Organizational Structure of AirAsia

Keywords: airasia company structure, airasia success factors

1. 0 Introduction

Nowadays, the use of information technology plays a vital role for businesses to be competitive and succeed. Corresponding to Laudon and Laudon (2010), almost the all firms and organizations use it to survive; they invest in information technology and systems because these investment funds will go back a whole lot of advantages, such as; an increase in productivity, a reduction in costs and a rise in income. Information systems provide information for managers which help those to make better decisions and improve operations. This assignment will look at the greatest low cost service providers in Asia Pacific region - AirAsia Berhad, which is recognized as AirAsia. In such a work we will analyse how business has effectively used it and systems to boost their business. In addition, this paper will look to IT strategies of Air Asia and some businesses operations within group where information systems were successfully implemented.

Organization background

If you want to comprehend today, you have to find last night. (Pearl Buck)

Generally, without history, there is no future and everything in our life has his record. Thus, it is short Air Asia's record:

First of most, AirAsia was founded in 1993 by Malaysian federal as a second airliner to the major countrywide air company MAS (Malaysian Airlines) and AirAsia began operating after 3 years on 18th November 1996. Through the next 5 years, AirAsia failed annually to bring revenue, as a result; AirAsia acquired a great debt of about USD $ 37 million in 2001. However, this time around is the time when the real storyline of the major low-cost airlines began. In 2001, Dato' Sri Dr Tony Fernandes with companions Dato' Pahamin Rejab (previous chairman of Air Asia), Dato' Kamarudin Meranun, and Dato' Aziz Bakar purchased the AirAsia from Malaysian owner HICOM Holdings Berhad (now known as DRB-HICOM Berhad), for a symbolic price RM1 (USD 0. 25 cents), and agreed to close the bills of the company. (AirAsia Annual Survey, 2008, p. 3)

They started with an innovative goal to make air travel cheaper and less expensive to individuals who "Now Everyone Can Fly". AirAsia was re-branded and re-launched and started out new life with two Boeing B737 planes, about 250 staffs and got only five destinations to Kota Bahru, Kota Kinabalu, Kuching, Labuan, Langkawi and Penang. Relating to AirAsia website, today after 10 years Air Asia has around 100 air planes and flies to more than 60 destinations from 23 countries. Additionally, Air Asia runs more than 3, 500 flights a week and has around 8, 000 staffs. In '09 2009 AirAsia ferried more than 22 million travellers and AirAsia is ASEAN (Association of South Asia Nations) carrier. (AirAsia Annual Record, 2009, p. 4)

It can be evidently seen that AirAsia has made a significant success in flight industry which is interesting to know what and how managers of AirAsia use to achieve this fantastic outcome. It'll be explained later in following chapters.

Organization Perspective and Mission.

Nowadays every business has quest and vision claims, which show what company is - (objective) and a view of what business wishes to be - (vision). (Harrison and John, 2009) Furthermore, the mission statement of the organization must be broad because it is an umbrella which includes organization's programs and services. (Angelica, 2001)

1). AirAsia's Perspective:

Continue to be the cheapest cost airline in every market we provide.

2). AirAsia's Mission:

  • To be the best company to improve whereby employees are treated within a large family
  • Create a internationally identified ASEAN brand
  • To attain the cheapest cost so that everyone can take a flight with AirAsia
  • Maintain the best quality product, embracing technology to reduce cost and enhance service level (AirAsia website)

Business Strategies and Success factors.

"Without a strategy the organization is similar to a dispatch without rudder, going around in circles". (Joel Ross and Michael Kami)

Air Asia Success factors.

AirAsia has achieved a tremendous success since its "reconstruction". Due to some success factors AirAsia gets some competitive advantages in air travel competition. By using it AirAsia is a good lowest cost flight company in South Asia. The key point of Airasia's success factors is to provide low fares is to regularly keep costs low. Providing low costs needs the high efficiency atlanta divorce attorneys part of the business. Thus, all of business, every system process, everything must combine best industry routines. AirAsia'a success factors can be analyzed in the central values of the organization. AirAsia gets competitive advantages and makes their business successful by using these key strategies:

Safety First - Basic safety is the most essential criteria in every area of the organization operations; protection is the area where AirAsia will never compromise on. All conditions, which determine by regulators in the countries where AirAsia manages, are complied by the greatest low fare airline. Furthermore, partnering with the world's most renowned maintenance providers to be made certain that AirAsia's airplanes always in the best condition.

High Airplane Utilisation - The AirAsia airplane captains' ability, to make a fast turnaround of 25 minutes which is the quickest in the region, is more convenient for customers to visit. It has resulted in high aircraft utilisation, better airline and staff output and lower costs.

Low Fare, No Frills - Providing to guests to have the selection of buying exclusively ready meals, snack foods and beverages from in-flight service at a realistic price.

Streamlined Procedures - The important key of the AirAsia's success is to make techniques are simple as possible.

Leans Syndication System - Offering a wide and innovative range of syndication channels to make booking and traveling easier.

Point to Point Network - Making use of the point-to-point network maintains procedure simple and lower costs. A lot of the AirAsia's flights are brief haul (four-hour trip radius or less) which keeps lower costs.

Company Business Strategy.

The Business Strategy of AirAsia is "To continue to be the lowest cost short-haul air travel atlanta divorce attorneys market it serves, delivering strong organic growth through offering the lowest airfares at a uprofit".

This strategy centering in six main proper thrusts:

Leanest Cost Structure

  • Efficient and simple point to point businesses
  • Attracting and keeping hardworking and smart people
  • Passion for continuous cost reduction

Maximise Shareholders' Value

  • Resilient profit progress through our lower cost base
  • Expansion of the AirAsia network in a advisable and disciplined manner
  • Invest and enhance the AirAsia brand to increase shareholders' returns

Safety

  • Comply with the best International Aviation Protection Expectations and practices
  • Keep functions simple and transparent
  • Ensure the security of the People and Guests

 

Passion for Guests' Satisfaction

  • Maintain simplicity in every application
  • Practice the unique and friendly AirAsia experience at every opportunity
  • Recognize the linkage between guests' satisfaction and long-term success

 

Transparency

  • Transparency in decision-making and information writing
  • Optimum disclosure - greater than industry norms
  • Timeliness in disclosing information

 

Human Capital Development

  • Invest in both hard and tender skills
  • Recognize all our People as contributors to our success
  • Reward quality and individual contributions
  • Maintaining one brand over the Group

 

Analysis of the existing Business Environment.

Industry Evaluation - Porter's Five Causes Model.

1. Bargaining Ability of Supplier

First of all, it could be clearly seen that the key AirAsia's distributor is the airplane suppliers. Generally the power of aircraft suppliers is quite strong because of monopolisation in airplane manufacturers; there are only two types of airplanes Boeing and Airbus. The switching cost for airplane suppliers is very high due to expensive needs to change airplanes, for example: it will be very costly for AirAsia to change airplanes and train employees to be utilized of new airplanes. In all honesty, nowadays, only several air travel manufactures can be found in airline industry, thus the energy of airplane suppliers is very fantastic. If we turn to other suppliers, such as, petrol, food and other suppliers, it is clear that their power is not so strong because AirAsia can change them and it will not have an effect on to costs. The increase in price can be dangerous for these suppliers because AirAsia can stop working with them.

2. Bargaining Power of Buyer

Generally, the power of customers is definitely high since there is no any transitioning cost for customers to improve from one airline company to some other, however; in this case, it could be thought that the output of AirAsia is very unique and fantastic in South Asia region. In addition, there will be transitioning cost for customers who wish to change AirAsia to another airline company, because of this; the bargaining ability of potential buyers is low.

3. Threat from Substitutes

In South Asia region there are several possible substitutes for flight industry, such as; trains, buses, autos or ships. However, the prices for other substitutes are more costly or at the same level, comfort, time spending and other factors during the travelling tend to be worse than in irline travelling. Nowadays, air traveling is faster, cheaper and convenient, because of this; threat of substitutes is respectively low.

4. Threat from New Entrants

Airline industry is very costly for new organizations to entrance into this industry. New organizations will need to have a big capital, strong support from administration and must correspond for some requirements for flight organizations. There are difficult barriers for new organizations, for occasion; cost advantages of existing flight organizations, brand loyalty of customers, high switching charges for customers and federal constraints. Therefore, the menace from new entrants is low.

5. Rivalry Intensity

In general, your competition between flight organizations in Malaysia is not very strong. There is merely one competitor for AirAsia in Malaysian airline industry is Malaysian Airlines (MAS) which may be regarded as a "friendly" rival. Thus, the strength of rival is lower in Malaysian airline industry.

3. 3 AirAsia Competitive Edge.

The strategic positioning has several ways in which the company can perform competitive advantage. For example, offering similar benefits for less cost to customers or retain cost but offer better benefits for customers. In the case of Maybank, the strategy used by the company is to maintain the worthiness of bank products and services, while offering great benefits and value, as well as the nice quality of these products and services.

Focusing on the variety and quality with their products and services, Maybank exercise their competitive advantages. Specifically, through its subsidiaries Maybank provides a huge and diverse selection of products and services. That allows its customers to work with multiple services in a single bank group. By entrusting their money to the time-tested standard bank, whether insurance, private banking or property management. All this, along with high quality services and highly professional personnel of the lender create convenience for customers, therefore increasing competitive benefit.

One of the critical indicators in achieving competitive advantage of Maybank is to improve the quality and quickness of services through the benefits of it. Maybank since its inception wants ways to make life easier for its customers, through enhancing the quality of its services. Information technology have performed an important role in this. Maybank always has been the first ever to introduce new solutions, thus providing greater benefits and opportunities for its customers.

4. 0 Analysis of the existing IS/IT Strategy Environment and IT alternatives of Maybank.

Yield Management System (YMS)

It is also called Revenue Management System; it knows, anticipates and reacts to the patterns of customer to increase revenue for the business. This takes into account the operating costs and helps AirAsia to optimise prices and allocate capacity to increase expected profits. The optimization is performed on two levels in AirAsia:

Seat (Every seats is known as an opportunity to maximize revenue. Chairs can be found at various prices in several things of time. A reservation done at a later time will be charged more than the one done previously - for the same seats)

Route (By adjusting charges for routes/destinations which have a higher demand in comparison with others). The effective method however is to incorporate these two levels for many flights, all routes so that both chair and the option are effectively priced for all your flights.

AirAsia has recognized increased revenue (3-4%) for the same quantity of aircrafts by taking benefit of the forecast of the high/low demand patterns, effectively shifting the demand from low period to high period and by charging reduced for past due bookings. Over the past year or two, AirAsia have actually decreased prices (essential for LCC) as the YMS has given them the window to increase their revenue by offering higher discounts, more often during off-peak times while bringing up prices only marginally for peak times. (Voneche, n. d).

Computer Reservation System (CRS)

AirAsia's CRS (Start Skies by Navitaire) has helped it to expand at a dramatic pace before handful of years

"Navitaire's Open Skies technology has truly enabled Airasia's growth from 2 million individuals to 7. 7 million people in under two years. Open Skies scaled easily to support our expansion. "

- Tony Fernandes -

CEO - AirAsia

Source: Navitaire (http://www. navitaire. com/res_and_dist/openskies. asp)

It can be an integrated web-based booking and inventory system. It includes Internet, call centre, air-port departure control and more. It is a primary sales engine motor that effectively removes the middleman (travel companies) and the sales commissions that need to be paid to them. Centralized customer data is also taken care of by Open Skies which helps AirAsia to keep tabs on booking and timetable airfare activities with real-time, on-demand confirming feature. The huge booking information that is provided online to the customers works as a pressure that brings more customers to work with the website thus reducing the client support costs. An important feature is that Open up Skies seamlessly integrates with the already put in place YMS so the systems can be used together for rates and revenue maximization (by giving home elevators bookings, schedules etc) and driving down the expenses of operation at exactly the same time. This CRS empowered AirAsia to present the first solution less travel option and also provides features such as advanced boarding moves in addition to online reservation that enabled the growth of AirAsia as these features attracted customers that did not have enough time for purchasing tickets from counters and coming in 1 hour early for acquiring a seats on the plane. AirAsia have proposed to implement a radio Delivery System

(WDS) to extend its reach via cell phones. With this, potential customers can book tickets via their cell phones. That is a tactical move for growth as the Asia-Pacific region has a larger population of mobile phone users rather than internet users.

Enterprise Source of information Planning System (ERP)

AirAsia has recently (May 2005) opted for a full fledged ERP system carried out by Avanade consultants. By implementing this package AirAsia is seeking to successfully maintain process integrity, reduce financial month-end shutting control times, and speed up confirming and data retrieval processes. (Microsoft Malaysia)

4. 1 IT and it is deployed by Maybank.

It can be said that Maybank has been always be on the path to improve quality of these products and services, thereby gratify all the needs of these customers. In other words Maybank has been always innovated its products and services by implementation from it. If to look back to days gone by we can easily see that Maybank was the first choice to create new technologies to the marketplace. For instance, Maybank was the first ever to embark on a computerisation program, First to apply the use of ATMs and establish a distributed ATM network with its subsidiaries, First to create Phone banking and First to create Internet Banking.

In 1981, Maybank was initially Malaysian bank to set up Automated Teller Machine (ATM) services. (total annual report, 2009). After that Maybank increased the amount of ATMs, with every year. ATMs give a lot of opportunities and advantages to the clients of the lender. Such as, usage of own accounts 24 time/7 days weekly, fast cash drawback, cheque booklet and statement need, fund transfer between own accounts and money transfer to third party accounts. Furthermore, Maybank was first domestic loan provider to apply MAS electronic Ticketing at their ATMs, this allow Maybank customers ticketless air travel in Malaysia on Malaysia Airlines. Later, due to its expansion to the South Asia market segments Maybank unveiling the Maybank RegionLink Service. RegionLink Service allows Maybank customers in Malaysia, Singapore, Brunei and Philippines to access ATM transactions at any Maybank ATM in these four countries. To effectively consumption and controlling its ATM network as well concerning enable their customers to possess an improved service, Maybank uses computerized teller machine management software from Diebold Inc.

Without a doubt, the web is one of the most crucial technological advancements of modern times. The rapid development of information systems have created vast opportunities for companies to lessen operating costs, increase speed and quality of their services, as well as the creation of additional benefits for their customers. Because of this and to create competitive benefits Maybank start its Internet Bank.

Basically, Maybank launch Internet Banking through its online financial portal maybank2u. com in 2000. This portal bring the convenience of online banking for its customers, who is able to open a merchant account, check balances, copy funds, settle charges and shop online via this web site, which employs 128-little bit SSL security technology. Later in 2001, Maybank start its E-bills service, which is often used only by their customers. In those days there have been 325 business organisations which were able to recognize repayment through internet bank. Conducting funds trades over the internet has been convenient and quick. This allowed the business to attain RM 500 million every month total average purchase. In 2003, Maybank launched Internet Banking Kiosks. It allow their customers to undertake internet banking ventures in provided terminals at its branches.

To maintain steadily its leadership position in internet bank services, in 2006, Maybank kick off Mobile Banking services in cooperation with Celcom and Maxis. It had been the first mobile banking in Malaysia. It allowed Maybank customers to access to the three most popular applications of Maybank2u. com: costs repayment balance enquiry and account transfers. From that time, Maybank customers possess the convenience of undertaking selected banking ventures in real time via the cellular phone.

In order to improve its efficiency and service MayBank concluded a series of deals with companies such as CSC and Microsoft. The main objective of IT infrastructure outsourcing agreement with CSC was to boost their IT services to put it for global economical growth and, regarding major disasters, to reduce its recovery time from three days to significantly less than eight hours. The data center was shifted from Maybank's headquarter to a secure and modern CSC facility. Furthermore, CSC setup separate data centre for disaster recovery that totally duplicates all of the banks critical data across all programs. CSC also provide simultaneous connection between loan company branches, the key data center and disaster restoration center. This deal allowed the company to reduce response time, to increase productivity and transactional rate.

An Enterprise Registration Contract with Microsoft Malaysia to look at one common software toolset for Maybank's desktop applications has given Maybank the capability to promote increased communication among employees and customers and improve cost efficiency. Among the results of the agreement was increasing efficiency and productivity of the employees.

4. 2 Effect on the consumption of IS/IT by Maybank.

In general, the utilization of information technology has a substantial impact on the task of the business. Effect of IT can be both at the organization, its efficiency, as well concerning clients and their marriage to the company.

In the situation of Maybank, IT was one of the fundamental factors of development and continued authority of the bank. Maybank always has been a pioneer in the introduction of the utilization of computer, which allowed the business to attain certain benefits. These benefits include competitive advantages, achieving the purpose of the company, better service for customers and increase earnings and market show.

Maybank could improve their service by using information technology and information systems. Provision of bank and financial services by way of a network of ATMs and internet banking has allowed its customers to access their accounts anytime and all over the world. Also, the IT/IS impact on the reduction of exchange costs and enough time spending on transfer, that is convenient for customers. Customer romantic relationship management system has been significantly influenced by information solutions. Increasing the means of interaction between the company and customers, has given Maybank chance to increase and improve understanding of the desires and needs of customers. All this resulted in much better service and client satisfaction, as well as the evident convenience for customers of Maybank.

Paying great attention to the use and implementation from it, Maybank thus creating conditions for bettering efficiency and productivity of their employees, as well as facilitating a repository of knowledge and being able to promote this knowledge over the company. In Maybank firmly assume that effective knowledge showing is a way to obtain competitive advantages. Also providing services and services Maybank has a competitive benefits. At the same time, it is just a temporary competitive benefits, because competitors can later get into the marketplace with similar products and services. Therefore Maybank is always on the path to improve its service.

On the other side, Maybank as a pioneer in the introduction of the utilization of IT gets the "first-mover advantage". It has a significant effect on enlarging market talk about. Also, the IT/IS comes with an effect on the reduced amount of exchange costs and individual capital costs. All this has allowed Maybank to increase income and market share.

Increased profits and market talk about, competitive advantages and better service has given Maybank an possibility to achieve its goal. Namely to become leading banking group in Malaysia, and placed the next goal to become a leading regional bank group by 2015.

5. 0 Conclusion

Technical improvement is coming more quickly than previously, thus, influencing all areas of an average company. Today, it is essential to the business to use information technology in order to work. It is become crucial factor for the Maybank to employ IT/IS to be able to contend in digital world, where everyone utilize it. Nevertheless, it is important to keep in mind that the most crucial factor still is the folks and companies such as Maybank also have to invest their profit staff training, in order to be competitive enough or even to create competitive benefits. Since it is people who create it.

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