Business Strategy Aviation Industry Across World

Question: Describe about the Business Strategy for Aviation Industry Across World. Answer: Introduction The aims and purpose of this particular assignment are to focus on the key objectives of the aviation industry in India. The selected airline company in the assignment is AirAsia, which is one of the low cost airline industries across the world. Its headquarters is situated near Kuala Lumpur, and it is one of the largest aviation organizations when measured regarding flight size and destinations (AirAsia, 2016). The overall Airline Industry across the world is a complex concept, and there are different kinds of competitions, which exists in every corner. The study will focus on five important questions, which will highlight the business operations and competitive analysis of AirAsia. Analysis of the Macro Environment to evaluate the Aviation Industry in India The answer to this particular question will highlight the macro environment analysis of the selected airline company, AirAsia. The application a proper macro environment analysis will emphasize the use of an appropriate and relevant market tool, termed as PEST Analysis. With the utilization of this particular environmental analysis tool, AirAsia will be able to analyze all the major factors, of the external environment (Aras Crowther, 2012). There are four major points, which are analyzed to evaluate all the major factors. Factors Case Evidence Positive (Opportunities) Negative (Threat) Political One of the major economic factors in the all the airline industry is the fluctuations of the oil prices. Recently, the recession hit the aviation business, however with this economy slowing down the majority of the passengers want to enjoy the journey at a lower cost. Analyze the external factors Economical This particular Malaysian-based airline industry has faced certain operational issues while operating its business outside Malaysia mainly when the price of fuel increased. Help in the financial decision making process Social Due to the fact of growing population worldwide, tourists and some educated people are helpful for the expansion of this particular industry. Help to analyze the demographic conditions Technology The final factor is the application of the technology in the aviation sector. The organization follows different crucial element, which will conclude about the progression of the technological advancement. AirAsia provides the combination of air ticketing as well as hotel bookings, car hire, and travel insurance. However, the organization launched one of the major packages, which includes GO Holiday (AirAsia, 2016). Helps in technological advancement Figure 1: PEST Analysis of AirAsia Analysis of the Aviation Industry in India based on Air Asia and its Competitors The answer to this particular question will analyze all the important factors, which will contribute the competitiveness of AirAsia while operating its business in Asia and an attractive industry for AirAsia. Some of the crucial elements in this particular industry include cost factor, government policies, economic challenges and competition in the sector. In order to develop proper competitive business tactics, there are certain essential business tactics, which the organization applies in the overall business, policies. Some of the important features of this particular business organization include the following points. These are the crucial points, which conclude the aviation sector of the India. India is good place for the aviation Industry and has an aim of becoming the third largest aviation sector globally by the year 2020. The business opportunity in the country for AirAsia has a good prospect because of the growing demands. In order to operate in the Indian Aviation Industry the following factors need to analyze in order to develop an effective marketing plan. Development of a single passenger class, providing a minimum set of facilities in the industry, reducing the cost of acquisitions and maintenance process and emphasis on direct sales of tickets and employees working in multiple roles are some of the key factors of competitiveness (Armstrong Kotler, 2013). It is important to conclude about the economic background of India, which is one of the fastest growing economies in the world. The government contributes as one of the vital roles towards supporting and encouraging new industries into the economy. Competition is one of the major parts in every business (Grewal Levy, 2013). However, in order to evaluate a proper solution, AirAsia need to develop an appropriate pricing strategy, as it is one of the major factors, which hampers the purchasing decisions of the customers. VIRO Methods contributes four important factors, which will focus on Value, Rareness, Imitability and Organization. The VIRO Analysis is an analytical technique concludes different kinds of survival dimension for the organization as well as for its competitors. Suppliers Power The power of suppliers is immerse in the aviation industry because there are three inputs that the airline industry need to focus which includes fuel, aircraft and labor. Buyers Power Due to the low carrier cost the buyers power is becoming very high as there are different kinds of close alternative options are available. Entry and Exit Barriers In this particular industry the mode of entry and the mode of exit is not restricted, as nay firms can start their business at anytime and left the market at anytime. Threat of Substitutes The options of the passengers is much diversified, if any particular group of customers is not satisfied it they will automatically shift to the next alternative option. Competitive Rivalry This particular industry is very much competitive, as there are many companies operating its business in the same sector. Table 2: Porters five forces Strategic resources and competencies of Air Asia There are certain organizational aims and objectives, which majorities of the business firms tries to accomplish in the business operations. Strategies are developed by different organizations, which will allow the activities of the business to run in a smoother manner. However, resources of the organizations are limited (Hitt, Black, Porter, 2012). The answer will evaluate the overall strategic capabilities by matching the requirements of the company. Majorities of the firms try to ensure in the optimum utilizations of resources. There are certain classifications of resources, which include financial resources, organizational designs, and corporate resources, and technological resources are some of the key resources, which the organization focuses on. Competitive Analysis of Air Asia through strategic capabilities Companies belonging to any industries have direct as well as indirect competitors. AirAsia is one of the major aviation companies, which operates its business across the major cities of the globes. Some of the core competitors of AirAsia reflected in the following part of the study. Malaysian Airlines, Singapore Airlines, Thai Air and Air Sri Lanka are some of the most significant competitors of AirAsia. However, on other airlines, AirAsia provides better value for money through strategic capabilities (Hasan, 2012). Nevertheless, towards evaluating all the crucial factors, the application of the SWOT Analysis will conclude what are the different kinds of factors, which affects both the external environment as well as the internal environment. Some of the important factors, which this particular airline industry develops in order to conclude its strategic choices, are as follows. Development of a proper market penetration process, which includes retaliation from the competition, enhan cing the service, which includes mass customization by combining the strategic capabilities are the two important factors. The final factor is the process of market development, which concludes the competitive advantages. Drawbacks and loopholes of Air Asia There are particular challenges as well as the weakness of the AirAsia in the overall business operations. Massive investment is required for the organization to purchase airplanes and implement the latest technology, which includes a high amount of operational cost (AirAsia, 2016). It is one of the low cost airline services across the world, which provides all the customers to get tickets at affordable prices. On the other hand, due to this particular reason, there are some significant drawbacks in the operational management of the organization. As compared with other premium airline services, the company in some respect lacks in different kinds technological advancement SWOT Analysis of Air Asia The application of SWOT Analysis is one of the most valuable marketing tools, which majorities of the organization irrespective of the nature of the business follows in the process of developing a proper business plan. With the application of this particular tool, AirAsia will be able to develop a good situation analysis process, which will scan both the internal environment as well as the external environment (Hood, 2013). Strength and Weakness are the two factors, which will conclude the factors that will examine the internal environment on the other hand; the reaming two factors will scan the external environment, which includes opportunities and weakness. FACTORS ANALYSIS Strength The company maintains a strong brand name in the aviation industry. The airline industry is one of the low cost airline organizations all over Asia. AirAsia maintains a strong management team, which coordinates with governments and other airline industries. Based on different reports the aviation company has performed a remarkable job towards the utilization process of IT. Weakness One of the major weakness of AirAsia is the organization do not have its own repairs and maintenance services. There are some complements made by the passengers about the services There are certain challenges faced by the companies towards investing for new airplanes. Opportunity The organization has developed a proper target market, keeping in mind the requirements of the middle class people. ASEAN open Skies has been reached. Low cost services. Treats Increase in competitions. Based on certain statistical reports the overall profit margin of AirAsia is around 30%, which attracted many competitors. Customers worry about safety. Table 3: SWOT Analysis of AirAsia Application of SWOT Analysis and identification of the key issues in Indian Industry The aviation sector of India witnessed high growth in all the major aspects of the business. The answer to this particular question will address all the issues, which AirAsia need to analyze before entering into new markets. However, there are some important points, which need to investigate by the organization before going into the Indian market. Some of the key issues which this particular aviation sector faced based on the SWOT Analysis are highlighted in the following part of the study (Wong Brooks, 2015). High operational cost, Cost of fuel is very much high, shortage of maintaining facilities, congestion at airports and much more are some of the important factors, which contributes as some of the vital issues in the overall aviation industry in India (Kotler, 2012). However, AirAsia operates its business operations in the major cities of the globe. India is one of the developing nations. Some of the key attributes of a developing country are fewer household incomes, weak economic growths, and entry of low cost carriers, less sustain business growths, and less supporting government policies are some of the key factors, which affects the overall India aviation industry (Kotler Armstrong, 2012). In order to develop a proper market plan for market penetrations based on the findings of the SWOT Analysis, AirAsia needs to analyze all these vital factors for the development of a proper marketing plan. Development of business level Strategies of Air Asia Strategies are developed by the organization by keeping in mind the common goals and objectives of the organization. The target market, which is adopted by AirAsia, comprises mainly of middle-class passengers. The overall objective of AirAsia is to provide an affordable service to its customers. Nevertheless, some of the key strategic actions, which are adopted by AirAsia, are reflected in the following part of the assignment. Single Class Service It is one of the low cost airline services, which offers a single class service without other options at sustainable low prices. As compared with the other aviation industry, the company only believes towards providing service only in aviation (Kotler Keller, 2012). There is a lack of entertainment facilities offered by the organization, which do not include meals, entertainment amenities, loyalty programs points and access to airport lounges. These business strategies help the organization to reduce the clearing and maintenance cost, loading and uploading time and cost improving process efficiencies by maintaining lower cost and much more (Robinson, 2012). Low Fixed Costs This particular organization has done a remarkable job while retaining a proper low cost throughout its operational activities. The organization strongly believes towards developing a proper as well as a proper pricing strategy, as it is one of the crucial factors, which affects the purchasing decisions of the buyers (Kurtz Boone, 2012). AirAsia successfully maintained an low overall cost of different activities, which includes low rates for its long-term maintenance, and low airport fees. Developing these overall strategies has reflected towards developing a low price in the tickets. Analysis of the primary drivers of Air Asia in Indian Aviation Industry The answer to this particular question will evaluate the possessed geographic sources of advantages. Researchers have not developed a single coherent of the drivers of success towards entering in a new market. Growth is one of the major concerns in this particular industry. Some of the key primary drivers include growth in national income, growth in the middle class income, investments in airports and related infrastructure and many more are some of the key drivers in this particular industry (Peoples, 2012). The mode of entry is one of the crucial factors, which different organizations including AirAsia need to evaluate in the overall business plan. The analysis of the overall key driver includes the company does not have to commit resources for setting up business facilities (Glassman et al., 2015). On the other hand, in many cases the cost of production obtained by contract, the cost of providing services becomes lower in the overall business activities. Recommendation for Air Asia to address the key issues Developing a proper business plan which will match the demographic conditions The primary part in any business operations is to analyze the demographic conditions of the selected country. In a developing country such as India, the notion of the demographic conditions contributes as one of the most significant aspect (Pride, 2012). However, AirAsia has done an excellent job towards the process of developing a proper financial plan towards the process of evaluating a proper pricing strategy (Timmis, 2015). In India, the majority of the people are from middle background. The overall pricing decisions reflect the buying decisions of the customers. However, AirAsia is one of the organizations, which provides low cost carrier services across the globe. Develop a proper Situation Analysis procedure in order to specify the key issues In order to address the key issues the organization need to analyze all the key factors in both the internal environment as well as in the external environment. With the application of a proper situation analysis procedure by using different kinds of marketing tools, AirAsia will be able to address the key issues in the overall business proceedings (Robbins Coulter, 2012). The two important marketing tools include the application of SWOT Analysis and the application of PESTEL Analysis, which will evaluate all the barriers, and challenges of the aviation sector for AirAsia in both the environments. Application of SAFe criteria for recommendations Planning is one of the crucial parts and on the other hand, implementation of planning is equally important. There are three important factors, which will conclude the SAFe criteria for the implementation of the recommendations includes suitability, acceptability and feasibility. The overall objective towards developing a proper business plan is to gather a proper sustainability in the business proceedings and operations (Eriksson Steenhuis, 2015). Some of the key examples which the organization need to focus on towards the use apply a proper SAFe criteria for recommendations includes market penetration, market development and service development in order to meet the requirements of the customers (McManners, 2016). Conclusion The selected organization in the study is AirAsia and the assignment will focus on towards the evolution process of a proper Business Strategy. The overall assignment contains five crucial parts, which describes about the key strategies of AirAsia in the business plan. 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