Discuss About The Connected Products Transforming Competition.
AirAsia is one of the lowest cost air services, which are not only deal with Malaysia but also 25 numbers of developed and developing countries all over the world. With maintaining a margin cost AirAsia tries to provide their service into domestics and international. According to the journal of “The Ascendance of AirAsia: Building A Successful Budget Airline In Asia”, nowadays with maintaining this low cost and providing good quality services, if AirAsia tries to introduce their business into a new country, the management have to encounter into huge loss preliminary. To overcome this circumstance, a specific strategy is very essential, by which organisation can reach one of the leading positions.
The external analysis of AirAsia can be made through the application of strategic management tools like SWOT. It can help to identify the vital issue which can harm the future profitability of this company.
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Strength: v AirAsia is recognised to be the best airline throughout the worldwide and also has a right image. The company uses eco fuel to minimise the air pollution, and high technology equipment has been used throughout the travel v The Organization had improved its low-cost model for airline service. v The company had its first market collaboration with ICT |
Weakness: v The duration of the travel compared to the other international flight is taken a bit time. v The company has a secondary airport which consists of a non-central location. |
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Opportunities: v The customers frequently earn flight tickets and categorised gold and silver class according to their travel. v Partnership with the various reputed brand which sponsors the company well as correctly. |
Threats: v Despite the brand name, its air accidents have occurred mostly in the past few years. v Security is the primary concern from the plan highjack. |
Table: External SWOT Analysis
(Source: Swadesh, 2017)
Internal analysis compact with rectifying all internal faults such as strength, weakness, capitalises and resource of an organisation that is going to help the organisation to achieve the ultimate goals and future growth. To attract the more substantial number of the customer, the airline company is successfully using the marketing and seals business strategy (Grant, 2016).
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Strength: v The airline has a strong management team. v To maintain the fuel cost, it had a robust strategy and done some great execution controlling the overall budget |
Weakness: v The limited human resource is one of the weaknesses of the organisation |
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Opportunities: v Including customer service and operation different from old technology model. v Incising the rate of the fuel cost may decrease the market competition. |
Threats: v Entrance other low-cost airline company can be a threat to this organisation v Security is the primary concern from the plan highjack |
Table: Internal SWOT Analysis
(Source: Asrah et al. 2018)
The Functional level strategy According to the journal, “The ascendance of AirAsia: building a successful budget airline in Asia”, AirAsia is quite well designed and maintain for expand in the international market. The business strategy divides into some department, and those are Human Resource, Financial Resource, Marketing and seals team (Niederwieser & Baldomero, 2016).
Human Resource: This resource includes a support system which is mainly hiring personal resource, skill development, and application tanning of benefits to the legal structure defined by the airline community. The department is entirely responsible for the business management strategy formed for any organisation.
Financial Resource: Financial Resource is the essential element for the run the airline system. Sometimes the funds needed to expand throughout the worldwide.
Marketing and Seals Team: Getting value regarding return on its investment, marketing indicates the number of actions undertaken to make sure that the airline fulfils all the demands of its regular customer. Like other airline organisation, AirAsia has also not been left out to promote its brand on social media (Hambrick, 2014).
Business Level Strategy is in core competencies which should be focused on satisfying customer needs and preference to gain a beneficial outcome and the whole process done through the business strategy. Business level plan feature proceedings are taken to provide value to customers and put on a spirited benefit by exploit core competencies in unambiguous, personality manufactured goods or service markets. Business-level strategy is worried about a risk situation in the current industrial market, absolute to the participant and the five forces of competition. To survive the current industry, knowing a customer is very significant, to obtain and sustain a competitive advantage. According to the journal, “The ascendance of AirAsia: building a successful budget airline in Asia”, There are four strategies in for any company to set up a competitive market, and one should undoubtedly follow all these strategies.
Cost Leadership: Building modern state art facilities to attract the customers. Maintain tight control over production cost and other expenses.
Porter’s Five Force Model: As stated by, Hogg (2016), cost leadership model helps to control one’s business expenses, but with the help of porter five force model one can quickly set up new business. This model includes five rules that are, Rivalry, the Burgeoning power of customer, Bargaining power of suppliers, Substitutions, Threats. These entire five rules can help to develop a new company.
Cost Advantage: Identify the unnecessary value cost and control the damage. Reformation the value chain as the industry needed.
Risks: The wrong intentionally using technology, limitations of companies exposure and tunnel vision are the riskiest thing in business level strategy nowadays.
Concept of Leadership: Leadership is a process by which a person impacts other to achieve the aim and directs the industry in a particular which make the organisation more consistent and logical. It is said that the attribute or traits, such as benefits value ethics and character, can influence the leadership. Knowledge has direct access to process and directs the leader’s mentorship while the other aspect contributes to the leader certain characteristic that makes him unique from all. The below tables shows the implication in terms of positive impact and negative impact on the business strategy:
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Positive impact |
Negative impact |
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i) To improve the moral values of employee the common leadership action can be a part to develop an organisation. Employee moral values have a huge impact on the current business market and affect the productivity. ii) Good leadership can improve manager-employee relation, building up a strong foundation and trust between them. iii) Developing a better communication skill between the leaders and the employees will make the organisation better in terms of productivity, infrastructure, and workforce management. iv) A genuine leadership helps to clear all the objectives goals of the company to the employees. In this way the workers know the exact work to do to increase the productivity of the company. |
i) Poor leadership impacts the overall team performance of the company and the employee output is going to bear without a good leadership ii) Poor leadership makes the task incomplete that decreases the productivity and creates a negative brand image of the company. iii) To gather knowledge about the function of work, specific training and self-assessment is very essential. On that aspect a good leader can play a curtailed role. Apart from that, the employee cannot get interested in the individual working field. iv) To maintain a good atmosphere in the internal environment of the office area, leadership concept is an important thing. As a pioneer that leader can change the mind of an employee. With the corpulence of the bad mentality leader, the employee can behave like a beat. |
The entire aim of the leadership is to generate a cultural environment in a large and well set up industry which may be quite difficult for an outsider to cope up with the new culture. In one way, leadership creates the culture or another way one can say, aesthetic establishes the leadership opportunities, both indicate the same justification.
Leadership function on cultural perspective: Companies reflects the image of the leader who runs the organisation. In the year of company’s set up, the managers ensured to everyone that it would be a place that accepts diversity and workforce from all over the world. Thus over the next few years, the ethics of the leader became the focus part of the cultural society.
The obstructers to cultural change: According to the journal, “The ascendance of AirAsia: building a successful budget airline in Asia”, the internal issues are the real obstacles to cultural change. Premature and satisfaction ideas generate a negative environment. Making some difference in the process leads to some mistake, and it is normal though the changes are positive for industrial purpose. Thus people learn different coping mechanism to steer clear of the new changes.
A code of ethics is significant for business to set up and to make sure that everybody in the organisation is clear on the ultimate goal, values and guideline principal of the company. Code of ethics for any organisation is not simple enough initiative from a moral perspective. Apart from that, code of ethics also helps to construct faith and reliability among the stakeholders and enhance the overall brand image. Ethical people are those who can decide the difference between the right and the wrong choice. The required advantages of ethics in business can act as applying the principal of honesty and fairness to relationships which connect between the employees and the customers. However the organizational ethics and principled stands on the business operational, which are best, demonstrated through the acts of responsibilities, comparison, fairness, and indignity. The main issue for business owners and managers is to make sure that all employees should understand and follow these ethics. Based on this, an organisation can develop its business strategies in a proper way.
Workforce Diversity: Many companies feel privileged on having a diverse workforce. A diverse workforce does not always indicate for an international corporation, many domestic corporations have a diverse workforce. Workforce diversity is a type of employee unit which includes a mix of workers from different cultural and ethnic background of different ages and genders.
Lack of Resource: Before starting a new organization, one should confirm about the required source of materials which provides the products in future. Having a proper resource can run a company for a long time, so it is very important for any business organization.
Hyper-competition: It is a situation in which a lot of competition is faced by the various organization. Market changes in no time so in this process it is very easy to enter a new market for another company.
In specific, SMART short term of five aspects of comprehensive, actionable goal settings which help to create such organisation goal to improve industrial exposure. SMART consists of five terminologies, using these terminologies, business goals are described below (Porter, 2014):
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Specific: |
Divided long terms goals into short terms goal to work efficiently, so everyone in the organisation knows where they stand. |
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Measurable: |
The organizational task so one can easily quantify for answerability and investigation for implementation of the work. |
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Attainable: |
Asking too little or too much for the team members of that organisation. |
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Relevant: |
All projects are aligned with the corporate mission to increases the number of stakeholders for the organisation. |
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Time Bound: |
Appropriate time goal for all projects, one should avoid all mission crap and motivated other employees. |
Using SMART methodology, business goals should be designed for AirAsia Company.
The industry environment and competitive advantage will depend on some external factor.
Political Factor: For the future grown prospect of any organisation, the political issue has a significant impact. In the growth and the success of every airline business, the government of New Zealand has played a vital role. The most significant number of airline shares is known to behold by the government which is near about 82% (Holloway, 2017). The political scenario of New Zealand is also stable unlike other nations. According to Hambrick (2014), a stable political situation helps a business to flourish rapidly. The main reason is that if politics is stable, the economy starts to grow. Infrastructure starts to improve. Marketing activities are possible to carry out properly to acquire more customers. In this context, it can be said that the political scenario of New Zealand is supportive of the growth of the company.
Economic Factors: Large business organisations greatly depend on the financial condition of the country. The financial situation of New Zealand, Australia, other Gulf country and European country is right, and hence the airline business seems to be complimentary for the future enlargement of the industry (Gordon, 2018). For example, New Zealand’s GDP is growing at a rate of 0.6% and the total GDP is around $185 billion. This positive economic growth is beneficial for the growth of Air Asia in this country in the coming years.
Social Factor: Social factors are highly depended on the growth and development of the company through preference of people, lifestyle, cultural and many more. New Zealand is home to a diverse people, but most are culturally emotional. Being originated in Asia, the company needs to understand the cultural difference between New Zealand and Asian countries and thereby need to develop strategies that can help to minimize the social factor challenge.
Technological Factor: The whole airline business stands with the help of modern technologies. Airline’s business organisations are always trying to gain and learn new innovative techniques to achieve the competitive position in the market. New Zealand is considered as one of the developed and first world countries where new innovations come first. Therefore, the technological aspect also seems to be in favour of Air Asia’s growth in the country.
Environmental Factors: As stated by, Carlton (2015), from the airline’s activities and any adverse effects, the airline industry needs to protect the environment. To maintain the ecological factors, AirAsia has brought in carbon offset program to minimise the air pollution.
Legal Factors: All the airline company in New Zealand needs to follow the ‘New Zealand Civil Aviation Act 1990′. Apart from the airline rules, the organisation have to maintain all the customer services related rule mentioned in their handbook.
Staff: Companies run on the basis of staff and the power of employees as the employees are the major part of company’s internal environment. Employees have to good at their own jobs to achieve the target of the company along with the increment of the productivity. The authorizations have to able at handling lower-level employees and observing the other internal parts of the company. The manager also able to control internal politics and conflicts as it can harm a good company.
Money: Company’s survival entirely depends on the economic condition of the company. Money is considered as an internal factor because it is built the whole infrastructure and increase the productivity by expanding the workforce. If a company reddens with cash, then the companies have a lot more flexibility to grow and expand the business. In a bad economy, a well-run business may not be able to carry on into the current market. However if the customer loses all their jobs or takes another job, it can hardly support the organisation. Understanding the economy can help to spot threats and opportunities towards the business perspective.
Company’s Culture: The internal culture includes the values, flexibilities, priorities, that the employees live by. The customer will conclude all such values based on the type of employees are hired by the company.
Competitive advantages: It is a procedure which allows a company to produce good product or service at a lower price that offers more desirable among the customers. This module allows a good productive entity to make more seals compared to its market competitors. Competitive advantage creates greater values for an organisation, like AirAsia, and company’s shareholders because of its certain strength. It is difficult for other companies to neutralize the advantage if the competitive advantage is more sustainable of that organisation. Competitive advantage is divided into two parts i.e. comparative advantage and differential advantage.
Comparative advantage is a procedure to generate a good service than other competitors that leads more profitable business for that company. Comparative advantage also depends on the economic scale of the company, geographical location and efficiency in the internal system. It shows that the organisation offer a service of the same value at a lower price as comparative advantage does not promise the customer a better service.
Differential advantage can be applied in a particular situation such as when a particular organisation offers a different service compared to the other company that is also a cheaper price then the whole situation started as a differential advantage.
Using these two business strategies, AirAsia builds a strong foundation in the airline business. The company offers a well-designed package at a much cheaper price in the market which attracts most of the new customer as well as maintain customer retention.
Vertical Integration: it is described that a company is creating its inputs or producing its outputs. Forward integration includes association into distribution. Vertical integration consists of a choice about which comprises the raw material to complete the customer chain. In addition to finish the forward and backward integration, it is mandatory to identify the difference between full integration and taper integration. However the vertical integration occurs based upon the assumption of the company to control several production or distribution which is involved of its product or the service provided by the company in a particular market. Vertical integration can be divided into two ways that are vertical background integration and another one is forward vertical integration. For example, AirAsia expands backward on the production path into manufacturing is identified as a backward integration on the other hand the forward expands on the production path into distribution is concluded as forwarding integration. Apart from this, as AirAsia mainly deals with 25 developing and developed countries, management of this organisation have taken so many decisions related to vertical integration most of the time. According to the journal report AirAsia launched Fintech products to provide more satisfaction to the customers within the aspect of vertical integrity process.
Diversification: diversification is a kind of assist strategies which used to expand organisational operations by adding together products, service, strategies and stages of production to exiting the business. Basically the diversification is the main key to allow the company to enter the new market strategies that are different than current operations. It indicates towards a unique market strategy where the company generate its revenue creating a new product in the market. This is the riskiest section as the business has no experience with the new market strategies and does not know if the product of the company is going to be successful. Various types of diversification are related to diversification and unrelated diversification.
Related Diversification: This diversification indicates into a new activity which is connected by company existence activities by a value chain.
Unrelated Diversification: This diversification indicates into a new activity that has no connection to other companies’ existence.
Creating Value Through Diversification: In three ways, any diversify company can build its value by acquiring poorly run management system, by realising the economic condition of the business and last but not the least by transferring competencies among the industry.
Strategic Alliances: Strategic Alliance is basically an agreement between two or more than two companies to set up a new business motive and agreed upon the needed objectives. It often falls short of the legal partnership entity, agency or the affiliated corporate agency. Strategic Alliance possesses one or multiple business aspect which will help the other by enhancing others business. It can build up the outsourcing relationship where the organisation longing to accomplish long-term payback and modernism based on an equally desire conclusion. Under the satisfied condition, the companies have to realise the giant associated with vertical association without having to tolerate the associated external material cost. Such long-term relations between two or more than two company are often known as strategic alliances (Blair & Kaserman, 2014). As per the journal report about AirAsia, with using this business strategy in 2012 AirAsia started a joint venture project with Zest Air in Philippine to provide better quality service with a cheap rate for the customers. On the other hand, Malaysia AirAsia and Australia Jetstar merged with Alliance and started a new project from September 2013 for achieving the satisfaction of Australian customers.
Extrinsic Motivation: it happens when one goaded to execute a behavior or take part in an activity to gain reward or avoid from punishment. Some examples of extrinsic motivation are shown below:
Intrinsic Motivation: This motivation includes a different presentation as it is individual satisfying essential and performing an activity for someone owns sake rather than the want for some peripheral rewards such as:
Maslow’s hierarchy of needs:
Figure: Maslow’s hierarchy of needs
(Source: Niederwieser et al. 2016)
Maslow’s hierarchy is mainly comprised of Human motivation and Psychology. To survive a human being, the psychological need is very essential. There are so many different subparts in the context of Psychological essential, likely, Breathing, Food, Water, Shelter, Cloth and Sex. Safety needs are mainly included in Health, Personal Security and Financial Security. In the context of Social Belongings, the basic requirement of every human being is to protect their Family and Friends. Self-respect and self-confidence are most important factors of every human being which is mainly included with esteem and Self-actualization. As the main object of AirAsia organisation is to provide air service to the customers, the management should maintain Maslow hierarchy to acquire customer retention as well as new customers.
According to Swadesh (2017), a number of frameworks are present which can help in measuring and evaluating the strategic performance of a company. Some of them are as follows-
SMART-Strategic measurement analysis and reporting technique is a tool by which it will be possible to collect data on the organization’s mission, vision and objectives and the strategies that are implemented. Then, by analyzing the performance in accordance with the mission and vision, the strategic performance can be measured and evaluated (Arac?o?lu, Zalluho?lu & Candemir, 2013).
The Balanced Scorecard is another tool that can be used in this context to measure and evaluate the performance of AirAsia. Some other important tools are performance measurements questionnaire, performance measurement system and integrated performance measurement reference model. These frameworks take into consideration the achievement of an organisation in terms of financial performance and non-financial performances and then calculate them against the organizational objectives set (Arac?o?lu, Zalluho?lu & Candemir, 2013).
However, before the late 1980’s performance measurement and evaluation was done only based on few financial metrics like as Return on Investment as well as Return on Equity. These can also be used to measure and evaluate AirAsia’s strategic performance.
One of the most severe issues within an organisation is to manage employee attitude. AirAsia is also no exception from it. As the company operates in many countries, there are obvious reasons for maintaining a proper culture within the organisation which can ensure good employee attitude towards the customers. In many cases, the onboard staffs misbehave with the customers. This can lead to potential loss of customers and subsequent reduction of revenue for the company. AirAsia needs to bring in a new policy for managing employee attitude and behavior. This is an important change management procedure. In order to manage this change, the top management of the company can follow the Lewin’s Change Management Model.
Lewin’s change management model has three elements-unfreeze, change and refreeze. At first the company needs to identify what needs to be changed. For example, the organisation culture needs to change to improve customer service and performance of the company (Manchester et al. 2014). After the identification of the required change, there is a requirement to create a need for change. The support of the top management is essential in this part. However, it is important that the company also includes the employees and listen to their concerns as the change is based on employee behavior and organizational culture as a whole.
The second phase is to change. In this phase, the change objectives need to be communicated not only in the top management, but also among the low-level employees so that they can understand the reason behind the change. The opinion of low-level employees, managers as well as stakeholders can be beneficial in this change process (Hussain et al. 2016).
The third step is to refreeze the change. In this process, AirAsia needs to ensure that the change procedure is implemented properly. For this purpose, regular inspection, measurement of the success of implemented change and training to sustain the change is required. Once success is visible, the company can follow the same steps to manage any other change for improved organizational performance.
References list:
Arac?o?lu, B., Zalluho?lu, A. E., & Candemir, C. (2013). Measuring and evaluating performance within the strategic management perspective: A study on performance measurement of a seafood company. Procedia-Social and Behavioral Sciences, 99, 1026-1034.
Asrah, N. M., Nor, M. E., Rahim, S. N. A., & Leng, W. K. (2018, April). Time Series Forecasting of the Number of Malaysia Airlines and AirAsia Passengers. In Journal of Physics: Conference Series (Vol. 995, No. 1, p. 012006). IOP Publishing.
Blair, R. D., & Kaserman, D. L. (2014). Law and economics of vertical integration and control. Academic Press.
Carlton, D. W., & Perloff, J. M. (2015). Modern industrial organization. Pearson Higher Ed.
Gordon, P. H. (2018). France, Germany, and the western alliance. Routledge.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
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Holloway, S. (2017). Straight and Level: Practical Airline Economics: Practical Airline Economics. Routledge.
Hussain, S. T., Lei, S., Akram, T., Haider, M. J., Hussain, S. H., & Ali, M. (2016). Kurt Lewin’s change model: A critical review of the role of leadership and employee involvement in organizational change. Journal of Innovation & Knowledge.
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Lawton.T. & Doh. J. (2015) The ascendance of AirAsia: Building a successful budget airline in Asia.
Manchester, J., Gray-Miceli, D. L., Metcalf, J. A., Paolini, C. A., Napier, A. H., Coogle, C. L., & Owens, M. G. (2014). Facilitating Lewin’s change model with collaborative evaluation in promoting evidence-based practices of health professionals. Evaluation and program planning, 47, 82-90.
Narayanan, V. K., & Fahey, L. (2015). The relevance of the institutional underpinnings of Porter’s five forces framework to emerging economies: An epistemological analysis. Journal of Management Studies, 42(1), 207-223.
Niederwieser, D., Baldomero, H., Szer, J., Gratwohl, M., Aljurf, M., Atsuta, Y., … & Iida, M. (2016). Hematopoietic stem cell transplantation activity worldwide in 2012 and a SWOT analysis of the Worldwide Network for Blood and Marrow Transplantation Group including the global survey. Bone marrow transplantation, 51(6), 778.
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