Management of Air Asia Berhad

MANAGEMENT 1 1MANAGEMENT Capability analysis of Air Asia Berhad Name of the student: Name of student: Author note: Table of contents Introduction 2 Insight into the company 2 Discussion 2 Internal analysis of AirAsia Berhad 2 SWOT analysis 2 Resources and capabilities 4 VRIO analysis 4 Strategy exploitation to the key resources 6 Conclusion 7 References 8 Introduction Management of the organizational operations is necessary in terms of estimating the outcomes for deciding on the extent to which the activities align with the identified and specified objectives. One of the

Running head: MANAGEMENT
Capability analysis of Air Asia Berhad
Name of the student:
Name of student:
Author note:

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Table of contents
Introduction................................................................................................................................2
Insight into the company............................................................................................................2
Discussion..................................................................................................................................2
Internal analysis of AirAsia Berhad.......................................................................................2
SWOT analysis.......................................................................................................................2
Resources and capabilities.....................................................................................................4
VRIO analysis........................................................................................................................4
Strategy exploitation to the key resources.............................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
Management of the organizational operations is necessary in terms of estimating the
outcomes for deciding on the extent to which the activities align with the identified and
specified objectives. In this, capability analysis plays an important role, enhancing the
awareness about the additional resources needed for reaching the benchmark level of
performance (Salazar-Alvarez et al., 2016). Typical components of the capability analysis are
resources and capabilities, which makes the organization stand out from the rest of the
contemporary brands. In this assignment, the aim is to explore the resources and capabilities
of Air Asia Berhad.
Insight into the company
AirAsia Berhad has achieved accolades and glory by emerging as a low cost
Malaysian airline in terms of fleet size and destination. It is one of the largest Malaysian
airline, controlling the domestic and international flight services, operating in more than 165
destinations in 25 countries. The main hub is located at Kuala Lampur International Airport.
The subsidiaries of the company are AirAsia X, Indonesia AirAsia, Philippines AirAsia
among others. The company is owned by Tune Group. According to the ASX trading, the
company is enlisted as MYX:5099 (Airasia.com, 2019). According to the annual report of
2016, the annual revenue was RM 5.01 billion US$ and the net income earned was RM 1.574
billion US$. This is due to the hard efforts of 17000 employees. Adherence to the regulations,
establishes higher standards for the corporate governance. The vision statement caters to the
provision of better quality communication platform to the stakeholders. AirAsia Group
Berhad was enlisted on the main market of of Bursa Malaysia Securities Berhad in November
2004.

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Discussion
Internal analysis of AirAsia Berhad
SWOT analysis
Strengths
 Steady and consistent positioning- Low cost of the flight services bestows better
position and placement to AirAsia Berhad.
 Weekly flights- Weekly flights are assistance for the passengers availing short
distances flights (Airasia.com, 2019). Moreover, the fares are low, which increases
the demand.
 Innovation- using cutting edge technologies is assistance for AirAsia Berhad to
achieve upgradation in the infrastructure. These technologies are an effective means
for lowering on the operating costs. Typical evidence of this lies in transferring the
onus of the services to the customers availing self-service.
Weakness
 Sustaining costs- As it is a low cost airline, therefore, it is critical to sustain the
operational costs as possible. Fluctuations in the fuel costs and increase in the service
cost aggravates the complexities in maintaining consistency in the operational costs
(Airasia.com, 2019).
 Challenges in balancing service quality with pricing- The USP of AirAsia is the
carrier image, which enhances the brand image. Quality is one such aspect, which is
not to be compromised for maintaining retaining the prospective customers.
Maintaining balance between the quality and pricing adds to the compromise on the
quality in case of the flight services.
Opportunities

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 Overseas travelling- Introducing flight services to Malaysia, Singapore and Bangkok
can increase the revenue. In this, addition of special discounts, schemes and offers can
be effective for expanding the customer base (Airasia.com, 2019).
Threats
 Competition- Air India, Singapore Airlines and Virgin Airlines provide tough
competition to AirAsia Berhad.
 Regulating the prices- Fluctuations in the fuel prices is one of the major threats in
controlling the fleet services. Lack of price maintaining mechanisms is also an issue
in terms of maintaining the balance between the supply and demand.
Resources and capabilities
Resources and capabilities are homogenous in nature. Mention can be made of work
culture and innovative routes in which the flight services are to be introduced. Social media is
adopted by the company for disseminating the information about the essential services to the
stakeholders. Offshore marketing is practised for expanding the scope and arena of the supply
chain network (Airasia.com, 2019). The company is considered to possess competitive parity
due to the possession of rare resources and technologies. Mention can be made of the airline
carriers, which have assisted in the shifting the focus to the operational costs, enhancing the
profitability.
Demands for additional aircrafts have also increased with the significant growth of the
company. This situation has enabled the suppliers to be at an advantageous position.
According to the surveys, Asia receives 40% orders related to the new orders for Boeing and
Airbus. LCC looks after the accommodation facilities. One of the striking facts is that the
seating capacity in the flights have doubled from the past records. The prices of the air
carriers are non-competitive, the reliance on the suppliers is higher (Airasia.com, 2019).

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VRIO analysis
Resources
and
capabilities
Value Rarity Immitable Organizational
support
Competitiv
e
implication
Competitive
airfare
  Competitiv
e parity
Physical and
organizationa
l resources
   Competitiv
e advantage
on a
temporary
basis
Brand image     Sustenance
of the
competitive
advantage
Table: VRIO analysis of AirAsia Berhad
(Source: Airasia.com, 2019)
AirAsia reaches to the customers through low fuel price, cost savings from the single
aircrafts operations, fuel and energy consumption management systems. These are the
aspects, which can be easily copied by the competitors. Mention can be made of the tangible
resources, which include fleet size of Airbus A320. Its subsidiaries are located in Thailand,
Indonesia, Phillipines, India and Japan. Ansoff et al., (2019) states that intangible resources
include sustainable policies like that of SMS, talent attraction programs, controlling the fuel
costs and energy consumption machines. Rarity is reflected from the managerial strategies,
which are effective but yield temporary competitive advantage.

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Advertising campaigns through slogans like Now Everyone Can Fly, free ticket are
the means for attracting more customers. Sparrow, Hird and Cooper, (2015) is of the view
that social media is an effective platform, which is assistance in terms of expanding on the
customer base. Adding innovation in the logos acts as an agent in terms of enhancing the
brand image.
Reference can be cited of the digital airline services like Duty Free, BIG pay, Rokki
Wifi, which has increased the income of the company. Consistency in innovating the
websites is one of the greatest strengths of the company. This is in terms of gaining an insight
into the specific needs, demands and requirements of the customers. The option of feedbacks
is assistance in terms of assessing the approaches of the customers towards the levied flight
services (Zdravkovic, Stirna & Grabis, 2017).
Diversification is one of the strategies, which helps in adding to the profit margin.
Joint ventures with the companies dealing in in-flight catering services is assistance in saving
the operational costs. This approach is assistance in terms of maximizing the shareholder
returns through the means of increasing the resilience in the growth. The aim here is that of
stabilizing the lower cost base.
Transparency in the services is one of the aspects, which relates to the rarity. Mention
can be made of the transparency in the decision making processes, which helps the customers
of AirAsia Berhad to avail the services. The knowledge management systems enables the
staffs to control the information, which is shared to the clients and the customers (Jenkins &
Williamson, 2015). Installation of privacy cookies and policies is beneficial for AirAsia
Berhad in terms of enhancing the security in the private information of the customers and the
confidential codes. Along with this, lean cost structure is assistance in terms of maintaining
the balance between the supply and demand. Using graphs for sales forecasting is fruitful in

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terms of estimating whether the operations align with the identified and specified goals of
increasing the shareholder value and returns.
Strategy exploitation to the key resources
Aircrafts and fast turnaround time for the flight services are the aspects, which are
imitated by the contemporary brands. The culture is such, which supports openness is valued
through the leadership values and competencies of the CEO. High capital requirements
aggravates the complexities in terms of penetrating into the international markets
(Airasia.com 2019). This is the stage, where the company needs to expose succession
planning towards product development and the diversification. Typical examples can be
adding innovation to the design of the aircrafts and increasing the capacity of the engines. For
this, consulting the research and development team and engineers is assistance for expanding
the supply chain network. The exploitation of the resources is reflected from the financial
analysis. The net profit in the 3rd quarter was RM 130 million, which sustained the resources
through increasing the accommodation services and add on services. This situation mounted
the profit to RM466 million, accompanying the net loss in the same year (Nguyen, Yu,
Melewar & Chen, 2015).
Conclusion
Transparency in the services helps AirAsia Berhad to achieve accolades and glory
from the clients and the customers. Using the performance management systems is assistance
in terms of measuring the extent to which the operations align with the identified and the
specified goals. Innovation in the flight services is beneficial in terms of attracting the foreign
investors. Low operation costs increases the demand for the carrier flights, enabling the
company to expand the customer base. Rarity is reflected from the mergers and acquisitions
with the suppliers, which acts as an agent in terms of expanding on the customer base. Herein
lays the appropriateness of the competitive policies, which seems beneficial for the company

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in terms of improvising on the corporate social responsibilities. Advertising about the flight
services on the social media fosters the growth and development.

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References
Airasia.com (2019). About us. Retrieved 31st July 2019 from https://ir.airasia.com/
Airasia.com (2019). Strategic management. Retrieved 31st July 2019 from
https://ir.airasia.com/strategy.html
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., & Ansoff, R. (2019). Diagnosing
Future General Management Capability. In Implanting Strategic Management (pp.
105-125). Palgrave Macmillan, Cham.
Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis.
Routledge.
Nguyen, B., Yu, X., Melewar, T. C., & Chen, J. (2015). Brand innovation and social media:
Knowledge acquisition from social media, market orientation, and the moderating role
of social media strategic capability. Industrial Marketing Management, 51, 11-25.
Salazar-Alvarez, M. I., Temblador-Pérez, C., Conover, W. J., Tercero-Gómez, V. G.,
Cordero-Franco, A. E., & Beruvides, M. G. (2016). Regressing sample quantiles to
perform nonparametric capability analysis. The International Journal of Advanced
Manufacturing Technology, 86(5-8), 1347-1356.
Sparrow, P., Hird, M., & Cooper, C. L. (2015). Strategic talent management. In Do We Need
HR? (pp. 177-212). Palgrave Macmillan, London.
Zdravkovic, J., Stirna, J., & Grabis, J. (2017). A comparative analysis of using the capability
notion for congruent business and information systems engineering. Complex Systems
Informatics and Modeling Quarterly, (10), 1-20.