AIR ASIA Case Study Report
Nikhil Singh Tomer Business Strategy, BMGT 43370 2nd individual Assignment Addressed to Bernard Faughey MSc Project Management FT
I the undersigned confirm that the work submitted here is entirely my own work, and that any work of others which is included has been properly referenced and acknowledged according to normal academic guidelines. NAME: Nikhil Singh Tomer Student No. 14202643
Core concepts : Porter’s 5 forces, SWOT Analysis , Analysing the internal
environment, Porter’s Value Chain, Competitive advantage within International context(cost analysis and differentiation)
1.0 Porter’s Five Forces:
1.1 Threat of new entrants There is a need of ...view middle of the document...
Thus, trust on the brand or brand loyalty plays an important role in this. Certainly, AirAsia has built their trust on customer. It is not easy for nay new entrant to come into the industry and gain customer’s trust and build reputation. Also, it can be said that AirAsia will continue to enjoy this trust of customer until and unless it provides the cheapest fare.
1.2 Threat of substitute Other transport methods: Substitutes are basically products or services which can replace existing product or services. Airline industry thus have a huge substitutability as for example, if one has to go within the country bus, train or personal vehicle are good substitutes as they are cheaper. Considering about long-haul like India or Australia, Airlines are a good option and have low substitutes.
1.3 Power of buyer The bargaining power of buyers is high as not many airlines provide flights at cheapest price. AirAsia certainly has lower prices and provide good facilities and amenities to customer. Development of technology has helped airline industry. Now, people can buy their ticket on a click. Customer can go through many airlines website and also some travel websites and easily look at more cheaper and better price. Therefore, airlines have less negation power and customer enjoy high bargaining power.
1.4 Bargaining power of suppliers Airline industry has two suppliers-Airbus and Boeing. They are the only two companies who supplies aircraft to industry and thus enjoy Duopoly. Thus, bargaining power of suppliers is high. Other important products suppliers like fuel also have a high bargaining power as the fuel used in Aircraft is special and not many companies provide them. The secondary suppliers like food suppliers don’t have a strong bargaining power as AirAsia doesn’t provide these amenities in the travel. Also, there are many suppliers of these resources thus it given the company enough options to choose from. Power of maintenance suppliers is moderately low. This is because AirAsia has outsourced the maintenance and the contract is provided on ‘’competitive bidding’’ method (Grant, 2013). The imperative suppliers like Fuel have a high bargaining power. This is because not many suppliers are there in the market and also the fuel used by the Aircraft needs special fuel.
1.5 Rivalry among existing firms
High competition: There are a lot of rivals of AirAsia. In Asia; a huge number of airlines are using LCC with low fares and no frills like Spice jet. Worldwide, airlines like Ryanair impose an indirect competition on AirAsia. Thus, higher the competition and lesser will be profit generated. Customer can easily opt for some other flights which are suitable for them in aspects of time, schedule and price. Thus, this makes this industry a very high competitive place to be in.
High Fixed costs like wages, other purchases are not depending on the sales of the firm. Thus, every airline tries to maximize its sales which...