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1.0 Introduction AirAsia originally was founded by government and on 2 December 2001 was bought by Tony Fernandes. AirAsia was established in year 1993. AirAsia has travel around the earth and ascend to become the worlds best in year 2001. AirAsia continues to spread out the way for low-cost aviation through the innovation, efficient and passionate approach to business with a route a network that extent through over 20 countries. There are some companies which link with AirAsia such as AirAsia X, Thai AirAsia, Philippines AirAsia Inc., AirAsia Japan and Indonesia. In addition, for the vision part in AirAsia, AirAsia aims to be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares. While for the mission of AirAsia, AirAsia wants to be the best airline company to work whereby employees are treated as part of the big family. Besides, AirAsia try to maintain the lowest cost hence everyone can fly with AirAsia. Highest quality product, embracing technology to lower the cost and improvement in service levels will be maintained by the AirAsia airline also. Lastly, create a globally recognized ASEAN brand will be the mission part of AirAsia. In the values part, AirAsia will implement trough the following key strategies which are: Safety Low fare, no frills Lean distribution system Point to point network High aircraft utilization Streamline operation

The loyalty programmed of AirAsia will be BIG. BIG was known as the kind global programmed where can earn BIG Points to redeem free airline flight. Members can enjoy the preference booking, special offers and discount as an AirAsia BIG dedication member in term and condition apply. (AirAsia, 2013)

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2.0 Strategic Analysis Strategy analysis was known as the process of developing strategy for business by searching the business and environment in which it operates. (BusinessDictionary, 2013) 2.1 PEST analysis PEST will be the type of situation analysis in political, economic, socio-cultural and technological factors are investigate to chart of an organizations long-term plans. (BusinessDictionary, 2013) In the political part, AirAsia found that it is difficult to fly outside the Malaysia. Double-sided agreement will be the main barriers in the way of low cost carriers. The landing charges will also be another big factor which influence on costing of low fare airlines. Besides, the low cost airline industry which situated in South East Asia has been underdeveloped just because the aviation market is tightly adjusted by bilateral air rights contract. While in the economic part, AirAsia airline offers the low-cost carriers by providing inexpensive ticket and few in flight services. These may help in obtaining the attraction in the district despite having the strong competition from MAS (Malaysia Airline). For the current depression will hit on the aviation business. With the slow down economy, more people will want to buy the cheap tickets and enjoy the flight. Besides, the prices of the oil may be another factor for the airlines. It is difficult to control the operations cost once the pri ce of the oil increasing. For the social part, passengers are not willing to take the expensive airline for a longhaul flight. To help for the worlds population increasing, the numbers of tourist and educated person are needed as help for increasing the growth of aviation industry. SARS had scare people to fly over. Safety First was committed by the AirAsia, implement with all regulatory institutions, set and maintain constantly high standards and the last will be guarantee the security of staff and guests.

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While in the technology part, AirAsia provides the online service which can combines the air ticketing with hotel bookings, car hire and travel insurance. AirAsia had pushed the internet booking services in order to keep costs in check. Besides, AirAsia also introducing the GO holiday, the online programmed where consumers can book the holiday package online in real time. With the airbus A320, there will be better performance and reliability as help in proving the fuel efficiency and extra capacity. (UK Essay, 2013) 2.2 Porter 5 forces Porter 5 forces are a model which used by the company for industry analysis and corporate strategy development. This 5 forces include supplier strength, competition, customer power, the potential for new companies join the industry and threat of substitute products (BusinessDictionary, 2013)

Figure 1: Porter 5 Forces diagram

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2.2.1

Bargaining power of customers

Bargaining of buyers will be the ability of customers to put the firm under pressure. (Wikipedia, 2013) There are 2 types of buyer power which are customers price sensitivity and negotiating power. The Revenue Management System was the only system which used by AirAsia. This system had made the airline understands, anticipates, and react to the behavior of customer to maximize income from organization. This takes account into the operating costs and AirAsia has to optimize prices and distribute amount to maximize the expected income. Seat and route will be the 2 levels which optimize to be done in AirAsia. Seats are available at various prices in different points of time. Reservation will be charged once consumer changed the previous booking time to the earlier or late after the days. While for the route, it can be done by adjusting the prices for destinations that have higher demand when compare with others. Combination of these 2 levels for all flight will be the best effective method. (UK Essay, 2013) 2.2.2 Bargaining power of suppliers

Bargaining power of supplier can describe as market of input. Supplier can be a source of power over the firm. (Wikipedia, 2013) To overcome the problems of bargaining power of suppliers, AirAsia has opted for the full fledged ERP system in year 2005. By implementing the package, AirAsia is looking into well retain process incorruptness, reduce financial month-end closing processing times, and speed up reporting and data restoration processes. For the aircraft supplier, the power of supplier will be strong. Other supplier like food supplier and fuel supplier, the supply will base on the market condition. Prices could not be increasing too much as this may become the risk for the long term business. The second problem will be the high switching costs. Most of the AirAsias aircraft are Airbus models. Besides, the technology which used by the Airbus is the most progressive if compared with the previous Boeing model. This is why bargaining power of suppliers is strong. (UK Essay, 2013)

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2.2.3

Threat of new entrants

Threat of new entrance can be the profitable market that give high return and attract the new firms. (Wikipedia, 2013) There is a high barrier entering the airline industry since they postulate high resource to set up everything such as purchase or rent the aircraft, set up office, hire the new employees and etc. this may help in reducing the threat to AirAsia. Brand awareness will be important for industry. To enter the industry is not only ask for the high capital and at the same times create the brand awareness. Consumers will just choose the products and services which they most trust on. Brand loyalty can help in reducing threat to AirAsia too. Leading role and favorable brand awareness had made to become a first choice among the competition. (UK Essay, 2013) 2.2.4 Threat of substitutes

Threat of substitute will be the existence of products outside the area of the common products boundaries increases the propensity of customers to switch alternatives. (Wikipedia, 2013) For the substitute products of AirAsia will be train, busses and cruise. But, busses and cruises are not viable due to the geographical factor. Besides, business travelers telecommunication and video conferencing was also seen as the substitute. Cisco Webex offers unlimited meeting as low as USD 19 per month and the substitute is moderate. 2.2.5 Rivalry among existing competitors

For most industries, the intensively of competitive rivalry is the major stator of competitiveness of industry. (Wikipedia, 2013) The main competitors of AirAsia will be MAS and Firefly. Through the agreement in August 2011 between AirAsia and MAS, Firefly will be full abroad airline and MAS will focus on the strength and not directly compete with AirAsia.

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2.3 Value Chain Value chain will be the activities that convert input into output which add into bottom line and help to create competitive advantage. (BusinessDictionary, 2013) value chain can divide into primary activities and supportive activities 2.3.1 Primary activities

Primary activities in Porters value chains are as follows: Inbound logistics Inbound logistics includes few types of categories in airline industry such as how to progress flights, keep eye on competitors and how to get the lowest price as the control fuel efficiency by purchasing the advance when price is low. And last will be plan routes. Outbound logistics AirAsia mostly use the operation through online and customers can get their tickets by online booking. Customers can print out boarding tickets at homes. Besides, AirAsia uses general electric engine for the customer safety as customers are the priority of company. Sales & Marketing AirAsia has the strong brand name and marketing have significant collision on any organization sales. Hence, AirAsia sponsors The amazing race and mu football club. AirAsia paints some aircraft with club color and sports star, and Tony Fernandes wears AirAsia official red cap and T-shirt in every official events. Services AirAsia provides different t type of services to customers such as delay flights more than 3 hours then US$ 61 e-gift will be given. Customers can also pre-book the checked baggage in lower rate. Online booking hotels rent a car and medical services also being provided by AirAsia.

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2.3.2

Supportive activities

The supportive activities is took keep business clean and operational. There are: Firm infrastructure AirAsia has advances from a classic lcc into integrated service provider. AirAsia focuses on goals, provides cheap fare and explores the new markets. The decision making process is simple. Human Resource Management AirAsia hires the competent workers and assign multi-skilled people so that AirAsia can overcome the price in term of HR. this can sustain company mission and recompense employees in term of performance. Technology department AirAsia uses many types of technology to minimize cost and makes operation easier and efficient. AirAsia uses YMS which takes into account the operating cost and envisaged revenues. Besides, CRS used by AirAsia for web-based reservation and inventory system as CRS is a direct sale engine. ERP was implemented by AirAsia as helps for time saving and speed up reporting and data restoration processes 2.4 SWOT Analysis SWOT analysis will be a tool to identify strength, weakness, opportunities and threat of an organizational. This can be internal and external. (Investopedia,n.d.) For the strength part, AirAsia has maintained the low operational and maintenance cost by changing the type of Airbus from Boeing 737 to A 320. Besides, AirAsia having the low operating cost due to the online reservation system, no frill, quick checked in and etc. There is huge untapped market in district, especially for business travelers and segment of for-the-first-time-flying. And the last benefit of AirAsia will be the low cost airline.

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While for the weakness part, AirAsia having the huge investments to acquire airplanes and executing the latest technologies there is high amount of the operating cost. Besides, the fight time for the AirAsia is more or less limited to 2.5 hours and could not operate flights of longer duration without any frill. No Frill becomes impossible to implement for passengers. While comparison with MAS, MAS will be the full service airline where AirAsia is a no frills airline. Besides, MAS flights depart and arrive at KLIA but AIRASIA just depart and arrive at LCCT. In addition, MAS offers the higher luggage allowance but AirAsia just offer not more than 15kg luggage allowance. Foods are not serving in AirAsia but MAS has the offering the foods and drinks for the passengers. For the opportunity part in AirAsia, AirAsia should offer low fares which encourage people from all walks of life style to fly. Moreover, Airbus A320 should stimulate superior amount of passengers. Offering the comfortable services for every consumer might be one of the opportunities also. AirAsia might introduce the SMS booking which allows the customers to book their seats at anytime and anywhere. With the acceptance in warranty the security of stuff and customers, customer will have more confident and trust to flight via AirAsia. And the last will be the threats. For the threat, there is no more no-frills airline in AirAsia in order to meet numbers of customer demand increasing following with the success story of Malaysias budget carrier AirAsia. Singapore airlines plan to develop a budget carrier once Singapore airlines see the success of AirAsia. This can be the big market and opportunity in Asia. Furthermore, passengers would not choose AirAsia if passengers need to travel the long distance flight. Passengers would choose for the MAS or SIA which provide the better services.

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3.0 Strategy Formulation Strategy formulation is the process of choosing the most suitable course of actions for the realization of organizational goal and objectives. The process of strategy formulation normally involves 6 steps which are: Setting organization objectives Evaluate the environment of organization Setting quantitative target Aiming with divisional plans Performance analysis Choice of strategy

(Management Study Guide, 2009) 3.1 Business level

Figure 2: Porters generic strategies diagram

From the diagram above, it will become the simple way to let consumer know about the Porter generic strategies and how its apply in AirAsia airline transportation. Aligned with the mission statement, the business strategy of AirAsia is more focus on leadership. Nevertheless, AirAsia business strategies focus on specific market especially for customers who sensitive in pricing.

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AirAsia provides the services at the price which is lower than other competitors. This helps to builds and inherits the competitive advantage. Besides, there are 2 main characteristics of low cost businesses which including in AirAsia are outstanding efficiency and operation effectiveness. The objective of AirAsia is to achieve bigger cost advantages than the adversary by continuously looking for cost reduction along the value chain. Through the value chain analysis, people can determine how AirAsia creates cost benefits. The cost advantages comprise AirAsias older winner in competing with the opponents as competitors enable AirAsia to provide the lowest possible price to the sensitive price to attract the consumers. Cost can be the competitive preference and determines the market position in LCC industry. (Viknesh Rajandran, 2012)

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3.2 Portfolio analysis Portfolio analysis is a method of categorizing the product according to the relative competitive position and growth rate in order to lay foudations for strategic planning. (BusinessDictionary, 2013)

Figure 3: BGC matrix The star will shows about the high growth and high market shares. Starts will be diametric opposite of dogs. Starts generate the maximum profitability and involve the strong marketing and branding. In AirAsia, Kl-Penang and Kl-JB will be the 2 most domestic routes. These had achieved the percentages of 98 sold out rates. Besides, AirAsia provides the highest profit margin of almost 90%.For the recommendation, AirAsia may use the position to further the strength its dominance. This dominance can be done by providing additional service counter to serve the path. Airasia can offer the excellent service and best deals to the passengers. To fascinate new passengers, AirAsia can increase the baggage limits.

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Question marks will be high growth and low market shares. Question marks show the low market share but operate in high growth market. Question marks have the potential to become start if the companies have sufficient cash to pumped into or else fizzle out into dogs. In AirAsia, Kl-Gold Coast will be the most promising destination. This will be the cheap solution for the long haul flight to European. The airport tax is lower in Coolanggata Airport. Hence, this helps AirAsia to reduce the price. Furthermore, AirAsia has added the flight frequencies from once daily to thrice daily. Currently, this is one of the most highly sought routes. For the recommendation, AirAsia can use the available resources and capital to increase the frequency of this route. This can be the huge potential to return higher profitability. Cash cows will be high market shares in a mature market with little or no growth. Cash cows involve high revenue generators. In this part, this should focus less on advertising and more on customer retention. In AirAsia, the growth is sluggish but never ended for the demanding in Kl-Singapore route. This can be high tax and administrative cost. The narrowest compares to other routes will the profit margin. And, in cash cows, there can be highly competitive. In the recommendation part, AirAsia just needs to focus on the core services for ensuring theres no flight delay or other collision. Investment for promotion should be reducing as people nowadays had recognized the brand of AirAsia. Dogs will be the low growth and low market shares. The market itself is not growing. There is strong cause for the existing market. This can be the high liabilities as the company needs more money. In AirAsia, KL-London route is the lease profitable route. To support this route, AirAsia had lost Malaysian 20 million per year. Business travelers prefer the full service airline due to the long haul flight. Casual travelers opted for MAS economy class as travelers can enjoy the excess baggage benefits, flight meal and entertainment. Due to this reason, AirAsia decided to cancel this route started on January 2012.

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3.3 International level 3.3.1 Types of international strategy

Multinational strategy focuses on the local responsiveness. This type of advantage approach on the firm can quickly respond to different regional needs and opportunities. This strategy can help in reducing the communications needs as the local subsidiaries can make many resolutions. Global strategies emphasize quickness as there is strong central control from headquarters. Economics are come from standard product design and global manufacturing. Wide communications and control system is necessary to manage global firm. For the international strategy is similar to multinational strategy. But, the subsidiaries are very subordinate on headquarters for the new process and products. Pharmaceuticals Company will be the good example. And, the local subsidiaries underline the product approval by government and marketing. In this transnational strategy, company willing to do everything! Company will seek global efficiency while maintaining local reacting. Company combines the global activities through cooperation among headquarters and foreign same time as can obtain the benefit of global integration, efficiency and innovation. 3.3.2 Entry model strategy 3.3.2.1 Exporting Exporting will be the oversea sales in which supplier controls all activities and collect all drawbacks. (BusinessDictionary, 2013) AirAsia performs the activities on shippers behalf in order to provide services to shipper: 1. Complete the document, revise product or service codes and pay duties or taxes under applicable laws and regulations. 2. AirAsia acts as act as shipper's forwarding agent for consumers and export control purposes. 3. AirAsia redirect the shipment to receiver's address upon request by sender. (AirAsia,2013)
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3.3.2.2 Joint venture Joint venture will be the new firm formed to achieve specific objectives of partnership like temporary arrangement between two or more form. (BusinessDictionary, 2013) Through the star newspaper on June 2011, AirAsia is targeting to set up 3 more joint ventures to grow the adjuvant income and also in the midst of finalizing an agreement which will announce on Thursday to buy nearly 200 aircraft which cost US$ 18 billion which need to fuel growth from 2015 onwards. From the words of chief executive officer Tan Sri Tony Fernandes, the low cost airlines ancillary income will increase to RM50 per person in first 3 months versus RM38 previous relevant years. While in year 2012, Tony Fernandes will increase RM50 to RM 60 again. Besides, Tony also mentioned that was the first joint venture that will offer training for airlines throughout Asia when at the JV signing ceremony. Moreover, AirAsia has set up the bases in Thailand, Indonesia, the Philippines, and Vietnam. And, Singapore will be the next target. In addition, AirAsia joint venture in Philiphines is set to take off by October when JV airline begin playing the Clark-Singapore, Clark-Hong Kong and Clark-Macau routes. JV in Vietnam also will be take off even airline needs more aircraft in Thailand, Indonesia and Malaysia. (B.K. Sidhu, 2013)

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4.0 Strategic implementation Strategic implementation is the activity which performed according to the plan in order to achieve an overall goal. (BusinessDictionary, 2013) 4.1 Organization structure Organizational structure cares with the division of labor and coordination of task. There are few types of organizational structure in term of how well the structures satisfy the trade between specialization and coordination. The simple or entrepreneurial structure exists when the owner is also the manager. The organizational structure major strengths will be vision and flexibility. And, the increasing specialization functional needs to bring in by manager. For the functional structure, jobs or tasks are group together according to functional specialization. This structure can promote through division of labor and allow individuals to exploit inimitable abilities. But, the one disadvantage will be each department focus more on own department more than organizational goal. While the division, this structure focuses on the decision making and can be organize according the products and services market or geographical areas. The advantage of division structure will be higher level of motivation and innovation while the disadvantages will be resource allocation based on short-term contribution. For the matrix structure, matrix structures helps in increasing the organizational flexibility and meet the needs of environment changing rapidly. This can aim for the benefits increasing of functional specialism while improving the coordination functions. And the last will be network structure. In this structure involves formation of outsourced activities confine by central hub and this structure useful for the unpredictable environment such as fashion industry. The advantage of network structure is flexibility and allows quick responses to changes in market place.

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Below will be the divisional chart for AirAsia Company.

Figure 4: AirAsia divisional chart From the divisional chart of Air Asia, there will be 12 departments in AirAsia organization. Every department will be in charge by the head of the department. The departments will be categories into countries, quality and safety, engineering, information technology, commercial, communication, operation, bus dev, finance and the last will be secretary. With the divisional chart, AirAsia will be easy to operates and achieve the goal and compete with other competitors.

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4.1 Leadership Leadership will be the activity of guiding a group of people or an organization to achieve the goals. Leader will provide the clear information, knowledge and method to the group of members until the vision had been achieved. On 24 March 2009, Tony Fernandes mentioned that there is nothing more powerful that inspirational leadership that unleashes principled behavior for a great cause. To makes a company or government supportable, employees and citizens are impelled by the values and principles to do the right things no matter how arduous the situation. Law will tell people what to do and values will affect people what should do. And, thats the leaders job. Emotional intelligence will be part of the leadership. The components of emotional intelligence which can link into AirAsia will be motivation. Tony Fernandes keeps motivate his employees by encourage employees to pressure the passions. AirAsia works hard for creating the environment which can learn, grow and do what turns them on. Besides, employees in AirAsia should be clear about the AirAsia mission which is Now Everyone Can Fly. 4.2 Corporate governance Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administrated or controlled. Corporate governance also involves the relationship among stakeholders and the goal for which corporation is governed. 4.2.1 Importance of stakeholders

Stakeholders are those individuals or groups that affect or being affected by an organizations action. Stakeholders can be: Customers Suppliers Governments
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Local community Shareholders

Stakeholders can divide into 2 categories which is internal and external. Some stakeholders can be more powerful or interested compare with others. While for the stakeholders who are both interested and powerful will be the one who needs to be satisfied at first. Stakeholders are important in an organization as stakeholders provide the feedback to the companys performance and make the company to improve better and achieve the goal. In AirAsia, the stakeholders are customers, employees, shareholder and government. With the helping of stakeholders, AirAsia inclines to create profits by enlarging business reach Asia. Besides, AirAsia also expands routes and networks through cautious calculated manner. Moreover, AirAsia invents and increase the brand population in order to pull up the numbers of investors return. 5.0 Conclusion AirAsia will be the best airline company as having the cheapest price tickets and letting everyone can fly around the world. To make the company become better and better, AirAsia was recommended to provide more choices of foods and drinks in order to reach the satisfaction of passengers. In addition, AirAsia can think of giving extra luggage allowance to 25 Kg to the passengers. A good leadership style can be affecting the entire company and employees to become motivate and innovate. With the motivation and innovation, consumers believe that AirAsia can be the successful airline company.

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