Macro-environment analysis
Macro environment refers to factors that relate to the firm but that are outside the control of the firm. Macro-environment analysis helps to pinpoint the threats and opportunities that a firm might be facing. The factors are political, economic, social-cultural, technological factors, legal factors, sustainability environment factors, demographic factors, and international factors (Sadler, 2003).
Political factor
Economic factor
Socio-cultural factor
Technological factor
Legal factor
Sustainable Environmental factor
International factor
Industry environment analysis
The threat of new entrants
Bargaining power of suppliers
Bargaining power of buyers
The intensity of industry rivalry
Power of substitutes
Internal Analysis
VRIO Test
Gap Analysis
Internal gap analysis-business strategy gaps
The trend which the answer is “mismatch” shows a gap in the management structure. Trends whose answer is “match” indicates a good internal performance with respect to external performance.
Industry environment business strategy gaps
Key competitor-business strategy gaps
Current Strategy
Air Asia’s current strategy has adopted information technology. This involves:
- Yield management system – this is to anticipate the behavior of customers in order to increase revenue. This is through various categories of seats that have different prices and through the route where the firm aims at reducing prices for routes with high demand.
- Computer Reservation System – a web-based inventory and reservation system that includes call center, internet, and airport control functionality. The system allows Air Asia to satisfy the needs of implementing a low-cost business model.
- Enterprise Resource Planning (ERP) – The firm has an ERP system powered by Microsoft Business Solution. The ERP enables the firm to maintain process integrity and reduce financial processing time.
Business Strategy
Air Asia’s business strategy was to have a low-cost airline.
Brand strategy
Air Asia is a brand for low-cost carriers. It targets people who want affordable travel rates, and it defines its business as low cost and no-frills airline. The company changed its logo recently to suit itself in the market and maintain its market niche. The tagline for Air Asia has broadly incorporated its brand extension.
Corporate Social Responsibility (CSR)
Air Asia upgraded their fleet as part of CSR to improve fuel efficiency; thus, they are environmentally friendly. The other CSR is that the firm was the first to initiate equal employment opportunities by becoming the first airline to employ a female pilot. Air Asia also helps people in times of natural disasters, such as when they collaborated with UNICEF to raise $128 Million to help people affected by the earthquake in Haiti. Therefore, CSR in Air Asia focuses on the development of skilled and responsible citizens, gender neutrality, and creating a meritocracy (Campbell, 2003).
International strategy
Air Asia’s international strategy is to offer international service. It started flying from Kuala Lumpur to Thai in January 2004, and in 2005, it flew to Indonesia. The firm also expects to fly to China and India. The firm has plans to fly to Bangkok, Kota Kinabalu, Guilin, and Shenzhen.
Competitive Strategy
Cost Leadership Strategy
Air Asia is one of the low-cost airlines in Asia in the aviation industry. The firm offers its services below those of competitors to gain a market share and improve its profits.
Differentiation Strategy
The firm has been able to differentiate its products by providing fares for various classes of passengers. It has also concentrated in the low market thus is able to provide its services easily. The value created because of low prices adds a premium to the firm.
Focus Strategy
The focus segment concentrates on low-income earners and people from all occupations.
Recommendation
The firm is recommended to start business operations on other continents since this will increase its revenue base. It is also recommended that, since the firm is an equal opportunity employee, it should employ more women in the pilot team to increase the number of females.
References
Campbell, D. (New York). Business Strategy: An Introduction. 2011: Palgrave MacMillan.
Sadler, P. (2003). Strategic Management. Chicago: Kogan Page Publishers.