Strategy formulation in air asia indonesia strategic management module assignment Trisakti University, Excellent Class Program

3. Group Members:
O Dwitya Aribawa
O Chandra Gunadi Witedja
O Velly Anatasia
O Latipah

4. STRATEGY FORMULATION
STAGE 1: The Input Stage
EFE Matrix IFE Matrix
STAGE 2: The Matching Stage
IE Matrix
STAGE 3: The Decision Stage
QSPM

5. Vision is the agreement on the basic vision for which
the firm strives to achieve in the long run is critically
important to the firm’s success. –Fred David
One definition of vision comes from Burt
Nanus, a well-known expert on the subject.
Nanus defines a vision as a realistic, credible,
attractive, future for an organization

6. Mission statement components
O Customers
O Products or services
O Markets
O Technology
O Concern for survival, growth, and profitability
O Philosophy
O Self concept
O Concern for public image
O Concern for employees
(Fred R. David)

7. INPUT STAGE
External Factor Evaluation (EFE)
matrix method is a strategic-
management tool often used for
assessment of current business
conditions. The EFE matrix is a
good tool to visualize and prioritize
the opportunities and threats that a
business is facing.

8. Internal Factor Evaluation (IFE) matrix
is a strategic management tool for
auditing or evaluating major strengths and
weaknesses in functional areas of a
business.
•IFE Matrix summarizes and evaluates the major strengths and
weaknesses in the functional areas of a business.
•EFE matrix is a good tool to visualize and prioritize the
opportunities and threats that a business is facing.
•Ratings and Weighted Scores are two important variables in IFE
and EFE matrices.

9. MATCHING STAGE
The Internal External Matrix or short IE matrix
is based on an analysis of internal and
external business factors which are combined
into one suggestive model.
Internal-External (IE) Matrix positions an
organization's various divisions in a nine cell
display through plotting them in a schematic
diagram. The size of each circle represents
the percentage sales contribution of each
division, and pie slices reveal the percentage
profit contribution of each division in IE Matrix
(David, 2007).

10. Alternative Strategy
Forward Backward Horizontal
Integration Integration Integration
Market Market Product
Penetration Development Development
Related Unrelated
Diversification Diversification
Divestiture
Retrenchment Liquidation

11. DECISION STAGE
Quantitative Strategic Planning Matrix
(QSPM) is a high-level strategic
management approach for evaluating
possible strategies. Quantitative Strategic
Planning Matrix or a QSPM provides an
analytical method for comparing feasible
alternative actions. The QSPM
method falls within so-called stage 3 of
the strategy formulation analytical
framework.

12. Formulation Strategy Implementation
In

13. Vision Statement
To be the largest
low cost airline in
Asia and serving
the 3 billion people who are
currently underserved with poor
connectivity and high fares.

14. Mission Statement
O To be the best company to work for
whereby employees are treated as part of
a big family
O Create a globally recognized ASEAN
brand
O To attain the lowest cost so that everyone
can fly with AirAsia
O Maintain the highest quality product,
embracing technology to reduce cost and
enhance service levels

15. Values
We make the low fare model possible through the implementation of the
following key strategies,
O Safety First:
Partnering with the world’s most renowned maintenance providers and
complying with the with world airline operations.
O High Aircraft Utilization:
Implementing the regions fastest turnaround time at only 25 minutes,
assuring lower costs and higher productivity.
O Low Fare, No Frills:
Providing guests with the choice of customizing services without
compromising on quality and services.
O Streamline Operations:
Making sure that processes are as simple as possible.
O Lean Distribution System:
Offering a wide and innovative range of distribution channels to make
booking and travelling easier.
O Point to Point Network:
Applying the point-to-point network keeps operations simple and costs
low.

16. AirAsia Long-Term Objective
O From philosophy of AirAsia “Now Everyone
Can Fly”, that is the long term objective of
AirAsia, to make every people from every
background can fly with AirAsia.
O From their Vision statement “To be the
largest low cost airline in Asia and serving
the 3 billion people who are currently
underserved with poor connectivity and
high fares”.
AirAsia try to cover the Asia region market first
before they try to serve people all around the
world.

18. Vision Statement Analysis Sheet
Approach In the statement Analysis
Realistic To be the largest low Of course it’s realistic vision to be
cost airline in Asia the largest low cost airline in Asia
Credible Serving the 3 billion That statement very inspire
people employee to achieve service with
high level of excellence
Attractive Currently underserved Encourage employee to serve the
with poor connectivity passengers that currently
and high fares underserved
Future To be the largest low The future goal of AirAsia is to
cost airline in Asia become low cost airline
Length One sentence , 24 words . Short and clearly enough to
explain about AirAsia long term objective
What do we AirAsia want to become the largest low cost airline in Asia
want to
become?
Decision The vision is sufficient for the company, realistic,
credible, attractive and future view

19. Mission Statement Evaluation Mix
Component Yes/N Statement
o
Customers YES To attain the lowest cost so that everyone can
fly with AirAsia
Employees YES To be the best company to work for whereby
employees are treated as part of a big family
Public Image YES Create a globally recognized ASEAN brand
Self Concept NO None
Philosophy NO None
Survival NO None
Growth/profit
Technology YES Embracing technology to reduce cost
Market YES Everyone can fly with AirAsia globally
recognized ASEAN brand
Product services YES Maintain the highest quality product,
embracing technology to reduce cost and
Decision Fulfill six from nine missionlevel
enhance service statement criteria, that’s
means mission statement of AirAsia is good to implement
to the company.

20. Input Stage

21. AirAsia IFE Matrix
Key Internal Factors
IFE MATRIX Weight Ratin
g
Weighted-
score
Strengths
AirAsia Academy 0.2 4 0.8
Flexible and High Committed workforce 0.05 3 0.15
Good cabin service 0.03 3 0.09
Use new aircraft 0.02 3 0.6
Excellent utilization of IT 0.03 3 0.09
Successfully “elevated” the brand to 0.05 3 0.15
become a regional brand
E-booking and M-booking, quick way to 0.02 3 0.06
book tickets
Almost every two week the new promo 0.015 4 0.6
First mover of low cost airlines 0.1 3 0.3

22. Weaknesses
AirAsia does not have its own 0.2 1 0.2
maintenance, repair, and overhaul
(MRO) facility
Lot of complaints from customers on 0.12 2 0.24
their service
Limited human resources could not 0.05 2 0.1
handle irregular situation
Total 1 3.38
Weight
The weight assigned to a given factor indicates the relative importance of the factor. Zero means not important. One indicates very important.
Rating
Major weakness is represented by 1.0
Minor weakness is represented by 2.0
Minor strength represented by 3.0
Major Strength represented by 4.0
Based on IFE matrix above score of AirAsia Internal condition is 3.38 that
is indicate AirAsia has very strong internal position.

23. AirAsia EFE Matrix
Key External Factors Weight Ratin Weighted-
g score
Opportunities
Big market share in air transportation 0.3 3 0.9
Interaction among the industries of 0.03 4 0.12
tourism and transportation
Tax reductions in tickets fees 0.02 1 0.02
Inconvenient topographic structure flight 0.02 1 0.05
Differentiation low cost airlines service 0.1 4 0.4
The population of Indonesian people 0.05 3 0.15
Corporate facility services 0.03 1 0.03

24. Key Internal Factors Weight Rating Weighted-
score
Threats
The number of new airlines/followers 0.1 2 0.2
The rise of fuel prices 0.03 1 0.03
Weather uncertainty 0.02 1 0.02
Declining public trust 0.05 4 0.20
Full service airlines start cut costs 0.25 1 0.25
Total 1 2.34
Weight
From 0.0 to 1.0 to each internal and external factor in EFE and IFE Tables. Weights indicate the relative importance of that factor to being
successful in the firm's industry.
Rating
Rating of external factor from 1 to 4 IFE Tables to indicate how effectively the firm's current strategies respond to the factor. 1 = the
response is poor. 2 = the response is below average. 3 = above average. 4 = superior.
Based on EFE Matrix above, AirAsia has total 2.34 weighted score which
indicates that AirAsia has slightly less than average ability to respond to
external factors.

25. Matching Stage

26. Alternative Strategy Selection Using
IE Matrix
This IE matrix tells us that AirAsia should hold and maintain its
position. The company should pursue strategies focused on
increasing market penetration or product development strategy.

27. Alternative Strategy Based on
IE Matrix
Cells I, II, and III suggest the grow and build strategy. This means
intensive and aggressive tactical strategies. Your strategies should
focus on market penetration, market development, and product
development. From the operational perspective, a backward
integration, forward integration, and horizontal integration
should also be considered.
Cells IV, V, and VI suggest the hold and maintain strategy. In this
case, your tactical strategies should focus on market penetration
and product development.
Cells VII, VIII, and IX are characterized with the harvest or exit
strategy. If costs for rejuvenating the business are low, then it
should be attempted to revitalize the business. In other cases,
aggressive cost management is a way to play the end game.

28. Decision Stage

29. Strategy Selection Using QSPM

31. Strategy Selection Using
QSPM
Given by the Sum Total Attractiveness
Score figure. The Market Penetration
strategy yields higher score than the
Market Development strategy.
The Market Penetration has a score of
7.21 in the QSPM shown above whereas
the Market Development strategy has a
smaller score of 5.69.

33. Conclusion
O Vision of AirAsia
The vision statement is sufficient for the company.
Realistic, credible, attractive and future view is included in
their statement.
O Mission of AirAsia
Fulfill six (customer, employee, public image, technology,
market and product /services) from nine mission
statement criteria, that’s means mission statement of
AirAsia is good to implement to the company.
O “Now Everyone Can Fly”, that is the long term objective
of AirAsia, to make every people from every background
can fly with AirAsia.

34. Conclusion
O From IFE matrix we know actually the internal position of
AirAsia has strong internal condition.
But from EFE matrix AirAsia has slightly less than
average ability to respond to external factors.
O IE matrix tells us that AirAsia should hold and maintain
its position. The company should pursue strategies
focused on increasing market penetration or product
development strategy.
O Quantitative Strategic Planning Matrix (QSPM) we
came to conclusion that acquiring a Market Penetration is
a better strategy. This is given by the Sum Total
Attractiveness Score figure.

35. Suggestion
O Vision and Mission statement
We suggest AirAsia Mission statement will be better when they put the
philosophy of AirAsia (“Now Everyone Can Fly”) in that statement. For
instance the one point added for mission statement may be
“Serving every people even they low, middle or high economy
level can fly with us”
O Strategy Selection
The strategy should adapt by AirAsia from our analysis is Market
Penetration Strategy, when looking to adapt for increasing AirAsia
sales, profits and of course market share this strategy is very
appropriate to implement. Marketing efforts of the company to offer
their existing products in the current markets is called market
penetration strategy. The best way to do this to attract competitors
customer and looking for potential customer for the existing products.

36. Suggestion
How do AirAsia find new customers and emerge from the current industry
condition?
Kind of marketing effort for AirAsia to reach more Indonesian Market Share:
O Provide membership card for special fares and miles bonus, this card can
be get by customer when he/she make at least five flight (any destination)
using AirAsia.
O Clarify the AirAsia is not Malaysian Airline, AirAsia is Airlines for everyone, of
course for Indonesian too.
O Give value added to customer in the flight, for instance free Newspaper, free
snack or headphone to listen music on a plane.
O Embrace the positive campaign (campaign of cheap, on time and safe
traveling/zero accident) of AirAsia to media.
O Use low-cost and high credibility Online Social Media and Forums.
O Special promo fares for two way flight at the same day, it will increase the
number of business people passengers.
O Assurance the on-time of every Flight, when flight has been delayed more than
15 minutes without clarity, AirAsia will be gives the coupon of discount (30%-
50%) for next flight to same customer on a same month of delayed flight.

37. Now everyone can
fly