Your report should cover: Definition of the boundaries of the industry. In a deregulated market, the entry barriers for new airlines are lower, so it creates greater competition and average fares tend to drop 20% or more. Price of Air Travel however is a hurdle which let customers to think to take other available options. No. Air Asia is established on 12 December 2001 by Mr. Tony Fernandes, the CEO of Air Asia and expanding rapidly since that. After 50 years, Ansoff Matrix is still widely used by many organisations to develop their marketing strategy. Read more about this important marketing tool. In a deregulated market the entry barriers for new entrants are lower. Air Asia is the leading low fare airline in Asia and Air Asia succeed to become the award winning, ‘Asia Pacific Airlines of the year 2003’ by Centre for Air Pacific Aviation (CAPA) in 2003. There are kinds of diversification such as horizontal, vertical integration, and conglomeration. “Orders, Deliveries and Operational – Asia Pacific”. Direct contact with customers provides an opportunity to keep up to date of their expectations and solve their problems on time. 4  Pages. Singapore Airlines, Avianca, Airline 1634  Words | What is the Ansoff Matrix? Efficiency generates savings which are then passed on to customers so that inexpensive air travel can become a reality. Many countries have national airlines that are owned and operated by the government. AirAsia launched their new event ticketing system called AirAsia RedTix On March 20, 2010, targeting on non-airline flight tickets such as events, sports, and music. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! No plagiarism, guaranteed! Market Penetration will not cost as much as Diversification. (Section 4). Here in markets may be defined as customers, and products as items sold to customers (Lynch, 2003). There are few suppliers in the market for aircrafts; the companies are either Airbus or Boeing. The way to gain more market share with the same product is to attract competitor’s customers and get more loyal customers by marketing. Igor Ansoff designed the Ansoff Matrix in 1957 and this was first published in the Harvard Business Review. Buy high-quality essays & assignment writing as per particular university, high school or … 7  Pages. Your report should cover: Definition of the boundaries of the industry. So strategies like market development and market penetration will be preferred at the moment. Middle income earners are increasing specially in china and India; there is much talent for AirAsia to expand its routes. It offers long-haul services from Kuala Lumpur to Australia and China using an Airbus A330-300. product choices available to a company. In 2003, the author Lynch suggested that the, appropriate example of each. Setting up airline business requires huge investment. The Ansoff matrix is also referred to as the market/product matrix in some texts. Retrieved 9 February 2010. http://biz.thestar.com.my/news/story.asp?file=/2009/7/9/business/4284964&sec=business, http://www.airbus.com/en/presscentre/pressreleases/pressreleases_items/09_06_16_a350xwb_airasiax.html, http://www.tiags.com.vn:8080/?idx=newsdetail&mod=news&act=detail&id=92&type=2, Leong Hung Yee (27 December 2006). Analyse the strategy of AirAsia using the strategy tools we have discussed (Porter 5 Forces SWOT, Life Cycle, Ansoff Matrix and more). These strategies work a lot for AirAsia in order stay competitive in LCC market. 2. Low-cost carrier, AirAsia, Business process 1392  Words | VAT Registration No: 842417633. Ansoff identifies four generic growth strategies, these are: Partnership with Virgin Airline will provide great opportunity to expand its business in Asia as well as in other parts of the world. So at present AirAsia needs to increase its brand image and get more loyal customers. In doing that, constant price reduction is done by them to compete with others. As we know AirAsia has strong management team, which will surly make these strategies successful. It was a government-owned Malaysian Airline that was bought over by Mr Tony Fernandes and Dato Kamarudin Meranum for 1 Ringgit (MYR). Air Asia has been consecutively designated as the leading low-cost carrier in the Asian region. Analyse the strategy of AirAsia using the strategy tools we have discussed (Porter 5 Forces SWOT, Life Cycle, Ansoff Matrix and more). January 2010. http://www.airbus.com/fileadmin/backstage/documents/od/January_2010.xls. But the rule for matrix multiplication is that two matrices can be multiplied only when the number of columns in the first equals the number of rows in the second. Every airline is providing similar services to customers. So in promotions AirAsia should try to change these negative perceptions. Ansoff Matrix is an important strategic tool to come up with future strategies for AirAsia Flying Low Cost with High Hopes in the case solution. Commonly applied BCG and ANSOFF frameworks (Section 5) are finally devised for the two airline Groups to arrive at a set of reliable conclusions and recommendations (Section 6). Using Ansoff’s Product/Market Matrix, analyse the case evidence on which growth directions AirAsia and the Tune Group have pursued and made recommendations on future growth options. With CAE’s extensive expertise and vast experience, AirAsia would receive world-class aviation training for its pilots, cabin crew, engineers, ramp handlers, guest … Next propose a focussed strategy. Passengers have some negative perception about low cost carriers. (It switched from Boeing 737s in 2005) A single aircraft type offers economies in purchasing, pilot training, maintenance and aircraft utilization. But, to establish new business, open up a new company, strong management and financial ability is required to make it successful, but if it is not successful, it might create unbalanced circumstances for Air Asia because of loss of money and resources. Tanju Colak The partnering with Awair helps AirAsia to understand the condition of local market, so the company will have direction on how to enter and survive in the market by the help of an experienced partner (Awair). Its profit margins attract many new competitors. everyone Headquarters : Sepang, Selangor and Malaysia Create a globally recognized ASEAN brand. Global Strategy and Leadership Though relevant elements of PESTEL, SWOT, Stakeholders Analysis Model, Porter Five Forces, and Ansoff’s Matrix are provided in the appendices; however, overall, the content of this article is based on those models relevant elements. For example, Shin Corporation (formerly owned by the family of former Thai Prime Minister- Thaksin Shinawatra) holds a 50% stake in Thai AirAsia. There are resources to be evaluated before choosing a strategy, such as budgets, human resources, and network analysis. AirAsia has done horizontal diversification when entering into Indonesian market by partnering with Awair, which is an Indonesian airline. Premium Economics, Markets, Product-Market Growth Matrix 846  Words | Discuss how AirAsia and the Tune Group used their existing capabilities to grow and diversify their business. In Market Penetration company will not introduce new products. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. The suppliers for airlines are fuel suppliers, foods suppliers, merchandise suppliers, and aircraft suppliers. 5  Pages. So the power of supplier is strong. Do you have a 2:1 degree or higher? Air Asia was taken over by Tony Fernandes when the global economic crisis happened in 2001. In some cases, the Ansoff Matrix is BCG matrix evaluations shows that AirAsia has to apply few strategies which linked with their company’s operations. It helps decide whether an organization should pursue future expansion in new markets and products or should it focus on existing markets and products. 1. AirAsia Flying Low Cost with High Hopes has viably utilized this instrument to develop a procedure for accomplishing competitive advantage in the industry and various markets it operates in. Tune Hotels.com is a hotel chain established by AirAsia CEO Tony Fernandes. Our academic experts are ready and waiting to assist with any writing project you may have. However, taking into consideration Domestic Airlines, there are options available to the customers like by-road and train arrangements but again time consumption and convenience are the reasons which discourage customers to adopt any one of these two options. Some countries have deregulated or start deregulating their Airlines, for example The United States, Australia, and to a smaller extent Brazil, Mexico, the United Kingdom and Japan. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Thus, the threat is low for the industry. It might happen in many ways of terrorism either in certain countries or it might happen in the plane itself. 3  Pages. Market Penetration – tool used to increase organisations share in the market with its current product line. The organisations I have selected are Tesco and Virgin Group. Module 4 Airlines have leased or owned aircraft with which to supply these services. Growth strategies (Ansoff matrix) The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool used by firms to analyze and plan their strategies for growth Sustainable Growth Rate The sustainable growth rate is the rate of growth that a company can expect to see in the long term. [5] In the plan, AirAsia will build up and improve its route network by linking all the existing cities in the region and expanding further into Indochina, Indonesia, Southern China (Kun Ming, Xiamen, Shenzen) and India. This is a main limitation on profitability for established carriers, which tend to have a higher cost base. In this context products may be determined as But now with hubs in Malaysia, Thailand and Indonesia and 97 planes currently owned and over 100 planes to be received in the next few years, AirAsia have to make sure proper and continuous maintenance of the planes which will also help to keep the overall costs low. Company Registration No: 4964706. To keep stronger position in the market AirAsia has to adopt combination of market penetration and market development strategies. Air Asia leading airline was established with the dream of making flying possible for everyone. AirAsia was founded by a government-owned conglomerate DRB-Hicom in 1993. As discussed earlier, the main purpose of using airline services is to reach the destination. PART 1: Introduction Premium Thus, bargaining power of suppliers is strong. AirAsia alone don’t have capacity to cover this whole region. Discuss what is good and bad about this strategy. Another strategy that AirAsia can pursue is Market Development. The company might have to recruit new employees who have knowledge about the new business. Premium AirAsia can peruse this strategy by using marketing budget and using the existing marketing department. People think that LCC may compromise safety to keep cost low. The price would not be extremely significant in differences, which it depends on the accessibility of competitor’s services and suitability of the flight time that prompts them to switch. Our ir-vision. Their new venture in the short haul, low-cost carrier begins … Thus, the rivalry is strong. Excerpts from industry experts interviewed for this study are reported across sections 2 to 6 in support of the quantitative data on the two airline groups. Through unrelated diversification (conglomeration), AirAsia might spread risk if suddenly airline industry is having difficulties and have elevated profit opportunity from the new business. Here in markets may be defined as customers, and products as items sold to customers (Lynch, 2003). With a route network that spans through to over 20 countries, Air Asia continues to pave the way for low-cost aviation through our innovative solutions, efficient processes and a passionate approach to business. Thus it has a great opportunity to capture some of the existing customers of full service and other low cost airline’s customers. Same as Virgin Money, it includes life, home and motor vehicle insurance as well as prepaid credit cards. Introduction AirAsia acquired the then Non-operational Awair in 2004 with a 49% stake in the airline. is ansoff Mareix: Next, the analysis of SWOT come out with critical strategies that must be applied by AirAsia in order to perform better in future. Airlines can be classified as being intercontinental, intra continental, domestic, or international and may be operated as planned services or charters. Marketing. The competitive environment analysis for AirAsia Berhad is thoroughly scrutinised to examine the driving determinants that attributed to the organisation’s competitive advantage in the industry. Customers can switch to other airline easily that makes the industry competitive. AirAsia engages in direct sales through its web site and call center. ... (2016). Other than that, the technology used by Airbus is the most advanced, so Airasia have to rely on the Airbus model. Here in markets may be defined as customers, and products as items sold to customers (Lynch, 2003). The largest airline in Malaysia the business is known to be highly employee centric. This is a threat to all airlines especially low cost airlines that tries to keep their cost as low as possible. Customer service, Value chain, Michael Porter 1718  Words | No. Looking for a flexible role? Quadrants 1, 2 and 3 are prioritised issues, which we report on. (1) Product strategies for growth: a useful way of looking at growth opportunities is offered by the. A business can create market share by the combination of developing new products or exiting products in emerging markets or established markets which are indicated in the Ansoff matrix. 5  Pages. Now a days LCC market is becoming very competitive. Answer1: Market development is the strategy to sell the same product in new market. Air Asia is a low-cost airline headquartered in Malaysia. ANSOFF analysis has analysed their development in terms of product and market. Terrorism is affecting tourism and confidence in the airlines. Next propose a focussed strategy. For example Air Asia can open up new routes to other places than the existing routes. AirAsia has done vertical diversification as well, for example it is selling flight tickets without the help of agents through its own website and call centre. Introduction AirAsia declared a three-year partnership on 5 April 2007, with the British Formula One team AT&T Williams. Assignment title: 70446465 Currently they are operating from three countries Malaysia, Thailand, Indonesia and covering several destinations in China, India, Sri-lanka etc. Some texts refer to the market options matrix, which involves examining the options available to the organization from a broader perspective. It is a service operated by AirAsia X Sdn. Hypermarket, Brand management, Advertising 1093  Words | It describes the internal affection of the industry with elaborating competitive rivalry amongst the firms in the industry to the bargaining power of customers and suppliers. It will go with the same products in the same market. By sponsoring these events AirAsia can further improve its image. 1. Check out airasia.com and get only the best deals today! AIR ASIA – FLYING LOW COST WITH HIGH HOPES The Ansoff Matrix identifies four areas of growth: (1) Product strategies for growth: a useful way of looking at growth opportunities is offered by the Ansoff Matrix as it is a practical framework for thinking about how growth can be achieved through product strategy. AirAsia announced On February 2010 that it has purchased a 30% stake in VietJet and changed the name to VietJet AirAsia. strategy helps identifying corporate growth opportunities, also analysing companies based on market, product with possible growth opportunities which can be established by merging current and new products. In January 2004, airasia began its first international service from KL to Phuket in Thailand. Growth and Diversify by applying Ansoff’s Product/Market MatrixAnsoff’s matrix help to determine and analysis to grow AirAsia business via market penetration, product development and market development with the aid of this matrix AirAsia able to access their business on the business life cycle. *You can also browse our support articles here >. In 2003, the author Lynch suggested that the Ansoff Matrix describes the market and Free resources to assist you with your university studies! The Ansoff matrix presents the four major strategies that are used by the business organizations to achieve corporate growth. 1 AirAsia has strong position in Asian market. It is now the award winning with the largest operation low fare in Asia. The. In airline industry customers do not need to spend more on switching to another airline. If you need assistance with writing your essay, our professional essay writing service is here to help! Published: 16th Jan 2018 in “AirAsia embarks on 2nd chapter”. The extent of barriers to entry depends on following factors:-. The approach is to be easy to book, pay and fly and most of the seats are sold through online, this is in line with its motto ‘Now Everyone Can Fly’. The Ansoff Opportunity Matrix is another Strategic Management tool that describes and predicts an organization’s growth opportunities with the existing as well as new products and Markets (Capodagli & Jackson, 2007). The Ascendance of AirAsia Building a Successful Budget Airline in Asia Case Study Solution - The Ascendance of AirAsia Building a Successful Budget Airline in Asia Case Study is included in the Harvard Business Review Case Study. The total AirAsia fleet (including Thai AirAsia, AirAsia X and Indonesia AirAsia) consists of the following aircraft as of 14 July 2010. Premium Certain charges like landing charges, security charges and departure charges are beyond the control of airline operators. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Premium Now a day Asian low cost carrier market is becoming very competitive. Introduction [4] The company has placed an order of 175 units of the Airbus A320 plane to service its routes and at least 50 of these will be ready by 2013. There are upcoming sports events like 2011 Cricket World Cup in India, Sri Lanka, Bangladesh, and 2012 Olympics in London. AirAsia Case StudyMatriculation Number 40414735Bachelor of Arts Business Management Edinburgh Napier UniversityExecutive SummaryAirAsia is a low-cost carrier operating in Malaysia. Rising fuel prices have made operational costs high for the whole industry. 3  Pages. but still most parts of these countries are under served. Premium ANSOFF’S MATRIX Product and Growth Matrix Ansoff’s Matrix • Developed by Igor Ansoff ... AirAsia’s mission: • A low cost airline carrier that offers five-star service with 95% of on-time performance. AirAsia Case StudyMatriculation Number 40414735 Bachelor of Arts Business Management Edinburgh Napier University Executive Summary AirAsia is a low-cost carrier operating in Malaysia. Currently they are operating from three countries Malaysia, Thailand, and Indonesia and covering several destinations in China, India, Sri-Lanka etc. This is the strength of AirAsia that it has a very strong management team that consists of industry experts and ex-government officials. AirAsia is presently the largest customer of the Airbus A320. The introduce of different campaign by AirAsia such a “Ready to Fly” or “3 million Free ticket” help the company to extend their awareness in the market (Lee, 2013). 1. 1． What are the four product growth strategies according to the Ansoff matrix? Betriebswirtschaftliche und volkswirtschaftliche Grundlagen It also explains the threats of new entrants and already existing firms. In this situation AirAsia should not think about diversification. A direct sale has reduced AirAsia’s dependency on outside resources for its revenue. Advantages Of Ansoff Matrix 1210 Words | 5 Pages. Thus the buyers may be able to influence the airlines to reduce their prices. AirAsia’s partnership with other service providers such as hotels, hospitals (medical tourism), car rental firms, Citibank (AirAsia Citibank card) has created a very unique picture among travelers. Premium Next propose a focussed strategy. is ansoff Mareix: Introduction The Ansoff matrix presents the product and market choices available to an organization. Internet technology resulted in increasing the bargaining power of buyer. In 2006 A new budget terminals, the 1st of its kind in Asia was opened in Kuala Lumpur International Airport. The world leading low fare airline in the Asia, Air Asia has been growing rapidly since 2001, to become an award winning and the major low cost carrier in Asia. It was restructured into the first no-frills and low cost carrier (LCC) in Asia. AirAsia Price/Pricing Strategy: Following is the distribution strategy of AirAsia: AirAsia stands for low pricing and a no frills policy. AirAsia’s profit margin has attracted many competitors. 7  Pages. To continue to be the lowest cost short-haul airline in every market we serve, delivering strong organic growth through offering the lowest airfares at a profit. This strategy helps identifying corporate growth opportunities, also analysing companies based on market, product with possible growth opportunities which can be established by merging current and new products. Thus, is it appropriate AirAsia’s decision to purchase another 100 planes when the market may be turning? Ansoff matrix Cash Cows Cash cows are in the lower left quadrant. If Airasia change to Boeing again, then the cost will be high, because training cost for staff to go well with the aircraft features must be offered. Their links with AT&T Williams Formula One team and Manchester United (one of the world’s most famous football teams) have further improved their image to a greater extend beyond just Asia. Synopsis The Ansoff matrix is also referred to as the market/product matrix in some texts. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. AirAsia have to pursue limited growth strategies such as market penetration and market development in the future. In order to implement a strategy AirAsia has to evaluate the resources because if the resources are not enough, the implementation will not be maximized and there will be possibility that the strategy will fail. If there is terrorism happen in the area where AirAsia operates, it results in stopping their flights to ensure safety of passengers as well as the plane. Discuss what is good and bad about this strategy. To cover these fixed costs airline companies have to gain more market share. Air Asia can increase its brand image by promoting low-priced, on time and safe traveling experience campaign. In horizontal diversification, the company developed activities that are directly complementary to a company’s present activities. BUSINESS AirAsia’s local presence in countries such as Indonesia (Indonesia AirAsia) and Thailand (Thai AirAsia) has effectively elevated the brand to become a regional brand. On 2 December 2001, former Time Warner executive Tony Fernandes’s company Tune Air Sdn Bhd purchased the heavily-indebted airline for the token sum of one ringgit. assignment I will be describing how marketing techniques are used to market products in two organisations. Aforementioned, December 2001 by Mr. Tony Fernandes, the CEO of, when the global economic crisis happened in 2001. The best time for AirAsia Ads is during holidays when people are thinking to go on traveling. The cost of setting up of offices, leasing or buying aircraft, hiring pilots and other staffs incur a high cost.
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