AirAsia: Flying Low Cost with High Hopes SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AirAsia: Flying Low Cost with High Hopes
Private entrepreneur, Tony Fernandez took over the debt ridden AirAsia airlines from the Malaysian government in December 2001, months after the terrorist attacks of 9/11. One month later, he relaunched the airline as South-East Asia's first low cost carrier (LCC) and achieved an instant success with increased profitability and rapid route expansion. Under the tagline of "Now Everyone Can Fly", AirAsia was able to keep the lowest cost structure among its competitors and offered low airfare to customers. Being innovative down to the corporate bone, AirAsia pioneered several new services for its operation, including an ambitious plan that many other low cost, short-haul carriers viewed as risky-extending services to include long haul routes. In 2007, AirAsia was ranked as the best LCC in the Asia region. Its success had not only inspired many LCC followers in the Asia Pacific region, but also severely threatened the well-being of full-service operators, especially its major competitor at home, Malaysia Airlines ("MAS"). In May 2008, MAS initiated an unexpected price war by launching the "Everyday Low Fare" campaign, offering zero fare for domestic and short-haul flights, which were largely dominated by AirAsia. Amid surging flight operation costs globally and ever intense competition in the Asia Pacific region, how could AirAsia increase its competitiveness?
Swot Analysis of "AirAsia: Flying Low Cost with High Hopes" written by Stephen Ko, Claudia H. L. Woo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Airasia Lcc facing as an external strategic factors. Some of the topics covered in AirAsia: Flying Low Cost with High Hopes case study are - Strategic Management Strategies, Marketing, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the AirAsia: Flying Low Cost with High Hopes casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion,
wage bills are increasing, technology disruption, etc
Introduction to SWOT Analysis of AirAsia: Flying Low Cost with High Hopes
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AirAsia: Flying Low Cost with High Hopes case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Airasia Lcc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Airasia Lcc operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of AirAsia: Flying Low Cost with High Hopes can be done for the following purposes –
1. Strategic planning using facts provided in AirAsia: Flying Low Cost with High Hopes case study
2. Improving business portfolio management of Airasia Lcc
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Airasia Lcc
Strengths AirAsia: Flying Low Cost with High Hopes | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Airasia Lcc in AirAsia: Flying Low Cost with High Hopes Harvard Business Review case study are -
Effective Research and Development (R&D)
– Airasia Lcc has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study AirAsia: Flying Low Cost with High Hopes - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Airasia Lcc is one of the most innovative firm in sector. Manager in AirAsia: Flying Low Cost with High Hopes Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the AirAsia: Flying Low Cost with High Hopes Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Learning organization
- Airasia Lcc is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Airasia Lcc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AirAsia: Flying Low Cost with High Hopes Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Airasia Lcc are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of Airasia Lcc in the sector have low bargaining power. AirAsia: Flying Low Cost with High Hopes has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Airasia Lcc to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Airasia Lcc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Airasia Lcc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Airasia Lcc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Airasia Lcc has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Highly skilled collaborators
– Airasia Lcc has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in AirAsia: Flying Low Cost with High Hopes HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Airasia Lcc is one of the leading recruiters in the industry. Managers in the AirAsia: Flying Low Cost with High Hopes are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Airasia Lcc
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Airasia Lcc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Airasia Lcc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AirAsia: Flying Low Cost with High Hopes Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses AirAsia: Flying Low Cost with High Hopes | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AirAsia: Flying Low Cost with High Hopes are -
Capital Spending Reduction
– Even during the low interest decade, Airasia Lcc has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Need for greater diversity
– Airasia Lcc has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though Airasia Lcc has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - AirAsia: Flying Low Cost with High Hopes should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Airasia Lcc has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Airasia Lcc even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Stephen Ko, Claudia H. L. Woo suggests that, Airasia Lcc is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Airasia Lcc supply chain. Even after few cautionary changes mentioned in the HBR case study - AirAsia: Flying Low Cost with High Hopes, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Airasia Lcc vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AirAsia: Flying Low Cost with High Hopes, in the dynamic environment Airasia Lcc has struggled to respond to the nimble upstart competition. Airasia Lcc has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Airasia Lcc, firm in the HBR case study AirAsia: Flying Low Cost with High Hopes needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Airasia Lcc has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Airasia Lcc is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Airasia Lcc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Airasia Lcc to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Airasia Lcc has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities AirAsia: Flying Low Cost with High Hopes | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study AirAsia: Flying Low Cost with High Hopes are -
Developing new processes and practices
– Airasia Lcc can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Airasia Lcc is facing challenges because of the dominance of functional experts in the organization. AirAsia: Flying Low Cost with High Hopes case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Airasia Lcc can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, AirAsia: Flying Low Cost with High Hopes, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Airasia Lcc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Airasia Lcc to increase its market reach. Airasia Lcc will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Building a culture of innovation
– managers at Airasia Lcc can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Leveraging digital technologies
– Airasia Lcc can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Airasia Lcc can use these opportunities to build new business models that can help the communities that Airasia Lcc operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Airasia Lcc to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Airasia Lcc to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Airasia Lcc can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Airasia Lcc has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study AirAsia: Flying Low Cost with High Hopes - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Airasia Lcc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Airasia Lcc has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Airasia Lcc to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats AirAsia: Flying Low Cost with High Hopes External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AirAsia: Flying Low Cost with High Hopes are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Airasia Lcc in the Sales & Marketing sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Airasia Lcc can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Airasia Lcc needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Airasia Lcc can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Airasia Lcc can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study AirAsia: Flying Low Cost with High Hopes .
Increasing wage structure of Airasia Lcc
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Airasia Lcc.
Technology acceleration in Forth Industrial Revolution
– Airasia Lcc has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Airasia Lcc needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Airasia Lcc business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Airasia Lcc will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AirAsia: Flying Low Cost with High Hopes, Airasia Lcc may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Airasia Lcc in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Airasia Lcc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Airasia Lcc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of AirAsia: Flying Low Cost with High Hopes Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study AirAsia: Flying Low Cost with High Hopes needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study AirAsia: Flying Low Cost with High Hopes is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study AirAsia: Flying Low Cost with High Hopes is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of AirAsia: Flying Low Cost with High Hopes is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Airasia Lcc needs to make to build a sustainable competitive advantage.