Blue Ocean Strategy in Air Asia

Topics: Malaysia Airlines, Airline, Low-cost carrier Pages: 6 (1648 words) Published: December 3, 2011
Literature Review
Most of the companies must have a strategy for competing in the markets in which they offer products or services. The strategy will either be implicit or explicit, and the extent to which a company is successful compared with its competitors relies on the creation of competitive advantage through the activities that it performs to design, market, deliver and support its product or service. They develop strategy at an overall company level, within customer sectors and for regions, functions and locations. The process is intended to be an iterative one and one that remains alive and is continuously updated and adjusted to suit the changing competitive and economic landscape. Few companies in the world have managed to survive, let alone prosper, over long periods of time. AirAsia approaches to prevent this occurring and to generate continued growth is to frequently re-assess its strategy so that they build strong businesses in the attractive industries of the future

Company overview - Air Asia Berhad
AirAsia’s leading airline was established with the dream that everyone can fly. Since 2001, the company has swiftly broken travel norms around the globe. It 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 innovative solutions, efficient processes and a passionate approach to business. According to Mr Tony Fernandes, they are in a huge market and they are only 5 yrs old company. Southwest Airlines has 400 planes in a market of 350 million people. AirAsia in a market that’s double, triple that. Because of that AirAsia has a lot of potential to grow, but grow sensibly and grow at the right pace.

AirAsia have been aggressive on branding. They also put a lot of money into sports branding such as Manchester United. Many Asian companies don’t value branding as much because they don’t see it in the bottom line straight away. It’s something that even Mr Tony have to explain to his board time and time again, that the fruits of branding are over five years. But he thinks it’s been very key in AirAsia growth and they’ll continue to invest in it.

BlueOcean Strategies
To compete with Malaysian Airline System (MAS) - before the acquisition of MAS shares and regional airline, Air Asia have managed to avoid the red ocean by looking into the factors that industry take for granted and also factors that important to customers. With the Four Actions Framework proposed by Blue Ocean Strategy authors, Air Asia have implemented many strategic moves to ensure they are making Malaysia Airline and regional airline company irrelevant. AirAsia Strategy

By referring to the strategies picture we can summarize as below: EliminateThe company have eliminate over the counter booking system. •AirAsia also eliminate free Food/Beverage on the plane. This help AirAsia save cost. •They also eliminate Seating Class booking system.

Reduce“luxury” facilities provided by Airport Lounge. •No of attendance service on the plane.
Reduce the seat quality.

Focus on several key destination
Increase frequency of flight
CreateOnline Booking system
Point to point travel system

With this strategic move, Air Asia able to focus on factors that really bring value to the customers such as point to point travel system, easy booking system etc. This will help Air Asia to reduce cost and at the same time increase the value to the customers - Value Innovation. SWOT Analysis of AirAsia.

StrengthsLocally and Internationally Recognized
Constant Innovations
Keep a Strong Hold on the Industry
Successful company
Brand is all important
WeaknessesDependence on innovation of its products
Reports on faulty /delay items
Confusion among consumers
OpportunitiesOpportunities in the International Market •Possibility of product expansion
ThreatsUnpredictable Market
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