Air asia in vietnam tp021569

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Introduction to AirAsia
Analysis of External Environment (PEST Analysis)
Opportunities of AirAsia in Vietnam Airline Market
Threats faced by AirAsia in Vietnam Airline Market
Analysis of Internal Environment (Strengths & Weaknesses)
Generating Strategies with TOWS Matrix for AirAsia
Entry Strategies for AirAsia in Vietnam
Marketing Strategies for AirAsia in Vietnam
Conclusion

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Air asia in vietnam tp021569

  1. 1. AirAsia in Vietnam Prepared by: Chan Chee Mang TP021569 UC3F1201 IBM BM026-3-3 INTSM (International Strategic Management) Lecturer: Mr. Halmi Bin Yusoff Asia Pacific University (A.P.U) BM026-3-31 INTSM 10/29/2012
  2. 2. Contents Introduction to AirAsia Analysis of External Environment (PEST Analysis) Opportunities of AirAsia in Vietnam Airline Market Threats faced by AirAsia in Vietnam Airline Market Analysis of Internal Environment (Strengths & Weaknesses) Generating Strategies with TOWS Matrix for AirAsia Entry Strategies for AirAsia in Vietnam Marketing Strategies for AirAsia in Vietnam2 Asia Pacific University (A.P.U) BM026-3-3 Conclusion 10/29/2012 INTSM
  3. 3. Introduction to AirAsia Founded by DRB-Hicom in 1993, operation started in 1996Time Warner bought over the heavily indebted airline in 2001,and latter re-executive by Tony Fernandes‟ corporation- TuneAir Sdn Bhd with 1 Ringgit MalaysiaTony Fernandes turned the company to produce LOW-COSTflight services in 2002 by launching new routes in MalaysiaLow-Cost Carrier (LCC) of AirAsia operation had becomeimpactful in the flight service industry with the promotional fares Asia Pacific University (A.P.U) BM026-3-33 INTSM 10/29/2012
  4. 4. The Currentbecame the first and most successful Low-Fare airline withmore than 75 destinations in Asiathe associate companies-AirAsiaX, Thai AirAsia, IndonesiaAirAsia, Philippines‟ AirAsia Inc and AirAsia Japanthe main competitive advantage of AirAsia is AirAsia.com Asia Pacific University (A.P.U) BM026-3-34 INTSM 10/29/2012
  5. 5. AirAsia‟s Vision & MissionVision - to be the largest low cost airline in Asia and servingthe 3 billion people who are currently underserved with poorconnectivity and high faresMission - (1) To be the best company to work for whereby employeesare treated as part of a big family,(2) Create a globally recognized ASEAN brand,(3)To attain the lowest cost so that everyone can fly withAirAsia, and(4)Maintain the highest quality product, embracing technology Asia Pacific University (A.P.U) BM026-3-3to reduce cost and enhance service levels5 INTSM 10/29/2012
  6. 6. AirAsia‟s Value & Key StrategiesAirAsia’s ValuesSafety First (Partnering with the world‟s most renowned maintenanceproviders and complying with the with world airline operations.)High Aircraft Utilisation (Implementing the regions fastest turn aroundtime at only 25 minutes, assuring lower costs and higher productivity.)Low Fare, No Frills (Providing guests with the choice of customizingservices without compromising on quality and services.)Streamline Operations (Making sure that processes are as simple aspossible.)Lean Distribution System (Offering a wide and innovative range ofdistribution channels to make booking and travelling easier.)Point-to-Point Network (Applying the point-to-point network keepsoperations simple and costs low.) Asia Pacific University (A.P.U) BM026-3-36 INTSM 10/29/2012
  7. 7. Analysis of External Environment – Political Situation in Vietnam Airline IndustryVietnam‟s Government Policies-Operated under CommunistRegime for yearsIn fact, Vietnam welcomes foreign direct investment (FDI) andenhancing trade relations“Doi Moi” which means economic renovationThe Communist Party of Vietnam remains committed to market-oriented reforms and do not expect major shifts in policy directionover the next 5 years.The ruling communist party‟s authority is often intimidated by thecorruption among government bureaucrats. Asia Pacific University (A.P.U) BM026-3-37 Vietnams human rights record is gradually improving. Government INTSM 10/29/2012
  8. 8. Analysis of External Environment – Economic Condition in Vietnam Airline IndustryVietnam is the world‟s 22nd fastest growing economy withGDP growth estimated to reach 6.3% in 2013 and 6.5% in2014 (Thanh Nien News, 2012).Urbanization in Vietnam has been accelerating recently, witha UN projection suggests that the urban population will exceedthe rural population by 2040 (The World Bank in Vietnam,2011).Economic lift has brought many people out of poverty inVietnam, with poverty rate falling from 37.4% in 1998 to 14.5%in 2008Pacific University (A.P.U) BM026-3-3 Asia (The World Bank, 2012).8 INTSM 10/29/2012
  9. 9. Cont.Vietnams growth over the medium term depends onwhether it becomes a truly multi-sector economy in whichprivate businesses are able to grow and compete in anundistorted environment with the same freedoms as stateenterprises.In 2007, FDI inflows exceeded governments expectationsand credit growth rose by approximately 50%. However, forecasts for growth are being scaled down inlight of rising inflation and other signs the Vietnameseeconomy is overheating. Asia Pacific University (A.P.U) BM026-3-39 INTSM 10/29/2012
  10. 10. Analysis of External Environment – Social-Cultural in Vietnam Airline IndustryAnnual population growth rate from year 1999-2009 is 1.2%,with total population as of year 2009 is 85.85 million. Gap widens between rich and poor with growth of incomeinequality since 2002 andavailability of large and trained workforce at low cost. Asia Pacific University (A.P.U) BM026-3-310 INTSM 10/29/2012
  11. 11. The 5D model – HofstedePower Distance – 70% which means that people accept ahierarchical order in which everybody has a place and which needsno further justificationIndividualism – 20% Vietnamese is Collectivist society meansbelong to „in groups‟ that take care of them in exchange for loyalty.This is manifest in a close long-term commitment to the “member”group, be that a family, extended family or extended relationships.Loyalty in a collectivist culture is paramount and overrides most othersocietal rules and regulations.Femininity – 40% on the dimension means that the dominantvalues in society are caring for others and quality of life. A feminine11 Asia Pacific University (A.P.U) BM026-3-3 10/29/2012 INTSMsociety is one where quality of life is the sign of success and
  12. 12. Cont.Uncertainty Avoidance (UAI) – 30% Low UAI societiesmaintain a more relaxed attitude in which practice counts morethan principles and deviance from the norm is more easilytolerated. Vietnamese believe there should be no more rulesthan are necessary and if they are ambiguous or do not workthey should be abandoned or changed.Long-term Orientation – 80% Societies with a long-termorientation show an ability to adapt traditions to a moderncontext that is pragmatism, a strong propensity to save andinvest thriftiness, perseverance in achieving results and an Asia Pacific University (A.P.U) BM026-3-312 10/29/2012overriding concern for respecting the demands of Virtue. INTSM
  13. 13. Analysis of External Environment – Technology & Infrastructure in Vietnam Airline IndustryVietnam is aiming to accomplish its development plan for theaviation sector by 2020 including further expansion for aircraft fleet,building and upgrading airports, and developing better airportoperations and air traffic managementby 2014, Vietnam will become the world‟s third fastest-growingmarket for international passengers and freight, and the second-fastest in the number of domestic passengersThe World Economic Forum‟s 2010 Global Enabling Trade Reportrated Vietnam 103 out of 125 countries for availability and quality oftransport infrastructure.The government has also implemented a 3-year discount schemein April 2010University (A.P.U)charges relief to airlines at Vietnam‟s major13 Asia Pacific to provide BM026-3-3 10/29/2012 INTSMairports.
  14. 14. Strengths WeaknessesGenerating Exploitation and Accesses to Latest Technology Over-Relying on Online Sales Limited Customer Service Low-Costs Business Model Too Dependent on OutsourcingStrategies using Single Aircraft Type which gives Lower Turnaround Time Strong Management Team Established Brand and ReputationTOWS Matrix Opportunities Strengths – Opportunities Strategies Weaknesses – Opportunities Strategies Rise in the Middle Class Population  Promoting low costs and lower turnaround time to  Improve quality and service level Strong domestic growth rate attract the growing domestic market with development plan in aviation Increase in fuel prices eliminate unprofitable  Utilise strong branding and marketing to target the rise sector competitors in the middle income class and growth in leisure travel  Limited service reduces costs by Growth in leisure travel in Vietnam targeting increment in fuel prices Development plan in aviation sector  Making full use of exploitation towards internet which leads to higher fares Availability of large and trained workforce at low cost technology with development plan in aviation sector  Availability of huge amount of  Exploitation of internet technology simplifies processes skilled workforce reduces much for tourists training needed for handling online sales Threats Strengths – Threats Weaknesses – Threats Strategies Strategies Aviation Rules and Government Policies  Utilise strong branding and marketing which targets the o Modernize Navitaire with tragedy Macroeconomic Instabilities aviation rules and government policies in Vietnam recovery targeting heavy reliance on  Asia Pacific University (A.P.U) BM026-3-3 cost, lower turnaround time and strong Promoting low online sales and macroeconomic14 INTSM branding in order to cope with the macroeconomic instabilities 10/29/2012 instabilities
  15. 15. AirAsia‟s Entry Strategies in Vietnam Aviation Marketit is more viable for AirAsia to enter Vietnam market using jointventure as entry mode in aviation sector because the country forbids100% of foreign ownership. Besides that, domestic flights in Vietnam are still guarded by thecountry‟s law prohibiting foreign airlines from entering to protect thelocal airlines.Joint venture with a local brand (VietJet, 2010) in Vietnam wouldbenefit AirAsia as Asia‟s low cost leader and largest LCC to be ableto expand its operations further in the country, obtaining strongerposition among competitors, increase intra-regional connectivity, andas another opportunity in backing up the ASEAN region as tourismhub. Asia Pacific University (A.P.U) BM026-3-315 INTSM 10/29/2012Moreover, the joint venture will also contribute to the diversification
  16. 16. Marketing Strategies Maximized IT and implementing E-commerce in AirAsia business - AirAsia implemented current IT such as yield management system (YMS), computer reservation system (CRS), and enterprise resource planning (ERP) system Generate new Product Package Strategy - enhance on its Do-It-Yourself (DIY) package promotion by “Go Holiday” theme for travellers Asia Pacific University (A.P.U) BM026-3-316 INTSM 10/29/2012
  17. 17. ConclusionTo compete with their competitor in the Vietnamese businessenvironment, AirAsia needs to make a strategy to achieve their longterms objective and can be successful for doing their business. Thestrategic management becomes important due to the followingreason such as globalisation to survival their business, and then e-commerce become the critical success to the company nowadays. acompany needs to consider the company ability and how tointegrating it with the as well as main factor in the internal andexternal factor.How AirAsia can solve the current issues to be a low cost carrierleader in airplane industry? The first is to identify and analyse thedifferent strategic analysis, and then to solve the current issues withsome strategies such as Joint Venture Entry Strategy, ProductPackagePacific UniversityMaximized IT and implementing E-commerce in Asia Strategy, (A.P.U) BM026-3-3 10/29/2012 17AirAsia business, Operation effectiveness and outstanding efficiency, INTSM

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