Welcome To Our Presentation

Principles of Management Group : 8

Our Group Membars Are

1. MD.FAHIM AHMED-ID: 16-30987-1(CIS)2. HUMAIRA CHOWDHURY-ID : 16-31502-1(CIS)3. SYED MUHAIMINUL ISLAM-ID: 16-31780-1(BBA)4. MD.NIZAM UDDIN SHUVO-ID: 15-29930-2(CIS)5. NUSRAT ISLAM SRISTEEID:16-31033-1

TOPIC

• LOW- COST

• Compay : Airasia Airlines

Report Structure

Cover page

Acknowledgements

Table of Contents

Excutive Summary

Introduction

Literature Reviews

Findings & Analysis

Recommendations

Conclusion

Acknowledgement• First of all we would like to thank Almighty Allah & Our

Honourable Faculty Munsura Rahmatullah for her valueble comments & suggestions.

• Secondly I would also like to thank my friends who helped me a lot in Finishing this project with in the limited time.

• I am making this project not only for marks but also increase our knowledge .

• Thank again to all who helped me.

Table of Content

Excutive Summary

Introduction

•SWOT analysis •BCG Matrix•competitive five forces model•Organizational Structure

Literature Review

• Strength•Weaknesses•Opportunities•Threats

Findings Analysis

Recommendations

Conclusion

Executive SummaryThe campaign garnered approx 3 million eyeballs across

social media in a span of 24 hours .Approx 1000 people joined the conversation on twitter which led to #piolot your Dream trending at number 2 nationally and at verious positions at city level. The microsite experienced high level of engagement as users spent close to 2 minutes going through the cintent .The time spent is 2x more than in industry average .The campaign also resulted in an increase of 400 followers on twitter for airasia in 24 hours .The campaign results were achived through a cumulative investment of INR 2 lakhs .

Introduction• Airasia Airlines was established in 2001 offering

the new image of traveling under its opinion “ Now Everyone Can Fly “

• The begginning of low-cost airlines .• It presented low-rate of fares as well as services

which is necessible .• Airasia has Swiftly broken travel norms around

the globe and has risen to become the worlds best .

Introduction

• With a route network that Spans Through to over 20 countries .

• In 2004-Airasia acquired 49% stake in awair renamed as Indonesia Airasia.

• In 2006-Airasia took over Malaysian Airlines rural routes-fly Asian Expres.

SWOT Analysis

Strength Weaknesses

Opportunities

Threats

SWOT

Strength

• Effective top mangement.• Low cost model.• Single type fleet .• First to market with ICT collaboration.• Multi Skilled staff – seamless transition with workforce . • Strong strategy and executive –plan on fuel hedging,buying low cost

airbuses .• Strong brand name and joint venture with TATA,reputed name in

INDIA.

Weaknesses

• Limited Human resource .• Heavy reliance on IT .• Website down.• Poor services.

Opportunities

• Additional aircraft.• Growth expectation .• Easy access.• There is also opportunities to partner with

other low-cost airlines .

Threat

• Customars worry about safety .• Advertiesments problems.• Financial speculation .• Effect of fuel price .• Authority interferences and policy .

Compare with Jetstar Airlines

Compare AirAsia Airlines Jetstar Airlines

Smart Rating 54 40

User Rating 3.5 2.7

Based in Malaysia Australia

Number of Destinations 120+ 82+

Continents Served Asia,Australia Asia,Australia, North America

Airline Partners No partners Emirates,Japan Airlines,Qantas

Fleet Size 171 planes 119 planes

BCG Matrix

AirAsiaAirAsia

BCG Matrix• BCG matrix: BCG matrix mainly follows the company market share

and growth. Its Classifies firms as .

Cash cows: low growth rate, high market share.

Stars: high growth rate, high market share.

Question marks: high growth rate, low market share.

Dogs: low growth rate, low market share.

BCG Matrix

AirA

sia

BCG Matrix• The AirAsia airline has the two Classifies

Stars: high growth rate, high market share.

Question marks: high growth rate, low market share

• Because of their low cost service they get the most customers and so their growth rate is high.

Porter’s competitive five forces model

• Five Competitive Forces

Threat of New Entrants

Threat of Substitutes

Bargaining Power of Buyers

Bargaining Power of Suppliers

Current Rivalry

Porter’s competitive five forces model

Porter’s competitive five forces model

• Among them the AirAsia airline company has followed 3 competitive environments. They are- Threat of New Entrants: The case of difficulty new competitors

Airlines Company can enter. Threat of Substitutes: The extent to which switching costs loyalty affects the likelihood of customers adopting substitute’s productsand services. Current Rivalry: company among rivals increases when company growth rates slow, demand falls, and tickets prices descend.

Organizational structure

Organizational structure means the design and the formal arrangement of company. This organizational design based on six points. AirAsia the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares. Airline Company is the low cost company. ITS structure based on ……………

Organizational structure Work specialization: this company separate jobs with each step

completed by a different person. Departmentalization: To be the best company to work for whereby

employees are treated as part of a big family. Create a globally recognized ASEAN brand• to attain the lowest cost so that everyone can fly with AirAsia.

Chain of command: continuous line of authority that extends from upper levels to the lowest levels of the airline and clarifies who reports to whom .

Span of control: this company is managed by the top level management .al the managers are highly qualified. And they can effectively maintain the large amount of employees.

Formalization: this company is highly formalized and they have standard rule and regulations.

This airline follows the business level strategies

• This business strategy seeks to determine how this airline can compete in each of its business. How to achieve to be a lowest carrier in the world in Airplane industry. - the most successful carriers came to dominate their hub markets allowing them to exert greater control over pricing and capacity, The very small price is needed for continued and greater access to the world’s most prospective air travel markets. AirAsia needs to offer the lowest possible fare.

Low cost provider: “low cost maximum profit”It’s a low cost provider because consumers don’t need to pay anything

by booking flights through travel agents. This is because the airline pays the agent a fee for booking the consumer on one of its flights.

This company has mechanistic structure

The reasons are-

A rigid and tightly controlled structure-

High specialization Rigid departmentalization Narrow spans of control High formalization Limited information network

(downward) Low decision participation

They also have some key strategy like-

Safety First Streamline Operations

Partnering Lean Distribution System

operations. High Aircraft Utilization

distribution, Turnaround time at only 25 minutes

Point to Point Network assuring

Low Fare, No Frills Providing guests.

Recommendations To maintain the high level of profitability –

Act on the Prices :• Expensive tickets to be distributed when the demand in high .(week-

end)• cheap tickets avilable during the middle of the weak .• price increasing according to the demand . Act on the cost :• Offer more on board services/products to the passengers . Taxi booking services . Internet wifi access on board newspapers . We rcommend business level strategies .

Conclusion To be a leader in the low cost carrier industry , AirAsia needs to use

strategic management continuously because the airline industry is a unique and complex in nature. The budget airline needs not just reduce cost and make the operational activities running effectively but also needs to come out with the strategy that can make competition irrelevant or uncontested market space through differentiation which AirAsia already doing but it has to enhance it further. In a teleconference recently CEO Datuk Tony Fernandes said that AirAsia is in the best financial position now and it would continue its focus on lowering cost ,improving returns and expanding its network. Despite the share increase in prices of oil and aviation fuel resulting from the Middle East crisis, Datuk Tony Fernandes has assured to the customers that it will impose fuel surcharges.