Cross-Cultural Environment and Recommendations for AirAsia

This report analyzes the cross-cultural environment and provides key recommendations for AirAsia to manage them. It explores the cultural auditing, training and development program, and agile team formation. The report focuses on the international business model and the Lewis model of culture. The PESTLE analysis of AirAsia is also discussed.

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INTERNATIONAL BUSINESS
6/12/2019
Student name

INTERNATIONAL BUSINESS 1
Executive summary
The cross-cultural environment is one of the key issues that would be responsible for
international trade that will ensure the ease of employee’s interaction from various regions and
cultures. The purpose of the report was to analyse the cross-cultural environment and key
recommendation to manage them while considering one of the organizational cases that is
AirAsia.
AirAsia is a low-cost airline based in Malaysia and is identified to be the Malaysian largest
airline with destinations covered and by fleet size. The key characteristics observed in the culture
of these nations are impulsive people, emotional, relevance to the family and friends,
multitasking, poor followers of agendas. The culture was quite nurtured of the company and
manages cross-cultural skills to be a success and excel in every aspect. AirAsia claims to be
successful due to the human resourced of the company. The key recommendations for AirAsia to
increase cross-cultural proficiency include cultural auditing, training and development program
and agile team formation.

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Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................3
Literature review..............................................................................................................................4
International business model.......................................................................................................4
The Lewis model of culture.........................................................................................................6
Discussion and analysis...................................................................................................................7
PESTLE analysis of AirAsia.......................................................................................................8
The Lewis model influence on AirAsia.....................................................................................10
Conclusions....................................................................................................................................12
Recommendations..........................................................................................................................12
References......................................................................................................................................14
Appendix........................................................................................................................................17
Appendix 1.................................................................................................................................17
Appendix 2.................................................................................................................................18

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Introduction
The international business considers the trading of products and services outside the home
country of the brand. This would include assessing the business environment and understand the
factors that would affect the business in another nation. Moreover, it is one of the key strategic
decisions, which required detailed study of the internal and external business environment of the
company (Alvesson, 2016). The key factor that would affect the business is cultural differences
in home and the host country that is to be entered. The cross-cultural environment is one of the
key issues that would be responsible for international trade that will ensure the ease of
employee’s interaction from various regions and cultures. The cross-cultural business is focusing
on the barriers and differences caused by law, language, beliefs, and culture (globalnegotiator,
2019). The purpose of the report is to analyse the cross-cultural environment and key
recommendation to manage them while considering one of the organizational cases that is
AirAsia.
AirAsia is a low-cost airline based in Malaysia and is identified to be the Malaysian largest
airline with destinations covered and by fleet size. This airline group is engaged in international
and domestic flights to 165 or more destinations. The company is expanding their business since
2001 as the largest low-cost airline in Asia. The mission of the company is to encourage people
to travel through the air and make this service available for various incomes group that is
providing low cost airline. The major competitors of the company are Malaysia Airlines, and
Singapore Airlines. The report will include studying the key external environmental factors in
international business that would affect the company’s business (airasia, 2019).

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Literature review
International business model
International business includes expansion of business of an organization that initially requires
evaluating the external business environment that may be responsible for the identification of
opportunities and challenges for the company to expand business in a particular nation. One of
the key international business models includes a PEST analysis tool. PESTLE analysis includes
four key factors of the nation that would affect the company’s business in that nation as
presented in Appendix 1. The first factor in this model includes political factors that reflect the
political environment of the country. For conducting business in a nation, the government
support and allowance is very necessary, which reflect the relevance of the political environment
of the nation on the company. The political environment includes the elements or constraints of
the nation like the political stability of the country, the corruption level, government policies,
foreign trade policy, and trade restrictions. These factors majorly cause the entrance or barrier to
entry in a particular nation. Moreover, this would also affect the education system’s impact,
health regulations, and infrastructure. This largely depends on the attractiveness of the targeting
market of the company (Anitha, 2019).
The second factor of the model is economic factors that are the constraints reflecting the
performance of a particular economy. This factor includes various constraints like interest rates
in the nation and the disposable income of customers. The key effect of these factors is long term
on the company and is responsible for the supply and demand of the country. Moreover, the
pricing strategy of the company is largely depending on these factors. Moreover, the company
profit margin, sales of the product and services are depending on these factors (Calboli, 2015).

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The third factor includes social factors which would include assessing the opportunity for the
company considering the demographic factors like population of the country, gender equality or
preference, More constraints included in this factor are culture adapted in the nation that is the
language, value, religion, customers, and beliefs. This is considered to be the most important
factor that the company needs to study and integrate into its policy, business practices, and
marketing activities. The cultural barriers could be the large barrier for the company to enter into
the target nation and could be responsible for consumer behavior towards the products and
services and creation of a brand image (Craig & Douglas, 2015).
The fourth factor includes technological factors that considered innovation in technology that
will be affecting the company’s operations and identification of favourable or unfavourable
technological support to the company. This would include the level of innovation, automation,
technological change, automation, and technological awareness that a market possesses. This is
the key elements that are responsible for the company’s decision to invest or not to invest in the
industry (Choi & Park, 2016).
The fifth factor is legal factors; these factors are quite similar to political factors. However, these
include some specific laws pertaining to the company that needs to be abided by the company in
order to make the business conduct legally. This may initiate by the licensing laws when entering
into the nation, also include patent laws, copyright laws, antitrust laws, discrimination laws,
employment laws, and health laws. In case the organization is working in more than one nation,
it needs to regularly update the business practices as per the changing laws in each nation, which
may be challenging for the company in case the laws are rapidly changing in the nation.

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The last factor is the environmental factor, which has become the responsibility of the company
to consider as the environment is degrading with an increase in industries and population. Each
nation is now suffering from a degraded environment, where the concerned area may be different
as if some nations may face water scarcity, some may facing increase air pollution, energy
consumption and similar constraints. These changing environmental issues in the nation may
affect the business and their offerings to the customers. For this, it is recommended to the
company to adapt to corporate social responsibility that is applied by law above particular
earnings of the company (Evans, 2011).
The Lewis model of culture
Due to globalization, the cultural differences became essential for the managers, executives and
the leaders of multinational and international companies. The reason being the corporate culture
complexities increased, which has led to challenging in planning, recruiting, decision-making,
leadership and most importantly communication due to cross culture. Some of the cross-cultural
theories and model include Hofstede’s 4D models, Edward Hall, Tromenaars dimensions.
However, the Lewis model is the recent model of cross culture developed in the 1990’s (Kaur &
Ma, 2015). This model focused over the cross culture while integrating the various dimensions,
and provide clarity with the understanding of cross culture. According to this model (as
presented in appendix 2), the author has bifurcated three behavioural categories that the people
react which are found on higher percentage in some of the nations. The culture of all the nations
is divided into these three categories that are linear active, reactive, and multi active
(crossculture, 2019).
Among this first category is a linear active group that is identified to be found in English
speaking people that is the nations like New Zealand, Australia, America, northern Europe, and

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Germanic nations. The general behaviour found are polite but direct, talks half of the time, rarely
interrupts, job oriented and similar, and other charters presented in appendix 2. Next group is a
reactive group that is comprised of Asian nations, other than the Indian sub-continent that is
hybrid. The key traits observed are listening most of the time, polite and indirect, never
confronts, do not interrupt, highly people oriented. The third category comes is the multi active
which comprise of traits like emotional, talking most of the time instead of listening, display
their feelings, people oriented. These are more scattered like found in Middle East culture, India,
Pakistan, Arab, South America, Southern Europe, most of the Slavs, Mediterranean countries,
and Sub Saharan Africa (Anitha, 2019).
According to the study, these three categories possess distinct or unique trait or behavioural
elements suitable for different job positions. For instance, it is preferred to have linear as
accountants and engineers, doctors and lawyers as reactive, and salespeople are multi active.
Therefore, this would be helpful in the cross-cultural environment in various decision like
recruiting and selection decision, or training decisions, or leadership decisions (crossculture,
2019).
Discussion and analysis
The airline industry has grown to a greater extent to provide the Air travel facility in each nation.
AirAsia is one of the cost effective traveling company in Asia has increasedthis opportunity for
people and since the company has expanded to various international countries and has been
providing various facilities like online services and offline services. The company business
practices are the major challenge due to the expansion strategy of the company in other nations.

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PESTLE analysis of AirAsia
From the literature, one of the relevant international business model that will be helpful to
analyse the macro environment factors for AirAsia in PESTLE analysis for AirAsia. The factors
pertaining to Air Asia environment includes
1. Political factors
For Air Asia, the challenging increased with flying the airlines outside Malaysia that is the home
country of the company. One of the key obstacles identified in this case is the bilateral agreement
in case of low cost carrier. Moreover the for making the airline cost effective the company needs
to keep the cost and prices low but the landing charges are the major political factors which
affect the profit margin of the company and which are different in each nation. Moreover, in
nations like Southeast Asia where the aviation industry is strongly and strictly regulated through
the application of bilateral air rights agreements due to which this region seems to be
underdeveloped. Moreover, the threat of terrorism is another key factor affecting Air Asia
decision when expanding their business, especially after the September 11 terrorist attack
(Oberoi, 2017).
2. Economic factors
As discussed in literature this may affect the financial decisions and influence the financial
aspects of the company. There is very strong competition in Malaysia for Air Asia, however, the
low cost carrier is the key competitive advantage of the company; which is one of the
opportunity for the company. However, the key threat was the recession period that has affected
the aviation business and the economy being slowing down. Nevertheless, the company can
make this opportunity as they could offer cheap prices, which may be attractive to people in such

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a scenario. Another factor includes the oil prices in the nations that will influence the Air Asia
business. For instance, the threat includes that in case the prices are increased the cost operation
would become difficult (Rialp & Rialp, 2007).
3. Social factors
As discussed in the literature, these factors would affect the marketing and sales of the company.
The key cultural and social behaviour influencing the AirAsia business is the reluctant nature of
passengers to board an airline with no frills for a large haul journey. Moreover, factors like
increase in population across the globe, the number of educated people, and tourists that would
help the aviation industry growth. Moreover, the SARS that is the severe acute respiratory
syndrome has scared the population to fly through airlines. However, the company commitment
towards the safety first, could be helpful to maintain the standards that must be high and comply
with regulatory agencies. This would include ensuring guest and staff security (Calboli, 2015).
4. Technology factors
Technology is the key element in case of the aviation industry and since the AirAsia is also
providing the online services that comprise of the hotel booking besides air ticketing, travel
insurance, and car hire. Moreover, in order for the company to keep the cost in control, the
company had used the online booking services (airasia, 2019). Moreover, the company has
initiated the GO holiday program, according to which the customers can also book the real-time
holiday packages through the internet or click of the mouse. The need for Airbus has also
improved by the company in order to make it more fuel-efficient and provide additional capacity
that would result in reliability and better performance.
5. Legal factors

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The business slaws pertaining to Air Asia is to be followed in Malaysia. Moreover, it has to be
identified that if the norms of the company are as per the European Union, World trade
organization and similar international organization. The reason being the company is working in
more than one nation. Moreover, the intellectual property rights are to be protected a through
protection law may influence the business practices Of AirAsia. Moreover, the data protection
laws are another aspect related to the privacy of the customers and employees who needed to be
abiding by Air Asia due to increasing online services and the threat of terrorism. Moreover,
health and safety norms are another relevant laws pertaining to the company. However, since the
company is expanding the business globally, it can be said that the legal factors could be
challenging for AirAsia (Malik, 2016).
6. Environmental factors
These factors include the waste management specifically to the urban cities that plays a vital role
in case of AirAsia as the government is considering these norms to be abided by the companies
related to waste management. Moreover, recycling, customer activists, regular scrutiny by
related agencies are other related influencing factors for AirAsia. Moreover, the Paris climate
agreement has also affected the Malaysia government to abide by scrutiny of environmental
standards (Kolk, 2016).
The Lewis model influence on AirAsia
To model would reflect the employees of the company and organizational behaviour in each
nation. In the case of AirAsia, the company is dealing with cross-cultural environment and from
the literature; it has been observed that the Asian countries reflect reactive group behaviour. This
reflects that people are more of people oriented in the workplace organization and more polite.

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This would affect the business practices in the company and the company can better manage
their human resources as this will help the executives to understand the generic behaviour and
expected nature of the employees in particular nation (Du et al., 2018). The key characteristics
observed in the culture of these nations are impulsive people, emotional, relevance to the family
and friends, multitasking, poor followers of agendas. The key learning that they must comprise
of is the generation of enthusiasm, persuade and motivate them access their emotions, challenge
them personally, creating a positive atmosphere and generate dialogue. This would help AirAsia
to plan the policies and provide training (Allen, 2017).
According to the article in December 2018, AirAsia claims to be successful due to the human
resourced of the company. The people of the company are found to be one of the most forward
thinking people, and in the corporate world, the company authentic people engagement tactics
worked (Shek, 2016). Moreover, the culture was quite nurtured of the company and manages
cross-cultural skills to be a success and excel in every aspect. Moreover, the cross skilling
culture has created in the company that was the key factor for the success of the company
(beerandcroissants, 2019).

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Conclusions
From the report, the key highlighting points included AirAsia is a low cost airline based in
Malaysia and is identified to be the Malaysian largest airline with destinations covered and by
fleet size. The major competitors of the company are Malaysia airlines, and Singapore airlines.
For Air Asia, the challenging increased with flying the airlines outside Malaysia that is the home
country of the company. Moreover, the threat of terrorism is another key factor affecting Air
Asia decision when expanding their business, especially after the September 11 terrorist attack.
There is very strong competition in Malaysia for Air Asia, however, the low cost carrier is the
key competitive advantage of the company. Technology is the key element in case of the aviation
industry and since the AirAsia is also providing the online services that comprise of the hotel
booking besides air ticketing, travel insurance, and car hire. since the company is expanding the
business globally, it can be said that the legal factors could be challenging for AirAsia. recycling,
customer activists, regular scrutiny by related agencies are other related influencing factors for
AirAsia. AirAsia claims to be successful due to the human resourced of the company. The
people of the company are found to be one of the most forward thinking people, and in the
corporate world, the company authentic people engagement tactics worked.
Recommendations
The key recommendations for AirAsia to increase cross-cultural proficiency include
1. Training and development program

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In order to make the employees understand the various culture in order to make communication
effective in the organisation. It is important to make employees understand various cultures and
make relevant policies and business practices. Through cross-cultural training, it is possible to
make people comfortable in a different culture, understand one other, and cause for a particular
reason. Moreover, it could help for AirAsia to maintain harmony and relationship among the
employees (Cottrell, 2015).
2. Cultural auditing
It is not only applicable to implement the cross cultural environment, the control and evaluation
Are also necessary which is recommended for AirAsia as well to reflect it the cross cultural
competence of the company is going in the right direction and not hampering the work of the
company (He, 2017). This would include identifying the overall shared experience of the
employees in the organization and group people into different categories like thenicity,
nationality, gender, are, and religion and other cultural factors that would reflect the overall
elements of the organization. Moreover, the current expectations of the company can be assessed
and identification of the gap in the expected one and the actual competency could be analysed.
This would include the challenges and the difficulties faced by the people related to the
communication styles, attitude towards conflict, approaches to complete the activities, and
decision-making styles (Ghaderi, 2016).
3. Agile team formation
This could be helpful for the company to manage the cross-cultural environment and avoid
conflicts. A team smaller like 2 to 3 people can help the organization to manage the cross culture
better and also helpful for the accomplishment of the task effectively (Petersen & Kumar, 2015).

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References
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airasia, 2019. payment-channels. [Online] Available at: https://www.airasia.com/my/en/book-
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Allen, D.G., 2017. Recruitment and retention across cultures. Annual Review of Organizational
Psychology and Organizational Behavior, p.153.
Alvesson, M., 2016. Organizational culture. New York: Sage.
Anitha, J., 2019. Role of Organisational Culture and Employee Commitment in Employee
Retention. ASBM Journal of Management, 9(1).
beerandcroissants, 2019. air-asia-review. [Online] Available at:
https://www.beerandcroissants.com/air-asia-review/.
Calboli, I., 2015. Geographical indications of origin at the crossroads of local development,
consumer protection and marketing strategies. IIC-International Review of Intellectual Property
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Choi, D. & Park, D.H., 2016. Innovative service concept generation based on integrated
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Cottrell, S., 2015. Skills for success: Personal development and employability. Macmillan
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Craig, C.S. & Douglas, S.P., 2015. International Marketing Research. Chichester: John wiley &
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https://www.crossculture.com/the-lewis-model-dimensions-of-behaviour/.
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management strategies in manufacturing enterprises: A resource orchestration perspective.
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Ghaderi, A.A., 2016. Importance of teamwork, communication and culture on failure‐to‐rescue
in the elderly. British Journal of Surgery, 103(2), p.e47.
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He, S., 2017. Towards a new wave in internationalization of innovation? The rise of China's
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Kolk, A., 2016. The social responsibility of international business: From theics and the
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Malik, R., 2016. Combating Terrorism in India: Legal Prespectives. International Journal in
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Oberoi, S., 2017. Impact of terrorism on economic growth of India: Growth on flames!
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Appendix
Appendix 1
Figure 1: (Source: https://www.business-to-you.com/scanning-the-environment-pestel-analysis/

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Appendix 2
Figure 2: (Source: https://www.crossculture.com/the-lewis-model-dimensions-of-behaviour/)

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Figure 3: (Source: https://www.crossculture.com/the-lewis-model-dimensions-of-behaviour/)