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Global Business Strategy: Air Asia Case Study

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Introduction of Global Business Strategy: Air Asia Case Study

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The best strategic actions for the organization

AirAsia is the leading aviation company, which expands its business all over the world and provides airline-operating facilities. The organization also provides domestic and international flight facilities along with air cargo facilities. In 1993, a government-owned corporation DRB-HICOM set up AirAsia in Kuala Lumpur in Malaysia that has expanded its business over the years and in the current situation, the organization is one of the leading global aviation organizations (Saura et al. 2019).

The present CEO of AirAsia is Tony Fernandes and it deals with more than 21050 employees all over the world. During the pandemic situation, AirAsia has faced a huge business loss due to strict lockdown across the world. In the pandemic situation, the organization has reduced its workforce resources by deducting more than 5000 employees (Saura et al. 2019). The annual revenue will decrease to 3.13 million Malaysian ringgit as per the recent report.

Organization

Financial attributes

2019

2020

2021

AirAsia

Total revenue (Billion Malaysian Ringgit)

11.86

3.13

9.12

Net profit (BMR)

203

-5888

102

Dividend per share

23.6p

8.3p

34.12p

Table 1: Financial report in context to Airasia

(Source: Setiawanet al. 2021)

The financial transaction is one of the vital aspects of the corporate strategy that serves to be beneficial in stimulating organizational progression and productivity. AirAsia has suffered from multiple issues due to business strategy of the organization was not at all prominent for different stores in different regions (HU and XIANG, 2019). In the case of promotional strategy, the organization can take the innovative digital media promotional strategy by social campaigning that builds community awareness about the brand or products like creating and that provides a valued customer feeling that guides to engage more customers with the organization. (Kimand Ma, 2019). However, it is highly essential for the organization to rely upon innovative strategies to conduct its business operation for smooth business functioning. Expanding the consumer base is one of the vital strategies that can help organizations boost their financial productivity (Silvano, 2020). The organization will get more trustworthy as well as customer loyalty for that king of strategy that fulfills their requirements and makes its service quality safe and secure. Furthermore, implementation of this technology can enhance their sales along with their business performances by increasing their customer volume.

Strategic audit of AirAsia’s financial and business performances

A strategic audit is very important with the gap of a particular period that guides to recognize the management team of the organization if their organization will proceed in the right way. Apart from that, the strategic audit can also help to identify the business growth as well as actual profit or loss of the organization.

Resource audit

Financial Resource

? Net worth 12.3 billion

? Total asset 45.12 billion

? Per day revenue 11.5 to 16.20 billion

? Net property 1234.12 billion

Human resource

? In the Asia the approximate employee number is 4500 people

? In the global structure is 21050 people

Technical resource

? Maximization of information technology in the implementation of E-commerce business challenges

? AirAsia provides E-ticketing facilities and virtual communication with the organization authorities.

Table 2: Resource audit of AirAsia

(Source: airasia, 2022)

In context to workforce resources, the AirAsia is currently performing their performances with the approximately employee number is 4500 people only in Asia. In terms of the global level, the organization is dealing with more than 21050 people are working in this organization (Kalam, 2020). The strategic action will guide the organization to build the foundation stranger as well as accelerate the business growth. Different commercial promotional programs and creative transformation in the business policies will be helpful for re-energize the brand value of the organization (Sequeira, 2020). Digital presentation show arrangement as well as hallmark shopping facility provides a positive effect to the organization.

In the current situation, the organization runs its business with more than 12.3 billion in terms of net worth and the total asset of the organization is 45.12 billion which was increased from 39.12 in 2019. During the pandemic situation due to the outbreak of coronavirus the organization has faced a great financial loss as the business performance was almost stopped from early 2020 to the end of 2020 (Saura et al. 2019). In context to workforce resources, AirAsia is currently performing their performances with the approximately employee number is 4500 people only in Asia. In terms of the global level, the organization is dealing with more than 21050 people working in this organization (Kalam, 2020). From mid-2021, AirAsia has regained the business as the government allows normalizing the transport system.

Value chain analysis of AirAsia

Figure 2: Value chain analysis of AirAsia

(Source: Bae, 2019)

There are two types of activities primary activities, which consist of inbound logistics, business operations, marketing, and sales activities as well as customer service quality. The support activities include organizational infrastructure, human resource management, technical development as well as procurement of the organization. The value chain analysis guides the organization to monitor the business growth as well as the business productivity. According to Saura et al. (2019), in 2020, the chosen organization has faced a huge profit loss as limited customers were willing to get the aviation facilities.

The financial performance of AirAsia was decreased to around 65.5% and by the end of 2020, the organization has slightly improved their business revenue to $1200 million from $561.8 million (Kotane et al. 2019). During the pandemic situation, the organization has taken different business strategies in terms of organizational infrastructure and technological development. E-ticketing facilities are one of the most important technological strategies that uplift the business growth of the organization to around 23.4% (Kotane et al. 2019). Apart from that, safe and secure passenger transfer facilities attract the customers greatly and that has a positive impact on the revenue regain process.

Swot Analysis of Air Asia Aviation Company

Strength

Weakness

  • Consistent positioning maintained by Airasia
  • Innovative consumer services
  • Increased fuel cost
  • Challenges faced by Airasia in balancing pricing with service quality

Opportunity

Threats

  • Increased overseas travel
  • In festive season Airasia gaining extreme amounts of profit. 
  • Increased competition in the entire global market. 
  • Difficulty in cost management

Table 3: SWOT Analysis

(Source: AirAsia, 2022)

Analysis

It is highly essential for the organization to analyze the strengths possessed by the organization for fulfilling organizational goals while at the same time focusing on turning its weakness into strength. The Air Asia aviation company’s low costing air ticket is beneficial for all the common passengers. In the festive session most of people primarily travel in those cities, and that is the reason this aviation company is gaining a huge amount of profit. Airasia finding it difficult to manage the low fuel cost and maintain the vast fleet oriented aircraft. Furthermore, increased threat from competitors affects organization’s operation. Thus it is crucial for the organization to focus on implementing innovative strategies for meeting corporate objectives at the earliest.

Analysis and explanations with justifications of the strategic actions of AirAsia

AirAsia is much upgraded due to its innovative as well as attractive business strategy that affects its business productivity. Effective strategic action guides a business organization for clear guidance about sustainability enhancement as well as increasing their business revenue. The strategic activities of a business organization guide prioritizing the goals, maximizing the organizational resources as well as making a better decision-making process for the management team (HONG, 2021). AirAsia has taken some innovative business strategy that guides it to increase its financial performance as well as enhance its customer volume that affects its business productivity as well. In the previous three years, the financial performance was not too satisfactory and the revenue collection ratio was not so good so the effective strategic action guides to resolve all the issues of the organization and increase its sustainability in the competitive global market.

Targeting Broader demographics

In the context of communicational strategy, the organization mainly focuses on the younger generation making their promotional strategy and the distribution strategy will become narrow that affecting the financial process as well as the business performance of the organization. In 2021, the annual revenue was not also good for the organization because of their irrelevant.In the year 2020; the financial performance was greatly deteriorated by more than 23% from the previous year (Kumar et al. 2021). AirAsia mainly focuses on the corporate sections that refer to the high ticket prices and excellent passenger’s facility with luxury accommodations for its passengers. According to Cruz Rivera et al. (2021), during and after the pandemic situation the organization has shifted their focus on the broader demographic. After the huge loss in 2020, the chosen organization has reduced its ticket price and made it affordable for the working class as well. After the implementation of this business strategy, the revenue collection ratio increased by more than 14.23% (Darmaand Noviana, 2020). The passenger volume of the organization is also enhanced by 9.4% from the previous situation.

 Strategic action of AirAsia

(Source:Bae, 2019)

In this case, the organization will focus on the different age groups rather than focusing on a specific age group then the organization will gain more customers that affect its trustworthiness and the loyalty of the customer. As per the point of view of Kasanagottu and Bhattacharya (2018), by targeting a broader demographic the organization can increase its sales volume and productivity. Apart from that, the business organization of the global fashion industry has not made any particular product strategy for a specific region and that affect the customer more reluctant about this organization. Apart from that, broader demography guides the organization to better understand the requirements of the global customer as well as be aware of the current trend in the global fashion industry. In the pandemic situation, all the customers of different regions of the world become more concerned about their health and hygiene and for that purpose, most global organizations have taken different distribution strategies that increased the customer service system. Thus, in order to gain a considerable success all over the world. Around 50% of customers only from the international aviation industry initiatively consider the concerned brand as a quality based premium brand

 The financial performance of AirAsia

(Source:Kumaret al. 2021)

According to research, it is disclosed that during the fiscal year 2019 to 2020 the business performance of AirAsia was almost stopped and in that period the revenue collection structure of AirAsia was around $500k each month. By the end of 2020, the business performance becomes normalized as the customers were returned to get the flight service facilities (airasia 2022). In 2020, the monthly revenue collection ratio was not more than $750k but at the beginning of 2021 the revenue collection ratio was gradually improved and during that period average monthly revenue collection structure was around 1 million.

Innovative digital marketing strategies

In the context of innovative digital marketing strategies, the organization was already started its promotional strategies that guide to increase customer volume that will have a positive impact on the financial performance. By making social media campaigning the organization can be aware of the customer of their new product, as well as the marketing team, can make a new digital media advertisement that guides to increase the awareness among the employees. As per the perception of HONG (2021), this particular organization will be more beneficial by making awareness about its product to its target customer as well as new regional market.

The innovative digital marketing strategies guide the organization in implementing different types of technological and marketing strategies to regain the business revenue collection. The e-ticketing strategy guides the organization to earn more than 12.4% revenue growth in the recent year. In 2020, the pricing cost of the organization has decreased with the focus shift of the corporate area to the working-class people. The organization has reduced the ticket booking complexity and mitigated its capabilities in terms of the leverage of innovative technologies (airasia, 2022). During the pandemic situation, the organization has implemented different technological facilities into their business process that improves the revenue collection process. “Carbon neutral operation” is an innovative business strategy that reduces carbon emissions in the environment. It is seen that more than 8.5% lower carbon dioxide is emitted from the flight, which improves the environmental situation.

The customer service quality was also increased greatly the organization mainly focuses on a safe and hygienic atmosphere that attracts the customers. Time efficiency is another business strategy that guides impede the customer volume as well as the business productivity (airasia 2022). After the implementation of this strategy, the ticket booking number has been increased by more than 5.1% as well as ticket cancellation ratio was also reduced. For that purpose, the organization used different software technology to communicate with the customer in terms of ticket booking, receiving and solving queries of the customers. A Wi-fi facility in the flight is another technological strategy that attracts the customer greatly.

Business strategic alliances and productive development

Isolation though electrical system guides to improve the customer service quality and enhance the safety within the flight. During the pandemic situation, AirAsia has maintained a safe environment and no contact with customer service so that the customer feels valued and for that, purpose separate isolated seat facilities have been provided so that every passenger was safe from others (Tao et al. 2019). Medical facilities are another strategy that was incorporated during the pandemic situation. For providing the medical facilities the organization recruit an efficient medical team within the flights for the emergency cases and the passengers feel safe during their journey. According to recent research, it is disclosed that more than 23.4% revenue collection ratio has been increased with the application of this strategy. On the other hand, the organization has changed the service quality with the alteration of the consumer behaviour as the mitigate the risk facts by technical implementation. Due to service quality improvement, the customer volume of AirAsia has increased by around 12.4% (Tao et al. 2019). Different types of software are incorporated into the business process of the organization that guides to resolve the accidents and emergency cases during flight journey.

Technological development guides to reduce the risk factors and increase the scope of management skills. The managing committee was more aware of the safety and security of customers after the pandemic situation. Apart from that, the software recognizes the potential risk factors as well as some situational emergency that guides to improve the service quality to earn customer loyalty and trustworthiness (Dianat et al. 2018). Apart from that, AirAsia has increased its inflight connectivity with the help of different software that guides to mitigate the situational challenges during flight journey. Apart from that, for the betterment of customer service quality, the chosen organization has implemented self-driving robots in the flights as well as in the airport (Dianat et al. 2018). The Self-driving robot facilities resolve the safety issues with no human contact to mitigate any type of medical emergency.

The suppliers as well as marketing management authority of the organization create different types of business performances initiatives that guides to obtain multiple opportunities to make a sustainable position in this. According to Pyper et al. (2020), AirAsia is creating the different strategic alliances along with correlation business bond with several business organizations for a large number of respective recognition in respect of the global and domestic market (Bahr et al. 2022). Besides strategic alliance, it is also crucial for AirAsia to emphasize reducing operational costs to enhance corporate productivity in the upcoming days. Automation of business procedures can help organizations track and monitor their financial performance in the current competitive setting and help them gain a competitive advantage. Strategic supply chain management and warehouse management on the other hand serves to be beneficial in stimulating organizational production. It is highly essential for the organization to focus on warehouses managed by percentage overstocking of goods and products. Implementation and usage of corporate resources for warehouse management can help organizations speed up their business operational activities. 

Innovation and Internationalization

The advanced technology and the global trends alter the business performance of AirAsia and that also has a great on their business productivity along with revenue collection ratio. In the last year, the organization has been able to collect RM6.8 billion as its annual revenue which was increased from the scenario of 2020. The annual revenue per staff is around RM325.1 k in 2021 (Dianat et al. 2018). The latest venture of the organization is “AirAsia Xpress” which was launched by the end of 2019 to overcome the pandemic situation. The new venture of AirAsia refers to rapid ticket booking facilities and excellent customer service with a safe and hygienic atmosphere.

Critical reflection

Effective management style in the current competitive ambience is crucial for conducting business operations. The current learning module has focused on analyzing the performance of AirAsiain the current competitive business setting while achieving corporate goals. AirAsia is a premium luxury brand in the UK, which has a worldwide base market presence. This global premium brand primarily conducts its business operation in the international market, which includes Europe, USA and Asia. (Verbeke, 2020). During the whole learning procedure, I have realized that the AirAsia brand primarily encountered the difficult marketing challenge and also limitations of the product that further affected their organizational progression.

In my opinion, AirAsia has improved and regenerated its business strategies with the situation so that the organization sustain in the global aviation industry. Apart from that, whilst completing the study I have learned that evaluation and analytical skills are very important that I need to improve. The statistical is very crucial for the business analysis of AirAsia guides to increase my numerical analytical skills, which will be very helpful for my future study. Besides completing the study, I have learned that about different innovative technology and their application process in the business process that guides me for future research work. 

According to me, it is highly essential for the corporate sectors to implement innovative leadership and management strategies for contributing toward organizational progression. It can primarily generate huge revenue in a yearly manner. Employees are crucial stakeholders within the organization. Thus, it is highly essential for the organizational head to focus on the provision of training and developmental opportunities for the employees for enhancing their skills. According to Supawan and Deebhijarn (2020), the analytical skills of the employees serve to be effective in eradicating the loopholes within the organizational procedures.

According to me the leadership quality, analytical skill of the business managers and marketing strategy of the company is the mainstream reason for increasing a particular brand's market value and annual incremental value. According to Jia, (2022), the luxurious the power of analytical skills guides to increase self-productivity. As per my viewpoints, the global substance and business strategy of the premium luxury brand are contributing to achieving product substances for enhancing and protecting human rights and tackling the current financial crisis of the company (McWilliam et al. 2020). In my opinion, business developmental opportunities provide enormous scope for stimulating economic progressions. According to Pyper and Doherty (2022), the international oriented commercial brand's stiff competition poses a serious threat to the execution of the business plan. However, as per my knowledge base context capturing the full scope of financial business developmental procedures requires the implementation of innovative strategies to meet corporate objectives.

Conclusion and recommendation

The study primarily focuses on the strategic planning and nature of the luxury AirAsia brand, however, the competitive environment and strategic capabilities are partially conducted in this particular article. The actual infringement of the commercial brands’ lowest trademark was initially symbolized by the nation called the UK is spending a huge amount of money to fight against the counterfeits. However, in order to primarily protect the international brand’s trademark from the additional counterfeits and financial crisis, the luxury brand manufacturing company should focus on utilizing its corporate resources in a more suitable way while keeping track of its financial performance.

  • As per the study, in the present global sustainability business market, it is very essential for an aviation organization to conduct strategic market analysis and appropriate differentiation strategies to achieve corporate goals. However, for running an internationalization business, the higher authority of the organization needs to develop their leadership approaches and customer relationship. A research and development team can be appointed by the organization that guides to increase the performances level of the management team that guides to focus on the maintaining a sustainability in the regional market. Apart from that, the organization can recruit a technical development team that guides to emphasize the innovative technical skills and implement those into the business process that guides to enhance the financial performances as well as business productivity of the organization.
  • Conduction of business operation after detailed market research can serve to be effective in stimulating organizational performance. It is considered important for a business to have highly trained professionals as it improves the business performance of an organization in the end basis. Furthermore, in the current digitalisation era, organizations should focus on using online marketing strategies to attract a large number of consumers.
  • The organization can recruit a technical team, which is responsibly to implement the innovative or advanced technology into the business process that guides to improve the customer service quality. Besides this, the technical team also provides a proper training to all the employees of the organization to beware of the new technological implementation and their application. Apart from that, the marketing team should make a proper market survey with the help of different innovative marketing tools for better understanding the actual requirements of the customers.
  • AirAsia can increase its communication skills with the stakeholders for further business progress. The organization has faced several challenging situations due to lower internal communication skills as well as the organizational culture is not satisfactory (Darmaand Noviana, 2020). For that purpose, the implementation of diversity and inclusive work culture mitigate the situational challenges of the organization. As the organization deals with different cultured people so inclusive work culture will enhance the communication level that affects the business productivity as well as employee retention rate.

 

References

Journals

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Ceasar, M.J., 2020. Conflict management: a win-win strategy for organisational effectiveness in the changing global business environment. International Journal of Scientific Research and Engineering Development3(4), pp.136-146. 

Ceil, C., 2018. Business Strategy for ShakeAway Ltd. Available at SSRN 3519770.

Chen, X., Cheng, S., Shu, R. and Yang, Y., 2021, September. Digital Marketing Transition for Luxury Industry Under the New Coronavirus Epidemic-The Case of AirAsia. In 2021 International Conference on Financial Management and Economic Transition (FMET 2021) (pp. 248-254). Atlantis Press.

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McWilliam, S.E., Kim, J.K., Mudambi, R. and Nielsen, B.B., 2020. Global value chain governance: Intersections with international business. Journal of World Business55(4), p.101067.

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Websites

AirAsia(2022). About the company, Available at: https://www.airasia.co.in/home [Accessed on 28th April]

AirAsia (2022). About the company, Available at: https://www.airasia.com/member/[Accessed on 28th April]

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