The Ascendance of AirAsia: Building a Successful Budget Airline in Asia SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Ascendance of AirAsia: Building a Successful Budget Airline in Asia
In September 2001, Tony Fernandes left his job as vice president and head of Warner Music's Southeast Asian operations. He reportedly cashed in his stock options, took out a mortgage on his house, and lined up investors to take control of AirAsia, a struggling Malaysian airline. Three days later, terrorists destroyed the World Trade Center. Despite the negative aftermath of the 9-11 attacks, by 2003, AirAsia had demonstrated that the low-fare model epitomized by Southwest and JetBlue in the United States, and by Ryanair and easyJet in Europe, had great potential in the Asian marketplace. Now, Fernandes had to make plans to ensure that AirAsia maintained its momentum while considering the influx of new entrants into the low-fare segment of the airline industry in Asia.
Swot Analysis of "The Ascendance of AirAsia: Building a Successful Budget Airline in Asia" written by Thomas Lawton, Jonathan P. Doh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Airasia Fernandes facing as an external strategic factors. Some of the topics covered in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia case study are - Strategic Management Strategies, Growth strategy, International business, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the The Ascendance of AirAsia: Building a Successful Budget Airline in Asia casestudy better are - – supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, there is backlash against globalization, technology disruption, digital marketing is dominated by two big players Facebook and Google,
geopolitical disruptions, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of The Ascendance of AirAsia: Building a Successful Budget Airline in Asia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Airasia Fernandes, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Airasia Fernandes 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia can be done for the following purposes –
1. Strategic planning using facts provided in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia case study
2. Improving business portfolio management of Airasia Fernandes
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Airasia Fernandes
Strengths The Ascendance of AirAsia: Building a Successful Budget Airline in Asia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Airasia Fernandes in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia Harvard Business Review case study are -
Highly skilled collaborators
– Airasia Fernandes 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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.
Ability to recruit top talent
– Airasia Fernandes is one of the leading recruiters in the industry. Managers in the The Ascendance of AirAsia: Building a Successful Budget Airline in Asia are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Airasia Fernandes digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Airasia Fernandes 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.
High switching costs
– The high switching costs that Airasia Fernandes has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Training and development
– Airasia Fernandes has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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.
Low bargaining power of suppliers
– Suppliers of Airasia Fernandes in the sector have low bargaining power. The Ascendance of AirAsia: Building a Successful Budget Airline in Asia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Airasia Fernandes to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Airasia Fernandes 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 Fernandes is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Airasia Fernandes is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Airasia Fernandes is one of the most innovative firm in sector. Manager in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Airasia Fernandes is present in almost all the verticals within the industry. This has provided firm in The Ascendance of AirAsia: Building a Successful Budget Airline in Asia case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Airasia Fernandes 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses The Ascendance of AirAsia: Building a Successful Budget Airline in Asia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Ascendance of AirAsia: Building a Successful Budget Airline in Asia are -
Workers concerns about automation
– As automation is fast increasing in the segment, Airasia Fernandes needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Thomas Lawton, Jonathan P. Doh suggests that, Airasia Fernandes 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.
Aligning sales with marketing
– It come across in the case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The Ascendance of AirAsia: Building a Successful Budget Airline in Asia can leverage the sales team experience to cultivate customer relationships as Airasia Fernandes is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia, it seems that the employees of Airasia Fernandes don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Airasia Fernandes products
– To increase the profitability and margins on the products, Airasia Fernandes needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Airasia Fernandes 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 Fernandes 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 operating costs
– Compare to the competitors, firm in the HBR case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Airasia Fernandes 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Ascendance of AirAsia: Building a Successful Budget Airline in Asia HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Airasia Fernandes has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Airasia Fernandes is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Airasia Fernandes needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Airasia Fernandes to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Airasia Fernandes, firm in the HBR case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Airasia Fernandes 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 - The Ascendance of AirAsia: Building a Successful Budget Airline in Asia should strive to include more intangible value offerings along with its core products and services.
Opportunities The Ascendance of AirAsia: Building a Successful Budget Airline in Asia | 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Airasia Fernandes in the consumer business. Now Airasia Fernandes can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Airasia Fernandes 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.
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 Fernandes can use these opportunities to build new business models that can help the communities that Airasia Fernandes operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Airasia Fernandes can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Airasia Fernandes can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at Airasia Fernandes 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 Innovation & Entrepreneurship segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Airasia Fernandes can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Airasia Fernandes can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Ascendance of AirAsia: Building a Successful Budget Airline in Asia suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Learning at scale
– Online learning technologies has now opened space for Airasia Fernandes 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.
Better consumer reach
– The expansion of the 5G network will help Airasia Fernandes to increase its market reach. Airasia Fernandes 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Airasia Fernandes 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 Fernandes to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Airasia Fernandes 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, The Ascendance of AirAsia: Building a Successful Budget Airline in Asia, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Airasia Fernandes has opened avenues for new revenue streams for the organization in the industry. This can help Airasia Fernandes to build a more holistic ecosystem as suggested in the The Ascendance of AirAsia: Building a Successful Budget Airline in Asia case study. Airasia Fernandes can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Airasia Fernandes is facing challenges because of the dominance of functional experts in the organization. The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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.
Threats The Ascendance of AirAsia: Building a Successful Budget Airline in Asia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia are -
Consumer confidence and its impact on Airasia Fernandes demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Airasia Fernandes
– 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 Fernandes.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Airasia Fernandes needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Airasia Fernandes has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Airasia Fernandes needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Stagnating economy with rate increase
– Airasia Fernandes 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Airasia Fernandes 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia .
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 Fernandes in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia, Airasia Fernandes may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Airasia Fernandes in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
High dependence on third party suppliers
– Airasia Fernandes high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Airasia Fernandes 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 Fernandes can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Shortening product life cycle
– it is one of the major threat that Airasia Fernandes is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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 The Ascendance of AirAsia: Building a Successful Budget Airline in Asia 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 Fernandes needs to make to build a sustainable competitive advantage.