Air Asia Case Study

EXECUTIVE SUMMARY

The purpose of this report was to analyze the internal environment of Air Asia on the basis of Hubbard et al.’s (2008) model of value creation including its resources, capabilities and how those resources and capabilities combined to form strategic capabilities. The key competitive advantage was also identified in light of Hill and Jones’ (1998) Building Blocks of Competitive Advantage. It also analyzed two contemporary macro-environmental trends namely technological and sustainability in airline industry and explored the industry environment by using Porter’s Five Forces of industry competitiveness model.

The main findings were that the brand name is Air Asia’s outstanding intangible resource and human capital is the significant capability of Air Asia. It was also found that cost leadership was Air Asia’s key competitive advantage. Besides this, the airline industry depended highly on technology and the trend of sustainability was strong. Using a wide range of journals and website of new entrants for Air Asia was moderately high, bargaining power of suppliers, to analyse the situation, it was determined that the threat bargaining power of buyers and intensity of industry rivalry were all high and the power of substitutes was relatively low.

It was strongly recommended that Air Asia needed to take differentiation strategy in to consideration. Secondly, the firm should insist on deepening their networks and technology. Meanwhile, the airline should continue to train their staff and consider a joint venture to improve its competitiveness. In addition, it should expand its target market on the basis of the brand name. Finally depending on the government’s supports was also recommended.

Table of contents… Page

Executive Summary…………………………………………………………….……i

Table of content……………………………………………………………………...ii

1.00 Introduction………… ………………………………………………...……..1

2.00 Analysis of the Internal Environment………………………….…………….1

2.1 0 Resources and capabilities…………………………………………….1

2.20 The key competitive advantage………………………………….……..3

3.00 Analysis of the external environment ………………..…......…..............….4

3.10 The Macro-environment…….…..……………………..…..…….……...4

3.11Technological