porters five forces and value chain model air asia
DESCRIPTION
Porter’s five forces model and value chain for air asia in airlines industryTRANSCRIPT
Porter’s Five Forces ModelAnd Porter’s Value Chain for AirAsia in an Airline
Industry
PORTER’S FIVE FORCES MODEL
Porter’s 5 Forces Model
Threats of New Entrants
Rivals & Competitors
Threats of Suppliers
Power of Buyers
Power of Suppliers
Threats of New Entrants
• Threat of new entrants is relatively LOW. Why?– Need a lot of capital, investment and funding.– Need to conduct in-depth research and
development before entering the market.– Need to spend a lot of money on marketing and
advertising.– Need to hired highly skilled technicians and
engineers.– Need to find an enormous experience workers –
pilot, cabin attendants, etc
Threats of Substitutes
• Threat of substitutes is LOW due to:– Performance of substitute – cars, trains, buses,
ships which is takes longer time to reach destination
Rivals and Competitors
• Threat of rivalry and competitors in the flight services is HIGH due to:– Higher number of rivals– Customer easily to switch the airline services – High exit cost• Once entering airline industry, hard to find company
exit the industry due to high cost in paying loans, staff retrenchment and flight cancellation refunds.
Power of Buyers
• Power of buyer is HIGH due to:– Services given has no significant differentiation– Switching cost for buyer is LOW– Buyer have easy access to the information about
airline services such as price, promotion
Power of Suppliers
• Only 2 major suppliers for aircraft industry – Boeing and Airbus – So, the power of supplier is HIGH
• Switching cost is HIGH – aircraft, training of workers
Porter’s Value Chain
Primary Activities
• Inbound Logistics• Operation• Outbound Logistics• Sales & Marketing• Services
Inbound Logistics
• AirAsia currently only running an Airbus planes– can save cost on training of engineering and
focusing on other thing such as promotion and innovation.
• In-Flight services such as meals get from local delights– Can promote local food at the same time!
Operations• 25-minute turnaround
– Less time on the ground and more time in the air means AirAsia get the most of every flight through high aircraft utilisation, lower costs and greater airline and staff productivity.
• Low cost carrier model– Self automation
• Customer can book and print the ticket and also check-in by themselves, so this can reduce cost on counter services.
– No frills • Customer only pay for flight services charge. If customer need in-flight comfort such as
meals, blanket, customer can add-on later. – Cost-saving innovations
• Constantly on the lookout for the latest advancement in savings, AirAsia are the first airline to use the new Airbus A320 aircraft installed with ‘sharklet wing tips’ to lower wind drag and provide better fuel consumption.
Outbound Logistics
• Customer can book their ticket and check-in their flight thru online by themselves. This make AirAsia more convenience to the customer than other flight service available in Malaysia.
• Customer can easily get AirAsia flight service in all Malaysia airport
Sales & Marketing
• Sponsor well known sports team• Make a lot of advertisement all over the
media – internet, newspaper, tv• Make an flight promotion periodically – twice
or more in a year
Services
• AirAsia offer other services such as– AirAsia Car rental, Cargo, Megastore, Foundation,
Travel Protection, etc• AirAsia also offer after-sales-services
Supportive Activities
• Procurement• Technology Development• Human Resource Management• Firm Infrastructure
Procurement
• AirAsia separate their business procurement into different unit such as flight, hotel, in-flight services, merchandise, etc, but everything are connected to the goals of AirAsia.
• Each unit can focusing more on their own business.
Technology Development
• AirAsia using certain system to support their company operations– Yield Management System (YMS) which takes into
account the operating cost and expected revenues.
– Computer Reservation System (CRS) as a web-base for reservation
– Enterprise Resource Planning System (ERP) to speed up reporting and data retrieval process.
Human Resource Management
• HR hiring multiple skill personnel to increase the quality and efficiency of the company and also will reduce the cost for company such as time and training development.
Firm Infrastructure
• AirAsia focus on their goal which is provides the lowest price for customer
References
• http://en.wikipedia.org/wiki/Porter_five_forces_analysis
• http://en.wikipedia.org/wiki/Value_chain• http://
www.airasia.com/my/en/about-us/hi-we-are-airasia.page
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