary levels of safety and care, and an X-traordinary in-flight and service experience to all our guests – spreading the amazing AirAsia experience to X-citing destinations in Australia, New Zealand, China, Taiwan, Japan, Korea, India, Middle East and Europe. Vision of the company Vision of the company is “Now Everyone Can Fly” in term 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 of the company 1. To be the best company to work for whereby employees are treated as part of a big family 2. Create a globally recognized ASEAN brand 3. To attain the lowest cost so that everyone can fl y with AirAsia 4. Maintain the highest quality product, embracing technology to reduce cost and enhance service level Values We make the low fare model possible through the implementation of the following key strategies: 1. Safety First: Partnering with the world’s most renowned maintenance providers and complying with the with world airline operations. 2. High Aircraft Utilization: Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity. 3. Low Fare, No Frills: Providing guests with the choice of customizing services without compromising on quality and services. 4. Streamline Operations: Making sure that processes are as simple as possible. 5. Lean Distribution System: Offering a wide and innovative range of distribution channels to make booking and travelling easier. 6. Point to Point Network: Applying the point-to-point network keeps operations simple and costs low. Opportunities faced by AirAsia in light of external development a. Low fare of Indonesia-Malaysia trip The fare for Jakarta-Johor Bahru trip cost Rp 100,000 (RM 88.88 one way). And charge Rp 150,000 for a Bandung-Kuala Lumpur flight, and Rp300,000 for a Surabaya-Kuala Lumpur trip, whereas a Jakarta-Kuala Lumpur air ticket from Malaysia Airlines available at travel agents cost Rp 1.4 million. Meanwhile, LionAir on the same route, charged Rp 1.05 million. The cost fare provided by AirAsia help it open the Indonesia market. b. Low fare of Singapore-Bangkok service AirAsia will increase its services between Singapore and Bangkok by introducing a second daily flight to its existing schedule. This recent development came barely a month after Thai AirAsia operations started its first international flight to Singapore in early February this year. AirAsia is offering its guests promotional fares to/from Singapore-Bangkok from SGD$23.99 (THB 499) one way from the 28th March to 30th October 2004. It is much lower than the lowest fare SGD$56 offered by full-services carrier. This helps it open the Singapore market. c. Political connection AirAsia hold 49% of the Thai AirAsia with 1% being held by a Thai individual. The remaining 50% is held by Shin Corp. which is owned by the family of Thailand’s Prime Minister, Thaksin Shinawatra. Shin Corp. has financial strength, synergy in information technology and telecommunications, which support AirAsia internet and mobile phone bookings. Shin corp. allows subscribers of the Shin mobile phone flagship, advance information service, being able to reserve tickets through its short-messaging services (SMS). AirAsiA with its politically powerful backer may well grow up to bite. This helps it open the Thailand market. d. Malaysian government support The Malaysian government supported the establishment of AirAsia in 2001 to help boost the under-used Kuala Lumpur International Airport. AirAsia’s flights from Senai are meant to develop Johor into a transport hub to rival Singapore. AirAsia, therefore can provide an alternative route to travel to Bangkok, by using Senal Airport in Johor Bahru, in southern Malaysia. Opportunities faced by AirAsia in light of Internal Development a. Issue of IPO Kamarudin Meranun, AirAsia’s Executive Director announced the appointment of Credit Suisse First Boston (CSFB) and RHB Sakura Merchant Bankers (RHB) as the book runners for the company’s upcoming Initial Public Offering (IPO). The IPO strengthens AirAsia balance sheet, further cuts its existing low costs at 2.5 US cents per ASK and accelerates our growth plans throughout Asia. The IPO also allows AirAsia to expand its fleets of 18 Boeing 737-300s. b. Political connections Thai AirAsia is a join venture established by AirAsia with Shin Corp. is owned by the family of Thailand’s Prime Minister, Thaksin Shinawatra, and about 900 million Baht will be invested in Thai AirAsia over a five-year period. Shin Corp. oversees the finance and administration of Thai AirAsia while AirAsia shoulders the responsibility for marketing and operations. Shin Corp. has financial strength and support AirAsia to grow. AirAsia with its politically powerful backer may well grow up to bite. Challenges faced by AirAsia in light of external development a. Indonesia habit Preferences of Indonesian passengers are quite different from the concept of cheap air travel without extra service for the passengers (free snacks and drinks), and also their reluctance to bring light baggage. AirAsia prefers passengers with very light and minimum baggage. If this is the case, it may not last long. But Indonesian domestic airline companies are able to provide value-added extras like food and beverages as part of their service to the passengers, although at a relatively higher cost. The comparative edge of Indonesian domestic airline companies compared to AirAsia concern habit (culture). Furthermore, Indonesian domestic airlines were already trained with the low-cost air travel concept, known as tariff war. They have proved themselves as immune, and managed to survive. Last but not least, the Indonesian government or domestic airline companies had never announced the availability of a low-cost airline company of the country. All these affect AirAsia growth in Indonesian. b. Singapore government rejection Initially, AirAsia wanted to start flight from the southern state of Johor, near Singapore, it hoped to attract passengers by running a convenient bus service to the city-state. However, Singapore quickly quashed that idea. The Singapore government said it would not approve a bus link for AirAsia because it was not ‘in her nation interest’, reflecting fears that Singapore’s Changi airport would lose business to Johor’s new Senai airport. This makes AirAsia cannot abandon the use of Changi airport, and therefore suffer from a higher cost. This is because AirAsia flying to Singapore needs to suffer from flight congestion of Changi. Changi ha drawbacks of flightcongestion that could prevent the quick turnaround essential to keeping down costs. AirAsia find it stuck between big planes and circling to wait for a slot to open up, which means extra fuel costs. Moreover, the SGD$21 departure and security tah of Changi is too high for AirAsia low-cost operation. AirAsia had asked the Singapore government to waive the fees, however, a request that was not only rejected but also criticized. Beside Singapore – Bangkok, AirAsia now provides an alternative route to travel to Bangkok, by using Senai airport in Johor Bahru, in southern Malaysia. Seeking to cater to the different markets, fares for Johor Bahru – Bangkok are generally 20% lower in comparison to Singapore – Bangkok. AirAsia currently operate daily flight to Bangkok from Johor Bahru. However, the choice proved unpopular, as the route failed to attract Singaporeans because of the additional cost and inconvenience of having to travel in and out of Malaysia by road. All these affect AirAsia external growth. c. Minimum air-fare rates AirAsia faces challenges finding open takeoff and landing slots at opportune times, and Thailand’s regulation that sets minimum air- fare rates. Although Transport Minister Suriya Jungrungreangkit said the current minimum air-fare regulations will be scrapped to open up the market, he couldn’t name a date when this will be done. This seems to be favoritism toward Thai Airways International’s domestic operations, and affects Thai AirAsia to compete in the Thailand market. External changes which have impact on AirAsia a. Asia’s middle class growth Low-cost airlines are anticipated to have greater potential in Asia as there are many Asian cities with a population above one million people each as well as a rising middle class population. This growth of middle class in Asia provides a huge market potential for AirAsia to grow. However, as the market is becoming larger, more airlines or new comers would like to get a piece of the action. For example, Budget airlines, it is estimated, will capture at least 25% of Asia’s air travel market within next 10 years and a lot of the will be new, not diverted, traffic. Therefore, AirAsia will face more competitions at the same time. Besides the low-cost airlines, AirAsia still needs to compete with the conventional carriers. Although extra passengers of the low cost airlines will be coming from the new demand to be created by the low fares, the growth may not be entirely ‘stolen’ from big flag carriers. b. Actions of Changi and nearby airports The growth of low-cost airlines in south-east Asia has a significant effect on which airport will dominate the regional aviation market. Low cost airlines are seen as helping funnel more passengers to airport hubs. Therefore, there is a realization among regional governments that they need smashing airports and feisty carriers or they are going to miss out big time. Therefore, these governments are more willing to support low cost airlines. For example, the Malaysian government supported the establishment of AirAsia in 2001 to help boost the under-used Kuala Lumpur International Airport, and Thai premier’s Shin Corp. form a join venture with AirAsia that would benefit Bangkok’s new airport and create a new hub at Chiang Mai. Therefore, under this situation, it helps AirAsia grow in Asia. Moreover, as there is a growth of several south-east Asian airports, this poses a challenge to the status of Singapore’s Changi airport as a regional aviation hub. These airport include Johor’s new Senai airport in southern Malaysia, Bangkok new Suvarnabhumi airport which will be able to handle 45 million passengers when it opens in 2005, Bangkok Don Muang which recently overtook Changi in passenger number, etc. to maintain Changi’s position as the air hub in the region. Singapore is proposing a budget airline terminal at Changi by 2005 and lower passenger taxes to attract low cost airlines. This helps AirAsia grow and lower the cost. c. Action of existing airlines The existing airlines in south-east Asia have several actions to compete with AirAsia, for example, some have launched a low cost airline to flight with AirAsia. Singapore Airlines launched a low cost airline subsidiary, Tiger Airways, in the second half of 2003, only months after the scheduled launch of ValuAir set up by one of its former executives. Thai Airways have frequency and capacity to offer to their 13 domesttic destinations. They also have during the past two years, worked to improve operational efficiency, slashing unprofitable domestic routes, increasing flights on busy routes, strengthening yield management and controlling costs. All these make AirAsia face a huge competition. Marketing AirAsia, Asia’s leading low cost carrier, recently partnered with Yahoo! Mobile for its very first mobile campaign. The goal was to encourage interaction with users and increase the overall awareness of AirAsia and its promotions throughout Asia. Aimed at generating and maintaining top-of-mind awareness with their reach, Yahoo’s mobile marketing and advertising solutions provided a key advantage for AirAsia. The campaign saw tremendous success across seven target markets including Malaysia, Singapore, Thailand, Indonesia, Philippines, Taiwan, and Hong Kong, AirAsia became the first company on Yahoo Mobile in Malaysia and the success of the campaign showed how mobile marketing could help brands successfully communicate with the rapidly growing mobile consumer base. 1. IDENTIFY THE FIRM’S EXISTING MISSION |Item |Criteria |Criteria Stated |Criteria Not Stated | |1 |Customers | | | |2 |Product/Services | | | |3 |Markets | | | |4 |Technology | | | |5 |Concern for survival, growth and profitability | | | |6 |Philosophy | | | |7 |Self-concept | | | |8 |Concern for public image | | | |9 |Concern for employees | | | Existing mission statement of AirAsia: • To be the best company to work for whereby employees are treated as part of a big family. (9) • Create a globally recognized ASEAN brand. (3) • To attain the lowest cost so that everyone can fl y with AirAsia. (1,8) • Maintain the highest quality product, embracing technology to reduce cost and enhance service level. (2,4,5) 2. IDENTIFY THE FIRM’S EXISTING OBJECTIVES 1. Provide full fledge training and development to AirAsia pilot, aircraft engineers, cabin crew and guest service staffs 2. Develop the academy as an aviation training ground towards fulfilling AirAsia’s aspiration in becoming a regional aviation training hub 3. Serves as a platform to keep AirAsia on track with the latest industry development and to incorporate best practice into their operations 3. IDENTIFY THE FIRM EXISTING STRATEGIES 1. Safety First: Partnering with the world’s most renowned maintenance provider and complying with the world airlines operation 2. High Aircraft Utilization: Implementing the region fastest turnaround time at only 25 minutes, assuring lower cost and higher productivity 3. Low fare, no frills: Providing guest with the choice of customizing services without compromising on quality and services 4. Streamline Operation: Making sure the process are as simple as possible 5. Lean Distribution System: Offering a wide and innovation range of distribution channels to make booking and travelling easier 6. Point to point Network: Applying the point to point network to keep operation simple and lower cost Key Result Objectives |Key Areas |Objectives |Measure of performance | |1 |Marketing |Ticket order by online |1 | |2 |Innovation |Keep with the latest industry development |2 | |3 |Human Organization |Training to all employees |3 | |4 |Financial Resources |Allocate financial resources efficiently |4 | |5 |Physical Resources |Search the best physical resources for |5 | | | |operation | | |6 |Productivity |Provide best service in airline |6 | |7 |Social Responsible |Low cost carrier |7 | |8 |Profit |Low cost operation |8 | 2. DEVELOP NEW MISSION STATEMENT FOR THE ORGANIZATION (COMPRISING AL NINE ELEMENTS) Customer - Provide low cost carrier for customers Products/Service - High quality and safety products and services Markets - To be the first choice in ASEAN airlines Technology - Posses high technology in its operation Concern for survival - Low cost in its operation and maintain financial stability Philosophy - All company’s activities carry out in ethically Self-Concept - To be leader in ASEAN airline industry Concern for public - Concern for public benefit and affordable to fly with AirAsia Concern for employees - Give rewards to employees who did the best work 1. Evaluation of New Mission Statement on Nine Criteria |Item |Criteria |Criteria Stated |Criteria Not Stated | |1 |Customers | | | |2 |Products/Services | | | |3 |Markets | | | |4 |Technology | | | |5 |Concern for survival | | | |6 |Philosophy | | | |7 |Self – Concept | | | |8 |Concern for Public Image | | | |9 |Concern for Employees | | | 3. PROBLEM IDENTIFICATION |No |Problem Identification |Major Problem/Minor Problem |Priorities Of The Problem | |1. |Increasing |Minor |2 | |2. |Competition |Major |1(need immediate attention) | |3. |Customer decrease |Minor |3 | | |Rising fuel prices | | | 4. SWOT FRAMEWORK 1. IDENTIFICATION THE ORGANIZATION EXTERNAL OPPORTUNITIES / THREATS 4.1.1. OPPORTUNITIES 4.1.1.1. Asia’s middle income growth (soc) 4.1.1.2. The home government support (pol) 4.1.1.3. Applying technology advances in airlines industry (techno) For example e-ticketing, it is easy for people who are busy with their work and no time to walk in to the counter for booking ticket 4.1.1.4. Economic in good condition (econ) 4.1.1.5. The change of lifestyle of the customer (soc) 4.1.1.6. Political connection between home countries with other country (pol) 4.1.1.7. Limited substitutes for airplanes (substitutes) Although there are several substitutes (i.e. trains and ships) the geographical structure of Asia has made air travel an efficient, viable, and convenient mode of transportation 4.1.1.8. “ASEAN Open Skies” agreement (econ) It will allow unlimited flight among ASEAN’s regional air carriers beginning December 2008 4.1.1.9. The population of Asian middle class will be reaching almost 700 million by 2010(soc). This create a large market and a hug opportunity for all low cost airlines in this regional 4.1.2. THREATS 4.1.2.1. Price of oil increasing (econ) 4.1.2.2. The culture of passengers is different (soc) 4.1.2.3. Other government countries rejection (pol) 4.1.2.4. Many budget airlines growth (competitor) 4.1.2.5. Certain rate like airport departure, security charges and landing charges are beyond the control of airlines operator (pol). This is a threat to all airlines especially low cost airlines that tries to keep their cost as lower as possible 4.1.2.6. Users perception that budget airlines may compromise safety to keep cost low (consumer). Consumer feels not safe to use budget airlines since their price is very low 4.1.2.7. Supplier of airlines is limited (supplier) Power of supplier is high as there are limited (availability of) supplier (only Boeing and Airbus), the switching cost is high (i.e. airplanes and their maintenance are costly) and there are few substitutes airplanes 4.1.2.8. Technology problem (techno) For example, overload of information of hackers, hacked the airlines website and it will give bad impact to airlines 4.1.2.9. Natural disaster (demo) For example is flood, tsunami, and earthquake at certain place will influence the business of airlines 4.1.3. EFE MATRIX (EXTERNAL FACTOR EVALUATION MATRIX) |No. |Key External Factors |Weight |Rating |Weighted Score | | |Opportunities | | | | |1 |Asia’s middle income growth |0.06 |2 |0.12 | |2 |The home government support |0.07 |4 |0.28 | |3 |Applying technological advances in airlines industry |0.04 |3 |0.12 | |4 |Economic in good condition |0.06 |2 |0.12 | |5 |The changes of lifestyle of the customer |0.05 |2 |0.10 | |6 |Political connection between home country with other country |0.06 |3 |0.18 | |7 |Limited substitutes for airplanes |0.10 |3 |0.30 | |8 |“ASEAN Open Skies” agreement |0.04 |3 |0.12 | |9 |The population of Asian middle class will be reach almost 700 million|0.04 |3 |0.12 | | |by 2010 | | | | | |Threats | | | | |1 |Price of oil increasing |0.04 |2 |0.08 | |2 |The culture of passenger are different |0.03 |1 |0.03 | |3 |Other government country rejection |0.07 |3 |0.21 | |4 |Many budget airlines growth |0.04 |2 |0.08 | |5 |Certain rate like airport departure, security charges and landing |0.10 |3 |0.30 | | |charges are beyond the control of airlines operators | | | | |6 |Users perception that budget airlines may compromise safety to keep |0.04 |2 |0.08 | | |low cost | | | | |7 |Supplier of airlines is limited |0.07 |3 |0.21 | |8 |Technology is limited |0.03 |3 |0.09 | |9 |Natural disaster |0.06 |3 |0.18 | | |Total |1.00 | |2.72 | ENVIRONMENTAL THREAT AND OPPORTUNITY PROFILE (ETOP) | |Factors |Impact of factors |Important of factors |Environmental treat | |1 |Economic |10 |10 | | |2 |Political |5 |7 | | |3 |Social |7 |6 | | |4 |Technology |4 |5 | | |5 |Competitive |5 |6 | | |6 |Geographic |3 |4 | | |7 |Natural Environment |8 |5 | | • Impact from 10 (strong positive) to 0 (strong negative) • Importance of factor ranked from 0 (unimportant) to 10 (very important) Comment: The company is good since the total of EFE Matrix is 2.72. They can continue their current strategy for improving their business. For the major impact of factors is economic where the amount is 10 while, for importance of their major factor is 6, which mean quiet important. Geographic factor give less impact towards AirAsia business. 2. IDENTIFYING THE ORGANIZATION EXTERNAL STRENGTH / WEAKNESSES 1. STRENGHTS 4.2.1.1. Low cost for all passenger (mgt) It is suitable with their tagline ‘Everyone can fly’ mean to giving opportunity to all people to flight with the lowest possible fare and making them can flight even they only have less money 4.2.1.2. Has many destinations (operation) Route network of AirAsia has more than 20 countries, for example United Kingdom, Iran, China, New Zealand and France 4.2.1.3. AirAsia is the lowest leader in Asia (Operation) With the help of AirAsia Academy, AirAsia has successfully created a “low cost airlines mentality” among their workforce. The workforce is very flexible and high committed and very critical in making AirAsia the lowest cost airlines in Asia 4.2.1.4. High Technologies (mgt) The excellent utilization of IT have directly contributed to their promotional activities (email alert and desktop widget which was jointly develop with Microsoft for new promotion), brand building exercise (with over 3 million hits per month and the most widely surfed booking engine in the world) as well keep the cost low by enabling direct purchase of ticket by consumer thus saving on airlines agent fees 4.2.1.5. Get mane awards such as “World’s Best Airlines” for the second year, Asia Pacific’s Best Marketing Campaign (mktg). It shows AirAsia have good image and performance since it got so many awards 6. The customer can pay their booking ticket by credit card over phone (operation) 4.2.1.7. Good marketing campaign such as making a year deal with Manchester United, one of the English Football Club and recently had programmed at television “Travelog Asia”. This is one of the examples of good marketing strategy (mktg) 4.2.1.8. The current ratio is increase from 1.3 times to 1.47 times (fin) From 1 unit current liabilities can be covered by 1.47 unit of asset. It will make the company less risk 4.2.1.9. AirAsia has very strong management team with strong links with government and airlines industry leader (mgt) This is partly contributed by the diverse background of the executive management team that consist of industry expert and ex-top government officials 4.2.1.10. Increasing the profit 1061 million on year 2010 (fin) 1. WEAKNESSES 4.2.2.1. AirAsia receive a lot complaint from customer on their service (mgt) Examples of complaint are around flight delays, being charged for a lot of things and not able to change flight or get a refund if customer could not make it. Good customer service and management is critical especially when competition is getting intense 4.2.2.2. The facilities at the airport (mgt) There has limited chairs at waiting area 4.2.2.3. The waiting period between check in and depart is too long (operation) It takes around 2 hours for international departure 4.2.2.4. Apply autocratic management (mgt) They only considered opinion from top management to make the decision without asking from the other worker opinion 4.2.2.5. Rely on debt to much since ratio for year 2010 is 73.15% (fin) It is more than half its capital gets from borrower. It will risk the company 4.2.2.6. The average collection period is quite high which 76 days (fin) It means the companies have to wait until 76 days to collect their debt from borrower 4.2.2.7. No MRO (maintenance, repair, overhaul) facility (operation) Thus AirAsia cannot maintain its own planes. With an increasing fleet this is a competitive advantage 4.2.2.8. No frills (operation) They only provide the transportations services. The customer has to make pre-order for their heavy meal such as nasi lemak during booking their tickets. If not, they only can buy the chip and beverages 4.1.1. IFE (INTERNAL FACTOR EVALUATION) |No. |Key Internal Factors |Weight |Rating |Weighted Scored | | |Strengths | | | | |1 |Low cost for all passenger |0.13 |4 |0.52 | |2 |Has many destination |0.03 |3 |0.09 | |3 |AirAsia is the lowest leader in Asia |0.05 |4 |0.20 | |4 |High Technologies |0.05 |3 |0.15 | |5 |Get mane awards such as “World’s Best Airlines” for the|0.03 |2 |0.06 | | |second year, Asia Pacific’s Best Marketing Campaign | | | | |6 |The customer can pay their booking ticket by credit |0.04 |3 |0.12 | | |card over phone | | | | |7 |Good marketing campaign |0.03 |4 |0.12 | |8 |The current ratio is increase from 1.3 times to 1.47 |0.04 |3 |0.12 | | |times | | | | |9 |AirAsia has very strong management team with strong |0.07 |3 |0.21 | | |links with government and airlines industry leader | | | | |10 |Increasing the profit 1061 million on year 2010 |0.03 |3 |0.09 | | |Weaknesses | | | | |1 |AirAsia receive a lot complaint from customer on their |0.04 |4 |0.16 | | |service | | | | |2 |The facilities at the airport |0.06 |3 |0.18 | |3 |The waiting period between check in and depart is too |0.06 |4 |0.24 | | |long | | | | |4 |Apply autocratic management |0.05 |2 |0.10 | |5 |Rely on debt to much since ratio for year 2010 is |0.03 |2 |0.06 | | |73.15% | | | | |6 |The average collection period is quite high which 76 |0.06 |2 |0.12 | | |days | | | | |7 |No MRO (maintenance, repair, overhaul) facility |0.15 |4 |0.6 | |8 |No frills |0.05 |3 |0.15 | | |Total |1.00 | |2.75 | Comment: The company is a good since total of IFE matrix is 2.75. They can continue their current strength to cover their weaknesses to grab the opportunities on the industry Assessment of culture elements | | |Score (0-9) for each | | | |Importance |Compatibility with | | | |of culture |Strategic | | | | |Management | |1 |Founder's beliefs and values |7 |  | |2 |Key executive's style |7 |  | |3 |Maturity of organization |8 |  | |4 |Cohesiveness and collaboration |8 |  | |5 |Openness and trust |6 |  | |6 |Climate and organization |6 |  | |7 |Recognition of individual |4 |  | |8 |Rewards for performance |5 |  | |9 |Support of individual |6 |  | |10 |Participation in decisions |8 |  | |11 |Consistent communication |8 |  | |12 |Enforcement policies |8 |  | |13 |Degree of social interaction |7 |  | |14 |Opportunity for growth |10 |  | |15 |Level of job security |6 |  | |16 |Level of technology |7 |  | |17 |Degree of innovation |9 |  | |18 |Sense of belonging |5 |  | |19 |Latitude in job execution |6 |  | |20 |Sense of urgency |5 |  | Company capability profile – Managerial factors | | | |0% |Weak |Neutral |Strong |100% | |1 |Corporate image responsibility |  |  |  |  |  | Financial ratio profile |Profitability |  |  |  |  | | |Very Low |Average |Very high | |Liquidity |  |  |  |  | | |Very Low |Average |Very high | |Leverage |  |  |  |  | | |Very Low |Average |Very high | |Activity |  |  |  |  | | |Very Low |Average |Very high | Comment: Overall the company has strong financial position. Besides, the company has relied more on debt but they still can generate net profit to shareholders and others. They should decrease the number of debt towards reducing the risk. Company capability profile – Financial factor | | | |0% |Weak |Neutral |Strong |100% | | | | | | |50% | | | |1 |Accessed to capital when required |  |  |  |  |  | 5. MATRIXES 5.1. TOWS MATRIX | |Strengths | | |1. Low cost for all passengers | | |It is suitable with their tagline ‘Everyone can fly’ mean to giving | | |opportunity to all people to flight with the lowest possible fare and | | |making them can flight even they only have less money | | |2. Has many destinations | | |Route network of AirAsia has more than 20 countries, for example | | |United Kingdom, Iran, China, New Zealand and France | | |3. High Technologies | | |The excellent utilization of IT have directly contributed to their | | |promotional activities (email alert and desktop widget which was | | |jointly develop with Microsoft for new promotion), brand building | | |exercise (with over 3 million hits per month and the most widely | | |surfed booking engine in the world) as well keep the cost low by | | |enabling direct purchase of ticket by consumer thus saving on airlines| | |agent fees | | |4. Good marketing campaign such as making a year deal with Manchester | | |United, one of the English Football Club and recently had programmed | | |at television “Travelog Asia”. This is one of the examples of good | | |marketing strategy | | |5. AirAsia has very strong management team with strong links with | | |government and airlines industry leaders | | |This is partly contributed by the diverse background of the executive | | |management team that consist of industry expert and ex-top government | | |officials | |Opportunities |SO | |1. Asia’s middle income growth (soc) |1. Add new facilities to attract people for using AirAsia for going to| |2. Applying technology advances in airlines industry (techno) For |vacation (S1 & S2, O1) | |example e-ticketing, it is easy for people who are busy with their |2. Improve new technology for making people more convince using this | |work and no time to walk in to the counter for booking ticket |airplane (S3,O2)(Market penetration) | |3. Economic in good condition (econ) |3. Increase destination all over the world (S2, O3, O4) | |The change of lifestyle of the customer (soc) |4. Improve management for increase marketing strategies to attract | |4.Political connection between home countries with other country (pol)|people (S4,S5 & O5) | |5.Limited substitutes for airplanes (substitutes) |5. Increase website service to make people easy to make transaction | | |(S3,O2) | |Threats |ST | |1.Price of oil increasing (econ) |1. Do research and development (R&D) to find other alternative to | |2. The culture of passengers is different (soc) |reducing in use oil (S1,S6 & T1) | |3. Certain rate like airport departure, security charges and landing |2. Hire new stewardess for different culture to make passenger feel | |charges are beyond the control of airlines operator (pol) |comfortable using this service (S2,T2) | |This is a threat to all airlines especially low cost airlines that |3. Deal with supplier for cheaper in maintenance cost (S1, S6 & T4) | |tries to keep their cost as lower as possible |(Backward Integrations) | |4. Supplier of airlines is limited (supplier) | | |Power of supplier is high as there are limited (availability of) | | |supplier (only Boeing and Airbus), the switching cost is high (i.e. | | |airplanes and their maintenance are costly) and there are few | | |substitutes airplanes | | |5. Natural disaster (demo) | | |For example is flood, tsunami, and earthquake at certain place will | | |influence the business of airlines | | | |Weaknesses | | |1. AirAsia receive a lot complaint from customer on their service | | |(mgt) | | |Examples of complaint are around flight delays, being charged for a | | |lot of things and not able to change flight or get a refund if | | |customer could not make it. Good customer service and management is | | |critical especially when competition is getting intense | | |2. The facilities at the airport (mgt) | | |There has limited chairs at waiting area | | |3. The waiting period between check in and depart is too long | | |(operation) | | |It takes around 2 hours for international departure | | |4. Apply autocratic management (mgt) | | |They only considered opinion from top management to make the decision | | |without asking from the other worker opinion | | |5. No MRO (maintenance, repair, overhaul) facility (operation) | | |Thus AirAsian cannot maintain its own planes. With an increasing fleet| | |this is a competitive advantage | |Opportunities |WO | |1. Asia’s middle income growth (soc) |1. Improve existing facilities in airport (W2,O1 & O2) | |2. Applying technology advances in airlines industry (techno) For |2. Target on middle – income customer by affordable price (W1, O1 & | |example e-ticketing, it is easy for people who are busy with their |O3) (Market Penetration) | |work and no time to walk in to the counter for booking ticket |3. Improve management in service such as prediction in time (W1, O2) | |3. Economic in good condition (econ) | | |4.Political connection between home countries with other country (pol)| | |5.Limited substitutes for airplanes (substitutes) | | |Threats |WT | |1. Price of oil increasing (econ) |1. Manage wisely the waiting period in order our passenger come from | |2. The culture of passengers is different (soc) |anywhere (W3, T3) | |3.Certain rate like airport departure, security |2. Efficiently manage the compliant from passenger to avoid external | |charges and landing charges are beyond the |threat (W1, T2) (Retrenchment) | |control of airlines operator (pol) | | |This is a threat to all airlines especially low cost airlines that | | |tries to keep their cost as lower as possible | | |4. Supplier of airlines is limited (supplier) | | |Power of supplier is high as there are limited (availability of) | | |supplier (only Boeing and Airbus), the switching cost is high (i.e. | | |airplanes and their maintenance are costly) and there are few | | |substitutes airplanes | | |5. Natural disaster (demo) | | |For example is flood, tsunami, and earthquake at certain place will | | |influence the business of airlines | | 5.2 SPACE (STRATEGIC POSITION AND ACTION EVALUATION) MATRIX |Factors Determining Environmental Stability | |Technological changes | |Growth potential | |Market share | |Return on investment |Low |1 |2 |3 |4 |5 | |Division |Revenues(Mil) |% Revenue |Profit(Mil) |% Profit |Market |Growth | | | | | | |Share |Rate % | |PT Indonesia Air Asia |1,083,788,000 |28.06% |239,957,000 |22.61% |0.40 |17 | |Air Asia Hong Kong LTD |487,952,000 |12.63% |98,735,000 |9.30% |0.25 |10 | |AA International LTD |453,206,000 |11.73% |68,571,000 |6.46% |0.22 |-10 | |Thai Air Asia Co. LTD |1,119,739,000 |28.98% |488,443,000 |46.01% |0.55 |18 | |Air Asia Go Holiday Co. LTD |719,774,000 |18.63% |165,705,000 |15.61% |0.28 |15 | |Total |3,864,459,000 |100.00% |1,061,411,000 |100.00% | | | RELATIVE MARKET SHARE POSITION IN THE INDUSTRY For BCG Matrix, we can use above table and figure that Thai Air Asia Co. LTD contributes highest percentage in revenue market share followed by other association under Air Asia which is PT Indonesia Air Asia, Air Asia Go Holiday Co. LTD, Air Asia Hong Kong LTD, AA international LTD. Association for Thai Air Asia Co. Ltd is fall under Stars. It means this association for Air Asia should do backward, forward and horizontal integration also. In additional, this association will have opportunities to make more profit in the future by doing more aggressive strategies such as market penetration, product development and market development. For PT Indonesia Air AsiaAir Asia Go Holiday LTD, Air Asia Hong Kong, LTD it falls in under Question Marks which it shows that the division which is also doing aggressive strategies to promote products. This is because this four association for Air Asia are new in the industry so should do market penetration, market development, product development and divestiture. For AA International LTD falls under Dogs. It is shown that this division should do retrenchment, divestiture and liquidation. 5.4 GRAND STRATEGY MATRIX Air Asia CO. falls under Quadrant II because AirAsia have done many market development in industry such as launch its first routes to India to Tiruchirapali (Trichy) in the Southern India state of Tamil Nadu means Air Asia make market development with open new destination for attract passengers. In quadrant I also explained that Air Asia has strength in market penetration to take advantage on growth in new global markets because of high demand for lowest possible fare. Air Asia has now has Route network of Asia within more than 20 countries for example United Kingdom, Iran, China, New Zealand, and France. In addition, this company has the strength to launch related diversified products into more promising growth areas. So this quadrant is suitable for Air Asia because they already diversified many services. Furthermore, Air Asia also high cash-flow levels and limited internal growth needs. 5.5 IE MATRIX |Division |Revenues |% |Profit |% |EFE |IFE | |  |(Million) |Revenue |(Million) |Profit |  |  | |PT Indonesia Air Asia |1,083,788,000 |28.06% |239,957,000 |22.61% |3.10 |2.80 | |Air Asia Hong Kong LTD |487,952,000 |12.63% |98,735,000 |9.30% |2.30 |2.00 | |AA International LTD |453,206,000 |11.73% |68,571,000 |6.46% |2.00 |1.55 | |Thai Air Asia Co. LTD |1,119,739,000 |28.98% |488,443,000 |46.01% |3.30 |3.20 | |Air Asia Go Holiday LTD |719,774,000 |18.63% |165,705,000 |15.61% |3.00 |2.50 | |Total |3,864,459,000 |100.00% |1,061,411,000 |100.00% |  |  | The IFE Total Weighted Scores |I |II |III | |IV |V |VI | |VII |VIII |IX | . As the result, Thai Air Asia Co. LTD for i.e. Matrix under (division falls into cell I, ii and iv which is “grow and build”. Intensive (backward, forward, and horizontal integration, market penetration, market development, product development) strategies can be more appropriate for this area. Thai Air Asia Co. LTD can improve the intensive strategy for market penetration b create interesting marketing or events to attract people know well about this Thai Air Asia Co. Ltd service and the company can also do market development and product development strategy since Air Asia is one of company who give lowest cost airline in Asia. It means that the company can increase their advertising and marketing strategies in order to compete with their other associate company. Other than that, Thai Air Asia Co.LTD can explore to new market in order to boost their sales. 5.6 COMPETITIVE PROFILE MATRIX |Critical Success Factor |Weight |Air Asia |MAS |Fire Fly | | | |Rating |Score |Rating |Score | | | | | | | | |1. Product strength, quality, uniqueness |  |  |  |  |  | | | | | | | | |2. Customer loyalty |  |  |  |  |  | | | | | | | | |3. Market share |  |  |  |  |  | | | | | | | | |4. Low selling and distribution costs |  |  |  |  |  | | | | | | | | |5. Use of experience curve for pricing |  |  |  |  |  | | | | | | | | |6. Use of life cycle of products and replacement cycle |  |  |  |  |  | | | | | | | | |7. Investment in new product development by |  |  |  |  |  | |R & D | | | | | | | | | | | | | |8. High barriers to entry into the company's markets. |  |  |  |  |  | | | | | | | | |9. Advantage taken of market growth potential |  |  |  |  |  | | | | | | | | |10. Supplier strength and material availability |  |  |  |  |  | | | | | | | | |11. Customer concentration |  |  |  |  |  | | | | | | | | |12.Others: |  |  |  |  |  | | | | | | | | 7. QUANTITATIVE STRATEGIC PLANNING (QSPM) |Key Factors |Weight |Market Development |Market Penetration | |OPPORTUNITIES | |AS |TS |AS |TS | |1 |Asia’s middle income growth (So) |0.06 |3 |0.18 |3 |0.18 | |2 |The home government support (P) |0.07 |2 |0.14 |- |- | |3 |Applying technological advances in airlines industry (T) |0.04 |- |- |- |- | | |-For example e-ticketing. It is easy for people who are busy | | | | | | | |with their work and no time to talk in to the counter for | | | | | | | |booking ticket | | | | | | |4 |Economic in good condition (E) |0.06 |3 |0.18 |3 |0.18 | |5 |The changes of lifestyle of the customers (So) |0.05 |3 |0.18 |- |- | |6 |Political connection between home country with other countries|0.06 |- |- |2 |0.10 | | |(P) | | | | | | |7 |Limited substitutes for airplanes (SU) |0.10 |4 |0.40 |- |- | | |-Although there are several substitutes (trains and ships), | | | | | | | |the geographical structure of Asia has made air travel an | | | | | | | |efficient, viable, and convenient mode of transportation | | | | | | |8 |‘ASEAN Open Skies’ agreement |0.04 |- |- |- |- | | |- It will allow unlimited flight among ASEAN’s regional air | | | | | | | |carriers beginning December 2008 | | | | | | |9 |The population of Asian middle class will be reaching almost |0.04 |2 |0.08 |4 |0.16 | | |700 million by 2010. This creates a larger market and a huge | | | | | | | |opportunity for all low cost airlines in this region | | | | | | |THREATS | |1 |Price of oil was increasing (E) |0.04 |2 |0.08 |1 |0.08 | |2 |The cultural of passengers are different (S) |0.03 |2 |0.06 |- |- | |3 |Other government countries rejection. (P) |0.07 |3 |0.21 |- |- | |4 |Many Budget airlines growth (C) |0.04 |1 |0.04 |3 |0.12 | |5 |Certain rates like airport departure, security charges and |0.10 |3 |0.30 |- |- | | |landing charges are beyond the control of airline operator. | | | | | | | |This is a threat to all airlines especially low cost airlines | | | | | | | |that tries to keep their cost as low as possible | | | | | | |6 |User’s perception that budget airlines may compromise safety |0.04 |- |- |- |- | | |to keep costs low (C) | | | | | | |7 |Supplier of airplanes is limited (S) |0.07 |- |- |- |- | | |-Power of supplier is high as there are limited suppliers | | | | | | | |(only Boeing and Airbus), the switching cost is high | | | | | | | |(airplanes and maintenance are costly), and there are few | | | | | | | |substitutes for airplanes | | | | | | |8 |Technology problem (T) |0.03 |- |- |- |- | | |-overload of information or hackers hacked the airlines | | | | | | | |website and it will give bad impact to airlines | | | | | | |9 |Natural disaster – flood, tsunami and earthquake at certain |0.06 |3 |0.18 |2 |0.36 | | |place will influence the business of airlines | | | | | | |TOTAL | | |2.03 | |1.18 | |STRENGTH | |1 |Low cost for all passenger |0.13 |4 |0.52 |4 |0.52 | | |-it is suitable with their tagline ‘Everyone Can Fly’, means | | | | | | | |to giving an opportunity to all the people to flight with the | | | | | | | |lowest possible fare and making them can flight even they only| | | | | | | |have less money | | | | | | |2 |Has many destination |0.03 |3 |0.09 |4 |0.12 | | |-Route network of AirAsia has more than 20 countries. For | | | | | | | |example, UK, Iran, China, New Zealand and France | | | | | | |3 |AirAsia is the low cost leader in Asia |0.05 |4 |0.20 |- |- | | |-With the help of AirAsia Academy, AirAsia has successfully | | | | | | | |created a “low cost airline mentality” among their workforce. | | | | | | | |The workforce is very flexible and high committed and very | | | | | | | |critical in making AirAsia the lowest cost airline in Asia. | | | | | | |4 |High technologies |0.05 |- |- |3 |0.15 | | |-The excellent utilization of IT have directly contributed to | | | | | | | |their promotional activities (email alerts and desktop widget | | | | | | | |which was jointly developed with Microsoft for new | | | | | | | |promotions), brand building exercise (with over 3 million hits| | | | | | | |per month and on the most widely surfed booking engines in the| | | | | | | |world) as well keep the cost low by enabling direct purchase | | | | | | | |of tickets by consumer thus saving on airline agent fees | | | | | | |5 |Get many award |0.04 |2 |0.08 |3 |0.12 | | |-Such as the “World Best Airlines” for the second year, Asia | | | | | | | |Pacific’s Best Marketing Campaign. It shows AirAsia has a good| | | | | | | |image and performance since it get so many awards | | | | | | |6 |The consumer can pay their booking by credit card over phone |0.03 |- |- |2 |0.06 | |7 |Good marketing campaign |0.04 |2 |0.08 |3 |0.12 | | |-Such as making a year deal with Manchester United | | | | | | |8 |The current ratio is increase from 1.3 times to 1.47 times |0.07 |3 |0.21 |3 |0.21 | | |(fin) | | | | | | | |From 1 unit or current liabilities can be covered by 1.47 unit| | | | | | | |of asset. It will make the company less risk. | | | | | | |9 |AirAsia has a very strong management team with strong links |0.03 |2 |0.06 |2 |0.06 | | |with governments and airline industry leaders | | | | | | | |-This is partly contribute by the diverse background of the | | | | | | | |executive management team that consist of industry experts and| | | | | | | |ex-top government officials | | | | | | |WEAKNESSESS | |1 |AirAsia receives a lot complaint from customers on their |0.04 |3 |0.12 |3 |0.12 | | |services | | | | | | | |-Examples of complaints are around flight delay, being charged| | | | | | | |for a lot of things and not able to change flight or get a | | | | | | | |refund if customer service and management is critical | | | | | | | |especially when competition is getting intense | | | | | | |2 |The facilities at the airport |0.06 |2 |0.12 |- |- | | |-There are limited chairs at waiting area | | | | | | |3 |The waiting period between check in and depart is too long |0.06 |3 |0.18 |3 |0.18 | | |-It takes around 2 hours for international departure | | | | | | |4 |Apply autocratic management |0.05 |- |- |- |- | | |-They only considered opinion from top management to make the | | | | | | | |decision without asking opinion from the other workers | | | | | | |5 |Rely on debt too much since the debt ratio for year 2010 is |0.03 |2 |0.06 |2 |0.06 | | |73.15%. It is more than half of the capital get from borrower | | | | | | |6 |The average collection period is quite high which 76 days. It |0.06 |- |- |- |- | | |means the company has to wait until 76 day to collect their | | | | | | | |debt form borrower | | | | | | |7 |No MRO (maintenance, repair, overhaul) facilities |0.15 |3 |0.45 |- |- | | |-Thus, AirAsia cannot maintain its own planes. With an | | | | | | | |increasing fleet this is a competitive disadvantage | | | | | | |8 |No frill |0.05 |4 |0.20 |4 |0.20 | | |TOTAL | | |2.29 | |1.92 | 8. LONG TERM OBJECTIVES AND ALTERNATIVES STRATEGY 1. LONG TERM OBJECTIVES OF MARKET DEVELOPMENT 1. To increase net profit and sales of AirAsia for the future 2. To conquer the airline market share in the world 2. ALTERNATIVE STRATEGIES 1. STRATEGY 1: Enter the new geographical area such as Africa, United Arab Emirates (UAE) 1. ADVANTAGES 1. It will increase the number of sales of AirAsia and also makes more profit for the company 2. It also can build the customer preference to use AirAsia services for reach their destination 2. DISADVANTAGES 1. It has high risk whether the AirAsia airline will be accepted or not at the new places 2. Uncertainty of demand of consumers towards the company new location since the other airline company offered to that location before AirAsia enter 2. STRATEGY 2: offer new destination that hardly to reach 1. ADVANTAGES 1. Offer an additional location that hard to reach to the customer to need to go there in fast, indirectly can increase the AirAsia profit and sales 2. Increase customer loyalty towards AirAsia for providing them chance to go hard reach location with low cost rate 2. DISADVANTAGES 1. AirAsia incurred higher risk in case if there has no demand towards the service and it will affect the number of sales and profit of the company 2. AirAsia has high expenses due to buy the new airplane such as Fokker, hire additional employees to fulfill the service 9. STRATEGY IMPLEMENTATION (POLICIES & ALLOCATE RESOURCES) 1. MICKINSEY 7’s IMPLEMENTATION FRAMEWORK 1. STRATEGY The strategy of market development and market penetration must be implemented in the company in term of its operation. The market development strategy means such as opening the new routes for airlines in new location to attract more customers. The market penetration strategy is such as do mass marketing via many sources especially media to attract customer using airline services offered by the company. 2. STRUCTURE The company must be the divisional structure based on geographic area such as Indonesia, Filipina, Thailand, and other destinations of airlines because this will make the company more focus on its geographical area of airlines performance. 3. SYSTEM The company must be come out with new management information system within company for effectively disseminate any important information to staff and top management of the company. Any complaint or problems could be managing efficiently by doing this system. 4. STYLE Maintaining its current style of promotion must be based on its present current tagline “Low Cost Carrier”. For that can the company can obtain loyalty from their customer and maintaining high revenue. 5. SHARED VALUE Concern more towards its shareholders by increase of dividend payments to them to get full support and loyalty towards the company. They will feel it is worth it to invest in the company and definitely drag others investors to invest. 6. STAFF Provide development training to all staff for always maintain its services that have been provided to customers. Staff should always know the current development and changes which are the company made. 7. SKILL The company should look out more to employ expertise in term of develop its operational system and also marketing strategies. This is because nowadays customers tend to be attracted with implementation of mass marketing by using latest technology devices. 10. CONCLUSION AND RECOMMENDATION In conclusion, the AirAsia Company has a good performance after it launches the new strategy which is the cost carrier in Asia for airline industry. Nowadays AirAsia is such a well known and establish company in airlines industry and conquer the Asia market. Clearly state vision and mission of the company helps the company to set a proper conduct and action to achieve the two important things. Based on the external and internal evaluation factors shows us that the AirAsia Company can cover or face any barrier come from the both factors. This is because both of the external and internal factors evaluation is above 2.5 and made us realized that the company is not really affected with both factors. Next is the company formulation of strategies, in strategic management do has five ways in order to determine the appropriate strategies for the AirAsia Company. The five ways are TOWS matrix, SPACE matrix, BCG matrix, Grand Strategy matrix, and lastly Competitive Profile matrix. According to the five matrix ways, there are two strategies who get the first and second highest scores and for that the two strategies have been chosen as the most appropriate strategies that the company must implemented and take action regarding on that. The two strategies are market development and market penetration. These two strategies is important for the company in future development because they can help the company to maintain its current perfectly performance and the most important can help company to obtain higher revenue and sales. For example, the AirAsia opened its route of airlines services to India which is not ever implemented before. This is one of example market development strategy. Whenever the company feels worth it to open operation in India and quite high in demand, the company will open the same thing but different area in India is called market penetration. In our recommendation, we actually based on these two strategies which are market development and market penetration. We recommend that AirAsia should open new operation in the new geographical area that have never been reached before by the AirAsia company such as the Africa and United Arab Emirates in order to enlarge its current market share in airlines industry. By doing this hopefully can increase the company’s revenue or sales by attracting more consumers using AirAsia services. Besides that, we also recommend that AirAsia Company should open new operation or make an additional route to the company’s airlines at place which the companies already open the operation before. Basically this has been done to increase the market share of the company and also as one of the mass marketing ways to increase revenue of the company. For example currently the company had opened its operation in India and the company should open the new operation in the other part of India and this is what market penetration strategy will be implemented. ----------------------- CP IP SP High 1.0 Low 0.0 Medium 0.5 Go Holiday Low -20 Medium 0 High +20 Hong Kong PT Indonesia Thai Air Asia AA International Strong Competitive Position Weak Competitive Position Slow market growth Quadrant III Retrenchment Related Diversification Unrelated diversification Divestiture Liquidation Quadrant IV Related diversification Unrelated diversification Joint ventures Quadrant II Market Development Market Penetration Product Development Horizontal Integration Divestiture Liquidation Quadrant I Market Development Market penetration Product Development Forward Integration Backward Integration Horizontal integration Related Diversification Rapid Market Growth 2.0 4.0 Strong 3.0 to 4.0 3.0 Average 2.0 to 2.99 Weak 1.0 to 1.99 1.0 The EFE Total Weighted Scores High 3.0 to 4.0 3.0 Low 1.0 to 1.99 Medium 2.0 to 3.0 2.0 1.0