A LONGITUDINAL STUDY IN STRATEGIC DEVELOPMENT

Making a concerns in todays competitory epoch has become harder because concerns are confronting higher force per unit area from the increasing figure of rivals, but they besides have to vie in more dynamic and complex environment. The competition is besides go oning in air hose industry, that is largely induced by the digitalisation and determination of more advanced engineering, has forced every individual concern to accommodate the best concern scheme.

There are increasing figure of new bearers with new concern theoretical account which has changed the competition form in the air hoses industry.

Harmonizing to O’Connel and Williams 2005, direct competition between full service air hoses and no-frills bearers is escalating across the universe. The old concern theoretical account of most air hoses concern focused on the full service, while the new concern theoretical account focuses on utilizing digital engineering to do the concern becomes more and more efficient, and therefore, taking to be advantage.

Confronting the digitalisation epoch, Air Asia has emerged as one of the best public presentation company in air hoses industry. In this assignment we will discourse how, during the external and internal crises, Air Asia owns 51 % market portion of Malaysian air hoses industry. This assignment will besides seek to analyse Air Asia as the lifting star of today ‘s air hoses industry. The analysis included the how Air Asia designs its web, and how it applies E-commerce issues on its concern theoretical account.

Air Asia History

AirAsia Berhard which is besides known as AirAsia, is an air hose company which provides air transit service. Air Asia wants to be the lowest short-haul air hose in every market it goes in. To accomplish the end, it has some schemes such as thin cost construction, different ways of publicity, maintaining safety, fulfilling invitees, and developing human resources ( AirAsia.com, 2010, Internet ) .

AirAsia was established in 1993 and started operations on 18 November 1996. AirAsia has a really long ownership history. At the really first, AirAsia was founded by a government-owned pudding stone, DRB-Hicom.

Subsequently on, it was purchased by Tony Fernandez, former Time Warner executive on 2 December 2001. The company ‘s headquarter is in Sepang, Selangor, Malaysia. Its chief base is the Low Cost Carrier Terminal ( LCCT ) at Kuala Lumpur International Airport. Their operations are carried out in Malaysia, with 3,474 employees. Air Asia is the taking low menu air hose in the Asia and AirAsia is the innovator of low cost winging air hose in Asia.

AirAsia has been sing enormous enlargement since 2001 as the largest low cost bearer in Asia. It flies to over 61 domestic and international finishs with 108 paths, and operates over 400 flights daily and their subordinate companies located in Thailand and Indonesia. In Thailand, AirAsia has hub in Suvarnabhumi Airport and in Indonesia at Soekarno-Hatta International Airport. AirAsia operates scheduled both in domestic and international flight and in Asia, AirAsia is the largest low menu and no frill air hose.

Air Asia trade name doctrine

AirAsia trade name doctrine, ‘Now Everyone Can Fly ‘ , is related to their vision, that they want to be the largest low cost air hose in Asia and functioning 3 billion people who are underserved with hapless connectivity and high menus. Their mission is to be the best company to work for whereby employees are treated as portion of a large household, to make a globally recognized ASEAN trade name, to achieve the lowest cost so that everyone can wing with AirAsia, to keep the highest quality merchandise, encompassing engineering to cut down cost and enhance service.

Air Asia Cost Cutting Strategy

AirAsia focuses on several major issues. First, it is partnering with the universe ‘s most celebrated care suppliers and to follow with universe air hose operations to vouch the riders ‘ safety. Second, implementing the parts fastest turn around clip at merely 25 proceedingss, to guarantee lower costs and higher productiveness. Third, low menu without compromising on quality and services. Fourth, streamline operations and thin distribution system. Fifth, using the point-to-point web to maintain operations simple and low costs. Air Asia done focal point on the several major issues to cut the cost which are as follows.

Online Booking – Air Asia ever tries to maintain the operations simple and efficient to maintain the costs low, for illustration by simple and efficient online ticket engagement. Harmonizing to Fu Sen, an antique employee of Awair – the air hose company bought by Air Asia, the tickets that have been booked online can printed by the clients or the clients can merely retrieve the engagement codification and demo their individuality card for checking-in, so Air Asia can besides salvage some sum of money that it should pass on midst ticket stuff, like what other air hoses do, which cost about IDR 5000,00 each, and on ticket printing which may be more money

Selling Food On Plane – Another Air Asia ‘s manner to salvage costs is non to supply nutrient and drinks on the plane, as the end of the air hose is merely to ‘move person from one to another topographic point ‘ cheaply. It sells nutrient, bites, and drinks, on the plane, so clients who want to eat or imbibe can merely purchase what they want. By implementing this scheme, Air Asia can derive net income from the gross revenues of the nutrient and drinks because it sells the merchandises for higher monetary values than supermarket or jobber monetary values.

Cuting Daily Cost – Air Asia Indonesia may make retrenchment by cutting daily cost, such as supplying merely imbibing H2O in the office and non java or tea. Supplying java or tea cost more because java or tea besides needs sugar or cream pitcher to imbibe with, so cutting cost on drinks may be possible. Employees who want to imbibe java or tea might convey it from their places. ( AirAsia.com, 2010, Internet ) .

Difficult Workers – Harmonizing to Fu Sen, Air Asia besides tries to maintain the costs low by enrolling lone Numberss of workers needed and choosing merely capable and difficult workers, so each worker will hold plants to make and the company does non hold to pay workers who do non work expeditiously. The company besides gives multiple undertaking to some of the employees, for illustration, Air Asia does non engage cleaners to clean used planes that stop in airdromes. Alternatively, the air hostess or stewards of the planes have to clean the used plane. So, other than salvaging another sum of money, it besides can do maximal usage of the human resources available.

Promotion – Air Asia does publicities by telecasting, in yellow journalisms, and in the newspaper, but other than that, Air Asia besides promote the trade name by patronizing The Amazing Race Asia along the show and to hold a sponsorship trade with Manchester United ( MU ) . By holding the sponsorship trade with Manchester United, Air Asia tries to pull loyal MU fans in Asia to go with Air Asia ( AsiaTravelTips.com, 2009, Internet ) . It besides send intelligence missive by electronic mail to registered clients to inform free seats publicity for flights to some metropoliss in Indonesia such as Surabaya, Bali, and Lombok.

No Frill Airlines – One of the features of no frill airlines is to make fuel fudging plan, where beforehand purchase of fuel at fixed monetary value for future bringing is done to expect rises in monetary values ( AsiaTravelTips.com, 2009, Internet ) . Rises in monetary values will hit oil monetary values at the first clip because it is the most of import stuff in most industries. Air Asia besides maintains the safety of the aeroplanes by following with the highest International Aviation Safety Standards and Practices. To vouch the safety of the air planes, all Air Asia ‘s aeroplanes machines are taken attention by GE Engine Service since July 2002 for 5 old ages. Air Asia besides has a US $ 3 million partnership with Volvo Aero who will supply plane construction and machine spare parts for all Air Asia planes ( AirAsia.com, 2010, Internet ) .

So, for clients who want cheap but safe flight can take Air Asia, because even though the ticket monetary value is inexpensive, the safety is guaranteed For aeroplanes that are parked in the airdrome, air hose companies have to pay hourly rated menu. To salvage some money from paying airplane-parking menu, Air Asia tries to maintain the flight agenda efficient and on clip. The planes merely halt for about 25 proceedingss for cleansing, so every clip the air planes halt in the airdrome, the plane will be cleaned before the riders come into the plane, and the aeroplanes will take off right off.

Air Asia realized that fulfilling clients is the key for long-run success, and that is why it ever tries to fulfill its clients by winging on clip and to be friendly to every Air Asia clients. 90 % of Air Asia Indonesia ‘s flights in May 2009 flied on clip

( AirAsia.com, 2010, Internet )

Air Asia – Possible Alternate Business Schemes

There are three types of schemes that Air Asia can prosecute in order to be a major participant in the Indonesian air hose market. They are substantial growing scheme through variegation, limited growing scheme through market incursion or market development, and retrenchment

Diversification

Diversification is when the company is selling new merchandise into new market. Diversification is a hazardous scheme and the company has to be certain and good prepared before making variegation because variegation scheme largely costs more money than making limited growing scheme. There are types of variegation such as horizontal, perpendicular integrating, and conglobation, the company will be developing activities that are straight complementary to a company ‘s present activities. Air Asia has done horizontal variegation while come ining Indonesian market by fall ining with Awair, which is an Indonesian air hose company. The connection helps Air Asia to cognize the status of Indonesian air hose market, so the company will hold counsel on how to come in and last in the market by the aid of an experient spouse.

If Air Asia does perpendicular variegation, for illustration by selling all the flight tickets without the aid of agents and unfastened many Air Asia ticket topographic point, Air Asia will be able to command all the monetary values and can sell the tickets for lower monetary value. It will besides forestall the clients from holding bad service that the agents might give, because Air Asia can keep and develop the staff to be friendly and helpful at all clip and it might assist AirAsia to keep clients ‘ satisfaction. But, it means Air Asia will hold to pass some sum of money for constructing rent and to pay more employees.

By making unrelated variegation such as conglobation, Air Asia might distribute hazard if all of a sudden air hose industry is stuck and have high net income chance from the new concern. But to open up a new company, high quality of direction and fiscal ability is needed in order to do it successful, but if the new concern is non successful, it might make unstable status for Air Asia because of loss of money and resources.

Overall, variegation scheme needs a batch of money for constructing rent or to construct new office edifices, to pay more employees, and the company besides needs cognition about the new field that it is traveling to come in.

Market Penetration

Market incursion is a scheme to turn the same merchandise of the company in the same market. The lone manner to derive more market portion with the same merchandise in the same market is to pull rivals ‘ clients and acquire more loyal clients by marketing schemes.

By making market incursion, the cost will non be every bit much as making variegation because the company can finance the scheme by utilizing selling budget and utilizing the bing selling section of the company

Market Development

The other ways to derive growing by of limited growing scheme are merchandise development and to sell the merchandise in new geographical market. Air Asia might open up new paths to other topographic points than the bing paths: Bali, Balikpapan, Batam, Kuala Lumpur, Medan, Padang, Surabaya, Palembang, and Pekanbaru ( AirAsia.com, 2010, Internet ) .

Until June 2007 Air Asia aeroplanes from Indonesia still can non set down straight to Singapore because the Civil Aviation Authority of Singapore rejected the landing rights application. Air Asia aeroplane from Indonesia set downing straight in Singapore is traveling to convey advantages to both parties, as 20 % or 1.92 million of international tourers in Singapore in 2009 are Indonesian tourers ( media-indonesia.com, 2010, Internet ) . Other than Singapore, Hong Kong is besides a possible finish because there are a batch of Indonesian shoppers who go to Hong Kong to shop monthly, or even twice in a month.

Even though opening up more paths is traveling to be advantages, it costs more than making

market incursion because more avtur will be needed and may be more capable pilots.

Retrenchment Scheme

Retrenchment is when the company tries to cut costs or disbursement in making the activities ( Oxford American Dictionaries, 2008 ) . Air Asia has been really cost effectual and efficient

since the first clip, so a new possible retrenchment scheme might be hard to happen because every facet of the company are already runing with the lowest cost possible, except on the safety facet.

Retrenchment scheme can be done by backdown from offering some merchandises, in this instance might be a flight finish that is non truly profitable. But, Air Asia Indonesia merely has 9 finishs to of import metropoliss of Indonesia, so even though shutting of finish will diminish the disbursals of the company, it might convey the clients to Air Asia rivals.

Air Asia Indonesia Resources Evaluation

To implement a scheme, Air Asia has to reexamine the resources because if the resources are non plenty to make the scheme, the execution will non be maximized and there will be the possibility that the scheme will neglect. There are resources to be evaluated before taking a scheme, such as budgets, human resources, and web analysis ( H NC/H ND Business Strategy, 2009: 254 )

For variegation schemes, a batch of money will hold to be allocated to run the scheme. New employees who understand about the new concern besides necessitate to be recruited to run the new concern, and it means there will be another cost for employee preparations and to pay the employees ‘ wages. The company might hold to construct a mill or buy/rent new edifice for the new concern activities. So, variegation scheme is a high cost scheme, which may convey long-run profitableness.

For market incursion and market development schemes, less money will hold to be allocated to run the scheme compared to variegation schemes. Market incursion and market development strategies merely develop bing resources to acquire more net income or bigger market portion, and the budget for these schemes are largely taken from marketing budget

Air Asia ever wants uninterrupted costs decrease from the activities to acquire more net income.

So, lower cost scheme such as limited growing scheme will be preferred at the minute

Possible Future Schemes for Air Asia Indonesia

Limited growing schemes such as market incursion and market development will be the best scheme for Air Asia at the minute. Even though variegation might convey bigger net income to the company, the scheme is normally used when the company is holding excess money that can be invested in other concern. Air Asia Indonesia started in 2006 and is still a new air hose company that needs to last in the industry, so at the minute it would be better if the company tries to increase its trade name image and acquire more loyal clients than to open up a new concern

Air Asia may increase its trade name image by advancing inexpensive, on clip and safe going experience run. There are many inexpensive Indonesian air hose companies who are weak on these musca volitanss, so the run might pull concern people, who want to salvage cost, arrive at the meeting topographic point on clip and safely, to seek Air Asia. To do the publicity more attractive, if a flight is delayed, Air Asia can give 30 % price reduction verifier that will be posted to all riders who went on the delayed flight, and they can utilize the verifier on their following trip with Air Asia

Promoting on telecasting is expensive but effectual to increase the trade name image, so AirAsia Indonesia may publicize on the telecasting. Ad on telecasting is expensive, but efficient to make everyone in the state. To cut down the cost, the advertisement clip may be made shorter and the advertizement may non be aired really often.

Air Asia Indonesia might besides open up a new path to Indonesian ‘s favourite international vacation musca volitanss such as Hong Kong and Singapore, or educational topographic point such as Australia. By opening up new paths, even though more resources may be needed, it will enable AirAsia clients to vie with other air hoses

Air Asia Indonesia and Adam Air – Roles and Responsibility

Air Asia Indonesia entered the market in 2006 while Adam Air has been runing since2003. Both air hoses are well-known low-priced bearers. Both companies have schemes to vie and acquire bigger market portion.

One of the suggested schemes for Air Asia is to make image of safe and inexpensive air hoses. Air Asia has to stress inexpensive monetary value and safety in its selling run, because nowadays what people find is largely inexpensive but insecure flights. So, by turn outing and keeping the safety of Air Asia aircraft continuously, Air Asia Indonesia is keeping its long-run success

On implementing the scheme, Marketing Department will be responsible as publicity is a portion of selling. It might keep imperativeness conference to speak about why Air Asia would be the best low cost bearer, or throw events that are managed by outsourced PR companies. Air Asia might besides publicize its monetary values on Television and Newspaper and engage an advertisement bureau to make the undertaking, to acquire the best professional consequence.

Adam Air had done imperativeness release to inform developments in the service of the company. Adam Air neglected its duty to take attention of the safety of the aircrafts and did non keep the aircraft based on the demand ( Wikipedia.com, 2007, Internet ) because it saves a batch of money. As the consequence, there are some Adam Air accidents that caused decease. Since the last deathly accident, Adam Air has been to a great extent criticized and a clients left Adam Air because they are scared that someday the accident will go on to them.

After deathly accidents that happened, Adam Air did a imperativeness conference to seek to acquire back clients ‘ trust by denoting that they are holding a contract with an experient company who takes attention and look into the aeroplanes on a regular basis.

The 3rd scheme is to open up new of import finishs, such as Singapore, Hong Kong, and Australia. This undertaking will be the duty of Product Department as new finishs are considered as merchandise and market development. The section might hold to carry on research on other popular finishs that are still unavailable. Hiring experienced research company such as AC Nielsen, to acquire the best consequence, can make the research

To open up new finishs, Finance Department besides have to be involved to cipher the costs needed, besides Human Resources Department to cipher how many new workers need to be recruited

Targets for Accomplishments of The Schemes

The readying for market incursion scheme will be started on July 2007 and finished in October 2007. There will be one month for scheme operation reappraisal and developing the employees for the new plans, and so the market incursion scheme is targeted to get down in November 2007. The scheme will be runing for one months, so there will be the first large reappraisal

For opening new international paths, higher-level pilots and air hostess are needed, so Air Asia might hold to make choices and preparations to supply the best on-board staff. The company will besides hold to direct set downing rights applications to the new international finishs. So, opening new international paths may be long-run schemes so the readying will likely take at least 2 old ages. All schemes should be good prepared before they start to run