Exam (elaborations)
DES - Developing and Executing Strategy June 2021 solution
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- Heriot-Watt University, Edinburgh (HW)
DES - Developing and Executing Strategy June 2021 solution
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1. AirAsiaBusiness Issues
2020 2019
RM’000 RM’000
Group Company Group Company
Revenue + other 3,602,774 3,774 12,509,229 3,011,253
Operating profit (5,422) (257,968) 724,577 2,922,852
Total Equity (3,569,794) 2,910,740 8,546,890 8,950,736
Delivered 228300
24.2m monthly 3720 delivery
Super app stats e-commerce
users partners
orders
ILC and OLC While the ILC of the aviation industry had been growing
steadily with AirAsia commanding almost 60% of the market
share before the covid pandemic as of 2019, the industry
practically hit a wall. Covid regulations served to limit and
undermine the very purpose of the aviation and tourism
industry, which is connecting people and businesses around
the world, and bring it to a halt. With seemingly no end in
sight, 2020 ended up being a horrible year for the aviation
industry with billions lost and downsizing of previously
flourishing corporations brought to their knees. AirAsia’s OLC
was also in the growth stage with promising forecasts for
2020. AirAsia invested heavily into the digitization of their
platform and offering a multitude of complementary services
and expanding vertically and horizontally to diversify and
strengthen their offerings.
,Business Diagnostic Falling revenue which took a nosedive due to Covid
regulations and only recovering briefly when borders opened
in 2020. AirAsia’s super app which is a platform (or a
business unit in itself) served to synergise their airline and
non-airline products and services and limit principal-agent
problem such as Pay, Big loyalty program, Teleport, Santan
and more served to enhance AirAsia’s non-airline portfolio
and generate cash but sadly was not enough to cover
operation expenses and airline losses.
Domestic traffic almost regained pre-pandemic levels which
gave the industry (and AirAsia) hope to keep surviving.
AirAsia’s market share gave it the ability to compete readily
with other low-cost airlines.
Tony Fernandez and the senior managers realized (almost
too late) that relying on one source of income (cash cow) is
not conducive to longterm survival as a business and the
need to diversify to be able to survive these catastrophic
disasters
Cultural issues
1 - “We are in this together” mentality of management and
employees.
2 - Adopting UN sustainable development goals and
industry
- Progressing towards carbon neutral growth in
compliance with CORSIA
- Setting up programs and initiatives to support
AirAsia’s employees both current and furloughed.
Aiding current employees to upskill or helping
furloughed to find jobs.
, - Enhanced safety measures for guests
- S.O.S campaign for local businesses
Cultural diagnostic AirAsia grew from RM1 worth along with huge debt to be a
large enterprise that aims to provide low-cost services to its
customers and allow local business in the ASEAN region to
grow with them in a difficult time by providing shared
benefits.
All while having a comprehensive CSR statement with a
Whistleblowing policy – a platform to report unethical
behaviour.
Political issues
Strategic influencer Tony Fernandez, Datuk Kamarudin Meranun
1
Strategic influencer Airdigital team members, subunit team members (Big, Pay,
2 Teleport, etc)
Strategic influencer Political leaders & Regulators
3
Strategic influencer Local businesses
4 Suppliers
Strategic influencer Customers
5
Political diagnostic Shareholders are concerned about the revenue drop and
AirAsia’s ability to weather the storm. Covid regulations,
closed borders, how fast covid testing methods and
vaccinations take off and their effect on economy and its
effect on the aviation industry survival. On the other side,
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