What are the micro and macro-environmental factors that have contributed to the early success of AirAsia?
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The fact that the market was dominated by Malaysia Airlines System created a need for an airline that would not charge as much. This microenvironmental factor gave a boost to the idea that low-cost airlines would be in demand. The macro-level factor is that people were hesitant to travel after the events of September 11, 2001. This led to people wanting to take a holiday close-by, as to avoid any long-distance travel and risks. This, in turn, became a micro-level factor because the local population wanted to visit the nearby regions more. Another micro-level is the rising economy and people’s salaries. With a higher budget, people were willing to travel more, and when they were offered an alternative to the expensive flights, they took it without hesitation. The local advertisements made people aware of the company and its pricing, and this led to acknowledgment and popularity.
Discuss the micro and macro factors that would affect AirAsia’s performance in the current competitive environment described in the case?
Micro factors that would affect AirAsia’s performance would be the offers in the domestic economy and market. During the crisis, people are less inclined to travel, as all the savings go to the needs of people. The service and its quality that other airlines offer could be another detrimental factor, as people want to be comfortable and trouble-free during their flights. A competing company that could offer more sales, promotions, and cheaper fares will make a problem for AirAsia. Factors on the macro level are the locations and length of the flights that other airlines can offer. As the business world is developing, people need to go too far off places for their international deals. Worldwide airline companies have an established market that people know about and can rely on, getting to their locations fast and at a relatively low cost.
By focusing on low prices, has AirAsia pursued the best strategy? Why or why not?
Air Asia’s success came from the focus on lower prices. The unification of people into several occupations, such as engineers and pilots helping out was a great idea, as it allowed for higher salaries because of the fewer employees. Since the prices are much lower than those of the other airlines, AirAsia is able to attract more customers and make a profit due to numbers, whereas companies with high prices will have fewer people interested in flying with that airline. Also, there are many more people from the middle and lower economic class, so the population wanting to pay less will overtake the numbers of people interested in luxuries and high priced tickets. Air Asia has been providing cheaper flights with good service, and so, people feel the comfort and care that is demanded by airlines.
Given AirAisa’s current situation with bigger competitors following its business model, what other recommendations would you make to CEO Tony Fernandes for the future of his company?
The primary focus of AirAsia is the domestic market, and the company should start focusing more on international flights. Because the world has become a much smaller place, due to the ability to travel, people are interested in seeing all the different locations, and international travel is rising. Even if there are not as many people traveling, the planes could be made smaller, so that there are savings in maintenance and gas. More promotions by offering bundles to families and groups of people could prove beneficial, as people enjoy savings and seasonal sales. Having an even lower cost to students would attract the younger population, which is always curious to visit far off and unfamiliar places, and the same could be done for seniors.