Air Asia Strategic Management Recommendations

Topics: Low-cost carrier, Airline, AirAsia Pages: 22 (5759 words) Published: October 12, 2013

MGMT 3347

Table of Contents:

1.1  Industry Identification
1.2  General Environmental Analysis
1.3  The Industry Environment
1.4  The Competitive Environment
1.5  Opportunities and Threats

2.1  The Firm’s Resources: Tangible and Intangible
2.2  Capabilities Identification
2.3  Core Competency Analysis
2.4  Value Chain Analysis
2.5  The Firm’s Weaknesses
2.6  SWOT Analysis

3.1  Current Strategies
3.2  Future Strategies


An analysis of the External Environment would be done so as to facilitate a direct comparison between the generic elements where AirAsia has been founded in. The report then would delve into an internal analysis whereby the Porter’s 5 Forces would reiterate the direct forces that would affect the Airline Industry and subsequently, AirAsia itself. The capabilities and core competencies of the firm would be explained in greater detail towards the latter part of the report before a series of analysis would be done to segregate the more influential ones from the rest. A series of strategies would be then recommended for AirAsia to undertake so as to continue building brand awareness and brand equity throughout the world as a low-cost carrier.

1.1 Industry Identification
AirAsia belongs to the airline industry. Competition in the airline industry is very intense and is growing rapidly together with the increase in demand for budget fares across Asia. The different airlines are making use of several strategies to compete with one another in the airline industry and it is crucial for airline companies to identify their competitive advantages so as to be able to achieve profits and brand equity globally.

1.2 External Environment Analysis

Political factors such as changes in regulation and the global trend toward privatisation of government-owned or government-regulated firms have had implications on the general environment. Furthermore, taking budget flights out of Malaysia can be quite a challenge. Many governments have been instrumental in dabbling in the success of airline companies in Asia. Most airline companies in Asia have had full or substantial state ownership as well as management and control. A prime example in Malaysia would be Malaysian Airlines System (MAS). Such companies are often well-subsidized by their governments and do not face much competition. Instead of being profit-oriented, they are more focused on fulfilling national objectives. As such, privatization and de-regulation have paved the way for new routes and airport deals via the use of open skies agreements between countries and permission of entry of private airlines (Dellit 2002) As such, they would give new airlines that are low-cost carriers such as AirAsia, Jetstar and Tiger Airways chances to access domestic routes and tapping into market share of the airline industry.

However, in light of globalization, the airline industry has also been hit by threats such as terrorism, accidents, attacks and disasters. A drop in customer confidence in a particular airline company would be detrimental to a company’s profits as well, hence a low cost carrier would be subjected to factors such as aviation restrictions, consumer preferences and geographical infrastructure of Asia (Steverman 2009). To combat such uncertainties, a budget airline company would have to be meticulous in selecting favourable routes in it’s day to day operations so as to avoid any form of possible negative impacts. (Dellit 2002)

Despite standard of living observed to be improving globally, there exist variations within and between countries. Economic downturns in the recent years have cost companies to lose profits in the industry. However, this proved to be an opportunity for budget airlines. The result...

References: Khor, YL, Ramli, M, Azeman, A, Goh, GG. 2009, Branding an airline:  a case study of AirAsia. Available from: . [9 October 2012]
Kirby M
Periabras, R C. 2012, AirAsia expands Fly-Thru innovation. Available from: . [9 October 2012]
PRLOG 2010, Technology Drives the Airline Industry
Silverstein B 2010, Airasia. Available from: . [9 October 2012]
Sreenivasan V, 2010, Jetstar, Airasia link hands; may twist Tiger’s tail
Steverman B, 2009. Renewed Terrorism Threat Rattles Airlines. Available from: <>. [10 October 2012]
The Economist 2012, Spreading its wings
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