Discovering the branding & imaging of the company

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Requirement

1- Discuss the strategic challenges of an organization of your choice and explore what could be done in order to address these challenges.

Solution

The chosen organization is AirAsia
Executive Summary

This paper provides an in-depth analysis of the key management, operational issues & financial issues of AirAsia. AirAsia was founded in 1993 and started functioning in 1996. It was a turbulent start for AirAsia which had heavy financial losses as it brands itself as Asia's lowest cost carrier. It rebranded & launched itself in 2005. SWOT analysis, PESTLE, PORTER, BCG has been done to understand the internal & external factors which are affecting the company. Finally, the conclusion is drawn, in discovering the branding & imaging of the company.

Introduction

The company started its operations in 2005 & Tune Air Sdn Bhd (Tune Air) acquired AirAsia. Ever since its most successful airlines with low-cost carriers & change its image from a loss-making to a successful profit Venture center, it has tagged its brand image of the low-cost carrier.
Now Air Asia is among the top air carriers & has branded its image as a low-cost carrier. It’s on a growth spree since 2005. Expanded globally with the 108 routes & having a fleet globally Thai AirAsia, Indonesia Air Asia, Malaysia, etc. Keeping the costs at a bare minimum & making customers happy along with satisfied journey is the basic aim of Air Asia. Its tagline of 'Now Everyone Can Fly', operating in high efficiency which is passed on as a low cost to customers instead of focusing just on profits. Every customer is treated differently & provided the best-customized service experience. The aim of the investigation
The Aim of doing in-depth research by analyzing SWOT, PESTLE, & PORTER has understood AirAsia strengths, a study in-depth competitive analysis, understanding of internal & external factors contributing to the success of AirAsia. The weakness or the threat can always be conquered by strategizing opportunities, resources & situations in a positive outlined manner. Through this we would be able to provide concrete planning for AirAsia to identify its potential opportunities to expand, region-wise, grow customer database, satisfy clients & stakeholders, etc. By integrating & partnering with the low-cost technology it will be able to expand on a larger scale globally & would be able to reap efficient economies of scale. The key is to develop a cost-effective strategy to get better visibility to expand on a larger scale & could penetrate in the new domain easily. Hence planning, execution, management blending with the external, internal factors are the key to strategies & expand on a larger scale with the given resources.

Discussion on Company Overview

Company Overview

AirAsia branded itself as low-cost airlines & is expanding its wings globally. It has operations in South East Asia which have expanded rapidly and it's still the second-largest air carrier in Malaysia. It serves from low class to high class & customizes itself to every customer. Senior management is quite strategic in approach & it has a great leadership style which has displayed immense visibility (Kamisan, 2013).

AirAsia's Vision

To serve the customer with highly innovative & customized experience & expand more globally.  

AirAsia's Mission

Integrating satisfying customers along with treating employees equally at class par, making their journey a memorable experience. Globally low-cost ASEAN brand. High efficiency integrated to low-cost experience of the customer. Maintain the highest quality blended with the best services served to customers globally.

AirAsia's Values

With a low-cost fare, making AirAsia a lucrative brand by focusing on below strategies such as

  1. SafetyFirst: High-class partners which are adhering to compliance standards & at the same time providing efficient world airline operations.

  2. High Aircraft Utilization: Aiming to reduce travel time to shortest routes, assuring high efficiency operating at low cost.

  3. Low Fare: Providing customer innovative customized services.

  4. Streamline Operations & Lean Distribution System: Keeping operations simple & flexible & making it an experience to remember.

  5. Point to Point Network: Keeping costs low by low operations.  Customer customized products and services offered by Air Asia

  6. In-flight services: Inbound flight food & drinks provided. The customer requested customized merchandise for e.g. mugs, caps etc.

  7. Online services: AirAsia allows customers to book tickets online. Any delays or time lags is updated on the system & notified via SMS services. Chatter -flight: As per every group it provides services to provide meetings to serve individual customers.

Channels of distribution

A number of alternate 'channels' of distribution may be available:

  • Selling directly: AirAsia uses the direct selling such as outbound sales force, via mail order, the Internet, Telephone sales

  • Selling indirectly: AirAsia includes all from agents selling on behalf of the producer, distributor (wholesaler), who sells to retailers & Retailer (dealer or reseller), who sells to end customers

Sales and Marketing

AirAsia is operating globally providing A-class international services at a low cost. Domestically or be it internationally AirAsia has many competitors to face. Getting into an international model & at the same level, they can face much more tough competitions at every level. Due to local or international policies, some airlines can benefit due to the low operational cost & some get easy penetration in the market (Musa,2011).
Their strategy to provide low-cost services to the customized customers has helped to market themselves on a larger level.

Branding

AirAsia through strong advertisement has made a strong presence & good visibility status. Its tagline " Now everyone can fly" . They are always in touch with regular, loyal customers & hence it always has an enhanced customer database.

Group Discounts and Offers

Promotional strategies, discounts, promotions, aggressive group coupons have helped AirAsia to penetrate deeply into the market (Ng, H.S, 2011). AirAsia provides ticket at discounted prices to be booked online. If purchased at bulk or group it helps in providing more discounts.

Computer Reservation System (CRS)

Through its CRS system, it's able to allow tickets to be booked online & promote on a larger scale. Its CRS is quite effective in detailing customers about any delays through online services, SMS alerts emails etc. Incase of cancellation or refund customers can contact online.
All the web agents, customer service people, passengers, staff can very well remain coordinated, work parallel & book, cancel, refund or see the flight changes at their own convenience.

Self Check In

Automatic booking as per the customer convenience through online or apps. It’s convenient to get an update about delays, bookings on a timely basis (Ricart, 2005).

Air Asia credit card

Air Asia provides a wide range of credit services be it in leisure or holiday bookings etc. With an Air Asia credit card a customer can purchase any goods or services while traveling anywhere in the world online (Samovar, 2015).

Go Holiday services

It has a product called as Go Holiday & provides all sort of services within seconds of display. Activities in different countries with their different rates and prices on Air Asia's web page. All the travel arrangements, leisure booking, online view, mapping & everything can be traced through this application.

Foreign workers and Contractors strategy

AirAsia also targets most foreign workers from Indonesia, Singapore, Thailand, China, Macau who may not afford the expensive flight home and offer them the cheap fare which attracted most of them as would go home very often without paying much (Shuk-Ching Po, 2010).

The Competitors

It has a direct & indirect competitor. Direct competitors that provide the same competitive services. Direct competitors include Malaysia Airlines: same routes flights , Singapore Airlines: similar flight routes from London and Kuala Lumpur., Thai Air: Flights in between Bangkok & Kuala Lumpur, Air Srilanka: Flights in Colombo and Bangkok.. It's facing tough competition worldwide & needs to have aggressive marketing.

Strategic Challenges 

During an in-depth research over the AirAsia, it was found that company faces some of the key challenges & needs to form suitable strategy to overcome from it.
AirAsia is a southeast based company & in order to expand globally needs to it penetrate, explore new territories. By expanding more covering various countries it would be able to reap economies of scale.
It needs to diversify more by providing distinguished products & services to customers. Challenge lies in providing more innovative & unique products & services which captures the eyes of customers & they stay loyal to the brand.
Sometimes exploring a new densely populated country like India, the challenge may be in convincing the bureaucrats & bear political instability factors. Hence how to form an optimum strategy to negotiate & bargain remains a key challenge for the company.
In order to analyses strategic challenge we need to first do in-depth research over the internal factors affecting Air Asia such as strength, weakness, opportunities, various external factors affecting such Porter five forces affecting Air Asia, economic, legal , technology in order to understand if AirAsia will able to sustain the challenges & convert it into an opportunities. 

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Analysis of Factors affecting AirAsia

SWOT
Internal & external factors which could affect AirAsia needs to be studied & briefly highlighted.

  • Strengths: Air Asia main strength lies in the strong promoter. well established in South East Asia. It has a global operations in 25 countries and 400 routes. Its subsidiaries are in Indonesia, Thai, Philippines, Japan. It has a big fleet size of 300 airplanes

  • Weakness: Not having extensive routes & is facing a tough competition

  • Opportunities: Budgeting, cost costing of low budgeted customers & it has a s trong brand image presence

  • Threats: Some of the threats for AirAsia are rising fuel costs, labour costs & growing competitors in the same LCCs in Market.

Porters 5 Forces Analysis on Air Asia

External factors affecting AirAsia brand & how AirAsia can competitively use it  for the betterment in defining its scope should be in-depth studied. 

  • 1.  Threat of new Entrants- Jet Star, Tiger Airways giving a tough completion in the low cost & providing a barrier to creating loyal customers. Starting it at large scale is tough with huge costs to be it the appointment of staff side or recruiting employees to wise. Diversification is the key to providing an extensive opportunity to get loyal customers, keeping completion at bay. Switching Cost is low& hence significant changes will have a repercussion effects in the cost operation & revenue generation. Government & legal laws are tough to break since it might promote cartels, joint ventures or mergers resulting in the monopoly operations of individual airlines operating into it.

  • 2.   Rivalry among existing firms- High numbers of Competitor: Competition is tough & tough to break due to the low-cost operators such as JAL Express, Tiger Airways, Air Arabia, Jetstar Airways, and etc. Fixed Cost is also high so when we talk of operating cost is high & changes can’t be easily made. Setting up a fleet to getting a new airplane on the board incurs huge costing experience. Exiting an Airline business can also be tough due to high cost. Once the fixed cost is incurred in setting up huge fleet costs, buying airlines, getting a hired expensive staff, employees, pilots etc. it will be tough to have an exit strategy & might take years in getting out of the business.

  • 3.  Threat of Substitute product- Ease to switching. Due to the availability of so many direct competitors which are operating at low cost, it's easy for customers to switch to rival companies. The performance of rivalry. Better staff or customer services can also result in the switching of the customers or employees to the new place. Relative pricing experience is almost same, one is catering into hence further discounting & promoting will result in more financial losses.

  • 4.   Bargaining power of buyers- The similarity of the product. There are no clear distinguishing product highlights as same are providing same types of products. Low switching costs. Tough competition since a number of airlines operating is already at low costs. Moderate Portion of buyers expands on the airline. Bargaining & negotiation of prices is tough. Customers have access to market information. Since everything is available online & information technology is quite uniformly integrated hence everything these days is transparent to customers. The concentration of Buyer's power in many hands. Buyers have a high bargaining & negotiation powers. 

  • 5.   Bargaining Power of Suppliers- Supplier concentration is few & great scope of power to negotiate. The scope is limited to the only operation such as Boeing or Airbus. Fuel, training or merchandise all are limited available. High Switching Cost. Replacing the fleet, airlines or replacing even the staff, pilot etc is tough.

Porter Value Chain.
 
Legend
CRS        : Computer Reservation System
FSS        : Flight Scheduling System
YMS      : Yield Management System
DBM      : Database Marketing
IS            : Internet Sales
CC          : Call Center
 
Above figure shows Porter Value Chain
Diversified opportunity in the low-cost barriers. Opening up of the personal fleet has helped in increasing the efficiency to scale & get low-cost operations. Trained pilots & staff, customer services, well-equipped a ground staff. Aggressive market campaigning leads to the better penetration of the market. Incase of delays or lags, customers are duly reported to avoid any chaos & confusions. For complaints or grievances, its customer service can handle it sensitively & carefully.

PESTLE Analysis for Air Asia

  • Political: Set up in Southeast Asia it’s difficult to have expanded through joint ventures or mergers due to the formation of the cartel. The threat of terrorism is always prevalent & security services needs to be toughened.

  • Economic: Strong competition in between the market & there is always economic volatility globally impacting AirAsia Airlines. Bilateral agreements are tough to break & crack a deal. Due to the currency fluctuations, global changed reforms it impacts the operational cost & Oil prices is another regulatory factor for this type of airline. If oil prices go high, it is very difficult to control the cost of operation.

  • Social: Passengers are reluctant to board a no-frills airline for a long-haul flight. Demographics, population rise, preferences for short routes have always favored the airlines. The outbreak of the epidemic diseases has resulted in fewer people traveling for leisure activities & has resulted in the drops. Joining hand with AirAsia, which thinks of the customer, staff safety has also avoided such affected routes & by thinking of safety first. Since globally customers have a sizeable contribution in the internet space & covering more of online services to better provide the enhanced services at a reduced TAT. AirAsia has also an app that provides the services at readily available such as Go Holiday It has bought more fuel-efficient & environment-friendly airlines which cause less pollution & provides better coverage.

  • Technology: It has the latest technology & always upgrades itself to the latest new techniques. Integration & mixing with the new technology helps in exploring low operating cases & enjoying economies of scale.

  • Legal: It's always bounded to have a legal obligation & follows ethics, rules of conduct with proper rules & procedures.

  • Environment: More fuel-efficient carriers are introduced which has helped in being environment-friendly & cost-effective.

Marketing Plan

  • Cost advantages activities: It has integrated with low costs & taken advantage of this. Using one type of Airline service has also helped AirAsia to inbuilt the low maintenance, fuel-efficient & helped in building the value brand. Cost-effective in terms of building and marketing, campaigning & generating high revenues at a reduced cost. All the staff, pilots, customer service employees, ground staffs, cabin crew, etc are academy-trained, to handle all types of situations & their main focus always remains to make customers happy.

  • Target Market: It targets low- income customers & tourists globally. It has a regional office in Malaysia & globally it is expanding by setting up its fleets in various countries. It focuses on providing a smooth journey for transiting passengers. Kuala Lumpur is operating a hub, a crucial connecting point between Europe and Asia/Australia.

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Proposed Strategy for AirAsia

  • Extending New Routes: Including new unexplored terrestrial routes & providing more facilities. More routes & more flights will add more to the customer database.  New travel points will help in catering to more customer needs.

  • Activities related to this strategy: Marketing research Feasibility Study & finding a strategic partner to explore more. Binding contracts or tie-ups with the hotels at a new location. Marketing new flights & inbuilt designed new routes.

  • Timeframe and cost: Time is short & planning a new place to invest in a fleet or buying a new airline needs to be cost-effective (Gokce, 2014).

  • Organizational change: Recruiting new employees, Training them to satisfy customers. Opening in new locations fleets or destination regional offices.

  • Evaluation criteria: Judging the pros & cons, analyzing the cost-effective strategy & valuing a brand should be evaluated on the proper grounds. Private Suite for the business customer: High quality should always be integrated with the diversified products & services. The customers’ should have a satisfying experience & hence should focus on this.

  • Activities related to this strategy: Technical and feasibility Study Allocated budget, Contract with a company to install new facility & installation of aircraft's onboard facilities

  • Timeframe and cost: Introducing a new airline or craft or fleet requires time to operate & fully integrate into the system.

  • Organizational change: Employees or staff should be able to handle crises situations like terrorism etc. New binding contracts with new partners.

  • Evaluation criteria: Per unit sold it needs to be quantifiable.

Conclusion

By evaluating & doing an in-depth analysis like  PESTLE, SWOT and, PORTER, Value chain, and marketing analysis, It could be concluded the way AirAsia has been growing & developing it has strategized, positioned well in the market. Having loyal customers is a treat but to every time sustain their expectations is always a task which should be done through with efficient TAT. AirAsia should rethink about its core competencies. AirAsia should diversify more, have more products, services, merchandise & promote on a larger scale. In this manner, it will be able to expand more & spread its wings. Partnering & investing in more airlines, fleets will help in the expansion plan of AirAsia globally. To remain a leader it should also develop another strategy to stand a class apart from its competitors (Daniels, 2006). By integrating & partnering with the low-cost technology it will be able to expand on a larger scale globally & would be able to reap efficient economies of scale.

References

  • Daniels, J. D. & Radebaugh, L. H. (2006), International Business 'Environments and Operations, 8th edition, Addison-Wesley, USA.

  • Gokce, B., Guney, S. and Katrina, A., 2014. Do doctors' perception of hospital leadership style and organizational culture influence their organizational commitment?. Social Behavior and Personality: an international journal, 42(9), pp.1549-1561.

  • Kamisan, A.P., and King, B.E., 2013. Transactional and transformational leadership: A comparative study of the difference between Tony Fernandes (AirAsia) and Idris Jala (Malaysia Airlines) leadership styles from 2005-2009. International Journal of Business and Management, 8(24), p.107.

  • Musa, M.A., and Ismail, S.E., 2011. Governance Structure and the Creativity and Innovation Process. International Journal of Interdisciplinary Social Sciences, 6(1).

  • Ng, H.S., Kee, M.H.D. and Brannan, M., 2011, October. The role of key intangible performance indicators for organizational success. In Proceedings of the 8th International Conference on Intellectual Capital, Knowledge Management and Organisational Learning.

  • Ricart, J.E. and Wang, D., 2005. Now Everyone Can Fly Air Asia. Asian Journal of Management Cases, 2(2), pp.231-255.

  • Samovar, L.A., Porter, R.E., McDaniel, E.R. and Roy, C.S., 2015. Communication between cultures. Nelson Education.

  • Shuk-Ching Poon, T. and Waring, P., 2010. The lowest of low-cost carriers: the case of AirAsia. The International Journal of Human Resource Management, 21(2), pp.197-213.

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