Strategic Management and Leadership in AirAsia

Running head: STRATEGIC MANAGEMENT AND LEADERSHIP
Strategic Management and Leadership
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1STRATEGIC MANAGEMENT AND LEADERSHIP
Table of Contents
Introduction......................................................................................................................................2
1. Definition of success....................................................................................................................3
2. Reasons for success.....................................................................................................................7
3. Internal analysis...........................................................................................................................9
3.1 Value chain analysis..............................................................................................................9
3.2 Core competency of AirAsia...............................................................................................11
3.3 VRIN Analysis.....................................................................................................................13
4. The contribution of the leaders..................................................................................................14
5. Review of the strategy used.......................................................................................................16
5.1 Growth strategy...................................................................................................................16
5.2 Competitive strategy............................................................................................................18
6. Analysis of the future of the company.......................................................................................19
Recommendations and future forecasting of AirAsia...............................................................21
Reference List................................................................................................................................22
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2STRATEGIC MANAGEMENT AND LEADERSHIP
Introduction
Overview of the company
AirAsia is a Malaysian low-cost airline and it has it headquarter in Kuala Lumpur.
AirAsia is the largest airline in Malaysia by destinations and fleet size. AirAsia commenced its
operation in the year 1996. AirAsia reached the revenue of RM5.01 billion in the year 2016 and
net income of the organisation was RM1.57 billion in 2016 (Airasia.com, 2018).
Nature of the business
AirAsia Berhad is in the airline industry and it has been named as the world's best low-
cost career for consecutive nine years. Therefore, AirAsia provides air transport services for
travelling passengers at low cost.
The markets served
AirAsia operates in more than 165 destinations across more than 25 countries. Asia has
its low-cost carrier terminal at Kuala Lumpur and its affiliate airlines are AirAsia India,
Indonesia AirAsia, Thai AirAsia and Philippines AirAsia. Fleet size of the organisation
excluding subsidiaries is 89. AirAsia X mainly focuses on long-haul routes (Airasia.com, 2018).
Challenges faced
Airbus 320-200 went missing with 162 people on board from Indonesia city heading
towards Singapore. It came to the news that Airbus of AirAsia crashed into the Java Sea.
Consequences of this incident led to drop the airfare by almost 9% to bring the passengers back.
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3STRATEGIC MANAGEMENT AND LEADERSHIP
AirAsia faced the issue of declining the value of the domestic currency in Malaysia. In recent
time, AirAsia faces the issue due to rising fuel price and high landing charge.
1. Definition of success
For some of the business leaders, success is monetary rewards and creating a positive
impact on others in the business. According to Dijkhuizenet al., (2017), success in business is the
gradual realisation of worthy goal and success can be defined for accomplishing the goals with
creativity, hard work and passion. In the business world, success can be stated as running a
profitable organisation with integrity and honesty along with making a meaningful contribution
to the communities it serves. It can also be stated that success is something all the leaders
striving to get it and success comes in different shape and size. In the arena of the business,
success is meeting the goals which have been set by the leaders. As stated by Djamasbi et al.,
(2014), success is about comparing the business with others; however, it is about
accomplishment and growth.
Measuring the success of the organisation
Balance scorecard is a strategic planning and management system which organises
organisations utilises to communicate what the organisations are trying to accomplish. Balance
scorecard prioritises the projects, services and products and it helps to measure and monitor
progress towards strategies targets (Fooladyand et al., 2015). Balance scorecard helps to measure
the organisations in four perspectives to develop the KPIs, objectives, initiatives and target.
 Financial elements talk about financial performance and resource use
 Customer and stakeholder element points out the customer value and satisfaction along
with retention
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 Internal process deals with efficiency and quality
 Organisational capacity talks about human capital and infrastructure, technology and
culture
Balance scorecard of AirAsia
Objectives Performance
measure
Initiatives
Financial
perspective
Improve cost
structure and increase
asset utilisation
Plane lease cost Reduced cash
expenses
Improve Yields
Eliminate defects
Expand revenue
opportunities
Market value and
seat revenue
News source revenue
Improve profitability
Market capitalisation of AirAsia
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Figure 1: Market capitalisation has increased with time (2005-2017)
(Source: Ir.airasia.com, 2018)
Objectives Performance
measure
Initiatives
Customer and
stakeholder
perspective
Increasing market
share and customer
retention
Number of repeat
customers
Implementation
CRM and providing
sustainable
promotions
Customer satisfaction
and customer
profitability
Lowest prices and
flights are on time
Implementation of
customer loyalty and
monitoring changes
in consumer trends
Passengers increase table:
2013 2014 2015 2016 2017
Passengers
carried
21,853,036 22,138,796 24,254,506 26,410,922 39,092,972
Table 1: Operating statistics
(Source: Ir.airasia.com, 2018)
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