Strategic Analysis of AirAsia and Tune Group's Business Strategies

This report provides a comprehensive strategic analysis of AirAsia and Tune Group, examining their market environment and business operations. It begins with an introduction outlining the paper's focus on Porter's Five Forces, Value Chain Analysis, and the Ansoff Matrix to assess the companies' external capabilities and strategic decisions. The discussion section delves into Porter's Five Forces model to analyze the attractiveness of the Southeast Asian airline industry, including factors like supplier power, buyer power, entry barriers, substitute threats, and rivalry intensity. A value chain analysis is then conducted to determine the organizational capabilities of AirAsia and Tune Group, focusing on inbound and outbound logistics, marketing, services, infrastructure, human resources, and technological development. The report also applies the Ansoff Matrix to explore the growth and diversification strategies employed by both companies, including market development, product development, and market penetration. The conclusion summarizes the findings and provides recommendations for improving the business structure of AirAsia and Tune Group, emphasizing cost reduction and operational efficiency.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Porter’s Five Model Analysis......................................................................................................2
Value Chain Analysis..................................................................................................................4
Ansoff Matrix..............................................................................................................................6
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9

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Introduction
The focus of the paper is to appropriately examine the market environment of Airasia
Airlines and Tune Group ltd which is engaged in different business operations. The analysis
would be including Porter’s Five Force Analysis for the aviation industry so that the external
revenue which is generated is not affected in any manner. In addition to this, the analysis would
also be including value chain analysis for the company of Airasia Airlines and Tune Group. In
addition to this, the discussion would also be applying Ansoff Matrix for examining the external
capabilities of the business of Airasia Airlines and Tune Group (Airasia.com 2019). Further the
analysis also would be including recommendations for making improvements in the business
structure of the companies in future period.
Discussion
Porter’s Five Model Analysis
The porter’s five force is a useful technique which is applied for the purpose of analysing
the external environment in which the business operates. The airline industry is on a growth
phase due to rise in both international and domestic travel. The porter’s five force model
effectively identifies the factors which has a direct influence on the income which is produced by
the entity. The porter’s five forces model for South East Asian aviation industry is effectively
portrayed below:
 Supplier’s Power: The bargaining power of the supplier in the aviation industry is
immense which is mainly due to the three main inputs which is used by such airlines.
These inputs are fuel, aircraft, and labor and all these factors are susceptible to influences
of external environment (Hussain et al., 2013). The prices of fuel are always fluctuating

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in the global markets which has direct impact on the profitability. Therefore, it can be
said that the Airlines companies must consider such factor in taking any decision
regarding the operations.
 Buyer Power: The bargaining power of the customers is low considering the customers
are dependent on airlines for travel services. It is therefore clear that the prices which is
set for ticket fares are not dependent on the customers or any travel agents or agency. The
prices which is set by the management is based on the costs of operations and certain
margin of profits.
 Entry and Exit Barriers: The airline industry needs to have proper investment fund to
enter the industry and operate in an effective manner. The airlines mainly require capital
investments so that the activities of the entity are appropriately supported. It is also to be
noted that at the time of exit as well, businesses need to absorb significant amount of
losses for exiting from the industry (Managementstudyguide.com, 2019). The
requirement of such high capital for entering the industry is the major factor which
discourages new airlines from entering the industry. It is also to be noted that the initial
cost of operations is generally quite high which makes the profitability for the business
difficult. The economies of scale are only achieved by businesses which are already
established and therefore it makes it difficult for new enterprises to enter the market.
 Threats of Substitutes: The threat of substitutes and complementary products for an
airline industry is quite low which is mainly due to the uniqueness of the services which
is provided by the business. It can therefore be estimated that the threat of substitutes is
quite low in the industry.

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 Intensity of Rivalry: The airline industry is extremely competitive in nature as numerous
airlines exist in the industry providing the same services which is the main reason that the
intensity of the rivalry is quite high in the market.
Value Chain Analysis
Value Chain Analysis is a tool which is used by management of a company for the
purpose of identifying the internal capabilities of a business and how the business can increase
the overall efficiency of the business. The value chain analysis which is conducted for the two
businesses are given below:
AirAsia
Inbound Logistics
The inbound logistic involves processes which is followed by the airline so that a level of
efficiency can be preserved in the execution of activities of the entity. Some of the inbound
logistics activities involve scheduling flights, keeping a track of the competitors so that a level of
effectiveness is preserved in the processes of the entity (Shaw, 2016). This is the procedure
which is followed by the airline to keep the prices and costs of operations low. The Business of
Tune group has applied diversification strategies so that the proper services is provided to the
business.
Outbound Logistics
The outbound logistics for the business involves safe travel of the customers which can
be domestic flight or international flight. The management of the company uses online booking
system for the flights which saves considerable time and also maintains efficiency in the
processes of the entity.

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Sales and Marketing
The sales and marketing of Air Asia forms an important aspect of the business strategy of
the business. The senior officials invests significantly on advertisement so that the services and
product of the business can be promoted appropriately. It is also to be noted that the brand name
of the company also contributes significantly to the sales which is achieved by the company.
Services
The model of business of Air Asia is to ensure that the customers are satisfied with the
level of service which is provided by the business so that the customers of the business are
retained. In addition to this, the airline also provides e-vouchers in case there is a delay in the
flights of the company (Lidstone & MacLennan, 2017). The company provides online booking
of hostels, rent cars for any place the clients want to travel. The business model of the company
is to ensure that quality services is provided to the customers and the business also aims to
ensure that the fare for the travel services is appropriate and reasonable.
Firm Infrastructure
Air Asia is a big company and has an appropriate asset base which makes the business
leading service provider in travel business and the business is looking to expand the operations at
the same time maintain the fare price as low as possible.
Human Resource Management
Air Asia hires the best skilled labourer so that a level of efficiency can be preserved in
the activities of the entity (E. Dobbs, 2014). The employees are the life force of the business and
therefore senior management aims to retain the employees of the business so that skilled
employees can be retained in the organization.
Technological Development

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Air Asia utilizes different forms of strategies and technology for the purpose of
minimizing the costs of operations so that a level of efficiency of the company. The company
uses online system for the purpose of booking tickets and also implements the enterprise
planning system for managing the reporting process of the entity and also managing the activities
of the business.
Ansoff Matrix
The Ansoff matrix provides appropriately the strategies which can be applied by a
business for the purpose of expanding the activities of the entity so that the company is able to
achieve growth in the operations of the business (Mindtools.com. 2019). The Ansoff strategy for
the business of Airasia and Tuna Group is appropriately presented below in details:
Market Development:
This is a step which is undertaken by a business when the business is targeting a new
market or new area of an existing market so that the operations of the business can be enhanced.
As per this strategy of the business, same product is provided to the new market so that the
senior oficials would be able to increase the income which is made by the business.

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Diversification Strategy:
The diversification strategy which is applied by a business allows the management of the
company to diversify the operations of the entity so that more revenue is generated from the
activities of the corporation. The business of Tune Group and Airasia airlines follows
diversification strategy so that the management can produce revenue from different lines of
opertion. The diversification strategy is also considered to be risky as there is a chance that the
diversified line may not be profitable and incur losses for the business. This is done for a new
product so that the business has multiple lines for generating revenue from operations.
Market Penetration
The market penetration strategy is applied by a business to appropriately enter new
market region for making more revenue from the conducting the activities of the entity. The

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market penetration strategy is applied by a business so that it can enter into new markets. The
market penetration is applied by business so that the activities of the entity can effectively impact
the competitors.
Product development
The product development process is undertaken by a business which is trying to
introduce new product in an existing region so that the entity is able to exclusively increase the
income which is generated by the business in the long run. The airasia airlines would be looking
to diversify the operations of the business for making more income.
Conclusion
The above analysis effectively reveals that the management of Airasia and Tune Group is
looking to expand the activity of the business in new areas in order to generate more revenue
from operations of the business. The above discussion also shows the application of Porter’s Five
forces model which allows the business to identify factors which can have maximum impact on
the revenue generation process of the business. In an overall estimation, it can be recommended
to the management of Airasia and Tune group that proper strategies needs to be implemented for
the purpose of reducing the costs of the entity and thereby enhancing the efficiency of operations
of the business.

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Reference
Airasia.com (2019). . Retrieved 29 November 2019, from https://www.airasia.com/en/gb
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
Hussain, S., Khattak, J., Rizwan, A., & Latif, M. A. (2013). ANSOFF matrix, environment, and
growth-an interactive triangle. Management and Administrative Sciences Review, 2(2),
196-206.
Lidstone, J., & MacLennan, J. (2017). Marketing planning for the pharmaceutical industry.
Routledge.
Managementstudyguide.com (2019). Porters Five Forces Analysis of the Airlines Industry in the
United States. . Retrieved 29 November 2019, from
https://www.managementstudyguide.com/porters-five-forces-analysis-of-airlines-
industry-in-united-states.htm
Mathooko, F. M., & Ogutu, M. (2015). Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management, 29(3), 334-354.
Mindtools.com. (2019). The Ansoff Matrix: Understanding the Risks of Different Options.
Retrieved 29 November 2019, from
https://www.mindtools.com/pages/article/newTMC_90.htm
Rothaermel, F. T. (2017). Strategic management. New York, NY: McGraw-Hill Education.
Shaw, S. (2016). Airline marketing and management. Routledge.