P R E PA R E D BY

PREPARING FOR AND EVALUATING THE CHALLENGES OF GROWTH ON AIR ASIA

CONTENT

• History• Product and services• Things air Asia can do to prepare for growth• Warning signs that AIR ASIA is growing too fast• Reasons for growth in air Asia• Stages of growth• Challenges of growth in air Asia• Conclusion• references

HISTORY OF AIR ASIA• Asia's leading airline was established with the dream of making

flying possible for everyone. Since 2001, Air Asia has swiftly broken travel norms around the globe and has risen to become the world's best. Air Asia was named the World’s Best Low Cost Airline in the annual World Airline Survey by Skytrax for five consecutive years in 2009, 2010, 2011, 2012 and 2013 and has been ranked Top 5 among the most recognized and admired airlines in the Asia Pacific Top 1000 Brands 2008. With a route network that spans through  to over 20 countries, Air Asia continues to pave the way for low-cost aviation through our innovative solutions, efficient processes and a passionate approach to business. Together with our associate companies, AirAsia X, Thai AirAsia, Indonesia AirAsia, Philippines' AirAsia Inc and AirAsia Japan , AirAsia is set to take low-cost flying to an all new high with our belief, "Now Everyone Can Fly".

AIR ASIA PRODUCT AND SERVICES

THINGS AIR ASIA CAN DO TO PREPARE FOR GROWTH

Know what growth means for you and your company.To prepare for something, you have to know what it is and how you'll recognize it. Growth is more than just hitting a set of numbers--it's a package that includes changes to your company in terms of operations, production, staffing and facilities. In addition, think about what growth means to you personally. What will your life be like when your company grows and profits increase? How hard are you going to have to work? Are you ready and willing to do what it takes? Maintain relationships with your funding sources.The faster you grow, the more cash you're likely to need. Growth financing is every bit as hard--if not harder--to obtain than startup funding. Do regular cash-flow projections so that you know how much credit you're going to need well before you have to start writing checks. Develop and maintain strong relationships with your funding sources and be sure to have primary and backup sources available. In today's financial climate, it's harder than ever to predict credit availability, so stay on top of your cash and financial needs to give yourself have plenty of room to maneuver when it's time to borrow. Get comfortable being in the spotlight.Successful owners of growing companies are almost always in the spotlight to some degree--maybe not always to the general public but certainly within your industry and with your employees. Be prepared for a level of attention that you probably haven't received before. Hire people based on where you want to be, not where you are.The team that can successfully run a $1 million company is not the same team that can run a $100 million company. If your goal is growth, hire people who can perform in the size company you want to be--they'll help you get there. Put the right people in the right places.The right people doing the right jobs is absolutely critical to sustain growth. Whole person assessments and job benchmarking will allow you to take a systematic approach to hiring and career development, which will reduce your mis-hires and employee turnover. 

THINGS AIR ASIA CAN DO TO PREPARE FOR GROWTH CONT’D

• Take care of your people.Your employees are what keep you successful. Recognize and reward that. Working in a high-growth organization is stressful and challenging. Take note of your employees' work and respond appropriately, or risk losing top talent. Create an environment where people are willing to work through the growing pains. In addition, take care of your suppliers, professional advisors and anyone else who can have an effect on your operation. 

• Listen to the experts.You may be an expert in your business, but you don't know it all. What's more, there often will be experts who know more about particular parts of an industry than the insiders. Identify the experts, listen to them and learn from them. Let them help smooth out your learning curves and keep you on your growth track. 

• Stay close to your customers.No company can do without customers, and if you don't stay close to them, you'll lose them. Know what they need, but more important, know what they want and do everything you can to give that to them. Most important, communicate. Never let your customers wonder what's going on. Tell them--whether it's good or bad. 

• Focus on your core business and don't get distracted.Stick to the business your company knows best. Be sure any diversification or product line expansion you do makes sense. If it has nothing to do with your core business don't get into it just because it seems like a good opportunity. Otherwise, you'll you confuse your customers and your employees--and you'll likely find that dividing your efforts reduces the quality and profitability of everything.

• Just as you plan for when things go wrong, also plan for when things go well. When you're prepared for growth, you better can manage the changes it brings and let it take you to the goal you set when you started.

WARNING SIGNS THAT AIR ASIA IS GROWING TOO FAST

But there is such a thing as a business growing too fast. When that happens, it can be bad news for air Asia. They could run out funds to keep supplies in stock. You could run out of manpower to fulfill client requests or orders. And once you hit a major snag, the effects can ripple throughout the rest of your business.So how can you tell if your business’s growth is getting out of control? Watch for these signs.

You need to borrow to make ends meet: When your outgoing cash flow isn’t matched by your incoming cash flow, you’ve got problems. And relying on your business or personal credit to make up the difference is a bad idea. What happens if you need unforeseen electrical repairs in your planes or to get a new air-plane and you have no available cash to pay for it? Borrowing money is a sure sign that you’re growing before your business is ready.

Your employees are over-worked and unhappy: Are you asking too much of your staff, forcing them to work overtime or work on projects outside their field? It might be time to take a step back and re-evaluate the products and services you are offering. Focus on providing a few services really well and make sure employees get the down time they need.

Complaints are mounting: One of the first things that happen when a company gets too big, are they have to cut corners when it comes to customer service. When this happens, complaints will rise. Not only will the volume of customer service issues increase, but word will start to spread about your business’s incompetence. It’s imperative that you nip this problem in the bud before the damage becomes irreversible.

Your profit margins are too tight: Small profit margins mean less wiggle room when things get tough. Small errors in accounting or unforeseen expenses can be disastrous. If you notice that your profit margins aren’t leaving you much of a cushion, there’s a good chance you need to scale back on your operation.

You can’t remember the last time you saw daylight: Everyone needs time to relax, including the boss. If you’re working seven days a week and spending every minute of daylight in the office to keep up with the growing demands of your business, that’s not good. If you’re not burned out already, you will be very soon. When business owners deny themselves much needed R&R it’s usually because they’re spreading the business beyond its reasonable limits based on available manpower.Growth is good, but it’s important that you’re reasonable about your expectations and your timeline for getting there. To prevent you from suffering the consequences of growing too big too quickly, set reasonable goals and develop a plan for responsible growth.

REASONS FOR GROWTH IN AIR ASIA1. Attract and retain talented employees: growth is a firm’s primary goal to generate

promotional opportunities for employees2. Accommodate the growth of key customers: they are compelled to grow to

accommodate the large numbers of important customers3. Influence, power and survivability: larger businesses usually have more influence

and power than smaller firms.4. Market leadership: occurs when a firm holds the number one or the number two

position in an industry in terms of been the best among the rest5. Economies of scales: occurs when increasing production lowers the average cost of

each unit produced and meeting the needs of customer6. Economies of scope: occur when the scope of a firm’s operations creates efficiencies.

HOW DO AIR ASIA MANAGE THEIR GROWTH

1. Create a Scalable Management Model: they remained constant in their activities by meeting the needs of customers and making sure everything is in order

2. Define a Quality Control System: As your company grows you must make sure that the quality of your goods or services is maintained despite its increasing size. As such, you must determine what elements should exist in a quality control system and then assign the responsibility of maintaining that quality to someone within your management model.

3. Execute the Systems 100 Percent of the Time: Now that you have created a scalable management model with a defined quality control system it’s time to make sure it is executed to perfection.

4. Listen to the Numbers. Numbers Do Not Lie: Lastly, even when you set up the systems and grow management and quality control systems in pace with your organization’s growth you must still always be mindful of the numbers. Numbers don’t lie. If used properly, they will tell you where additional oversight or changes are needed within your organization to increase efficiency, sales, and quality.

STAGES OF GROWTH

Early growth: two things happen in this stage, either the person starts working on the business rather than in the business and formalities i.e. procedures and policies are developed

Continuous growth: decisions takes place and the business will start developing related products and services

Maturity: this is where the growth of the business stall and also focused in managing efficiently than developing new products

Decline: it is not inevitable that a business enter the decline stage

CHALLENGES OF GROWTH IN AIR ASIA

Mergers & Acquisitions: Merger & Acquisition strategies for growth can be significantly improved in their effectiveness with the Market Engineering system.

New Product Launches: Many new products are launched into the marketplace with little prior planning. Market Engineering can ensure that your organization is fully equipped to address all aspects of a new product launch.

New Growth Opportunities: The demand for growth is endless. Market Engineering can help identify and rank the most promising growth opportunities available.

R&D Idea Evaluation: New ideas are often presented by the lab based entirely on the development of a new technology without regard to the customers, market, or competition. By adding the market perspective, you will greatly improve your probability of success.

CHALLENGES OF GROWTH IN AIR ASIA CONT’D

Problems with Competitors: Occasionally, a competitor begins to create significant problems for your company and the market. Frost & Sullivan's Market Engineering Research can help you successfully address it.

Ineffective Business Plans: In today's fast-moving and competitive business environment, it is rare that we see an effective business planning process in high-technology businesses.

Lost In The Market: Being "Lost in the Market" is a problem you are facing if your company is completely unaware of what is going on with the competition and customers in the market in which you are competing.

Falling or Flat Market Share: Market share is the number one health indicator for your company. Market Engineering techniques can help you avoid market share problems and ensure your organization is not surprised by market share fluctuations.

CONCLUSION

• The strategies of Air Asia focus more on the management and access of information rather the creation of irrelevant airline services.

• For this reason, Air Asia has developed a unique set of guiding principles - simplicity, cost-efficiency and effectiveness.

• Total commitment to these principles makes the airline services of Air Asia very user-friendly to its customers.

• SWOT analysis of AirAsia with reference to sustainability and future growth shows more opportunities than threats.

• AirAsia is fully determined to exploit these opportunities and convert more threats into opportunities for success.

REFERENCES

• Corporate profile. (2012). Air Asia. Retrieved from http://www.airasia.com/ot/en/about-us/corporate-profile.page• Dr. Abang N Dahlan . (2013). Seminar 3 Topic 5

Strategy Research • Lawton, T. & Doh, J. The ascendance of Air Asia:

building a successful budget airline in Asia. Ivey Case Study No. 2.

THANK YOU !

NOW EVERYONE CAN FLY