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Management report: Air Asia - Essay Example

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Air Asia: The World’s Lowest Cost Airline. Air Asia operates in a market structure that is dominated by considerable competitive rivalry as it relates to pricing specifically…
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Download file to see previous pages It is a market that is slow to achieve growth, however it is in a maturity stage for low cost carriers that provide opportunities for service delivery innovations and relaunch to improve growth rather than ultimately decline through complacency. Air Asia also maintains limited negotiation and price bargaining power in the supply market, due to its standardisation strategies for fleet procurement and maintenance, which poses a cost and efficiency risk to the business model. Because of it limited availability of large capital expenditures, the airline relies on technology and innovation as key contributions to gain market attention rather than upgrading services or using costly advertising. In fact, the company uses low cost banner ad and Facebook digital media sources for its advertising function (Grant 2010). Cost recognition, in many operational factors, contributes to the firm’s ability to keep overhead low and offer competitive ticket pricing. Air Asia has also elected to become more interactive with cooperative partnerships and alliances to improve its brand reach and improve service quality, alongside with cost reduction efforts related to consolidation of service and labour. All of these factors, and more, contribute to this airline being able to boast being the world’s lowest cost carrier. Outside of its strengths in operations, quality, marketing and strategic-minded values, Air Asia does maintain some weaknesses in terms of promotion and also as it relates to over-reliance on technology to justify its competitive position and meet with changing consumer demand and preferences. This report highlights several recommendations for the organisation to improve its competitive position and still achieve effective strategic outcomes related to its proven business model based on the case study in Grant (2010) with supplementary support for all business functions. TABLE OF CONTENTS Executive Summary 1. Introduction............................................................................................................ ... 5 2. Market and corporate analyses................................................................................... 7 2.1 Challenges in the oligopolistic markets........................................................ 7 2.2 Management of externalities and innovation management.......................... 9 2.3 Setting standards and standards management............................................... 11 3. Recommendations....................................................................................................... 13 4. Conclusion................................................................................................................... 15 References TABLE OF CHARTS AND FIGURES Figure 1: Porter’s Five Forces Model................................................................... 7 Figure 2: Current Positioning Map of Air Asia among Competition.................... 10 1. Introduction Air Asia in an oligopolistic market structure, one in which few firms dominate a market, thus each competitor is reliant on the performance of competitor analysis as a means to outperform service delivery, marketing or expansion strategy through predictive and quantitative or statistical analysis. In the oligopoly, Air Asia must be concerned with the advertising and promotion occurring with competition in order to identify its own market positioning strategy, the tangible value chain activities which drive competitive strategy and also the ability of the competition to secure brand-related ...Download file to see next pagesRead More
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