Examples Of Diversification Strategy Of Airasia

In the local region, Qantas managed to outweigh its competitor by gaining a toll of 65% compared to its competitor. Evidently this shows Qantas is the number one preferred airlines compared to other competitor airlines like Virgin, Tiger Airways and Emirates airlines. However the situation is not the same in South East Asian region as Qantas only managed to obtain about 15% of market share compared to likes of Air Asia who leads the market share with 60% in this region. Conversely, this is not a concern for the airlines as the airlines managed to generate revenue of 5 billion dollars, with a predicted passenger growth of 4.9% which is equivalent to 2.9 billion passengers by 2034.

This report will be discussing strategic management to a company in the airline industry. This report will examine a chosen company’s strategic management and outline the stages. Strategic management is analyzing the situation facing the firm, also on the foundation of analysis formulating a strategy and lastly implementing strategy. Strategic management is the identification and the description of strategies that can be used by managers so as to attain better

Singapore Airlines have a dual strategy that balances purposes that are traditionally viewed as incompatible opposites. The Harvard Business Review describes this as being “a premium service provider and a cost leader”, (Heracleous & Wirtz, 2010). Combining product differentiation through uncompromising customer focus which “includes everything that would enhance the travel experience for the customer” (Phong, 2014) and cost leadership “product leadership does not mean ever-more complex offerings or throwing money at a problem”. In general, Singapore Airlines strategy is about organic growth and enhancement of partnerships with other airlines. However, Singapore is investing its healthy profits in other airlines, such as SilkAir and Virgin Australia both to establish presence in those markets, and to build partners for codeshare arrangements. Singapore Airways maintains low operational costs through outsourcing of support functions, such

The “ Battle Of The Air” has been used to describe current situation in the airline industry. The emergence of “ No Frills “ discount carriers such as Air Asia, Mahlindo, Firefly have threatened the survival of the traditional giants such as MAS, SIA, Thai Airways in the APAC regions and even the Big Boys across the continents such as United, Delta, Continental, Luftansa, Emirates and US Airway ( Myron J.Smith, 2012 ) face competition

Air Asia is the founder of low cost airlines in the Asia region since the advent of deregulation by Malaysian Government in late 90’s which in itself is a very important economic factor, without deregulation a low cost Airline cannot enter the market. For the reason that of Air Asia’s lower price, the factors affected are the

AirAsia X’s main strength is the low price that it offers for customers. For most airlines in the industry, it is extremely difficult to keep the price low for long-haul flights as the full services offered in most airlines increase the operating costs. In addition, X also benefited from the expansive network, infrastructure and customers that AirAsia already has that enabled them to grow fast with good financial outcomes. On the other hand, X’s main weakness is the technology. The website always crashes and the company doesn’t have its own database of customers. X also doesn’t enjoy from a strong relationship with the Malaysian Transport Ministry. This can be detrimental to the company as it finds competing with Malaysia Airlines in some profitable routes to be difficult. However, X has some opportunities. For example, in order to keep the low price ticket, cooperating with fuel companies which will offer low fuel price and increasing demand in low cost airlines will bring profits. The major threat for AirAsia X is the protectionist measures taken by the Malaysian government that prevented X from flying planes to some destinations with high demand. This would have been a very

• Provide background on the global industry • Present a regional analysis • Discuss current and future evolvement of the industry (trends) • Discuss challenges and strategies impacting the industry • Discuss the new breed of airlines • Discuss why airlines fail and how to achieve success

Five major passenger airlines dominate their industry by size (Grant, 2013, p. 479). But their size, legacy costs and hub and spoke business model created significant exit barriers (Grahm & Vowles, 2006, p. 108). New competitors not only started with no entry barriers but also few if any exit barriers. Legacy carriers had to identify new innovative strategies to augment their core business models to profitably compete.

In next 10 years two types of vertical integration will turn out to be more regular; the first is Large resort organizations will begin owning their own companies such as cruise ships or airlines. The second being Travel organizations assuming control in administration and possessions which would excel booking at just their lodgings. This implies for the buyer that the hotel business is moving far from an administration industry and more toward a benefit based industry. In travel organizations, the vertical integration would be a forward integration. This is because the business would start at the travel agency and end at the actual stay in the hotel. In light of the fact that the vertical integration is about expanding benefit through various stages in the

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

Focusing on the low-cost, long-haul segment - AirAsia X was established in 2007 to provide high-frequency and point-to-point networks to the long-haul business. AirAsia X’s cost

Strong brand equity - AirAsia’s brand name is well established in Asia Pacific (Learning Curve)

Next, one of the strengths for AirAsia company would be it has a very strong management team and also significant links with government and airline industry leaders. This can be said so is because the executive management teams are mostly built up by relevant industry experts and ex-top government officials. In addition, without the protection of national airlines brought about by deregulation, building alliances as strategy became necessary for many airlines to stay competitive and gain access to a global market too huge for any existing airline to dominate. There was a case where Shin Corp which is formerly owned by the family of former Thai Prime Minister which named Thaksin Shinawatra holds a 50% stake in Thai AirAsia. This has successfully helped AirAsia to open up and capture a sizeable

Diversification is a method of investing that been shown to increase portfolio return while reducing portfolio risk as measured by standard deviation. This method specifically increases the efficient frontier for investors. The challenge to an investing firm is an appetite by its customers for an ever increasing efficient frontier. One area to explore to obtain this increase is through further diversifying through international diversification.

AirAsia believes in the hassle free, no frills, low fare business concept and feels that keeping costs low needs high efficiency in every part of the business. Efficiency creates savings which are then passed to the customers so that they will able to purchase on the affordable price but still with a high quality of air travel. AirAsia targets people who want to travel around Asia for leisure or business purposes. The fares of Air Asia are relatively known as a lower fares than the other airlines. Selected strategy used by Air Asia targeting to passengers who are willing to travel without frills of meals, airport lounges or frequent flyer miles in exchange for fares which is