Corporate Business Strategy Assignment Report

Running head: BUSINESS STRATEGY
BUSINESS STRATEGY
Student’s Name
University Name
Author note

1BUSINESS STRATEGY
Executive Summary
The significant objective of the report is to provide an analysis on the functioning of the
public listed company in Malaysia, AirAsia Berhad. The report highlights the current growth
phase of the company in its business life cycle and its present brand positioning on the basis of
its key activities. The corporate, business, and growth strategies of the organization have also
been discussed with reference to the theories of Porter’s generic strategies. The core
competencies of the company have also been identified on the basis of the intangible and
intangible resources available and utilized by them. Furthermore, the method in which the
company achieves a sustainable competitive advantage in the airline industry of Malaysia has
also been highlighted in the report. The report analyzes the competitive situation prevailing in
the airlines industry using Porters Five Force Analyses. It determines the CSR strategy of the
chosen PLC Air Asia and its alignment with United Nation’s Sustainable Development Goals of
Agenda 2030. Lastly, it provides recommendations to achieve sustainable competitive advantage
for the next three years and concludes the report.

2BUSINESS STRATEGY
Introduction
AirAsia Berhad is identified as one of the major low-cost airlines of Malaysia with its
headquarters located in Kuala Lumpur. The airlines company provides domestic as well as
international flight services to its customers in more than 23 hubs spanning across more than 150
destinations (Newsroom.airasia.com 2020). There are several airline chains affiliated with
AirAsia Berhad including Thai AirAsia, Philippines AirAsia, India AirAsia and Indonesia
AirAsia. The company was established in the year 1993 after which it commenced it operations
on 18th of November, 1996. The current strength of the company comprises over 22,000 highly
skilled staff engaged in over 11,000 flights on a weekly basis (Newsroom.airasia.com 2020).
The primary mission of the AirAsia Berhad airlines company is to provide high quality of
flight services to its customers at the lowest fares. The operations of the company thereby caters
to the requirements of over 600 million guests all over the Asia Pacific (Newsroom.airasia.com
2020). In order to ensure sustainable business operations and functions, AirAsia Berhad ensures
its responsibility towards its numerous stakeholders by conducting its activities with integrity
and safety (Newsroom.airasia.com 2020).
Business Life Cycle
Observing the progression of the business activities of AirAsia Berhad, it can be
identified that the company is currently at the growth phase of its business life cycle. It is so
because the company is still seeking to expand the scope of its business through the
incorporation of changes and introduction of additional services through online mediums. During

3BUSINESS STRATEGY
the growth phase the business organization undergoes a rapid growth in its net sales and thereby
its profits (Muzellec, Ronteau and Lambkin 2015).
Figure 1: Business Life Cycle
(Source: author)
Brand Positioning
The positioning of AirAsia Berhad in the airlines industry is characterized by a
competitive advantage obtained with the help of high quality of services provided at low costs to
its customers (Niyomsart and Khamwon 2015). Among the various competitors of the company
in the airline industry like Malaysia Airlines, THAI and Singapore Airlines, AirAsia Berhad
provides its customers with the highest quality of services at the lowest possible fares (Eng and
Vichitsarawong 2019). The brand positioning of a business organization in the industry provides
an insight on the competitive environment present and the methods in which the company may
acquire a competitive advantage (Singh, Kalafatis and Ledden 2014). The figure provided below
identifies the position of AirAsia Berhad in the airlines industry of Malaysia:

4BUSINESS STRATEGY
Figure 2: Brand Positioning of AirAsia Berhad
(Source: Author)
Corporate Strategy of AirAsia Berhad
The increasingly competitive environment of the airline industry requires the
organizations to strategize efficient means to carry out successful business operations and obtain
a competitive advantage in the market. Such strategizing may include a set of corporate
strategies that assist the business organizations to develop directions and goals that are to be
achieved through its operations and functions. Corporate strategy thus includes a mission and
vision for the organization that are internalized and integrated with the interests of the various
stakeholders for the purpose of creating and increasing value (Rugman and Verbeke 2017). The
corporate strategy of AirAsia Berhad is based on the mission of the company, which is to allow

5BUSINESS STRATEGY
everyone to fly. This mission of the company is based on the provision of high quality services to
the customers at low fares. In this regard, it can be noted that the primary corporate strategy of
AirAsia Berhad is to increase the scope of its business through maximization of productivity and
efficiency along with the reduction of operations cost (Sugiarto 2014). The corporate strategy of
the company further involves the vision of establishing and maintaining their position as the
lowest cost airline in the market. In order to achieve this, the company engages in focusing its
activities towards obtaining high margins along with sustainability of growth (Ir.airasia.com
2020).
AirAsia Berhad follows the corporate strategy of horizontal integration. This strategy
involves a process of increasing the services and goods produced by a business organization
along with an expansion of the supply chain. Such horizontal integration may be done with the
help of either internal expansion or through mergers and acquisitions. In the case of AirAsia, the
organization has increased the scope of its business with the help on expansion into the markets
of various nations like Philippines, Indonesia, India and Thailand. AirAsia has purchased Zest
Airlines of the Philippines in order to create AirAsia Zest (Centreforaviation.com 2020). The
growth of the company in the airline industry and the obtaining of a competitive advantage in the
market has been facilitated by the strategy of low-cost adopted by AirAsia Berhad (Adler et al.
2017). The Chief Executive Officer of the company, Tony Fernandes has stressed upon the
provision of high quality of customer service in order to obtain maximum customer satisfaction
and loyalty. The low cost strategy adopted by the company aims at reducing the cost of
operations at all levels of the business activities. Furthermore, the corporate strategy of the
company also involves an adequate utilization of resources and assets available to them. Such a

6BUSINESS STRATEGY
low cost strategy thereby increases the efficiency of the organization through the process of
stimulating new markets (Ir.airasia.com 2020).
Business Strategy of AirAsia Berhad
The incorporation of an efficient business strategy is essential for business organizations
as it helps in creating goals and targets on the basis of its operations and enhancing the
productivity and profitability. The decision making process in the organizations and
identification of strengths and weaknesses within the scope of its business are enhanced by
strategizing means to utilize resources in an efficient and sustainable manner (Alstete 2014).
There are different types of strategies that can be adopted by business organizations including
cost leadership, cost focus, differentiation and differentiation focus.
The business strategy adopted by AirAsia Berhad is that of cost leadership. The strategy
of cost leadership helps in the establishment and maintaining if a competitive advantage in the
market by lowering the cost of operations of a business organization. The primary purpose of
adopting the business strategy of cost leadership is to exploit the scales of production of good
and services. This in turn helps the organization to obtain significant market shares. The concept
of cost leadership was developed by Michael E. Porter to identify the methods through which a
business organization may be able to obtain a competitive advantage in the market. These
methods were identified to be the reduction of production costs, thereby increasing the profits of
the business organizations through the sale of their good and services. The second method
pertained to the increase of market shares with the help of selling the products and services at
low prices while making significant profits due to the reduced costs of production. However,
reducing the costs of the goods and services alone cannot ensure the increase in the overall sales
for the business organization. This also requires the maintenance of high quality standards so as

7BUSINESS STRATEGY
to obtain maximum customer satisfaction. The presence of a low cost base for labor and other
resources along with efficient logistics and easy accessibility to the capital required to invest in
advanced and resource efficient technology is also essential to ensure the success of a cost
leadership strategy.
The airline transportation service was previously considered to be a luxury that was
affordable only to the high income groups of individuals. However, due to the development of
the cost leadership strategy, AirAsia has resulted in the facilitation of flight services to customers
from different income groups. In this regard, it may be identified that the cost leadership
business strategy adopted by AirAsia Berhad has enabled it to increase its market not only in
Malaysia but also in several other countries in the Asia Pacific (Pearson et al. 2015). The low
cost carrier business strategy further enables the organization to efficiently utilize the resources
available to them through high utilization of aircraft (Jeddi et al. 2014). This means that the
airlines company commences its services to the customers from early morning till late at night in
order to ensure maximum sales of flight tickets. Furthermore, the company also does not provide
free food or beverage services to the customers during the flight, thereby reducing the cost of
their operation. The customers are also not given any specific or assigned seating, however they
may be able to choose their seats by paying extra for the ticket. Cost efficiency in the operations
of the company is also ensured through the system of ticketless travelling, thereby saving the
cost of printing and distributing the tickets to the customers. The company also does not provide
any refunds to the customers for cancellation of tickets (Dostaler and Fiset 2015). Within the
scope of the organizational structure, the employees and staff of AirAsia Berhad are trained for
limited types of aircrafts, thereby saving the costs of training, learning and acquiring different

8BUSINESS STRATEGY
types of spare parts. Homogeneity of services is also maintained by the airlines company by
ensuring a similar level of competency for all the staff and employees.
Growth Strategy of AirAsia Berhad
Due to the ever increasing scope of the travelling and hospitality industry, there has been
an observable growth in the airline industry as well. In order to keep up with the market trends,
the organizations operating within the industry must also strategize means for the growth of their
business. There are various strategies that can be adopted by such business organization for the
purpose of bringing about growth and development. Such strategies include market penetration,
market expansion, product expansion, growth with the help of diversification and acquisitions or
mergers (Schmidt, Spann and Zeithammer 2014).
The growth strategy adopted by AirAsia Berhad is that of market penetration. The growth
strategy of market penetration entails the marketing of existing products and services of a
business organization in the market, thereby aiming at increasing the market share. The business
strategy of cost leadership adopted by AirAsia enables the organization to reduce its cost of
operations thereby allowing it to acquire a greater market share in the airline industry of
Malaysia (Homsombat, Lei and Fu 2014). Lowering the cost of operations provides the scope for
the acquisition of larger shares of the existing market, as well as those in the different countries
where the company operates. The company additionally engages in price adjustment for the
provision of its services at low costs to the customers. This strategy in turn provides a
competitive advantage to the company over its rivals thereby helping it to acquire a larger market
share. Other means of obtaining greater market shares adopted by the company include an
efficient analysis of the risks and challenges that may be faced by AirAsia in the airline industry
of Malaysia, helping them to capitalize on the opportunities.

9BUSINESS STRATEGY
Ensuring the maximization of customer satisfaction through the maintenance of high
standards of quality of the services provided to the customers builds a positive brand identity of
the company and engages the participation of a greater number of customers to resort to the
services of the company over its competitors in the market. Such positive brand identity and
maximization of customer satisfaction also helps the company in capturing a greater market
share. Strategic alliances and joint ventures with other airline companies through the Asia Pacific
has also helped the company to develop its market share in the global airline industry. Such joint
ventures may be identified to include AirAsia Zest in Philippines and collaborations with other
airline companies in Indonesia (Centreforaviation.com 2020).
Core Competencies and Sustainable Competitive Advantage
For the successful operation of business activities organizations are required to efficiently
utilize the resources available to them. These resources may be categorized into two sections,
namely tangible resources and intangible resources. Tangible resources are the physical assets of
an organization and may include its inventory, infrastructure, equipment, vehicles and the like.
Intangible resources on the other hand are those that are non-existent in a physical form but are
considered to be important assets to the organization, including expenses, goodwill, services of
the employees, brand identity and goodwill.
An analysis of the method in which the tangible and intangible resources available to a
business organization are utilized can help in the assessment of the core competencies of the
company. In this regard, it may be said that there are several tangible and intangible resources
available to AirAsia Berhad that are cost efficiently utilized by the company, thereby serving as
its core competencies in the highly competitive environment of the airline industry of Malaysia.
The tangible resources of the company include the infrastructure of the hubs located in the

10BUSINESS STRATEGY
different locations across the country of Malaysia, the fleet size comprising of Airbus A320,
Airbus A321neo and Airbus A330, and the equipment used for the maintenance of the fleet and
customer services (Newsroom.airasia.com 2020). The intangible resources of the company
include the skills and competencies of over 22,000 staff and employees, the positive brand
identity of the company in the Malaysian airline industry and the goodwill of the company
towards its various internal and external stakeholders including the various customers throughout
the world and particularly that of the Asia Pacific where the services of the company are made
available. The utilization of these resources in an efficient manner happens to be one of the
major core competencies of the airline company, thereby allowing them to capture a major
portion of the airline market share in Malaysia.
The cost efficiency in the utilization of these resources further depends on the manner in
which technology is developed according to the changing trends of market, industry and
customer demands and requirements. Such cost efficiency in the utilization of resources thereby
proves to be a competitive advantage to the company in the Malaysian airline industry. In this
regard, it can be pointed out that acquiring a competitive advantage alone cannot ensure the
success of business operations and activities of an organizations. In order for the organization to
develop and grow in the industry it is essential that the competitive advantage thus established is
sustainable in nature. Sustainable competitive advantage can be acquired by a business
organization through the utilization of its resources in a manner that cannot be easily duplicated
by its rivals or competitors.
AirAsia Berhad ensures a sustainable competitive advantage while conducting its
business operations by providing low cost carrier services to its customers. Such a service is
provided to them through the efficient utilization of the tangible and intangible resources

11BUSINESS STRATEGY
available to them, so as to reduce the cost of production. As discussed earlier, the company
ensures cost efficiency in its operations through a variety of methods that include the provision
of high quality of services to the customers that are chargeable if customized according to the
needs and requirements of the customers. Therefore, the two factors that significantly contribute
to the sustainable competitive advantage of AirAsia Berhad in the airline industry of Malaysia
are cost efficiency and effectiveness of operations. The highly skilled staff and employees of the
company further contribute to the provision of outstanding quality to customer services that in
turn engages maximum customer satisfaction and a positive brand identity that in turn helps in
the development of a trust and loyalty from the customers. These factors together combine to
ensure that the company acquires a greater market share in the market of the airline industry of
Malaysia, above its competitors like Malaysia Airlines, Singapore Airlines and THAI airlines.

12BUSINESS STRATEGY
Competitive analysis of the industry in which Air Asia operates
The airlines industry is highly competitive especially in the Malaysian airlines industry.
The existing airlines compete with the other airline service providers in the markets as well as
with the new entrants from time to time (Pearson, Pitfield and Ryley 2015). The airlines products
are undifferentiated and they are homogeneous, which increases the level of competition
prevailing in the market. However, according to Homsombat, Lei and Fu (2014), the airlines
industry is free from regulations and other economic barriers. The airlines industry is
characterized by high capital and huge expenditure structure and operating expenditure. One of
the important characteristics of Air Asia is its condition of market entry. The conditions for
market entry differ between the domestic and the international markets. As per the opinion of
Suki, (2014), in the international market, the entry is comparatively difficult because of the
bilateral negotiations between the governments. While on the other hand, entry in the domestic
markets depends on the level of liberalization and deregulation (Homsombat, Lei and Fu, 2014).
In the airlines industry, government plays an important role in regulating the services providers
in the markets and the existing players in the markets which have significant impact on the new
entrants. There are two important forces which drives the industry: global economy and Safety
issues (Homsombat, Lei and Fu, 2014). There are new trends prevailing in the Malaysian
domestic airlines industry. There is an increasing popularity of low cost airlines in the industry.
In the past years, there has been a rise in low cost airlines.

13BUSINESS STRATEGY
Competitive analysis of Air Asia using Michael Porter’s Five Force Analysis
With the help of porters five force analysis, the competitive structure of the airline industry can
be assessed.
Degree of rivalry among the existing customers:
As stated by Jeddi et al. (2014), the Malaysian airlines industry is highly competitive. Air
Asia faces considerable threats from the Malaysian Airlines. The switching cost is low. The
services and products offerings of Air Asia are similar with no significant differences. It faces
direct competition with Tiger Airway and Jet Star. The company is currently facing stiff
competition from the low fare airlines such as JAL Express, Jet Star Airways, and Air Arabia.
Due to similarity in the product and service offering of the companies, the competition is fierce
(Jeddi et al. 2014).
Barrier to entry:
There are high barriers of entry in the market. New entrants offering one or two routes
will be able to enter the market easily compared to the other larger airlines serving multiple
routes (Jeddi et al. 2014). There are highly possibilities that the small airlines might get
transformed to larger airlines. However, as mentioned by Chang et al. (2015), the new entrants
might face challenges getting access to labour and capital. The startup cost is high; this can be a
barrier to entry for the new entrants. Air Asia has expanded its product lines.
Availability of substitute products in the market:
The presence of substitute products in the market is high. There are other low cost
airlines operating in the Malaysian airlines industry (Chang et al. 2015). It is easier for the

14BUSINESS STRATEGY
consumers to switch to other cheap alternatives. There is stiff rivalry in the performance.
Consumers might consider differentiating them through the quality of service provided, accuracy
of takeoff time, relative price and the staff services (Park, Yap and Lee 2015).
Bargaining power of the suppliers:
The bargaining power of the suppliers is high. The supplier in the airline industry is
concentrated in few hands (Park, Yap and Lee 2015). There is limited number of suppliers in the
market. This increases the bargaining power of the suppliers. The other suppliers in the markets
such as merchandise supplier, food supplier and fuel suppliers depend on the conditions
prevailing in the market (Park, Yap and Lee 2015).
Bargaining power of the consumers:
The bargaining power of the consumer is strong. The switching cost is low. Consumers
prefer to choose services for which the price is comparatively low (Park, Yap and Lee 2015).
Further, there is no product differentiation in the market, which increases the power of the
consumers in the market.
Competitive climate for Air Asia
According to Chang et al. (2015), in the Malaysian airlines industry, government plays an
important role as regulator in the industry through the ministry of transportation and department
of civil aviation. The government plays an important role as it holds majority of the shares in The
Malaysian airlines industry. According to Park, Yap and Lee (2015), Malaysia airlines market
has because highly challenging for the airlines. There is volatile demand in the market. The
future of the airline industry is highly uncertain. It can be said, that Air Asia operates in a highly

15BUSINESS STRATEGY
competitive market. The product differentiation is low, which further increases the level of
competition in the market.
CSR Strategy of Air Asia
CSR Strategy of Air Asia
Air Asia is committed towards the implementation of corporate social responsibility
throughout its operation in the past two years. According to Kuo et al. (2016), the company has
been involved in variety of activities concerning the environment, communities, employment,
occupational health, and safety along with the customers. These activities of the companies are in
alignment with the four social responsibility pillars essential for maintaining partnership with all
the major stakeholders of the business organization ensuring sustainability in their growth (Park
2019).
Responsibility towards global environment
The company undertakes programs and campaigns to address the environmental
problems representing the crucial issues which hamper the lives of humans being. The company
as a part of their CSR strategy undertook the following activities in the past years:
Recycle program: The Company initiated a Go Green campaign in which it promoted recycling
and reusing to its stakeholders. The company introduced the 3 R’s that is Reuse, Reduce, and
Recycle (Paling and Thomas 2018). It introduced bins for recycled products. This concept was
straightforward and fundamental as it directly influences the lives of the people. This is directly

16BUSINESS STRATEGY
in alignment with goal 12, 13 and 15, of United Nation’s Sustainable Development Goals of
Agenda 2030.
Neutering wild animals: This campaign has been imitated by the animal lovers of the employee
group. They collected stray dogs and control of the population of stray dogs, which if grows can
lead to health risks of human beings (Ir.aaid.co.id. 2020).
Bali beach cleanup: Bali Beach Cleanup initiative was undertaken by the employees by
collecting plastic wastes from Kuta beach (Ir.aaid.co.id. 2020). This has been a responsible act
which is in alignment with Goal 11 of United Nation’s Sustainable Development Goals of
Agenda 2030 that is to make ‘sustainable cities and communities’ and Goal 14, to ‘conserve and
sustainability use oceans, seas for sustainable development.’
Responsibility towards employees and OHS (occupational health and safety)
Air Asia is committed towards meeting its obligations concerning employment and well-
being of employees and OHS (Ir.aaid.co.id. 2020). The company ensures that the employees are
provided with proper health and social security programs covering retirement insurance, death,
work accident, and other insurances with due observance to United Nation’s Sustainable
Development Goals of Agenda 2030 and other manpower regulations (Pearson and Merkert
2014). Furthermore, the company organizes training programs such as emergency evacuation
simulation, OHS training, and fire fighting training. These programs and training programs are
aimed to raise hazard awareness culture and ensure that the staffs and the employees remain
vigilant towards their health and safety along with the work environment (Pearson et al. 2015).
The company has been successful in creating safety and convenient workplace and reduces the
rate of employee turnover. This promotes ‘sustainable economic growth, productive

17BUSINESS STRATEGY
employment, and decent work for all’ as mentioned in Goal 8 of United Nation’s Sustainable
Development Goals of Agenda 2030 (Pearson et al. 2015).
Responsibility towards society and communities
Social responsibility towards community and other efforts is an opportunity for Air Asia
to strengthen its bonding with the potential stakeholders and ensure its alignment with the
company’s capacity (Mayer 2018). It provides learning and work opportunities; it offers
internship programs and accepting interns. The internship programs aims to provide education
and training to students from tourism schools and mechanical engineering on ground operations
and engineering (Mayer 2018). The company also provides expertise to universities to give
lectures and informs the students regarding certain subjects (Kuo et al. 2016). This initiative is in
alignment with Goal 4 of United Nation’s Sustainable Development Goals of Agenda 2030 that
is ‘quality education’. Additionally, the company carries out other programs such as blood
donation campaign.
Responsibility towards consumers
Customers are important aspects of these business organizations. The company ensures
that the consumers are provided with best services without exception. The company fulfills its
obligations as stated in Transportation Minister Regulation No. 49 of 2012 concerning any
situation of cancelled fights or delayed fights (Kuo et al. 2016). Additionally, the company takes
initiative to respond to consumer feedback online through websites or emails or the call centre. It
works collaboratively to reduce the number of customer complaints.
As per the Paling and Thomas (2018), it has been identified that the company undertakes
various steps and initiatives to ensure compliance with its corporate social responsibility. The
planning and strategy are sustainable, however according to Park (2019), these strategies needs

18BUSINESS STRATEGY
to be reviewed from time to time so as to further ensure sustainability. The present strategies of
corporate social responsibility are not aligned with all the goals and statements of United
Nation’s Sustainable Development Goals of Agenda 2030. Therefore, it is suggested that the
company must review its strategies to ensure sustainable corporate social responsibility and
sustainable development (Park 2019).
Recommendations
According to Pereira and Caetano (2015), there are mainly two broad sources of
competitive advantages for the business organizations: unique resources and distinctive skills. It
is recommended that the company must incorporate service differentiation as their strategy along
with effective market segmentation. This ensures survivability and sustainability in the long run.
Considering the level of future uncertainty and level of competition prevailing in the Malaysian
airlines market, service differentiation will be an effective strategy for achieving sustainable
competitive advantage. It is also recommended by Whyte and Lohmann (2015), that the
business organization must implement a cost leadership strategy. It is considered as the basis for
long run and sustainable competitive strategy. In order to ensure sustainability in its competitive
advantage, Air Asia, must leverage its competency in initiating cost advantage. Considering the
latest trends in the Malaysian airlines industry, there has been an increase in the demand for cost
carriers (Min and Joo 2016). This trend is more likely to increase in the next three years.
Therefore, it is recommended that Air Asia must concentrate more on the low cost carrier in the
airline industry. According to Akamavi et al. (2015), the latest trends in the airlines industry, is
an opportunity for Air Asia to enhance its business growth and operations. If the cost is
controlled along with the focus on efficiency and reliability in service, it is more likely that Air

19BUSINESS STRATEGY
Asia can grow in the airlines industry. Air Asia being a market leader in the Malaysian markets,
it is more likely that it will face competition from the existing players as well as the new entrants
in the market (Min and Joo 2016).
Cost leadership strategies: Generic strategies of the business organization are ways of achieving
competitive advantage. This helps the company is developing an edge over sales by reducing
cost and increase revenue (Akamavi et al. 2015). It is suggested by Tan and Yap (2015), that Air
Asia must consider increasing the market share by implementing the strategy of cost reduction
thereby making reasonable profits.
Differentiation strategy: As per Min and Joo (2016), the services and products in the airlines
industry is similar. There is little or no differentiation among the products offered by Air Asia
and the products of its competitors. Therefore, it is suggested that Air Asia must deliver high
quality products and services. It must focus on effective sales and marketing to ensure that the
consumers in the market have knowledge and awareness of the benefits in differentiated
offerings (Akamavi et al. 2015).
Focus strategy: The companies must focus on niche markets by determining the dynamics of
the markets as well as the unique needs and requirements of the consumers. It is suggested by
Tan and Yap (2015), that Air Asia must capture the markets and enhance its brand image to
attract the customers. They must develop well specified products and low carrier cost for the
segment consumers in the markets. This redirects the consumers from the competitors.
Therefore, it can be said that Air Asia must pursue cost leadership and differentiation as
business strategy to ensure sustainability. It is also recommended that the business organization
must implement a combination of competitive strategy with an emphasis on both cost leadership

20BUSINESS STRATEGY
strategy and differentiation strategy as mentioned by Tiwari and Kainth (2014). As per Pereira
and Caetano (2015), consumers have higher expectations and want to pay low price for the
services which are differentiated and unique. As the global competition increases, the companies
must integrate the generic strategies and position themselves to improve their ability to adapt the
changing business environment and adapt new skills and technologies (Tiwari and Kainth 2014).
This strategy would enable the business organization to effectively leverage the core
competencies and grow its business in the next three years.
Conclusion
The report has discussed the current corporate strategy, business strategy and growth
strategy in the past three years. It analyzes the resources and capabilities of the company that
leads to core competencies and sustainable competitive advantage. The report has discussed the
competitive analysis of Air Asia using Michael Porter’s Five Force Analysis. It has been
identified that Air Asia operates in a highly competitive business environment. The airlines
industry offers similar products and services which increases the level of competition in the
market. The report has identified and interpreted the competitive climate for Air Asia. It has
been identified that Air Asia faces considerable threats from the Malaysian Airlines. The barrier
to entry in the market is high due to stiff competition, the operations cost of high in the airlines
market. The presence of substitute products is high in the market. The bargaining power of the
suppliers is high in the market. The power is concentrated in the hands of few suppliers. The
bargaining power of the consumers is also high considering the presence of competitors in the
market. The future of airline industry is highly uncertain. The report has identified the CSR
strategy of Air Asia and its alignment with the United Nation’s Sustainable Development Goals
of Agenda 2030. It critically discusses the CSR sustainability of Air Asia. The CSR strategies of

21BUSINESS STRATEGY
Air Asia are appropriate as it aligns mostly with United Nation’s Sustainable Development Goals
of Agenda 2030. Further, the report has provided recommendations for Air Asia to attain a
sustainable competitive advantage in the next three years.

22BUSINESS STRATEGY
References
Adler, R., Stringer, C., Shantripriyan, P., Birch, M.G. and Tohmatsu, D.T., 2017. AirAsia:
Towards a ‘new world’carrier strategy and implications for performance management system
design. In The Routledge Companion to Performance Management and Control (pp. 319-333).
Routledge.
Akamavi, R.K., Mohamed, E., Pellmann, K. and Xu, Y., 2015. Key determinants of passenger
loyalty in the low-cost airline business. Tourism management, 46, pp.528-545.
Alstete, J.W., 2014. Strategy choices of potential entrepreneurs. Journal of Education for
Business, 89(2), pp.77-83.
Centreforaviation.com (2020). AirAsia Zest Airline Profile | CAPA. [online]
Centreforaviation.com. Available at: https://centreforaviation.com/data/profiles/airlines/airasia-
zest-z2 [Accessed 20 Jan. 2020].
Chang, D.S., Chen, S.H., Hsu, C.W. and Hu, A., 2015. Identifying strategic factors of the
implantation CSR in the airline industry: The case of Asia-Pacific airlines. Sustainability, 7(6),
pp.7762-7783.
Dostaler, I. and Fiset, J., 2015. 3 Airline companies: strategies and trends. In The Global
Commercial Aviation Industry (pp. 103-130). Routledge.
Eng, L.L. and Vichitsarawong, T., 2019. Competition and profits in the airline industry: the case
of AirAsia and Malaysia Airlines. International Journal of Revenue Management, 11(1-2),
pp.126-150.
Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-airlines
strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and
Transportation Review, 63, pp.1-16.

23BUSINESS STRATEGY
Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-airlines
strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and
Transportation Review, 63, pp.1-16.
Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-airlines
strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and
Transportation Review, 63, pp.1-16.
Ir.aaid.co.id. (2020). Investor Relations: Corporate Social Responsibility - PT AirAsia Indonesia
Tbk. [online] Available at: http://ir.aaid.co.id/social_responsibility.html [Accessed 20 Jan. 2020].
Ir.aaid.co.id. (2020). Investor Relations: Corporate Social Responsibility - PT AirAsia Indonesia
Tbk. [online] Available at: http://ir.aaid.co.id/social_responsibility.html [Accessed 20 Jan. 2020].
Ir.airasia.com (2020). [online] Available at: https://ir.airasia.com/strategy.html [Accessed 20 Jan.
2020].
Jeddi, A.R., Renani, N.G., Khademi, A., Shokri, V. and Noordin, M.Y., 2014. Low-Cost
Strategy Factors in Airline Industry: The AirAsia Case. In Advanced Materials Research (Vol.
845, pp. 652-657). Trans Tech Publications.
Jeddi, A.R., Renani, N.G., Khademi, A., Shokri, V. and Noordin, M.Y., 2014. Low-Cost
Strategy Factors in Airline Industry: The AirAsia Case. In Advanced Materials Research (Vol.
845, pp. 652-657). Trans Tech Publications.
Kuo, T.C., Kremer, G.E.O., Phuong, N.T. and Hsu, C.W., 2016. Motivations and barriers for
corporate social responsibility reporting: Evidence from the airline industry. Journal of Air
Transport Management, 57, pp.184-195.
Mayer, R., 2018. Airline sustainability and corporate social responsibility. In The Routledge
Companion to Air Transport Management (pp. 277-296). Routledge.

24BUSINESS STRATEGY
Min, H. and Joo, S.J., 2016. A comparative performance analysis of airline strategic alliances
using data envelopment analysis. Journal of Air Transport Management, 52, pp.99-110.
Muzellec, L., Ronteau, S. and Lambkin, M., 2015. Two-sided Internet platforms: A business
model lifecycle perspective. Industrial Marketing Management, 45, pp.139-150.
Newsroom.airasia.com (2020). About us — AirAsia Newsroom. [online] AirAsia Newsroom.
Available at: https://newsroom.airasia.com/about-us [Accessed 20 Jan. 2020].
Newsroom.airasia.com (2020). Sustainability — AirAsia Newsroom. [online] AirAsia
Newsroom. Available at: https://newsroom.airasia.com/sustainability [Accessed 20 Jan. 2020].
Niyomsart, S. and Khamwon, A., 2015, October. Brand Love, Brand Loyalty, And Word Of
Mouth: A Case Of Airasia. In Niyomsart, S., &Khamwon, A.(2015, October, 19-22). Brand Love,
Brand Loyalty, and Word of Mouth: A Case of AirAsia. Paper presented at the International
Journal of Arts &Sciences’(IJAS) International Conference for Business and Economics, Rome,
Italy.
Paling, C. and Thomas, C., 2018. Airport sustainability and corporate social responsibility.
In The Routledge Companion to Air Transport Management (pp. 297-310). Routledge.
Park, E., 2019. Corporate social responsibility as a determinant of corporate reputation in the
airline industry. Journal of Retailing and Consumer Services, 47, pp.215-221.
Park, T.S., Yap, L.H. and Lee, J.Y. 2015, CASE STUDY: AIRASIA, WHAT’S NEXT?.
Pearson, J. and Merkert, R., 2014. Airlines-within-airlines: A business model moving
East. Journal of Air Transport Management, 38, pp.21-26.
Pearson, J., O'Connell, J.F., Pitfield, D. and Ryley, T., 2015. The strategic capability of Asian
network airlines to compete with low-cost carriers. Journal of air transport management, 47,
pp.1-10.

25BUSINESS STRATEGY
Pearson, J., O'Connell, J.F., Pitfield, D. and Ryley, T., 2015. The strategic capability of Asian
network airlines to compete with low-cost carriers. Journal of air transport management, 47,
pp.1-10.
Pearson, J., Pitfield, D. and Ryley, T., 2015. Intangible resources of competitive advantage:
Analysis of 49 Asian airlines across three business models. Journal of Air Transport
Management, 47, pp.179-189.
Pereira, B.A. and Caetano, M., 2015. A conceptual business model framework applied to air
transport. Journal of Air Transport Management, 44, pp.70-76.
Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Schmidt, K.M., Spann, M. and Zeithammer, R., 2014. Pay what you want as a marketing strategy
in monopolistic and competitive markets. Management Science, 61(6), pp.1217-1236.
Singh, J., P. Kalafatis, S. and Ledden, L., 2014. Consumer perceptions of cobrands: The role of
brand positioning strategies. Marketing Intelligence & Planning, 32(2), pp.145-159.
Sugiarto, T., 2014. Beyond the low-cost strategies in Indonesia of the AirAsia company. work,
6(7), pp.10-11.
Suki, N.M., 2014. Passenger satisfaction with airline service quality in Malaysia: A structural
equation modeling approach. Research in transportation business & management, 10, pp.26-32.
Tan, B.S. and Yap, E.H., 2015. Sustainable Growth of the Commercial Aviation Industry in
Malaysia Using a System Dynamics Approach. Journal of Engineering, Science and
Technology, 10(9).
Tiwari, S.R. and Kainth, J., 2014. Malaysia Airlines: in search of a sustainable business
model. Emerald Emerging Markets Case Studies, 4(7), pp.1-10.

26BUSINESS STRATEGY
Whyte, R. and Lohmann, G., 2015. The carrier-within-a-carrier strategy: An analysis of
Jetstar. Journal of Air Transport Management, 42, pp.141-148.