Case Analysis (Air Asia)

Introduction

As the world’s lowest cost airline and Malaysian second largest National Airline, Air Asia has risen within a few years to become a giant in the industry. It has been able to provide a different approach and experience to air travel. With affordable fares and services that are in line with the nation’s aspiration of profit and benefit to citizens, the airline has been able to nurture the vision “Now Everyone Can Fly” without compromising the Flight Safety Standards (Bazaraa et al. 2001). However, probably due to the rapid growth and rise into importance, the company has been faced with various management issues especially related to the maintenance of the trend already taken (Conway 2011, p. 2). The current paper aims at making a deep analysis into the company and its management strategy to bring out these issues. Further, the case study will use a management model to evaluate the options of the company and give recommendations.

Problems Identification

The strategic management problems faced by Air Asia have been associated with the rapid unplanned growth that has characterized the company (Bowen 2000, pp. 25–41). First, as an upcoming company in the industry, the company still has no company maintenance department. The maintenance, repairs and MRO services for their planes are sought elsewhere. It increases operational cost (Haldane Dodd 2012). Secondly, there have been recent reports of customer complaints related to failure to refund fares in cases of missed flight, delay of flights as well as increase in the prices of commodities onboard. All these issues are related to management failures (Jiang 2012). The internal communication system has not effectively managed the flow of information. As a result, the growth of the airline has not been uniform. With varying and poorly aligned missions, strategies and objectives among the departments such failures arise (Leinbach & Bowen 2004, pp. 299–321). Communication within the company could have been effective to ensure that as the company expands to colonize more of the air travel, the initial objective of making air travel cheap was withheld without looking for other avenues to raise funds. Similarly, the expansion of the airline would have been more appealing if the company sought to construct own maintenance facility.

Model Selection

The whole idea of success was a result of the environmental advantage and correct timing of the company. Using the Porter’s Diamond model, it is effective to analyze the managerial issues affecting the Airline and give recommendations. According to this model, the competitive advantage of business is based on the ability of the company to maintain communication between the strategies, demand factors, supporting factors and industries, conditions for production and the regulations of business. When a company maintains a healthy communication between these factors, there is a competitive advantage that develops and keeps the company ahead of others in the industry (Ozgen & Campus 2011, pp. 61–76).

Analysis of the Model

From this model, the conditions refer to the situations within the country that regulate the production and services offered by the company. These include infrastructure and labor laws. The demand conditions refer to the market requirements while strategies and structures are the conditions inside the company and plans that keep the company relevant in the market and whose main objective is to enhance growth of the company (Ozgen & Campus 2011, pp. 61–76).

The issues related to the lack of a maintenance facility in the airline company, indicate a defect in the communication between the strategy and structure and the market demands. The company has reached out to more people in the population through purchase of planes. However, it has not been going hand in hand with preparations on the facilities required for the increasing number of planes such as repairs and maintenance (Leibler & Huse 1993, pp. 1357–1368).

Whereas these seem to be effective communication between the company’s expansion strategy and the regulations and conditions laid down by the government, the market demand seems to have an issue. The customer complaints related to delayed flights and lack of refund of fares; as a result, of missed flights, indicates a lack of preparation on the part of the company. The company’s mission to make everyone able to fly is based on a strategy to make air travel fares affordable to all. When this has not been communicated at all levels of the company, there is a risk of breach of customer’s trust. Therefore, the company appears to have failed in managing the operations with only the subsidized fares, thereby looking for other means of obtaining that money lost through failure to refund, delays and increasing prices of commodities (Jiang 2012).

When there is a failure in the communication, according to this model, the company struggles to reach its mission. Even with a good business, production and marketing strategy, the company lacks the uniformity necessary to ensure that there are overall growth and progress. It is also possible that the speed of growth for a company like Air Asia has greatly affected its implementation of the communication as well as the making of a viable strategy. The market and the environment were not adequately studied before setting out to business. Restructuring the operations, deeper research and effective internal communication are necessary for ensuring that these issues are solved (Pierce 2003).