my personal 2009 degree paper

1. ROZIAH WATI BINTI RAHMAT
AIRASIA BERHAD
By:
ROZIAH WATI RAHMAT
KARTINI KARIM
YANG IZHANI ITHNIN
NOR ASALEHA HJ. MUHAMMAD MURAD

2. ROZIAH WATI BINTI RAHMAT
INTRODUCTION

3. ROZIAH WATI BINTI RAHMAT
AirAsia Berhad
• The ideas to built up the AirAsia
• The establishment of AirAsia
- Company Statement
- Management, Marketing and Financial
Perspective
- Management and Leadership and
Marketing Analysis

4. ROZIAH WATI BINTI RAHMAT
CASE SUMMARY/
BACKGROUND

5. ROZIAH WATI BINTI RAHMAT
With the tagline 'Now everyone can
fly'(1), AirAsia’s philosophy of low fares
is aimed (5) and to make flying
affordable for everyone (2)
Existing Mission Statement

6. ROZIAH WATI BINTI RAHMAT
• AirAsia become one of among the world's first truly low-
cost long-haul airlines in Asian Market.
• To become franchisor the globally renowned 'AirAsia'
brand from AirAsia Berhad toward variety of industry such
as Airline, Travel Tour, Hotel and Financial Services in the
market that AirAsia enter.
• AirAsia Berhad to poised to extend AirAsia's success to the
long-haul segment in growing market such as Cambodia,
Philippine and Vietnam in the future.
• To offering sustainable and continued delivery of everyday
low fares to current air travelers with changes
environment.
Existing Objective

7. ROZIAH WATI BINTI RAHMAT
- Low fare, no frills
- Frequent flights
- Guest convenient
- Safety first
- Cost optimization operations
Existing Strategies

8. ROZIAH WATI BINTI RAHMAT
Develop New Mission
Statement for AirAsia

9. ROZIAH WATI BINTI RAHMAT
'Now everyone can fly'(1), AirAsia’s philosophy
(6)of low fares is aimed and to make flying
affordable for everyone (3) Built up a strong
brand name as a trendsetter in the aviation
industry, particularly in terms of innovation (4),
safety and service excellence (2) and coupled
with consistent profitability (5). The corporate
culture of AIR ASIA MALAYSIA is routinely
described as fun and upbeat (7), where
employees (9) are committed and passionate to
the company’s vision and motivated to provide
excellent customer (8) service.
New Mission Statement For The
Organization

10. ROZIAH WATI BINTI RAHMAT
PROBLEM IDENTIFICATION

11. ROZIAH WATI BINTI RAHMAT
1. AirAsia had limited capital with liability are increasing year by
years based on the new airplane Airbus A320 purchasing
agreement (Competitive Information) 2(Moderate priority
concerns)
2. There is a long and uneven legislative history of public policy
toward pricing at the cost margin that Air Asia used
(Economic) 3(Less priority concerns)
3. At the end of June 2005, the company still faces current
liability RM152 million compare to RM149, RM145 million in the
same period at 2004 (Economic) 3(Less priority concerns)
4. Pricing method at the cost margin on account at differences in
the grade, quality or quantity of the commodity sold was
exampled (Economic) 3(Less priority concerns)

12. ROZIAH WATI BINTI RAHMAT
5.AirAsia gain profit only in Malaysia market and
remain loss in Thailand and Indonesia event the
industry in the market are potential to grow.
(Environment) 1(Need immediate concerns)
6.Oil Rate remain increase in US$110 and to maintain
the low process in ticket AirAsia have to lower cost
in their expenditure in Marketing activities.
immediate concerns)2(Moderate priority concerns)

13. KARTINI BINTI KARIM
TOWS FRAMEWORK

14. KARTINI BINTI KARIM
OPPORTUNITY
• They are on the few airlines that fly nonstop to China and
India and grab this market on the sub-region (competitive
information)
• Airline company can probably control their own traffic at the
local airport’s Low Cost Carry in KLIA does to save money
(competitive information)
• Cutting down on delays can reduce the amount of money
used to services debts and yield NPV’s (environmental)
• The economic of scale allow to streamline costing further and
will allow more fare promotion to local destinations and along
the way (economic)
• The recourses to develop new routes and potential point of
the connection to promote domestic tourism in country by
offer a simple yet affordable means of travel for local citizen
(culture)

15. KARTINI KARIM
• Asian members open sky arrangement that allow
increasing number of set in every countries that
involved, it open the right to every airline industry to
enter the market (political)
• More than 10 million passenger are used Malaysia as
their link to other countries (demographic)
• Low rate in Marketing Strategy in Asian Airport and
the introduction of Airline Forum and Carnival in
European open opportunity to Asian Industry to enter
the market (Environment)

16. KARTINI KARIM
THREATS
• Regulatory framework in airline industry for each market in East
Asian, North American and European market (name change or
language barrier, fuel surcharge based on the subsidiary of local
government, advertise fares for marketing strategy)
(competitive information)
• Government regulation in Asian market are crucial aspect to
enter the market bases on the survival local airline industry such
as China and Singapore (legal)
• High Inflation in Thailand and Indonesia impact airline industry
in terms of purchasing power of the customer and it decrease
the demand to used the airline (economic)
• Market remains fragmented in majority development country in
Asian and this give disadvantage to acted to this market
without high financial support (economic)

17. KARTINI KARIM
• Changes in Malaysia Ringgit: USD$ unstable, that
show that the loan and borrowing that used US
currency have to face longer loan period (economic)
• Oil Rate remain increase in US$110 per barrel and to
maintain the low process in ticket AirAsia have to
lower cost in their expenditure in Marketing activities.
(economic)
• Image of lower cost airline are low quality in safety
that be mindset majority of the customer, based on
high number of accident are from this categories
(Social)

18. KARTINI KARIM
STRENGHT
• Converting a RM40 million debts into a multimillion Ringgit
airline, Air Asia has become Asia’s leading low cost carrier in
South-Eat Asia (economic)
• Consider Air Asia work ethics, organizational behaviors and also
communities is one of the best in Malaysia (environmental)
• Air Asia success in order to having praiseworthy employees and
in the same time making prevalent view on customer’s
expectation (demographic)
• Air Asia stimulates demand by offering the lowest fares,
comprehensive distribution channel and develops various
products and services while maintaining simplicity (competitive
information)
• Air Asia is effectiveness and brilliant of management upon
employees to compensate their customers in a shape of what
they call “now everyone can fly” (social)

19. KARTINI KARIM
• Used Total Quality Management (TQM) to ensure all people in
an organization utilize their effort to contribute to the
efficacious organizational goals meet (technology)
• Air Asia is the first airlines company in the world that offer a
total comprehensive booking system by using mobile phone
and wireless devices such as PDA (technology)
• Air Asia also offer cheap Hostel beds from RM13 by launching
Go Hostel on 2 March 2005 (technology)
• Air Asia joint venture with RHB bank Berhad and Maybank2U
to provided credit card service that be know as Tune Money
(environmental)

20. KARTINI KARIM
WEAKNESSES
• There is a long and uneven legislative history of public policy
toward pricing at the cost margin that Air Asia used
(economic)
• At the end of June 2005, the company still faces current
liability RM152 million compare to RM149, RM145 million in
the same period at 2004 (economic)
• The increase the trade and other payables in buying 12 new
aircraft Airbus A320 and this situation increase the loan and
interest of payment in more than 20 years and the airplane
only can be used in next 3 years (environmental)
• Limited Management experiences to most of the employee
due to the task that incorrect the employee to doing multi
task performance (culture)

21. KARTINI KARIM
• Non ticket system numbering for customer to set and
this make unsystematic placed of order and
increasing the time to spent in passenger looking for
set (legal)
• Inconsistence of passenger number in weak day’s
and AirAsia have to face the potential fly without
maximum numbers of potential to gain the minimum
expenditure for single flat (demographic)

22. KARTINI KARIM
FINANCIAL RATIOS

23. KARTINI KARIM
• Liquidity Ratio
The liquidity ratio is the measure of the overall ability of the
firm to meet its maturing obligation by relying on its current
assets, in other words. It measures the ability of the firm’s
liquid resources to pay current and maturity on items. For
current ratio for AirAsia is also same. This indicates that the
ability of the asset to be liquid into cash is same.
• Leverage Ratio
Leverage ratio is concern with how much the company owes
outsider in relation to assets value of the company and to the
company’s long term capital structure. Higher borrowing
indicates risk because the firm needs to finance the interest
charge imposed on them. As measure in AirAsia financial
statement, the Debt Ratio is Increase from 65.23% to 67.32%
by 2.09 %. Its show that the ability of the one unit of total
asset to pay the debt is increase.

24. KARTINI KARIM
• Activity Ratio
Activity ratio use to measure the efficiency of the management
in utilizing the assets of the company as well as managing the
overall operation of AirAsia. The account receivable turnover
indicates the ability of this company stock to be sold is
decrease from 0.0016 times to 0.0002 times. This indicates
that the ability of the company to charge its stock over the
year
• Profitability Ratio
The profitability ratio measure the relative success of the firms
that is combine the effect of liquidity activity and leverage
management on the firm’s overall operating result. It relates
to the firm’s ability to obtain returns relative to sales, assets
and equity. Profitability ratio gives an insight into the company
policies and is regarded as an important ratio by the auditors
to detect any errors or unusual fluctuation as due to error of
fraud. The Profit Margin, its indicates by the ratio we found out
that the Net Profit Margin for AirAsia increase from 1.67% to
2.32%.

25. KARTINI KARIM
D’PEST ANALYSIS

26. YANG IZHANI ITHNIN
MATRIXS

27. YANG IZHANI ITHNIN
TOWS MATRIX
• ANALYSIS
In SWOT matrix is widely be used as strategic
planning for AirAsia, the analysis does have some
limitations in themes of competitive advantage, so it
must end with it own self. The matrix can be
starting point go discussion on how proposed
strategies could be implemented as well as cost
benefit consideration that ultimately could lead to
competitive advantage for AirAsia in this industrial.
This SWOT matrix indicated forward, and horizontal
integration; market penetration; market
development, product development, conglomerate
diversification and joint venture.

28. YANG IZHANI ITHNIN
SPACE MATRIX
• This is quite importance to comprehend, as
while organizations are subject to constant
change, and as a result often work
continually on various contingency plans,
AirAsia should be consistency in approach.
Competitive quadrant indicated backward,
forward, and horizontal integration; market
penetration; market development and joint
venture.

29. YANG IZHANI ITHNI
BCG MATRIX
• ANALYSIS
In Start division it means high relative market
share and high industrial growth rate should
receive substantial investment to maintain or
strength AirAsia dominant position in Low Cost
Airline System in Malaysia and East Asian
Countries. In Start quart it indicating forward,
backward and horizontal integration; market
penetration; market development; and product
development are appropriate strategies for these
divisions to consider.

30. YANG IZHANI ITHNIN
THE INTERNAL –EXTERNAL (IE)
MATRIX
• ANALYSIS
The IFE total weighted score on the x-axis and the
EFE total weighted scores on the y-axis for the
AirAsia company are 3.47 and 3.21, so that the
prescription for division falls into cells I,II,IV that
can described as grow and build. Intensive (market
penetration, market development and product
Development) or integrative (Backward Integration,
forward integration and horizontal integration)
strategies can be most appropriate for these
divisions.

31. YANG IZHANI ITHNIN
GRAND STRATEGY MATRIX
• ANALYSIS
Note that the left column consists of key external and
internal factors, and the top row consists of flexible
alternative strategies. Specially, the left column of
information obtained directly from the EFE Matrix and IFE
Matrix. In a column adjacent to the critical success factors,
the respective by each factor in the EFE Matrix and the IFE
matrix are recorded. Based on the situation AirAsia in
Quadrant I, that are consider alternative available are
Market Development, Market penetration, Product
Development, Backward Integration, forward integration
and horizontal integration and also related diversification
strategies can be most appropriate for these divisions

32. YANG IZHANI ITHNIN
COMPETITIVE PROFILE MATRIX
• ANALYSIS
This is quite importance to comprehend, as
while organizations are subject to constant
change, and as a result often work
continually on various contingency plans,
AirAsia should be consistency in approach.
Competitive indicated backward, forward,
and horizontal integration; market
penetration; and market development.

33. YANG IZHANI ITHNIN
MATRIX ANALYSIS AND TOWS
SUMMARY
• ANALYSIS
Based on the analysis in the matrix, AirAsia can
choose Forward Integration, Horizontal
Integration, Market Penetration, Market
Development and Product Development as the
alternative strategies to achieve the company
objective but each of the strategy have the pro
and contra for AirAsia. The beat alternative
strategy can be only be choose based on the
strengths and weakness of AirAsia and based on
QSPM analysis it determined the best among the
best.

34. YANG IZHANI ITHNIN
QUANTITATIVE STRATEGIC
PLANNING
• ANALYSIS
Product Development is consider as
the best strategy for AirAsia to achieve
it long term goals and in the same time
can used the alternative strategic as
main power to achieve it.

35. YANG IZHANI ITHNIN
LONG TERM OBJECTIVE
AND ALTERNATIVES
STRATEGY FOR PRODUCT
DEVELOPMENT

36. YANG IZHANI ITHNIN
LONG TERM OBJECTIVE
PRODUCT DEVELOPMENT
•To increase operating profit by 25% for AirAsia
new countries operation in Philippine and
Cambodia and Middle East.
• To increase highly skilled element of workface
by 10% at the end years 2008
• Increasing sales of ticket by 20% into all level
of AirAsia division in 5 year

37. YANG IZHANI ITHNIN
ALTERNATIVE STRATEGIES IN
PRODUCT DEVELOPMENT
• Repositioning
Repositioning can be used to aim diversity away from existing
market by uncovering new applications, uses or market
segment for current product. In AirAsia situation repositioning
means AirAsian can niches their segmentation to be more
focus and realistic. By using the same objective “Everyone Can
Fly”, should AirAsia repositioning their product more toward
the middle segment people? The answer will be yes. AirAsia X
is the best example of repositioning but it limited in long
destination to European and China in one way fly. AirAsia
should develop new services that not only capture sub
domestic market but also future market in Middle East such as
UAE, Qatar or Arab Saudi in addition to increasing better
image about quality airline system from Asia.

38. YANG IZHANI ITHNIN
Advantages
• By implemented this strategy AirAsia can achieve as below
advantages in their performance and operation:
• Strategic decisions involving services and product-which
product lines should be continue, which to add and which to
delete.
• Can identified and select the potential market in which AirAsia
will have competitive advantage.
• Such statement of focus can drive the operations of a firm.
Disadvantages
• By implemented this strategy AirAsia should also consider
several problem that may occur such as:
• Product and services that provide small and limited growth
rate will be not notice as potential market
• Limitation in terms of management power and financial cost

39. YANG IZHANI ITHNIN
New Product Lines or Additional
New product lines means AirAsia develop such
product (1) new to the provider as opposed to the
market place (2) be additional to the product range
already on offer. For example, AirAsia can provide
service such as van and buses to tack customer
from the local transport to airport or having travel
tour in stop destination for customer during the
waiting time in local destination. This develop new
lines in AirAsia service and other development can
AirAsia done such as selling Insurance cover to the
passenger.

40. YANG IZHANI ITHNIN
Advantages
• By implemented this strategy AirAsia can achieve as
below advantages in their performance and
operation:
• It helps in the task of the long term objective
• Differentiation, can be based on product quality,
product features, innovation, service, distribution, or
strong brand name
• Lost cost strategies can be based on an experience
curve, which links cost reduction to cumulative
production volume, or on other factors such as no-
frills products or automated production processes.
• A preemptive move attempts to generate a “first-
mover” advantages

41. YANG IZHANI ITHNIN
Disadvantages
• By implemented this strategy AirAsia should also
consider several problem that may occur such as:
• Difficult to coordinate various functional are
strategies so that AirAsia don’t work at cross-
purpose.
• Focus strategy will direct its effort toward narrow
part of either the product line or the market.

42. NORASALEHA BINTI MUHAMAD MURAD
McKinsey 7S Implementation
Framework

43. NORASALEHA MUHAMAD MURAD
• Strategy
• Structure
• System
• Style
• Shared Value
• Skills

44. NORASALEHA MUHAMAD MURAD
TIME PHASE PLAN

45. NORASALEHA MUHAMED MURAD
COST ESTIMATES

46. NORASALEHA MUHAMAD MURAD
In order to adopt product development strategy,
which involves introducing the new or modified
services to the present markets, we expect the sales
and marketing expenses increase by 11.27%,
property, plant, and equipment increase by 57.4%,
administrative expenses decrease by 41.22%, other
operating expenses increase by 59.54%, investing
activities increase by 35.62%, financing activities
increase by 29.3%. Income and expenses for each
income statement are translated at average
exchange rates.

47. NORASALEHA MUHAMAD MURAD
CONCLUSION

48. NORASALEHA MUHAMAD MURAD
• Strategic analysis
• Management prospective
• Marketing prospective
• financial prospective
• Overall conclusion

49. ROZIAH WATI , KARTINI , YANG IZHANI AND NORASALEHA
THE END
Question & Answers session