REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

1.0. Introduction

“Low cost carriers have reshaped the airline industry competitive environment within
liberalised markets and have made significant impacts in the world’s domestic
passenger markets, which had previously been largely controlled by full service
network carriers,” (John F. O’Connell & George Williams, 2005). “Understanding
customers’ expectations and subsequently being different from competitors are
important in order to survive in the today world of globalization. It is monitor service
quality and satisfaction with a view to influencing the behavioural intentions of their
customers,” (Saha & Theingi, 2009).

1.1. AirAsia Group

“The AirAsia was established in 1993... A young Asian brand gone global, AirAsia is the
World’s Best Low-Cost Carrier and the Airline of the Year for 2009 & 2010,”
(AirAsia.com, 2007-2010). “The second Malaysian low cost carrier is Firefly, a full
subsidiary of Malaysian Airlines which is the full service national carrier. Firefly was
founded only in the year 2007,” (Ahmad et al, 2010). The development strategy of low
cost carriers can be summed up as “Low costs, low fares, and no frills. Through the
corporate philosophy of “Now Everyone Can Fly”, AirAsia has sparked a revolution in air
travel with more and more people around the region choosing AirAsia as their preferred
choice of transport. The company’s shares were listed on the Kuala Lumpur Stock
Exchange and were included in global index of Morgan Stanley Capital International Inc
- MSCI Standard Index Series.

1.2. Vision and Mission

“AirAsia annual report reported AirAsia creates values through the following vision and
mission. AirAsia’s value vision is to be established as the leading low-cost carrier in the
Asian region,” (AirAsia annual Report 2008, 2008). AirAsia’s mission is to be a low cost
airline carrier that offers five-star service with 95% of on-time performance. “AirAsia’s
also to be able to provide affordable airfares, at the same time promoting Malaysian
hospitality and the local food. AirAsia focus on customer’s needs by stimulating demand
and offers the lowest fares, comprehensive distribution channel and developing various
products and services,” (AirAsia.com, 2007-2010).

Unity College International, Malaysia (2010) Page 1 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

2.0. External Environment Analysis (Air Asia Strategic Management)

Based on the structure-conduct-performance paradigm, Michael Porter presents this

process of selection in a structured manner in his “five forces” approach in the interest
of showing companies exactly what positioning options and strategies are open to them
in the context of the opportunities and threats present in a given market (Please refer to
Appendix page 17 of 24; figure 1). “Porter takes competitive intensity as a criterion and
applies it to five fundamental competitive forces that shape the market and its
environment,” (Porter, 1980). The following (Please refer to Appendix page 18 of 24;
figure 2) illustrates Porter’s typical presentation of the model and also depicts the key
determinants or criteria that can be used to analyze and evaluate competitive intensity.
“The descriptive results concerning the external opportunities and threats as identified in
the SWOT analysis (Please refer to Appendix page 19 of 24; figure 3) are applied to the
five forces using Porter’s system in order to evaluate the intensity of the competition,”
(Berger, Kotler & Bickhoff, 2010).

2.1. Opportunities

“The “ASEAN Open Skies” allows unlimited flights among ASEAN’s regional air carriers
beginning December 2008. This will definitely increase the competition among the
regional airlines,” (Russell, 2007). However, “with the “first mover” advantage as well as
its strengths in management, strategy formulation, strategy execution, strong brand and
“low-cost” culture among its workforce, this agreement can be seen as more of an
opportunity,” Gilles et al.

2.2. Threats

Certain rates like airport departure, security charges and landing charges are beyond
the control of airline operators and this is a threat to all airlines especially low cost
airlines which tries to keep their cost as low as possible. For example, “Changi airport in
Singapore charges SGD21 for every person who departs from Singapore,” (Singapore
Travel Information, 2010). “AirAsia Bhd’s net profit jumped 43% to RM198.9mil for the
second quarter ended June 30, 2010 from RM139.2mil year 2009,” (Yee, 2010) has
already attracted many competitors. Most of the full service airlines have or planning to
create a low cost subsidiary to compete directly with AirAsia. For example, Singapore
Airlines has created a low cost carrier Tiger Airways.

2.3. PEST analysis

In analyzing the macro-environment (Please refer to Appendix page 20 of 24; figure 4),
it is important to identify the factors that might in turn affect a number of vital variables
that are likely to influence the organization’s supply and demand levels and its costs,
(Kotter & Schlesinger, 1991; Johnson & Scholes, 1993). “The radical and ongoing
changes occurring in society create an uncertain environment and have an impact on

Unity College International, Malaysia (2010) Page 2 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

the function of the whole organization,” (Tsiakkiros & Pashiardis, 2002). “The analysis
examines the impact of each of these factors on the business. The results can then be
used to take advantage of opportunities and to make contingency plans for threats
when preparing business and strategic plans,” (Byars, 1991; Cooper, 2000).

2. 3.1. Political

Flying outside Malaysia is difficult. “Bilateral agreement is one of the obstacles in the
way of truly pan-Asia budget carriers. Landing charges at so-called "gateway airports"
and navigation charges are often prohibitively expensive and in key destinations like
Bangkok, Beijing, Hong Kong and Singapore,” (AirAsia In The Press, 2003).

2. 3. 2. Economic

In spite of stiff competition from Malaysian Airline (MAS), AirAsia's low-cost carriers
offering cheap tickets and few in –flight services are gaining attraction in the region. “In
theory, Asia has most of the ingredients for making a budget airline work which has a
huge and dense population base, the emergence of underused regional airports, a
growing propensity among some upwardly mobile people to travel, and relatively high
Internet usage,” (AirAsia In The Press, 2003). With the economy slowing down, more
people will want to enjoy its cheap tickets.

2. 3. 3. Social

Passengers also are reluctant to board a no-frills airline for a long-haul flight. "The
longer the route, the less price-sensitive the passenger becomes. They don't want to be
crammed into a plane for six or eight hours," (AirAsia In The Press, 2003). Especially,
“when there are limited or no in-flight services. AirAsia wanted to become a company
that worked on the basis of the average man in the street being able to afford our air
fares,” (Huttner, 2003) and people who would not have considered flying, or would not
fly as often as they as do now.

2. 3. 4. Technology

“Our internet site is rocking and we are proving everyone wrong. It is the major
distribution channel now, accounting for 40% of our business,” said Dato' Tony
Fernandes at The Evening Standard, 2003. “AirAsia provides online service that
combines air ticketing with hotel bookings, car hire and travel insurance. To help keep
costs in check, Air Asia has pushed internet booking services,” (AirAsia In The Press,
2003).

Unity College International, Malaysia (2010) Page 3 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Unity College International, Malaysia (2010) Page 4 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

3.0. Internal Environment Analysis (Air Asia Strategic Management)

To figure out the internal factors such as strengths and weaknesses, and external
factors such as opportunities and threats to business objectives, a SWOT Analysis of
AirAsia for internal factor can be conducted and shown below.

3.1. Strengths

AirAsia’s success is contributed by the diverse background of the executive

management team that has professional industry expertise, very good strategy
formulation, and execution. AirAsia has well established brand name in Asia Pacific:
AirAsia success in South-east Asia attracted publicity and the group used these
opportunities to promote and increase its brand awareness without additional
promotional costs. “Potential Market growth and air travellers: AirAsia operates in
countries where potential air travellers are based, where the top tourist destinations are
and where the urbanization is constantly growing,” (Budhiarta, I., 2009).

3.2. Weaknesses

“AirAsia does not have its own maintenance, repair and overhaul (MRO) facility”,
(AirAsia In The Press, 2003). It may be a good strategy. But now, with few hubs
(Malaysia, Thailand and Indonesia) and over 100 planes currently owned and about
another 100 planes to be received in the next few years, AirAsia have to ensure proper
and continuous maintenance of the planes. High fuel Cost increases operational Costs:
Fuel costs account for approximately 31% of airline’s cost of sales. Aircraft fuel
expenses in the company have already been rising. (Please refer to Appendix page 21
of 24; figure 5).

4.0. Significant Resources

AirAsia is a constructive and supportive management. AirAsia was very supportive and
responsive in encouraging and listening to its employee for any ideas in reducing cost.
This made the employees more productive and creative in doing their performance.
Highly skilled employees were the source of all capabilities that AirAsia possessed. The
experience and knowledge which they had were hard to imitate by other competitor.
Capabilities to reduce cost were the competitive weapon that would be used by AirAsia
to corner other competitor. “Their effect in reducing cost boosted AirAsia to be one of
the top in low cost air carrier competition,” (AirAsia, 2005).

Unity College International, Malaysia (2010) Page 5 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

5.0. Capabilities

Analyzing Air Asia (Charles et al, 2005) highlighted that were the product of AirAsia
employees’ creativity. “All the capability that AirAsia possessed required high skill from
its conductor. Without sufficient knowledge, it will only give small benefit to AirAsia,”
(Aruan, S. H.6).

The longer aircraft on the ground means that the less productive it will be. By shortening
the turnaround time, AirAsia was able to gain more profits. It was gained by removing
frills service and removing chair booking and extensive crew drilling on performing quick
turnaround (Shari, 2003).

Low-cost short hauls. Management also conferred with mechanics on how to coddle
spare parts so they can last longer. For example: to extend the landing gear usage time,
mechanics advise pilots to take a shallow approach on landing (Shari, 2003).

Due to above practices, AirAsia then will able to utilize its aircrafts at higher rate. Higher
rate of utilization signify that higher profit will be gained by the firm and also lower the
cost as the distributed fixed cost get smaller. All these capabilities enable AirAsia to
perform its competency in providing low cost air transportation services. Chart showed
us how the capabilities that AirAsia possessed enabled it to lead the air transportation
market in providing low cost services. (Please refer to Appendix page 21 of 24; figure
6).

Unity College International, Malaysia (2010) Page 6 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

6.0. Competitive Advantage

AirAsia can create a competitive advantage; a value chain analysis for airline industry
has been conducted as below to model AirAsia as a chain of value creating activities.
The goal of these activities (Inbound logistics, Operations, Outbound logistics,
Marketing and Sales, and Service) is to create value that exceeds the cost of providing
the product or services, thus generating a profit margin. (Please refer to Appendix page
22 of 24; figure 7). “In view of the Competitive Strategic must have cost leadership,
differentiation strategy and market share and market segmentation,” (Porter, 1980).
They are the main strategy to monitoring the Airsia to provide the full service and
maintain the profitability while the competition suffers losses. (Please refer to Appendix
page 23 of 24; figure 8)

6.1. Identifiable External Factor

“External Environment Factor means opportunities and threats that exist outside the
organization and are not usually within the short run control of top Management,” (Jack
Koteen, 1997). Identifying and linking with keys actors and institution in the outside
community that can affect the performance profile, such as client, legislatures, boards,
professional associations and special interest groups.

6.1. 1. Cross-Country Differences in Cultural, Demographic and

Market Conditions

“Regardless of a company's motivation for expanding outside its domestic markets, the
strategies it uses to compete in foreign markets have to be situation-driven; cultural,
demographic, and market conditions vary significantly among the countries of the
world,” (Jones, 2007). Cultures and lifestyles are the most obvious country-to-country
differences. Market demographics are close behind.

6.1. 2. Characteristics of Multi-Country Competition

Multi-Country Strategy is matched to local culture and Market needs which is turn
affects the service specifications. Airasia is the first Asia company competition in one
country market is independent of competition in other country. “Rivals vie for national
market leadership compare to other low cost airline,” (Jana, 2003). (Please refer to
Appendix page 23 of 24; figure 9)

Unity College International, Malaysia (2010) Page 7 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

6.1. 3. Internet Technology Service

Internet Technology service becoming important because the rapid development in E-

commence. Nowadays, E-commerce Business Model and strategies is becoming a
business tool. E-commence also has become a vital strategic management to sell
products, advertise, purchase supplies, bypass intermediaries, track inventory, eliminate
paperwork, and share information. In total, electronic commerce is minimizing the
expense and cumbersomeness, improved products, and higher profitability.

6.2. Internal Weaknesses

Internal Analysis, the strategy planning process, focuses on the reviewing the
resources, capabilities and competencies of the Airaisa. The goal is to identify the
weaknesses of the Airasia.

6.2. 1. Strategy Mistake

The Management has to determine the root of the problem. “Some of the sourcing
matter can be selling assets, cutting cost, boosting revenues, revising strategies and a
combination of efforts,” (Triant G. Flouris, Sharon L. & Oswald, 2006). If the competitor
in the industry dim prospects in the future, it probably makes sense to cut back the
business or cut all the losses.

6.2.2. Strategy Management

AirAsia Company strategic management: “How AirAsia can be a leader in the lowest
cost carrier in the airplane industry”. Strategy Management focuses almost exclusively
on the internal strengths and weaknesses of the Company and also concerned with the
present and the future situation of the business as a whole. Its success had not only
inspired many Lower Cost Carrier followers in the Asia Pacific region, but also severely
threatened the well-being of full-service operators, especially its major competitor at
home, Malaysia Airlines ("MAS").

6.2. 3. Industry Attractiveness Factors

“In conducting an analysis of the Industry Attractiveness Factors, it is required to

brainstorm all relevant factors for the company’s market situation and then check
against the factors presented for each force in the diagram,” (Porter, 1980). The next
step is to highlight the key factors on a diagram, and summarize the size and the scale
of the force on the diagram. It is suggested to use relevant signs, for instance, “+” and
“-" to represent the forces moderately in company’s favor, or for a force strongly against.
(Please refer to Appendix page 24 of 24; figure 10 & 11)

Unity College International, Malaysia (2010) Page 8 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Unity College International, Malaysia (2010) Page 9 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

7.0. Conclusion

The key finding in this study of the Strategy Management Module is a set of managerial
skills that should be used throughout the organization, in a wide variety of functions.

The overall purpose of the experimental strategic learning and management process is
to establish which strategic options or elements thereof are robust across the scenarios
and use the healthiest elements to develop the Airasia Company strategic intent, focus
or theme.

Simultaneously, “SWOT analysis is a methodology of examining potential strategies

derived from the synthesis of organizational strengths, weaknesses, opportunities and
threats (SWOT),” (Michael Adam Associates, 2004). The Airasia Company to identify
the most significant to “extensive data collected as a result of the analysis to serve as a
spark for roundtable discussions and refinement of current strategies, generation of new
strategies, stronger capability and potential to fund the program and serve the client
base than the competitive agencies,” (Philip Kotler & Andreasen,A. R. 1995).

Finally, in this Strategy Management Module known that compete with another
competitor of Airasia Company was doing successful in the airplane Industries. The
Strategy Management becomes very important due to such as developing a strategy,
resources strength and weaknesses, competitive strategy, e-commence business and
to sustain competitive advantage outsourcing the business.

Unity College International, Malaysia (2010) Page 10 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

8.0. References

Ahmad Azmi, Aliah Hanim, Norzalita & Astuti Agustina. (2010). Service Quality and
Satisfaction for Low Cost Carriers. International Review of Business Research Papers
Vol.6, No.1 February 2010 , 47‐56.

Applegate, Lynda M., Austin, Robert D., & Soule, D. L. (2009). Corporate Information
Strategy and Management (8th Ed.). New York: McGraw Hill.

(2008). AirAsia annual Report 2008.

(2009). AirAsia annual Report 2009.

Air Asia (2005). AirAsia Corporate Website. Retrieved on October 27, 2010, from
http://www.airasia.com/

Air Asia (2005). Analyst Presentation 2005, Second Quarter Results. Retrieved on October
29, 2010, from http://www.airasia.com/investor/pdf/AirAsia_Second%20Quarter
%202005_Analyst%20Presentation_21st%20February%202005.pdf

AirAsia In The Press. (2003, July 3). Retrieved October 24, 2010, from The Wall Street
Journal Europe: http://www5.airasia.com/site/my/en/pressRelease.jsp?id=144a3d23-
c0a8c85d-eb784700-b8d4a0c7&type=read

AirAsia Investor Presentation, CLSA Investor Forum Hong Kong. (2007, September).
Retrieved October 2, 2010, from AirAsia: http://www.airasia.com/iwov-
resources/my/common/pdf/AirAsia/IR/CLSA%20Investor%20Forum%20KL%2007.pdf

AirAsia.com. (2007-2010). Retrieved october 6, 2010, from AirAsia Berhad:

http://www.airasia.com/ph/en/aboutus/corporateprofile.html?

Airlines must merge or go bust: Fernandes. (2008, June 16). Retrieved September 09,
2010, from malaysiakini: http://www.malaysiakini.com/news/84534

Alex, I. I. (2010, 04 24). Managing International Business Coursework on AIR ASIA.

Retrieved October 12, 2010, from Scribd: http://fliiby.com/file/835195/neniq14ohi.html

Alexander, L. D. (1985). Successfully Implementing Strategic Decisions. Long Range

Planning.

Budhiarta, Iwan. (2009). Strategic Analysis of AirAsia: The Best Low-Cost Carrier Airlines
in the world. Unpublished, faculty of Economics and Business, National University of
Malaysia, Malaysia.

… References

Unity College International, Malaysia (2010) Page 11 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Byars, L. L. (1991). Strategic Management: Formulation and Implementation : Concepts

and Cases/Student Edition. New York: HarperCollins.

Cary, W. P. M. (2009). Professional Diploma Program in Logistics and Supply Chain

Management Project Studies: Enabling Technology in Airline Industry.

Cathy, A. E. (2009). Hospitality Strategic Management: Concepts and Cases. New York:
John Wiley and Sons.

Chan, D. (2000). Capstone summary – Insights and implications for management

development. Singapore: MCB UP Ltd.

Charles, K., Sandy, H. A., Christian, T. & Ramaratnam, N. (2005). Air Asia – Strategic IT
Initiative. Faculty of Economics and Commerce University of Melbourne 2005 .

Cooper, L. G. (2000). Strategic Marketing Planning for Radically New Products. Journal of
Marketing , 64 (1), 1-15.

Coyle, K. (2010, January 6). AirAsia and Jetstar unveil strategic partnership. Retrieved
October 2, 2010, from Business Traveller Asia-Pacific:
http://asia.businesstraveller.com/asia-pacific/news/airasia-and-jetstar-unveil-strategic-
partnership

Fernandes, T. (2004). Malaysia’s High-Flier. Business Week, i3891 July 12, 2004 (p. 58)

Financial Report-First Quarter Report 2008. (2007, November 23). Retrieved September
25, 2010, from AirAsia: (2008), http://www.airasia.com

Flouris, T. G. & Oswald, S. L. (2006). Designing And Executing Strategy in Aviation

Management. England: Ashgate Publishing.

Gilles, Manon, Matthias, Maxime & Elisabeth. Case study: Air Asia. PPT:
http://sorbonnelea.free.fr/CaseStudyAirAsia.ppt

Grant, R. M. (2005). Contemporary Strategy Analysis. Blackwell.

Hamel, G. H. & Prahalad, C. K. (1994). Competing for the Future. Boston: Harvard
Business School Press.

Hamel, G. H. & Prahalad, C. K. (1989). Strategic intent. New York: Harvard Business
Review.

Hamel, G. H. & Prahalad, C. K. (1990). The Core Competence of the Corporation. Harvard
Business Review.

… References

Unity College International, Malaysia (2010) Page 12 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Huttner, D. (2003, July 10). No Frills, Smaller Bills. Retrieved November 15, 2010, from
The Far Eastern Economics Review: http://www.faqs.org/abstracts/Business-
international/No-frills-smaller-bills-Parting-advice.html

John F. O’Connell, & George Williams. (2005). Passengers’ perceptions of low cost
airlines and full service carriers: A case study involving Ryanair, Aer Lingus, Air Asia
and Malaysia Airlines. Journal of Air Transport Management , 11 (4), 259-272.

Johnson, G. & Scholes, K. (1993). Exploring Corporate Strategy – Text and Cases, Hemel
Hempstead. Europe: Prentice-Hall.

Jones, D. (2007, Jun 11). Competing in Foreign Markets. Retrieved October 16, 2010,
from Associatedcontent from yahoo: Business & Finance:
http://www.associatedcontent.com/article/271702/competing_in_foreign_markets.html

Katsioloudes, M. I. (2006). Strategic Management: Global Cultural Perspectives for Profit

and Non-Profit Organizations (Managing Cultural Differences). Oxford: Elsevier Inc,
Butterworth Heinemann.

Koteen, J. (1997). Strategic Management in Public and Nonprofit Organizations: Managing

Public Concerns in an Era of Limits Second Edition / Edition 2. Greenwood Publishing
Group.

Kotler, P., Berger, R. & Bickhoff, N. (2010). The Quintessence of Strategic Management:
What You Really Need to Know to Survive in Business. london: Springer.

Kotter, J. & Schlesinger, L. (1991). Choosing strategies for change. Harvard Business
Review.

Kulo. (2008, July 23). SWOT Analysis for AirAsia. Retrieved October 26, 2010, from Blog:
http://kulothunkan.blogspot.com/2008/07/swot-analysis-for-airasia.html

Kuzmicki, J. F. (2001). Industry and competitive analysis. Mississippi University for

Women: The McGraw-Hill Companies.

Kwok, V. W.-Y. (2007, September 17). Phuket Crash Raises Fears About Budget Flights.
Retrieved October 25, 2010, from Forbes.com:
http://www.forbes.com/markets/2007/09/17/phuket-air-crash-markets-equity-
cx_vk_0917markets05.html

Lloyd-Smith, J. (2003, June 16). London Evening Standard. Retrieved October 28, 2010,
from Malaysia takes off with no-frills airline: http://www.thisislondon.com/news/business/

… References

Unity College International, Malaysia (2010) Page 13 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Michael Adam Associates. (2004, March 19). What is a strategic plan? Retrieved
november 12, 2010, from maa managing for success: http://www.maa-
uk.co.uk/articles/What-is-a-strategic-plan.htm

Naimey Abd Jalil, Nor Akma Abdullah & W. Norhafizainee. (n.d.). Airasia story. Retrieved
September 26, 2010, from http://www.scribd.com/doc/36387718/Air-Asia-Story

Organization for Economic Co-operation and Development (OECD), (1997). The Future of
International Air Transport Policy: Responding to Global Change. Paris: OECD

Oum, T. H. & Yu, C. (1998). Winning Airlines: Productivity and Cost Competitiveness of
the World’s Major Airlines. Norwell, Massachusetts, USA: Kluwer Academic Publisher

Oum, T. H. & Yu, C. (2000). Shaping Air Transport in Asia Pacific. Aldershot, England:
Ashgate Publishing Ltd

Park, K. (2004, October 25). Singapore Airlines May Say 2nd-Qtr Profit Fell 18% on Fuel
Cost. Retrieved October 2, 2010, from Bloomberg:
http://www.bloomberg.com/apps/news?
pid=newsarchive&sid=aYCnh7OI8QJg&refer=asia

Philip Kotler & Andreasen,A. R. (1995). Strategic Marketing for NonProfit Organizations
(5th Edition). Prentice Hall.

Porter, M. E. (1980). Competitive strategy: techniques for analyzing industries and

competitors. New York: The Free Press.

Porter, M. E. (1991). Towards a Dynamic Theory of Strategy. Strategic Management

Journal , 95-117.

Porter, M. E. (1991). Competitive Advantage: Creating and Sustaining Superior

Performance: with a New Introduction. New York: Free Press

Porter, M. E. (2010). five forces model for analyzing an industry’s structure. In R. B. Philip
Kotler, The Quintessence of Strategic Management: What You Really Need to Know to
Survive in Business (p. 48). London: Springer

Prying open ASEAN's skies. (2007, July 6). Retrieved October 25, 2010, from Asia Times
Online: http://www.atimes.com/atimes/Southeast_Asia/IG06Ae01.html

Saha, G.C. & Theingi. (2009). Service quality, satisfaction, and behavioural intentions. A
study of low-cost airline carriers in Thailand. Managing Service Quality , 19 (3), 350-
372.

… References

Unity College International, Malaysia (2010) Page 14 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Shari, M. (2003). A Discount Carrier Spreads its Wings; Air Asia is Going International, and
Rivals are Scrambling. Business Week, i3847 Sept 1, 2003 (p. 27)

Sinha, D. (2001). Deregulation and Liberalisation of the Airline Industry. Aldershot,

England: Ashgate Publishing Ltd

Singapore Travel Information. (2010). Retrieved 11 15, 2010, from IPBA 2010 Singapore:
http://www.ipba2010.org/v1/11-travel.html

Stephen Ko, Claudia H. L. & Woo . (2009, Jun 11). AirAsia: Flying Low Cost with High
Hopes. Retrieved October 21, 2010, from Harvard Business Review:
http://hbr.org/product/airasia-flying-low-cost-with-high-hopes/an/HKU833-PDF-ENG

Taneja, N. K. (2002). Driving Airline Business Strategies through Emerging Technology.

Aldershot, England: Ashgate Publishing Ltd

Thomas, G. (2007). AirAsia’s New World, Air Transport World, April 2007, p.24, Website:
http://www.atwonline.com/magazine/article.html?articleID=1895

Tsiakkiros A., & Pashiardis P. (2002). Strategic planning and education: The case of
Cyprus. The International Journal of Educational Management , 16 (12), 6-17.

Turbulence sure to test ambitions of Asian airlines. (2008, May 01). Retrieved October 28,
2010, from Asiamoney, cover story: http://www.asiamoney.com/default.asp?
page=7&ISS=24757&SID=706404

Yee, L. H. (2010, August 19). AirAsia Q2 net profit 43% up on higher passenger load.
Retrieved November 15, 2010, from The Star Online:
http://biz.thestar.com.my/news/story.asp?
file=/2010/8/19/business/6881852&sec=business

Unity College International, Malaysia (2010) Page 15 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

9.0. Bibliography

AirAsia launches online shopping portal. (2010, July 19). Retrieved October 19, 2010,
from Newstraitstimes: AirAsia to offer wider range of products online,
http://www.tmsamericas.info/cms/content.jsp?
id=com.tms.cms.article.Article_e09fb0ac-caba7cb6-11e6a370-c4747769

Byrne, J. A. & Arnst, C. (1997, March 10). Can Walter Fix AT&T? Retrieved October 16,
2010, from Businessweek: http://www.123people.com/ext/frm?ti=personensuche
%20telefonbuch&search_term=walter%20fix&search_country=US&st=suche
%20nach%20personen&target_url=http://lrd.yahooapis.com/_ylc
%3DX3oDMTVnazdkMXZrBF9TAzIwMjMxNTI3MDIEYXBwaWQDc1k3Wlo2clYzNEh
SZm5ZdGVmcmkzRUx4VG

Charlton, T. (2002, June 18). To Fix a Business, Change the Culture. Retrieved October
02, 2010, from BloombergBusinessWeek:
http://www.businessweek.com/smallbiz/content/jun2002/sb20020618_5037.htm

Chung, K. H. Lubatkin, M. Rogers, R. C. & Owens, J. E. (1987). Do Insiders Make

Better CEOs Than Outsiders? Academy of Management Executive , 1, 325-331.

David, F. R. (1991). Strategic Management. New York: Merrill/Macmillan Publishing.

Duncan, R. B. (1989). What Is the Right Organization Structure? Organizational

Dynamics , 17, 59-80.

Freeman, R. E., Daniel R. & Gilbert, Jr. (1988). Corporate Strategy and the Search for
Ethics. Englewood Cliffs, NJ: Prentice Hall Trade.

Grover, R. (2005, March 30). Robert Iger’s First Big Decision. BusinessWeek online .

Hambrick, D. C. & Cannella, A. C. (1989). Strategy Implementation as Substance and

Selling. The Academy of Management Executive , 3.

Harrison, J. S. & St. John, C. H. (1998). Strategic Management of Organizationsand

Stakeholders: Theory and Cases. Mason, OH: South Western Publishing.

Hill, C. W. L. & Jones, G. R. (1989). Strategic Management Theory. Boston: Houghton

Mifflin Company.

Hitt, M. A. Ireland, R. D. & Hoskisson, R. E. (2001). Strategic Management

Competitiveness and Globalization. Cincinnati, OH: Thomson.

Unity College International, Malaysia (2010) Page 16 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Bibliography

Kwok, V. W.-y. (2007, September 17). Forbes.com. Retrieved October 15, 2010, from
Phuket Crash Raises Fears About Budget Flights:
http://www.forbes.com/markets/2007/09/17/phuket-air-crash-markets-equity-
cx_vk_0917markets05.html

Lorange, P. (Winter 1986). Human Resource Management in Multinational Cooperative

Ventures. Human Resources Management , 25, 133-148.

Magnet, M. (1994, September 6). How to Grow in a Cyclical Business. Fortune , p. 78.

Marmon, M. (1995, January 30). Kodak’s New Focus. Business Week , pp. 62-68.

Miniace, J. N. & Falter, E. (1996). Communication: A Key Factor in Strategy

Implementation. Planning Review,24 , 26-30.

Mintzberg, H. (1978). Patterns in Strategy Formulation. Management Science , 24, 945.

Nishiguchi, T. & Alexandre, B. (1998, October 15). The Toyota Group and the Aisin
Fire. Retrieved October 14, 2010, from MIT Sloan Management Review:
http://sloanreview.mit.edu/the-magazine/articles/1998/fall/4014/the-toyota-group-and-
the-aisin-fire/

Pearce II, J. A. & Robinson, R. B. Jr. (1991). Formulation, Implementation and Control
of Competitive Strategy, 4th ed. Homewood, IL: Irwin.

Philip, R. H., Robert, T. M., & Sarah, V. M. (2004). Managing Cultural Differences, Sixth
Edition: Global Leadership Strategies for the 21st Century. Oxford: Butterworth-
Heinemann.

Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior

Performance. New York: The Free Press.

Porter, M. E. (2010). five forces model for analyzing an industry’s structure. In R. B.

Philip Kotler, The Quintessence of Strategic Management: What You Really Need to
Know to Survive in Business (p. 48). London: Springer.

Powell, L. (2008, May 01). COVER STORY: Turbulence sure to test ambitions of Asian
airlines. Retrieved November 16, 2010, from Asiamoney:
http://www.asiamoney.com/default.asp?page=7&ISS=24757&SID=706404

Robinson, E. A. (1997, March 3). America’s Most Admired Companies. Fortune , p. 68.

Ross, J. E. (1993). Total Quality Management. Delray Beach, FL: St. Lucie Press.

Unity College International, Malaysia (2010) Page 17 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Bibliography

Santos, P. F. (2005, June). Brazil’s Remarkable Journey,’’ Finance and Development. A

Quarterly Magazine of the IMF , 42.

Stephen Ko, Claudia H. L. & Woo . (2009, June 11). AirAsia: Flying Low Cost with High
Hopes. Retrieved October 21, 2010, from Harvard Business Review:
http://hbr.org/product/airasia-flying-low-cost-with-high-hopes/an/HKU833-PDF-ENG

Thompson, A. A. & Strickland III, A. J. (2004). Strategic Management: Concepts and

Cases. Chicago: ichard D. Irwin.

Ulrich, D. & Lake, D. (1991). Organizational Capability: Creating Competitive

Advantage. Academy of Management Executive , 5, 77-92.

Werner, M. (1990). Planning for Uncertain Futures: Building Commitment Through

Scenario Planning. Business Horizons , 33, 55-58.

Wheelen, T. L. & Hunger, J. D. (1989). Strategic Management and Business Policy.

Reading, MA: Addison Wesley Publishing Company.

Wilkins, A. L. & Bristow, N. J. (1987). For Successful Organization Culture, Honor Your
Past. Academy of Management Executive,1 , 221-229.

Wortman, M. S. (1979). Strategic Management in Not For Profit Organizations. In D. E.

Schendel, In Strategic Management. Boston: Little Brown.

Wright, P. Pringle, C. D. & Kroll, M. J. (1994). Strategic Management: Text and Cases,
2nd ed. Boston: Allyn and Bacon.

Unity College International, Malaysia (2010) Page 18 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

10.0. Appendix

Figure 1: The Strategic Forces of Value Proposition

Porter, M. E. (2010). five forces model for analyzing an industry’s structure. In R. B.

Philip Kotler, The Quintessence of Strategic Management: What You Really Need to
Know to Survive in Business (p. 48). London: Springer.

Unity College International, Malaysia (2010) Page 19 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Appendix

Figure 2

Porter, M. E. (1980). Competitive strategy: techniques for analyzing industries and

competitors. New York: The Free Press

Unity College International, Malaysia (2010) Page 20 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Appendix

Figure 3: SWOT Analysis of AirAsia

Unity College International, Malaysia (2010) Page 21 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA
 STRENGTHS
 Low cost
operations
 Fewer
management level, effective, focused and
aggressive management
 Simple proven
business model that consistently delivers
that lowest fares
 Penetrate and
stimulate to potential markets
 Multi-skilled
staffs means efficient and incentive
workforce
 Single type fleet
minimize maintenance fee and easy for pilot
dispatch
 OPPORTUNITIES
 Long haul flight
is an trial to get undeveloped market share
 Differentiation
from traditional LCC model by adding
customer services or operation as full service
airline with low fare
 Ongoing industry
consolidation has opened up prospects for
new routes and airport deals
 High fuel prices
will squeeze out unprofitable competitors
Unity College International, Malaysia (2010)
 WEAKNESSES
х Service resource is limited by lower costs
х Limited human resources could not
handle irregular situation
х Government interference and regulation
on airport deals and passenger compensation
х Non-central location of secondary airports
х Brand is vital for market position and
developing it is always a challenge
х Heavy reliance on outsourcing
х New entrants to provide the price-
sensitive services
 THREATS
х Full service airlines start cut costs to
compete
х Entrance of other LCCs
х High fuel price decreases yield
х Accident, terrorist attack, and disaster
and affect customer confidence
х Aviation regulation and government
policy
х Increase in operation cost in producing
value-added services
х System disruption due to heavily reliance
on online sales
Page 22 of 28
 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Cary, W. P. M. (2009). Professional Diploma Program in Logistics and Supply Chain

Management Project Studies: Enabling Technology in Airline Industry.

Unity College International, Malaysia (2010) Page 23 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Appendix

Figure 4: analyzing of the macro-environment

Kuzmicki, J. F. (2001). Industry and competitive analysis: The Components of A

Company’s Macro-Environment chapter 3: Mississippi University for Women: The
McGraw-Hill Companies.

Unity College International, Malaysia (2010) Page 24 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Appendix

Figure 5: Aircraft Fuel Expenses in Million of RM

Figure 6: total cost per AKS² in Competition

Unity College International, Malaysia (2010) Page 25 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Appendix

Figure 7: value chain analysis of airasia.

Charles, K., Sandy, H. A., Christian, T. & Ramaratnam, N. (2005). Air Asia – Strategic IT
Initiative. Faculty of Economics and Commerce University of Melbourne 2005 .

Unity College International, Malaysia (2010) Page 26 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

Figure 8: Competitive Strategic

Sources: Porter’s Generic Strategies (Porter, 1980)

Figure 9: Two Primary Patterns of International Competition

Source: Charter 6 - Two Primary Patterns of International Competition

Unity College International, Malaysia (2010) Page 27 of 28

 REPORT OF THE MERITS OF THE COMPETITIVE POSITION FOR AIRASIA

…Appendix

Figure 10: Industry Attractiveness Factors

Source: Corporate Information Snap

Shots

http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C4589V600
(Earning & Dividends Performance Chart)

Figure 11: Industry Attractiveness Factors

Source: Virgin Blue’s New World Carrier’s planned shift up market (Nov-2005)
http://www.centreforaviation.com/news/2009/07/30/virgin-blue-the-new-world-warrior-
under-siege-as-the-guard-is-about-to-change/page1

Unity College International, Malaysia (2010) Page 28 of 28