Air Asia: Strategic Management Report

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Air Asia: Strategic management report

Air Asia was founded in 1993 and has since grown to be one of the biggest airlines in the world. It initially operated in Malaysia and currently operates in over 25 countries (Ricart and Wang 2005). It began operations in October 1996, operating out of Kuala Lumpur as its central location (Ricart and Wang 2005). The airline was bought by Tune Air in 2001 for one ringgit, the equivalent of 0.26 US cents, at a time when the company had $10.5 million debt (Ahmad 2010). Tune Air comprised of three initial Malaysian investors, Tony Fernandes and Connor McCarthy (Ricart and Wang 2005). With Fernandes, a former Time Warner executive, at the helm, and McCarthy, RyanAir’s former director of
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The macro environment comprises of six segments, the demographic, economic, political/legal, socio-cultural, technological and global segments(Hanson, Hitt et al. 2011).
Global segment
Global events such as wars, terrorist attacks and pandemic health threats have a massive impact on the aviation industry. Terrorism can have massive impact on a region, particularly after a terrorist attack, such as 9/11, not only does the world economy drop but a huge impact is also felt throughout the aviation industry. A terrorists primary aim is to instill fear within a group of people (Einav 2003). As was seen after 9/11 where passengers dropped worldwide by 4% due to fear of flying (Costa, Harned et al. 2002).
A world health crisis can also threaten the aviation industry and tourism industries of many companies around the world. Not only does it restrict travel between countries but can also have potentially serious economic side effects, as was seen in 2003 when the SARS virus hit Asia (Fiorino, Dennis et al. 2003).

Demographic segment
In South-east Asia, more than half of the population live within a five and six hours flying radius from Bangkok and Kuala Lumpur (Ahmad and Neal 2006). Couple this with the geographic topography of the region, many parts of South-east Asia is separated by water and Indonesia has many islands. Surface (land and sea) transportation is not extensively developed and low-cost air transport services are an

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