How Air Asia Would Change Its Business Model in Its Effort to Expand Its Operations in the UK Market - Case Study Example

20 March Management: Paper Air Asia Berhad Air Asia Berhad is a Malaysian based organization that operates local and international flights. In its effort to attract large number of travelers, the company has embarked on provision of services that are cheap as compared to other airline companies in Asia. With it’s headquarter based at Kuala Lumpur International Airport, the company has effectively managed its operations that covers more than 25 countries. The company was established in 1993 by DRB-Hicom, a government owned cooperation. Due to the financial problems that faced the company in 2001, Tune Air Sdn Bhd Company bought Air Asia thus reducing the effects of monopoly that were instigated by Malaysia Airlines. This section of the paper seeks to assess how Air Asia would change its business model in its effort to expand its operations in the UK market. One of the major initiatives that the company has emulated in order to improve its profitability is expansion of operations through increasing the number of routes. For example, the company has created connection with various regions within Asia such as Vietnam, Shenzen, Indonesia among others. Even though the company enjoys strong customer loyalty in the domestic market, it has to emulate different strategies in order to penetrate UK market. This is based on the stiff competition and diversified environmental factors that determine the operations of UK airline industry. In the Malaysian market, Air Asia has remained competitive by offering low travelling fares to its customers. However, this is achieved at the expense of its employees who are given lower salaries. Due to the stiff competition in the UK airline industry, Air Asia has to increase its wages and salaries in order to motivate its employees. Otherwise, its employees will search for jobs in UK airline companies that are offering competitive prices. In the same way, Air Asia has low overhead costs. It is fundamental to note that in its effort to attain a significant share in the UK market, the company must emulate expansion strategies that are similar to those of UK companies. This implies that the company will have to increase the fare in order to generate more revenue thus enhancing its ability to carry out its operations in the UK market. In order to effectively penetrate the market, Air Asia will need to establish its own maintenance, repair and overhaul (MRO) facility in UK (Aruan 36). Additionally, the company must establish administration offices in various UK cities. Thus resulting to increased administration costs an aspect that the company is currently trying to avoid. Based on the above discussion, it is clear that Air Asia will have to break a number of its business model to remain competitive in the UK market. However, it is crucial to note that a strategy such as increasing the travelling costs will ultimately affect the loyalty of its customers both locally and internationally. In the same way, increasing employee’s salaries is a strategy that the company will not only initiate in UK but also in all countries it has established operations. Thus resulting to increased costs and reduced profits. This implies that Air Asia entry of the UK market will be difficult. Paper 2. First Solar’s multinational business context and internal resources First Solar is a technology company that is based in Arizona. One of the key aspects that have enhanced the production capacity of the company is experienced and motivated work force. With more than 5,200 associates, the company has been able to raise a significant capital that has made it possible to diversify its product line thus attracting large number of customers especially in the European market. During its establishment, First solar specialized in the production of glass products rather than manufacturing of photovoltaics. Based on the expertise of the company founder Harold McMaster in the glass manufacturing, he diverted his skills to the solar industry. He was also focused at reducing the cost of solar production by avoiding the usage of the crystalline silicon a material that was adopted by other solar companies (Nelson 7). Improved technology is another vital factor that enhanced the performance of First Solar in the photovoltaic industry. For example, the company preferred the use of cheaper commodity glass in its production instead of expensive ultrapure c-Si. In this way, the company reduced its total cost of production thus increasing its gross profit and shareholders returns. In its effort to effectively serve its customers, First Solar established six manufacturing plants in 2010. As a result, the six plants that were located in Asia, Europe and America increased the production capacity to 1.4W. In reference to its marketing strategies, the company adopted subsidy markets that were followed by emulation of transition and sustainable markets. Sustainable markets entailed those which required minimum subsidies. On the other hand transition markets were those that subsidies such as ITC were combined with other condition that ensured effective generation of solar energy. First Solar business models The adoption of narrow value chain strategy was beneficial to the company in that it led to specialization. To reduce its costs of production, First Solar also aimed at acquiring other energy firms. For instance, in 2007 the company bought Turner Renewable Energy thus enhancing the production system of the company (Nelson 14). Additionally, First Solar adopted vertical integration to enter the US market. This was based on lack of well-developed systems integration ecosystem as compared to the EU market. Competition Based on the improved growth and increased profitability of the solar industry, many companies have expanded their operations to counter First Solar in the markets. Key competitors that First Solar is facing in the solar industry include Chinese Suntech Power, Sharp electronics that is based in Japan, Yingli Green Energy, German based QCells, Solyndra and Applied Materials among others. Approaches as options for First Solar multinational business structure over the next 10 years There is need for First Solar to diversify its operations in other countries especially due to the decline in subsidy market in Europe. In the same way, the stiff competition and negativities of the recent economic downturn should propel the company to enter emerging economies in order to remain competitive. One of the major initiatives that the company should consider in the next 10 years is establishment of independent agents in the developing countries. This entails contracting with recognized energy producing companies in foreign countries to act as the company distributors. In the same way, the company should emulate franchises in the domestic and international market (Vollman, Thomas and Berry 21). In this way, the company will not only reduce its operations risk but it will also strengthen its capital base as a result of the annual fees and royalties paid by the franchisee. Paper 3. Value chain analysis of Coke Value chain encompasses the activities undertaken by organizations in order to improve the quality, distribution and packaging of a product with the main objectives of making it to attain a competitive advantage. In addition, it covers activities such as inbound logistics, outbound logistics, manufacturing operations, research and development (R&D), distribution, marketing and procurement. This section of the paper will describe the value chain of Coke one of the key brands that are produced by Coca-Cola Company. Suppliers To ensure that the suppliers provide quality ingredients that meet the needs of the company, Coca-Cola has put in place Supplier Guiding Principles (SGP). These are regulations that the entire supplier fraternity should follow to ensure that the company uphold its values of producing quality Coke brand in the international market. Key aspects that are covered by the SGP include open communication with all the suppliers around the world and assessing the ingredients and packaging materials to be certain that international quality standards are met. To ensure continuous supply of raw materials required in the production of Coke, Coca-Cola has embarked on training its suppliers as well as assessing the facilities used by the suppliers. For example, in 2006 more than 680 suppliers were trained (Plumb 12). In the same year, the company assessed 1,029 supplier facilities to ensure their compliancy with the set rules. Coke customers Coke customer base include chains of retailers in the international market as well individual consumers. Regardless of the size of their customers, the company embarks on expanding their business thorough providing quality brands that attract new customers as well as undertaking extensive advertisement. In its effort, to penetrate new markets, the company has established bottling partners in various countries. Coke Retailing Research Council The adoption of Retailing Research Council is a primary factor that has enabled the Coke brand to acquire a competitive position in the market. For instance, through the Research Council, the company is given the direction that it should follow based on the trend of the food retail industry. Through the establishment of corroborative customer relationship in various markets such as Mexico, Japan and India, the company has benefited from large number of customers who are loyal towards the Coke brand. Research and Development strategies have also significantly contributed to high production capacity. It is worth to note that the company has initiated modern machines in the production of the concentrates as well as in the filing of the bottles in all its production facilities. In this way, the company has not only reduced the production cost but also it has continued to provide quality brands that make it to effectively face off its competitors. Coke channel of distribution The high demand of Coke brand has prompted the company to employ various partners so as to ensure accessibility of the brand. For example, Coca-Cola sells its brands to fountain wholesalers, distributors as well as to fountain retailers. Once the brands are bought by the channels members, they are further distributed to retails outlets, restaurants, petrol stations among others. Core competencies of Coke brand Strong customer awareness As compared to all other non-alcoholic beverages, Coke is the most known brand in the soft drink market. Due to its quality and prestige in the international market, majority of the consumers can recognize the brand without much assistance from the sales executives (Ries and Trout 25) The strong customer awareness has not only been generated by its quality but also extensive advertisement and promotional strategies that the company has put in place. Strong brand image In its effort to put at bay its rivals in the soft drink industry, Coca-Cola Company significantly supports Coke in the international market. Through the sponsorship of global events including FIFA World Cup, the brand has enjoyed great fame world wide. Brand Positioning Effective positioning of Coke brand is an additional core factor that resulted to high sales and strong customer loyalty. To ensure that customers remember the brand during their purchasing process, the company adopts top of mind strategy (Trout 49). This includes attractive packaging and easily recognized color thus making it easier for customers to differentiate it from other brands. Sustainable quality Regular and upgraded packaging is primary aspect that has enabled Coke to attain a competitive position. Through the use of modernized machines and continuous training of its employees, Coca-Cola has ensured that the quality of its brands is not compromised especially during the manufacturing of the concentrates. Production of high quality Coke has benefited the company since the competitors are not in a position to copy the brand. Strategies that Coca-Cola should adopt to outsource functions of the value chain One of the major ways through which Coca-Cola should outsource its value chain is by hiring private distributors especially in less developed countries. It is imperative to note that due to poor infrastructure system in third world countries, the distribution of Coca-Cola brands is highly jeopardized. This has been used by the competitors such as Pepsi as an opportunity to penetrate such markets. Due to the fact that private distributors are aimed at making profits, the company will reasonably reduce its costs of distribution and consumers in developing countries will easily access the products. To improve its production capacity and meet the high demand of its brands, Coca-Cola should hire international companies that have wide experience in food technology. In this way, the company will ensure that the responsibilities of maintaining and servicing its production facilities are at the hands of experts. It is also vital for the company to employ the services of online advertising companies. Due to the increased use of internet as a marketing tool, Coca-Cola competitors have embarked on expanding their advertisement strategies especially in the emerging market. For example, in the Pakistan market, the company is faced by the threats from its competitors such as Amrat, Cola, Madni and Noras among others. Through online advertisers the company will ensure adequate advertisement that reaches large portion of young consumers whose purchasing behaviors are easily influenced by internet advertisements. Works Cited Aruan, H et al. Air Asia- Strategic IT Initiative. Faculty of Economics and Commerce. Melbourne: University of Melbourne, 2005.Print. Nelson, G. “First Solar plans major manufacturing plant in SE Mesa”. Journal of Arizona Republic 19. 11 (2011): 7-15.Print. Plumb, T. “Coca-Cola to unveil mini cans in D.C.” Washington Business Journal 54. 5 (2009):11-14.Print. Ries, A, and Trout, J. Positioning, The battle for your mind. New York: McGraw-Hill Inc, 1981.Print. Trout, J. “Positioning is a game people play in today’s me-too market place.” Industrial Marketing 54. 6 (1969): 45-57.Print. Vollman, Thomas E, and Berry, W. Manufacturing planning and control for supply chain management. New York: McGraw-hill, 2005.Print. Read More