Airasia Business Strategy

The business level strategy adopted by Air Asia is a restructured business model and became first airline operator in Asia to adopt the low-fare, no-frills concept, and continue to be the LOWEST cost airline in every market. The strategy was including SAFETY, LOW FARE, SERVICE and SIMPLICITY. To achieve its business-level strategy, Airasia achieved the target through Low cost, Efficiency, Stimulate New Markets and strong Cash flow. The business model as the following; Low cost strategy

The business level strategy adopted by Air Asia is a cost leadership strategy - LCC, and selling their services below the average industry price. With the LCC model, Airasia did not provide in-flight entertainment or free meals, but they offered the seat selection,

This model shows the five forces of industry competition; threat of new entrants, bargaining power of buyers, threat of substitutes, bargaining power of suppliers, and competitors. To analyze that is the chosen business-level strategy suitable for AirAisa to achieve a better position in the industry we have look at each of these forces.

Threat of new Entrant:

Threat of new entrants is another major aspect of the five forces. Threat of new entrant is the liberalization of the market. Existing firms have a large cost advantage. This industry requires a large amount of capital and without a strong customer base there will be little to no profit in the first few years. However, by chosing Businis model of Airasia, Airaisa can use the LOW-FARE strategy to blow against newer firms, so that by using money spend is enough to prevent most people from entering the industry.

Bargaining power of Buyers

The airline industry is combine of two groups of buyers. Individual flyers and travel agencies. However, the bargaining power of buyer is high due to a lot of number of competitors existing in the market. Thus, customers have high bargaining power as they can select a specific airline that cost them

Overall the bargaining power of buyers, business model strategy is suitable.

Bargaining power of the suppliers

For bargaining power of the suppliers. In here the major supplier in the airline industry is limited and it consists of aircraft manufactures, producers of airports and air fuel. So it can be said that power of these suppliers is moderate and is limited to certain category. In here, business model strategy also suitable, because one of strategy is Strong Cash flow. So, Airline firms are the only source of income for these manufacturers, so their business is extremely important. Based on these things the bargaining power of suppliers has a low threat as well.

Threat of Substitutes:

After looking at the threat of entry, it is important to consider that the threat of substitutes. This industry has a medium substitute risk level. There are substitutes in the airline industry. People can choose other form of transportation such as a car, bus or boat to have to their destination.

However, Some means of transportation will be more expensive than a plane ticket. But the main cost is time. Although planes are by far the fastest form of transportation available, consumers do sometimes choose other methods for various reasons such as cost if they are not