4.0 INTERNAL ENVIRONMENT Internal environment is the environment that impact directly to the organization. Internal environment are needed to identify the strength and weakness of Air Asia business through resources based view and culture. Core competencies Air Asia core competencies are offers low-cost and affordable airfares. Air Asia always offers low cost price to the consumer who choose Air Asia as their transport to move. It is suitable with the slogan which is “everyone can fly”. Air Asia also offers internet and mobile services as mediums for check-in and booking. Nowadays, people are moving towards the new technological environment. So, Air Asia make consumer feel easy to booking and checking the flight schedule using mobile anytime and anywhere. Another competence is a low-cost no frills airline, with an extensive regional network in Asia that caters people of all income. Distinctive competency Air Asia distinctive competence is a low cost carrier which offers five-star service where everybody can fly. Competitive advantage The three factors that form the competitive advantage for Air Asia in providing the low cost carriers are the strategic decision in using one type of aircraft, the synergy between Air Asia management and the employees and the productive and skillful employees. The strategic of using one type of aircraft can cut the cost down to 50 percent and also cut down the learning curve. Besides, training time can be reduced and eventually reducing cost since Air Asia use one type of aircraft. Second factor is the synergy between the Air Asia management and the employees. Management of Air Asia always support and motivate employees to work and be creative. This is because without the support from the management, employee will be less motivated in their creation and it will affect the Air Asia’s performances. So, it is proved that synergy are important and it hard to be imitate by other competitor. Last factor is productive and skillful of Air Asia employees. For Air Asia, the methods, procedures and tips that have been created by the
employees have helped Air Asia to thrive on the low cost that they produced. It was the secret that hard to imitate by other competitor such as the idea of “the one type of aircraft concept”. Organizational Culture Organizational culture can be defined as “ a pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration and that has worked well enough well to be consider valid and to be taught to a new member as the correct way to perceive, feel and think” (textbook) 1. Strong team oriented in corporate culture
Air Asia management always educate employees to focus on core strategy and maintain the low cost and high productivity
2. Stability
Air Asia increases the loyalty of the employees by giving the bonuses to all employees
who do well in their job best such as ticket free, holiday, incentives and others To keep the stability, Air Asia practicing ESOS (employee share ownership scheme) for all employees
3. Air Asia provide workers
Air Asia provides workers who are friendly working environment which are easy and
able to adapt with new environment quickly and sociable. Air Asia sponsoring numerous special events such as sponsors ‘Battle of the Year
Malaysia 2015’ at Queensbay Mall, Penang. Air Asia strive to be honest non-discriminatory, meritocratic environment
(https://prezi.com/6fcsj3y36vby/airasia-low-cost-budget-airline/)
Financial Five-year financial reports of Air Asia Company (RM
million,
otherwise stated)
unless For the year ended 31 December 2010 2011 2012 2013
2014
INCOME STATEMENT Revenue 3,948 4,495 4,946 Net total expenses 2,881 3,332 3,919 EBIT 1,067 1,163 1,027 Share of results of jointly- 12 (3)
5,112 4,194 918 14
5,416 4,562 854 -
controlled entities Share of results of associates Profit before taxation Taxation Net profit
42 361 1 362
23 60 83
1,380
1,338
17,856 8,790
20,664 11,390
5,001
4,555
961
302
(6) 1 1,099 777 963 (38) (222) (173) 1,061 555 790 BALANCE SHEET Deposits, cash and bank 1,505 2,105 2,233 balances Total assets 13,240 Net debt (Total debt - Total 6,352
13,906 5,676
15,729 6,177
Cash) Shareholders' equity
3,641 4,036 4,860 CASH FLOW STATEMENTS Cash flow from operating 1,594 1,404 1,324 activities Cash flow from investing (1,868)
(487)
(1,905)
(2,346)
(2,154)
activities Cash flow from financing 1,031
(300)
733
509
1,779
activities Net Cash Flow
617
152
(876)
(73)
757
(http://www.airasia.com/my/en/about-us/ir-5-year-financial-highlights.page) Table above shows that the financial report for the Air Asia Company for five years which is from 2010 until 2014. As we can see that, the revenue of Air Asia Company keep increasing
from year to year such as the revenue in 2010 was RM 3948 million were increased to RM 5416 million in 2014. Value chain analysis Value chain is a linked set of value creating activities that includes inbound logistics, operations, outbound logistics, marketing and sales, and service. The goal is to create value that exceeds the cost of providing the product or services, thus generating a profit margin.
Table shows that the value chain analysis of Air Asia Company using Porter’s value chain. This value chain divided by two parts which are the primary activity (includes inbound logistics, operation, outbound logistics, sales and marketing and services) and support activities (includes procurement, product and technology department, human resources management and firm infrastructure). Primary Activity 1. Inbound logistics
Air Asia is currently now running only one type of aircraft which is an Airbus planes. With using this one fleet aircrafts, it can save the cost on training of engineering and
focusing on other things such as innovation and promotion. For In-Flight services, meals can get from the local delights and we can promote local food to others at the same time.
2. Operation
Turnaround time. Air Asia flight takes 25 minutes to turnaround. It means that Air Asia use the less time on the ground and more time on the air. So, Air Asia gets the high aircraft utilization, lower cost, greater airline and staffs productivity.
3. Outbound Logistics
Customers can booking the ticket and check in the flight using online and mobile by themselves. So, this make customer feel convenience and easy rather than to book ticket
from another flight service that available in Malaysia. Then, customer also can easily get Air Asia service in all Malaysia airport. The service is good and the staffs are customer friendly.
4. Sales and Marketing
For the sales and marketing, Air Asia makes a lot of advertisement through all media such as newspaper, television, and internet. This is to ensure people are well known about the Air Asia such as promotion, discounts, and free seats. Air Asia makes will make promotion twice or more in a year.
5. Services
Air Asia offer services such as travel protection, lost and found services, follow up customer’s feedback and others.
Support Activities 1. Procurement.
Air Asia separates their business procurement into different units for example hotel, inflight services, flight and merchandise but everything is connected with the goals of Air Asia. So, each unit will focus on their own business.
2. Technology Development
Air Asia using specific system to support the operations. For example, Air Asia use Yield Management System (YMS) which will be used to calculate the operating cost and expected revenues, Computer Reservation System (CRS) functioning
as web base
reservation and Enterprise Resources Planning System (ERP) to speed up reporting and data retrieval. 3. Human Resources Management
Human Resources department will hiring the multiple skill personnel to increase the efficiency and quality of the company. Human resources also will reduce the cost for
company such as training development and time. Air Asia also hires capable workers, and they assign for multi skilled person that can maintain the company mission which is low price airline.
4. Firm Infrastructure
Air Asia will focus on their goal which is provides the low cost carrier for the customer. It is affordable for customer to pay. (http://docslide.us/education/porters-five-forces-and-value-chain-model-air-asia.html)
