Malaysia Airlines

According to the AirAsia case, cross matrix segments can examine competitive rivalry through geographical markets, demography and travel purposes. Based on the geographical segment in Malaysia, the prominent competitor is Malaysia Airlines (MAS). Competition rivalry is currently in Air Asia’s favour. With price being the main battlefield of competition, AirAsia leads the way due to its low operating costs. However, there are more competitors entering the market that have major carriers as backers or owners which may lead to an ‘unrealistic’ price war in the future. Major competitor like MAS is a Malaysia Airline Company, at the same time; it is a government-owned airline. Thus, MAS has huge capital compare to AirAsia. Based on the case, maximum passenger capacity of British Airways, Malaysia Airlines and Emirates is significantly higher than AirAsia. Competitors as above need to pay leasing cost which able to reduce flight operating cost.

3. Threat of substitute products or services

Substitute products are those products that appear to be different but can satisfy the same need as another product. For example, the fax is a substitute for FedEx, Nutrasweet is a substitute for sugar, and bottled water is a substitute for a cola. Moreover, ssubstitutes limit the potential returns of an industry by placing a ceiling on the prices firms in the industry can profitably charge. To the extent that switching costs are low, substitutes may have a strong effect on an industry. Sometimes a difficult task, the identification of possible substitute products or services means searching for products or services that can perform the same function, even though they may not appear to be easily substitutable.

In market segment, airline industry highly relies on passengers based on travel purposes. Scope of travelling is for business dealing, meeting, discussion or vacation. Growth of technology makes a big change in the today business world, with the advance in internet; discussion can be conducted through video conferencing or the simple chatting. Fortunately, with the Asian region being so huge and with its geographic ‘make-up’, air travel is not only a viable service but also well-organized and convenient. This makes the threat of substitution low to AirAsia. Travelling from, for example, Jakarta to Kuala Lumpur would be a time-consuming exercise. Moreover, with border controls remaining incredibly bureaucratic in certain areas such as Thailand-Cambodia, then flying is easily the most proper travel plan.

4. Bargaining power of buyers

Buyers may bring largest impact to an industry through ability to force down prices, bargain for higher quality or value-added services, and play competitors against each other. A buyer or a group of buyers is powerful if some of the following factors hold true. In addition, a buyer purchases a large proportion