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One of the best known frameworks done by Air Asia is offering the low airfares in the region. This concept is main focus to lower cost perpetually. As business environments become more competitive and in some cases more volatile, business organization have become more concerned about the “price”.
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Price is the key area of the marketing tools to generate revenues or profit. Internet pricing strategies are important as traditionally have been, this will lead to more price competition and price standardization. According to Quelch and Klein (1996) pointed out that the counteracting effects of the Internet on price. A vendor can use the internet to discriminate pricing globally. However, if they do not observe this precaution, consumers can quickly find out the price discrimination and opposition.
2.2 Information System
Air Asia use computers in its core-information processing centre of marketing and distribution, reservations, sales, and telecommunications. Information technologies, such as computerized reservations systems, assist Air Asia in marketing and distributing. The information system link together to its departmental and outsider may be necessary for the efficiency and cost effectiveness. Reservation systems, depending on the software can be used to generate forecasts on expected departure, return and booking.
Communications systems used at Air Asia have been substantially improved to incorporate features. The telephone systems help to transform the calls into important profit centre. The integration of information technologies may allow Air Asia to control its daily operations from a single integrated management system.
3.0 PEST ANALYSIS
3.1 Political / Legal
PEST analysis assumes that the success of an organization is dependent on the way in which the organization manages its interaction with its external environment (Johnson et al., 2008). The environment presents the organization with series of challenges, risks and opportunities. Such a business would clearly be affected by changes in the political environment.
One of the most obvious aspects is Government policies can have a huge impact on the Internet, and through the introduction of new policies and limit its development potential. For the entire e-commerce and commercial potential of the Internet, there are several issues need to be considered, these include an increase the security of transmissions across a network, legal issues, reduction of user dissatisfaction and confusion for the IT, develop the pricing structures for dissemination of information and reservations procedures (IvoryResearch 2010).
Policies and procedures should be established to promote understanding of the legal liabilities. This will encourage the organization to minimize the legal risk.
The Internet is not severely impacted by economic cycles. However, it is needs to be considered that the sales from the internet will be dramatically been affected by national and global economic changes.
These include changes in net disposable income levels that can influence the business performance (CIPD 2010). If disposable income declines the clearly the effective demand is likely to go down.
Socio-Cultural changes are often long term in the impact but should be monitored all the same. Shift in values may for example affect general attitudes towards internet technologies, in which have a direct impact on information technology and airline industries respectfully.
Attitude changes and demographic changes will change the market as well. Therefore, the ability of information technology to offer services at lower cost would deliver strong growth in airline market share.
Technological change may affect the business outcomes in many ways. Simple issues such as the development of internet online booking system launch by Air Asia in recent year. This made Air Asia offer the ability to check in online and print out boarding passes online (Wikipedia 2010).
There may influence the size of the potential market and the number of people able to travel to other countries. Increasing access to the internet may change the way in which the customers can booking the air ticket immediately, neither to wait long queue in the counter. Potential customers may also have changed expectations as a result of experiencing new technology.
As a result, improved channel distribution has meant that, increasingly, customers are exposed to, and aware of the products in other parts of the world.
4.0 SWOT ANALYSIS
SWOT analysis can play a valuable part in any strategic planning, it provide a simple framework and common language through which strategic options can be identified.
Internet will help to access new customers globally and enables to simplify the procedure. Such as the integration of sales, marketing, travel distribution and the daily operation as well as provide special package for corporate travelers.
Hackers can hack into a particular data storage and access to the network. There is a crisis of identity and invasion of privacy issues. Hence, the digital security needs to be regulated.
By using internet as a marketing tool to distributing electronic brochures and reservation forms via the Internet directly serve the consumers’ needs. This approach provides an important advantage for the industry to collect information and will help them better develop products and improving the quality of services.
The competitive environment is improving and its impact on the aviation industries is widely recognized as being complex and highly segmented. Growing competition from other airlines carriers are entry into the marketplace. This increased downward pressure on fares of Internet and increasing level of competition in travel distribution.
B. Task 2
5.0 MANAGEMENT INFORMATION SYSTEM
5.1 Resource Management
Training and development will concerned with the provision of learning, development and training opportunities which ensure that the employee has the skilled, motivated and committed it needs now and in the future. Air Asia stresses the training and development of the staff to keep abreast with changes. The normal one week on the job training is given to new employees. Training is ongoing for three months within the period of probation. Employee skills and knowledge will be upgraded with ongoing course using Air Asia’s academy (Idris, 2007).
It ensures that the employee has the skilled to handle multiple jobs in the organization. For example, the ability of computers to store, handling, processing and dissemination of information has greatly improved the efficiency of Air Asia. Reduced the time from the paper-pushing functions, this can greatly enhance the opportunities for employee utilization in the quality of service that offer to the customers. The training will help the employee to facilitate the business mission of its organization through managed information and technology, in which they are trained to learn new skills and develop new capacity to respond to these changes in the organization.
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5.1.1 Decision Making – Developing Human Capital
Air Asia will partners with Canadian Aviation Electronic to establish an aviation training centre and selected Kuala Lumpur as the location for its Southeast Asian training hub. Air Asia has locked a partnership with CAE for mutual benefits where CAE will provide pilot training for all of Air Asia current and future pilot in the region (Mywire.com 2010). These will improve the quality of training and human capital development within Air Asia. Partners with CAE will help the organization to develop high quality manpower in ensuring seamless business growth.
5.2 Information Technology Management
The information technology has had a greater impact to display the products that can be seen worldwide especially useful for linking Air Asia with customers or business partners. It provides a worldwide distribution channel for information and ability to link market demand to production planning, and helps the management to communicate quickly with those at lower level.
Air Asia have became the first in the world to introduce SMS booking where customers could book their seats, checked flight schedules, and obtain the latest promotional announcements through their mobile phones (Idris, 2007).
5.2.1 Decision Making – Information Technology
Air Asia keeps introducing innovative ways for online booking and ticket sales. It has locked a partnership with its IT vendors for mutual benefits where Air Asia can constantly improve the system while IT vendor learns to create innovative products according to customer requirements. It offers a wide and innovative range of distribution channels to make booking and traveling easier for its guests.
5.3 Customer Relationship Management
Customer Relationship management is important to pursue mutual benefit among customers and vendors. Individual customers can enjoy the benefit, with appropriate advice on getting the best out of their purchase; while the organizations able to improve retention and profitability (Buttle, 2008). In fact, CRM enables to simplify the processes and close deal faster. In long term, customer relationships should be cultivated for Air Asia to maintain competitive advantage.
5.3.1 Decision Making – Customer Relationship
Air Asia has invented to new CRM system in year 2009. It has customized their service after sales by providing variety choice of service, such as hotel, hostel and car rental. In Air Asia website, we can see that information on travel destination, hotel, transport, climate and recommendations is provided to customer for decision making before purchase.
5.3 Area of Improvement
Strategic information management and strategies effectiveness is a source of competitive advantage for Air Asia turn into their strength across a range of different product markets. A number of positions are normally can be improved to increase its competitive advantages and proficiency, in which enables Air Asia to achieve and maintain the business growth.
Organizations depend on their customers and therefore the organization should meet customer requirements and strive to exceed customer expectations. How customer expectations are the standard against which service is judge. That’s the mission. Therefore should understanding customer needs and expectations.
In recent years, one of the most obvious aspects of Air Asia done is upgrade their online booking system and payment system to improve efficiency. This will enhance customer satisfaction, and achieve continual improvement of its performance in pursuit of organization objectives. But unfortunately, luggage does not always arrive or with something missing still always happened. So, how to trace the missing luggage in short period and minimize a similar case happened again. It can help Air Asia to improving the quality of products and services provided to the customer.
5.3.2 Strategic Alliance
Air Asia introduced a first direct B2B engine to its agents in Asia, through one of its strategic partners, Citibank. The agents make immediate payment via a virtual Air Asia credit card through the internet based real inventory booking engine. The question is why; it’s formed up the strategic alliance between the parties? The popularity is business growth and get in on opportunities.
The strategies adopted in a specific market. A gap emerges between what organization goals would like to achieve and what it can do with available resources and capabilities. Air Asia must adopt new technology to compete against traditional rivals, as well as entrants that build the latest technology enterprises. The gap can be bridged by the alliance. For example, in order to compete on a global scale and at the same time maintain its independence, Air Asia must make alliances in partnership together with others countries to use facilities, information system, produce components and distribution channels to meet a critical business need.
In year 2004, Air Asia formed two joint ventures in Thailand and Indonesia. Why? Because Air Asia able to extend its marketing reach and build credibility with a particular target market. It’s also giving the opportunities to access needed information and greater resources including specialized staff and technology, increase sales in an existing market and enhance technological capabilities through research and development underwritten by more than one party. Another approach is once business is established it has provided the Air Asia with the opportunity to gain new capacity and expertise.
5.3.3 Product Improvement
Product improvement is the result of consistent, deliberate effort to move the developing organization to a higher level of capability. Product improvement entails developing and launching new products for sale in existing markets (Condensed GSAM Handbook, 2003). It also requires a planned and guided path to excellence, reaching various levels of improvement as intermediate goals along the way such as products with additional features, different packaging, different quality levels etc.
For example, Air Asia Go Holiday and Air Asia Tune Hotels which offer travelers a comprehensive package. Many budget travelers prefer to book their air tickets and hotels together and Air Asia will offer its customers with the facility of online booking and reservations as they book their flights. In other words, the product will be improved as a natural consequence. Today, the Internet is firmly established as a marketing strategy. It becomes an integral part of the marketing tools for the digital distribution channels and e-store services (Hofacker, 2000).
Since Air Asia entry the market, it is rapidly becoming the most popular airline and profitability organization. Why? Because it focuses on the strategic information system on ways of promoting and developing the product ranges. It is beneficial for Air Asia to combine new IT into the entire operation. It is generally accepted that information technology should be considered as strategic tools than tactical issues. We rely on information, it is not necessarily convenient mechanism to assist in decision-making and guide action. It is very important that the knowledge base to find a use of information. However, Air Asia will need to understand what is currently happening in the operating environment.
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