What Is Porter's Five Forces Model Of Airasia

Introduction

The combinations of demand for low budget airline in Asia region and leader with great visionary create the success chapter of AirAsia in worldwide. AirAsia extend their business coverage from only in Malaysia until today which cover most of the Asia show the company had implements the right business model to run their business for long term. The success of AirAsia attracts more company to step into low cost aviation market especially in Asia market. The status of AirAsia as Asia’s most success low cost airline will face huge challenge from other company in short future.
Identification of problems

With the famous slogan “Everyone can fly”, AirAsia had target their major customer group at lower income group (Tham, 2013). AirAsia

Porter’s five force is a simple but powerful tool for understanding where power lies in a given business situation (Tyrtania, 2012). This is important, as it helps the company understand both the strength of current competitive position, and the strength of a position that looking to move into. Hence, the Porter’s model has become an important method for analysis an organizations industry structure in strategies process (Grundy, 2006).

The model allows company to justify the company own strength and weakness in order to avoid wrong steps. Next, Porter believes a company corporate strategy should meet the opportunities and threats in the organizations external environment (Airline, 2013). Especially, competitive strategy should base on an understanding of industry structures and the way they change.

Porter’s five forces allow AirAsia to understand their current situation and challenge they might face in future. Porter’s 5 forces support AirAsia to predict the future issues and allow them to change their strategy to overcome the issues. The objective of this model is adjusted to each company specific situation by not only by the external market environment, but also by its own internal resources, competence’s and objectives (Airline,

The table above explains the current situation of AirAsia in the market based on Porter’s five forces. The chart shows that AirAsia is facing huge challenge from rival in same region for example, Tiger Airline from Singapore and Malindo Airline from Malaysia. It will create a signal for AirAsia to focus on what is the competitor doing and what should they react to overcome the negative effect bring by rival. The strong brand awareness of AirAsia had become the first choice for customers who need cheap airfare. The introduce of different campaign by AirAsia such a “Ready to Fly” or “3 million Free ticket” help the company to extend their awareness in the market (Lee, 2013). AirAsia should continue implement this kind of promotion as it does show a positive result from the customer especially with the use of social