Strategic Analysis of Air Asia: A Leadership Perspective

This report provides a comprehensive analysis of Air Asia's strategic management and leadership. It begins with an overview of the company, including its nature of business, challenges faced, and definition of success. The report then delves into the internal analysis, examining the company's value chain and applying the VRIN framework to assess its competitive advantages. The contribution of leadership to the company's success is also discussed, along with the strategies used by Air Asia to mitigate the impact of external factors. The report concludes with an analysis of the future prospects of Air Asia. The report highlights key aspects such as the company's clear market segment, competitive pricing, strong marketing, and operational style as reasons for its success. It examines the inbound and outbound logistics, operations, sales and marketing, and services of Air Asia. Furthermore, the report evaluates the sustainability of the company's core competencies, offering valuable insights into its strategic positioning and future growth.

Strategic Management and
Leadership

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview of the Company...........................................................................................................1
Nature of Business.......................................................................................................................2
Challenges Faced.........................................................................................................................2
Definition of Success...................................................................................................................2
Reasons for Success.....................................................................................................................3
Internal Analysis..........................................................................................................................3
Contribution of leader..................................................................................................................8
Strategies used by Air Asia........................................................................................................10
Analysis of future......................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Every business requires several strategies in order to become successful. These strategies
help in growth and development of organization in different markets. Also, it is required for
business to implement it in effective manner by analyzing the internal and external factors.
leaders play a vital role in implementation of strategies (Haines, 2016). they are responsible to
attain targets on time. this report will show how a small company started has been able to
successfully grown. Also, it will describe about internal and external analysis and how strategies
are developed accordingly. Moreover, contribution of leader in success of business is discussed.
At last what strategies are used in order to minimize the impact of external analysis on company.
For present report organization selected is Air Asia.
Overview of the Company
Air Asia is a Malaysian Airline headquartered in Kuala Lumpur. it operates all around the
world and in largest airline in terms of fleet and destination. The airline operates both domestic
and international flights in 165 destinations and 25 countries. the company was founded on 20th
December 1993. In recent times company has grown very rapidly (Ferlie and Ongaro, 2015). Its
main aim is to become largest low cost airline in Asia. Currently it has focused on expanding in
other continents.
At present time, fleet size of Air Asia is around 89 and destinations are 74 excluding
subsidiaries. There are about 17000 employees working in company. the entire group is divided
into several segments that operate in various countries. it is been described with the help of chart
as follows :
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Nature of Business
The main nature of Air Asia is to provide low cost airline facility for people to travel.
They are having an integrated network in different countries. due to its low cost and high quality
service they are able to attract a large number of people. Air Asia has mainly target middle class
people. thus, it has grown rapidly in short time.
Challenges Faced
Every company faces many challenges in their lifecycle. They have to overcome those in
order to become successful (Engelen and et.al., 2015 ). Similarly, Air Asia has also faces
several challenges in past years. This has highly affected their growth and development. They are
as follows :-
 Change in economic factors
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 Rise in prices of air fuel.
 Increase in competition among airline industry
3

 Technological advancement
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Definition of Success
An organization is said to be successful when they are able to remain compete in market
for long term. Their customer base and satisfaction is at very high level. besides this, company is
able to retain their stakeholder by fulfilling their goals and objectives. The success of
organization can be measured by different factors. they are as follows :-
Net profit – this is most essential factor to measure success. It describes profitability of
organization. The formula for calculating NP is revenue minus expenses. Air Asia net profits are
growing slowly.
Consumer growth – It depicts the increase in customer base in industry. Having large of
consumer reflect growth of organization. Air Asia customer base in expanded to wide area. They
have successfully developed a loyal customer base by showing a positive and better brand image.
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Staff expansion- it means increase in number of employees working in organization (Elmes and
Barry, 2017) This can be measured by finding out rise in staff. The workers working in Air Asia
has grown. In 2005 there were about 10000 staff and in 2018, 17000 are been employed.
Reasons for Success
It is observed that Air Asia has been able to become successful in such a short time
period. This is because of strategies that are been developed and executed. Moreover, there are
some reasons as well. They are explained below :-
Clear market segment – Air Asia entered in market and target specific segment. They only
focused on middle class people in every country. this enabled in attracting large people and
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providing services to them. Due to this they were able to attract them and generate customer
value.
Competitive pricing – Air Asia followed the competitive pricing strategy. In this they kept the
prices of tickets low as compared to competitors. Furthermore, they offered tax free tickets
during festive seasons.
Strong marketing – initially, Air Asia made huge efforts to advertise their products. They
highly promoted themselves through various sources (Aguinis, Edwards and Bradley, 2017).
Company used social media, TV, newspapers, etc. to public their ads. Through this, they created
a positive image in mind of people.
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Operational style – the way of operating style of Air Asia is also a reason for success.
Generally, they created a route of long fleets and frequently flied to more destination as
compared to competitors. This enabled passengers to switch flights.
Internal Analysis
A business operates within external and internal environment. so, if there is any change in
factors, it affects on is growth and operations to great extent. The internal analysis of company
refers to its operation through which value is generated. It helps in finding out what activities are
performed.
Value chain analysis- it shows how firm is able to gain competitive advantage over its rivals by
performing activities. This analysis is based on price and performance of enterprise. Here,
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activities are divided into two that is primary and supportive. Primary refers to core activities and
supportive are those through which core are managed and controlled. It helps in generating
customer value. porter value chain analysis is done:-
Inbound logistics – Air Asia inbound logistics include fuel management, food and beverage,
route planning, etc. it can be stated that Air Asia fuel management consists of 47% of operations.
they have focused on saving fuel (Uhl and Gollenia, 2016). Most of their aircrafts run on one
engine rather than two. Saving of fuel has been useful in reducing ticket prices. With help of it
they are able to provide cheap air tickets.
Outbound logistics – As Air Asia belongs to airline industry, there are logistics like ticketing,
security, health and safety tools, etc. in each of them a systematic process is followed. For
example- while booking ticket online, an e mail is sent to customer for confirmation. Through
this, they can easily check in at airport. The company has adopted automatic process which has
reduced manual working. It has saved time as well cost. therefore, they are able to provide high
quality services to people.
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Operation – There are many activities like maintenance of aircraft, stock checking, check in and
gate operations, etc. Air Asia have contracted with third parties in order to regulate their overall
operations. here, company pay fees only when maintenance is required. Thus, they do not have
to hire employees to manage this. it has benefited them in reducing expenditure.
Sales and marketing – It is a basic activity of Air Asia in which they promote and deliver
services to people. activities like partnerships, online sales, CRM, etc. are done in this. Air Asia
has set up various channels through which tickets are booked (Covin and Slevin, 2017). Besides
this, electronic payment system is installed for payments. They have effectively sponsored many
events and formed partnership with other companies.
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