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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, technology disruption, geopolitical disruptions, increasing commodity prices, challanges to central banks by blockchain based private currencies, there is backlash against globalization,
increasing energy prices, talent flight as more people leaving formal jobs, 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 -
Analytics focus
– Airasia Fernandes is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Thomas Lawton, Jonathan P. Doh can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– The Ascendance of AirAsia: Building a Successful Budget Airline in Asia firm has clearly differentiated products in the market place. This has enabled Airasia Fernandes to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Airasia Fernandes to invest into research and development (R&D) and innovation.
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.
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.
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.
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.
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.
High brand equity
– Airasia Fernandes has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Airasia Fernandes to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Airasia Fernandes
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Airasia Fernandes does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Innovation & Entrepreneurship field
– Airasia Fernandes is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Airasia Fernandes in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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 -
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia, in the dynamic environment Airasia Fernandes has struggled to respond to the nimble upstart competition. Airasia Fernandes 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 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.
High cash cycle compare to competitors
Airasia Fernandes 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.
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.
Capital Spending Reduction
– Even during the low interest decade, Airasia Fernandes 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Ascendance of AirAsia: Building a Successful Budget Airline in Asia, is just above the industry average. Airasia Fernandes needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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.
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.
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.
Interest costs
– Compare to the competition, Airasia Fernandes 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.
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 -
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.
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.
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.
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.
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.
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.
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.
Developing new processes and practices
– Airasia Fernandes can develop new processes and procedures in Innovation & Entrepreneurship 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Airasia Fernandes can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Airasia Fernandes in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Airasia Fernandes can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 -
Regulatory challenges
– Airasia Fernandes needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
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 Fernandes.
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 .
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 Fernandes 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.
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.
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.
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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Airasia Fernandes can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Fernandes business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Airasia Fernandes with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.
