Strategic Management TABLE OF CONTENTS
Added on 2020-04-01
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STRATEGIC MANAGEMENT1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Porter five forces analysis................................................................................................................3SWOT..............................................................................................................................................5Recommendations............................................................................................................................7Conclusion.......................................................................................................................................92
INTRODUCTION Strategic management is regarded as the process of setting objectives for the businessanalyzing internal and external environment of the business so as to operate efficiently in themarket. Further, it is a well-known fact that in the modern era the market where companiesoperate is full of challenges and this has the adverse impact on the businesses[ CITATIONWan14 \l 1033 ]. Therefore, effective strategies are must through which companies can easilymanage their overall performance, and in turn, it acts as the development tool for the entire firm.The tools such as SWOT, Porter, pestle, etc. are mainly undertaken for analyzing internal andexternal environment of the businesses. They support in knowing the range of challenges present in external or internal thatbusinesses will face and on the basis of the same it is possible to develop strategies. The presentstudy carried out is based on AirAsia X which is Malaysian low-cost airline headquartered inKuala Lumpur, Malaysia. It is considered to be one of the largest airlines regarding destinationand fleet size. Various tasks have been covered in the report which involves SWOT, Porter of thecompany along with recommendations to enhance present performancePORTER FIVE FORCES ANALYSIS In the present scenario, analysis of industry competitiveness is essential for long-termsustainability of a company. Furthermore, the use of Porter five force models can assistorganizations to analyze the overall extent to which external forces can impact the operations andactivities[ CITATION Tak16 \l 1033 ]. Implementation of Porter Five force model supportsbusinesses to understand and analyze the vital force which shapes the overall degree ofcompetition within a particular industry. The application of porter framework on Air Asia ismentioned below as: I.Threat of new entrant - The threat of new entrants in the airline industry can beconsidered as weak, and the rationale behind this is the entry barriers present with theindustry[ CITATION Wan14 \l 1033 ]. It can be asserted that massive investment,capital, and resources are required to enter the airline industry. Industries or sectors withlow entry barrier make it very easy for new businesses to get into theindustry[ CITATION Vog13 \l 1033 ]. However, it can be critically argued that thegrowing need and demand of travel among people in the world can encourage newbusinesses to enter the airline industry and compete with existing brands such as Air3
Asia. In such situations, the threat of new entry for the company like Air Asia canbecome very high. To deal with these types of situation, the brand will be required tocarry out changes in its strategy and products at frequent interval. The approach willsupport Air Asia to maintain its existing market share in the airline industry[ CITATIONSte13 \l 1033 ]. Considering the present situation of the market, it can be expressed thatthe industry has become saturated and this has resulted in creating obstacles for newcompanies regarding entering the industry. II.Rivalry of existing firm – Intense competition among businesses or companies in theindustry results in creating obstacles regarding achieving higher growth, profitability, andmarket share. Furthermore, customers are available with wide range of options to choosefrom and this result in affecting the overall sales and profits of companies[ CITATIONHub14 \l 1033 ]. At present, Air Asia is facing intense competition from the brand suchas Tiger Airways, Jetstar Airways, and SilkAir. Any changes in the price and strategy ofcompetitors force Air Asia to carry out modifications in its existing strategy andprices[ CITATION Roy14 \l 1033 ]. At the same time, the brand is required to emphasizeon areas such attaining the high degree of customer satisfaction and loyalty. The uniqueselling proposition of Air Asia is that it has adopted a low price strategy and this ishelping the brand to attract more and more customers. However, the threat of competitionwithin airline industry is very high, and this is a major challenge for the organization. III.Threat of substitute product – The threat of substitute product within the airline industryis very high, and this has emerged as a major issue for all brands including Air Asia. Therationale behind this high threat of substitute product is that there are different modes oftransportation available to the customers[ CITATION Per15 \l 1033 ]. Customers can optfor services such as private transportation (road) and fast trains (rails) to go from oneplace to another. In addition to this, the substitute services are much cheaper than theservices provided airlines industry. It sometimes acts as a motivational force andencourages people to buy substitute products instead of opting for the services offered byAir Asia[ CITATION Rot15 \l 1033 ]. The result of this is that the selected businessenterprise is not able to attract the desired number of customers in the long run. IV.Bargaining power of customer - In the airline industry, the bargaining power ofcustomers is very high, and this is another threat for Air Asia. It can be expressed that at4
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