Managing Performance and People - Air Asia Case Study

This article discusses the innovation and change management aspect of Air Asia, its drivers, organizational structure, and response to drivers of innovation. It also talks about the misfit between organizational mission and structure planning and the example of Malaysian Airlines. Lastly, it covers the success story of the Chinese entrepreneur Jack Ma.

Running head: MANAGING PERFORMANCE AND PEOPLE
MANAGING PERFORMANCE AND PEOPLE
Name of the Student
Name of the University
Author Note

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Introduction
With the development of technology, change has become an essential part of any
organization. Stated likewise, change is the only constant and if the organization has to survive
in the brutal business environment, then it is necessary that the organization needs to innovate
and adapt to the change so that it is able to compete with the other firms. In the first part, essay
aims to highlight the innovation and change management aspect of one such organization named
Air Asia which origins from Malaysia (Khavul & Bruton, 2013). A brief description will be
provided, followed by the drivers of innovation and change and a critical analysis of how the
company will be dealing with the change and a short comparison of other aspects in an
organization. The second part comprises of the relationship between the organizational mission
vision and objective with its structure and a brief not on the Chinese entrepreneur Jack Ma.
Brief description
Air Asia is a Malaysian low cost airline which has its headquarters in Kuala Lumpur,
Malaysia. It is the largest airline in Malaysia and has flights which reach to around 165
destinations in 25 countries. The main unique point of the company is that it sells no frills, low
cost tickets to the passengers so as to gain the attention of the target audience. The Aircraft
Company can be described as the pioneer of low cost travel in the continent. The company has
maintained this position since a long time and achieved a latest award in 2017.
Drivers of innovation and change for Air Asia
Purpose of Air Asia
The primary purpose of the Air Asia airline company is to provide low cost travel options
to the customers. Air Asia has realized that the continent has several nations which are still at its
developing stage and thus, for this reason, the organization aims to provide a cheaper option to
the different customers (Bernardo, 2014). The company has a greater utilization of its fleet and
operates many flights in a week.
Company goal and objective
The primary objective of the company is as follows:

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To capture a larger customer base
To become a leader in the Asian market
To provide low cost travelling to customers.
Strategies
The primary strategy that Air Asia adopts is the cost leadership strategy. The company
takes advantage of the fact that the developing countries have a larger customer base but the
other companies who operate in the given industry are all expensive airlines (Goffin & Mitchell,
2016). The customers in the developing country are unable to afford the higher costs and this is
the reason why the airline industry in the country has not being doing well. Air Asia decided to
convert this problem into an opportunity and came up with this idea of a low cost travel options
for the customers (Osborne & Brown, 2013). The airline has become a cost leader in his domain
and therefore, its strategy has worked out well. The budgeted airline concept has been praised by
all and helped the company to gain higher revenues.
Company strengths
The strengths of the Air Asia airline company have been given as follows:
High passenger loads
The flights of the company are generally well occupied and the flight has a high
passenger load.
Lower price offerings
The company offers low price offerings which make it easier for the company to capture
the larger market
High market share
The company due to its low pricing has a higher market share as compared to its
competitors in the given industry.

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High profitability
As the maintenance and facilities cost of Air Asia is comparatively quite low, the
company earns a high profit share.
Low overhead costs
The overhead costs of the company is quite low as it follows a policy of no frill offering
which mitigates any extra customer service cost which is generally incurred by the company
(Christensen & Horn, 2013).
Standard fleet
The company has a standard fleet seize which then helps the firm to maintain its
operations efficiently.
Direct customer contact
The company has a well developed website which allows the customers to book the
tickets of the company directly (Durant & Fiorino, 2017).
Organizational Structure
The organizational structure of the company is as follows:
The CEOs of the company are Aireen Omar and Tony Fernandez.

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Figure 1: Organizational Structure of Air Asia (Source: Airasia.com, 2018).
The company is divided into different departments as sated above and each department is
responsible for maintaining its own operations. There exists a good level of flexibility in the
organization where the different department holders have the power to take heir own decisions.
This goes a long way in helping the organization to make quick decisions as demanded by the
time (Tidd & Bessant, 2014).
Air Asia`s response to drivers of innovation
Air Asia`s response to technological drivers

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Technology is often considered to be the key towards the success of the firm. Technology
is a major diver of innovation in any organization and likewise over the years Air Asia has made
several changes in the organization that has enabled it to keep up with the innovation aspect.
The digital changes adopted by AirAsia are as follows:
Presence on social media- The Company is present on social media where it posts al its recent
updates and offers. It also uses this medium to socialize with its customers.
Website development- The website of the company is well developed and the company makes an
effort to provide convenience to the customers surfing the website.
Air Asia’s response to cultural drivers
Diversification of workers- The company has a large pool of employees working under the
company who belong to different cultural backgrounds and Air Asia has several policies under
its reign to support the company`s pledge to include diversity in its domain(Bloom, Draca & Van
Reenen, 2016).
Leadership style- The leadership of the company leaders follows a democratic style whereby the
different leaders have given the middle management to exercise responsibility and take decisions
on their own.
One of the competitors of is Tiger Airways. The airways also connect various destinations at
a similar cost price structure. However, the company has not been able to achieve success in this
field as its economies of cost strategy does not work as efficiently as that of Air Asians
The Strategic Management Analysis has been done below:
SWOT Analysis
Strengths
Strong promotion
Well established operations outside of the South East Asian region

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Fleet size of more than 300 aircrafts
Weaknesses
Competition in the industry is very brutal
Opportunities
Increase in traffic from India
Threat
Rising cost of fuel
Rising Labor cost and other taxes as well
With the change in the business environment, AirAsia has tried to make various changes
to its business model as well. These changes include changes in its promotion technique like the
use of social media advertising. It also includes a change in its use of a diverse workplace
whereby the company needs to hire people from wide background in order to ensure that the
company has opinions from all cultures (Westland, 2016).The given changes has bought about
several changes in the environment of the business and further strengthen its cost effective
strategy as the company has started using automated technology and cheaper promotion options
to further lower its costs.
Therefore, from the given analysis it can be stated that innovation and change form an
essential part of any organization and that any company should see to it that that with changing
times it is able to adapt to the given changes (Volberda, Van Den Bosch & Heij, 2013). Air Asia
has taken the effort of modifying its business according to the technological innovations and has
been successful in maintaining its strategic position while doing so.
Part B:
An organization is often considered to be a storehouse of different mission vision and
objectives (Drake & Spinler, 2013). A well defined mission and vision helps the organization in

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staying focused towards its actual objective. It is very important for an organization to have a
well defined mission as it serves as a motivating factor for the employees and helps in guiding
them well. The mission statement forms the basis of the organization`s activities and it is because
of this that the company must see to it that the structure of an organization is designed in a
manner such that it supports the mission and vision of an organization. However in many
organizations, this is not the case.
There are various causes of misfit that takes place between the organizational mission
and the structure planning. The reasons may be found with the help of external and internal
environmental factors affecting the organization.
External factors affecting the business
High regulated business environment- The business environment of a business often places
unprecedented demands on the business. These demands often lead to change in the structure of
the firm. For example, a company may have to make quick decisions in the organization which
may require the structure to be decentralized and in scenarios when this is not possible, the
organization may have to make their structure such. In this case, the organizational mission may
not be allowing so but it becomes important for them to do so.
Government legislations- Certain government legislations placed on the organization often
enable them to bring about a change in their organizational mission and vision. For example, a
small business organization may be placed by an unseen tax burden which may force the firm to
change their structure for a short time which may not necessarily go well with the missions and
goals of the organization.
Competition- Brutal competition in the business environment may also enabled he business firm
to keep changing its goals and missions regularly but these goals and missions may not
necessarily be suitable for its current organization structure.
Internal factors
The following internal factors tend to have an impact on the organization and cause a
misfit:

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Financial constraints- Not all organizations are blessed with financial abundance which may help
the firm to ensure that it is able to match the organizational structure with that of its missions and
objectives which may often change accordingly.
Employees- The employee base of the firm may not be strong enough to ensure whether the
missions and objectives align and fit with the management or not.
Example
Malaysian airlines are another popular airline company after Air Asia. The company is an
international carrier which engages in various routes around the globe. The organizational
structure is centralized and the different departments present in the organization are responsible
for taking the different decisions of the firm. However, with the increased competition and the
competitive business environment, the firm is required to change its mission and objectives
continuously.
Earlier, the company had the objective of providing customers service in a manner such
that the customers were satisfied. However, presently the given motive of the firm has changed
considerable and the present mission is to capture a larger target market. For this it is
continuously required to change its management structure and make quick decisions. However
the organizational structure is hierarchical and the lack of flexibility does not permit so. For this
reason, the company needs to see to it that the organizational structure is a fit to its mission. In
the present scenario, this is not the case and for this reason, the company has been suffering
problems.
Entrepreneur
Jack Ma is a Chinese business entrepreneur, investor and philanthropist. Ma is the co-
founder and executive chairman of the Alibaba Group which is a multinational technological
conglomerate. He is the richest men in China with a net worth of around US$42.2 billion and
also counts as one of the wealthiest people on earth. Jack Maa is also observed as the global
ambassador of business in China and is also stated to be one of the most powerful people by
Forbes.

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He is considered to be one of the most influential business leaders in China with his
company becoming the leading e-commerce player. Jack Ma is a man with innovation and has
started this business from the scratches. The company led by him has a market share of around
70%.
Ma was born on 1964 in China and began a tough life. He used to walk for 70 miles in a
day to give tourist tours to the customers and practice his English skills for the rest of the time.
He became a teacher after years of struggle in his preparation for the exams in the year
He had applied for various jobs during his period and got rejected at each of them. His
journey for Ali Baba started in 1995 when he was introduced to the term internet. He attended a
course in 1995 and that helped him to get acquainted with the term. He realized this gap and
thought about how any product was not available with respect to China and there was no
background information as well. He then prepared a website related to China and received
acclamation for that. It was at this time when he realized that internet was a very interesting
concept and began to raise money for his venture. Within three years of beginning the company
on China Yellow pages which helped companies to develop websites, the company raised
5000000 Chinese Yuan. This is the starting point of his business and then he created various
companies related to commerce. However it was in 1999 that Alibaba was formed.
The most commendable aspect of a leader is that he is very inspirational. He describes
that there is no one clear method of leading and that there exist different models. These different
models need to be adopted by a company and this is the aspect that is strictly applied by him. He
suggests that there is no single way of conducting the business and the e-commerce giant has
achieved success using the given theory.
Jack Ma is a patriotic person and believes that it is the duty of the business to see to it that
it contributes well towards the success of country as a whole. This is what the inspirational
leader Jack Maa has aimed to do and he believes that Ali baba has been a positive step for China
and has been able to improve the life of many citizens and been successful in improving the
economy of the country.
The most commendable aspect of Jack Ma is that he believes in hard work and
innovation. Jack Ma took advantage of the problem that there was no internet usage in China and

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that the world needed to know China as a place. With this, began the journey of a leader who
was successful in his ventures and introduced the world to China, a country which has now
become one of the fastest growing economies in the globe.
Conclusion
Therefore from the given essay it could be seen that change and innovation form an
essential part of the organization and it is extremely important for the firm to see to it that it is
able to change with the changing needs in an organization`s external environment. If the
organization is unable to do so then, it becomes very difficult for it to manage and survive. The
second part derived the relationship between the organizational structure and the mission, vision
and objectives of the organization. Any misfit between these might lead to problems for the
organization. Lastly, I chose Jack Ma as a leader who I look up to.

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References
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Bloom, N., Draca, M., & Van Reenen, J. (2016). Trade induced technical change? The impact of
Chinese imports on innovation, IT and productivity. The Review of Economic
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Christensen, C. M., & Horn, M. B. (2013). Innovation imperative: Change everything. The New
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Goffin, K., & Mitchell, R. (2016). Innovation Management: Effective Strategy and
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Tidd, J., & Bessant, J. (2014). Strategic innovation management. John Wiley & Sons.
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