Wednesday, January 29, 2020

Strategic Management Essay Example for Free

Strategic Management Essay Introduction For a company to succeed in its businesses, strategic management must be its main agenda. Managing multinational companies can be a hectic job and can end up in disarray if not well structured. Strategic management is based on a company’s top brass of management. The top management of the company is always at the center of decision making process on behalf the real owners of the company. This set up is in charge of mobilizing resources and structuring the company to match the external business environments. Formulating policies, planning and setting of objectives is the management’s concerns. Strategic management also deals with the achievement of the company’s vision through fast tracking the mission, programs and projects. In strategic management, there is a deliberate effort by the management to strike a scorecard that is balanced through evaluating the general performance of the business and the steps toward the achievement of the business’ set objective. Strategy in any business or company is in line with the expectations of all the stake holders of the business and must be based on the stakeholders’ objectives. Most multinational companies that have managed to be main players in the global business market have history of effective strategic management measures and settings. Such companies include the Coca-Cola Company, the Toyota Company, and the Hyundai Company among other multinational companies. Strategic management is the backbone of a successful multinational company or global business. Witcher Chau (2010) Background study For any company or business to be competitive in the market, there must be a high level and a well coordinated strategy management which is the fundamental aspect of tactics and goal setting. Strategic management is always vital in offering the direction to the business and its ultimate success. In business administration, strategic management and strategic consistency between the business and its environment needs to be struck. In various companies, strategic management is always undertaken by a management team which is mostly comprised of a Board of Directors among other stakeholders. Amason (2010) Different companies employ different strategic management approaches in trying to stay competitive in the business environment. The management boards in different companies apply different processes of evaluation and controlling the businesses and the various industries that are involved with the company. This is the case in two leading automobile companies, the Toyota and Hyundai companies. In assessing their competitors’ strategies, the two companies use various strategy management processes. Despite executing different strategic management forms, both companies consider basic factors in strategically managing their businesses. Such include the size of the organization and the need to adapt to the changes of the business environment. In order to achieve the objectives of any company, there are various aspects and concepts that need to be explored. A strategic management which is more structured may be employed in consideration to the size of the company, operations, requirements and the views of the stakeholders. Strategic management plays a very important role in shaping the way a business is run or the success and achievements of a company. Nevertheless, strategic management is always tied to the goals, vision, mission and the objectives of the company. In managing a company, the management board or team do work towards the views and expectations of the owners of the company or business. Hitt, Ireland Hoskisson (2009) Toyota Motor Corporation The Toyota Motor Corporation is based at Toyota at Aichi in Japan. The multinational company is an automaker with a large employee base of over 400000 employees with the largest manufacturing capacity of automobiles and specifically the famous vehicle brand ‘Toyota’. It terms of world revenue, the Toyota Company sits at the eleventh position and had manufactured an estimated 200 million vehicles in July 2012. Founded in 1937 as a family company by Kiichiro Toyoda, the company has been keen to strategically manage its businesses. The Toyota Company has had a choice of leadership that has embraced the benchmark of quality, perfect practices and corporate responsibility in the wake of stiff competition and technological advancement in the global market. Borowski (2010). The strategies of the company have been deeply rooted in principles that have continued to improve the respect for people, their strategy framework as been gearing towards waste cutting, positive attitude building and maximum utilization of the inherent talents of the workers. The Toyota Company has managed to create an impression of social responsibility in the global market. The company has exploited a number of strategies with a view of being the best company in terms of product quality and service provision vis-a-vis matching growing customers’ needs and technological advancement. The management board of the Toyota Company has been vigil to clinch any opportunity in developing and growing the company’s worth, a strategy that has gone a notch higher to see the company explore options of developing hybrid cars among other market strategies. The underlying strategy of the Toyota Company is rooted in rewarding merit and identifying faults in an attempt to perfect the product and service delivery. Through this basic strategy, the Toyota Company has managed to propel its influence and achieve an extensive customer base. Magee (2008). Strategy and management The success of the Toyota Company is attributed to its strategic management formula that has made them to remain competitive in the automobile market while maintaining the quality and efficiency of their products. The philosophy of management at Toyota Company has continued to evolve over a long period of time. This management philosophy has been built on the original value of the company which was centered on ‘Lean manufacturing and the concept of production in time. These two concepts have been vital in the development and growth of the company. The Toyota Company strives to produce designs of cars that are exclusively ideal and perfect. In its lean manufacturing policy, the company aims at achieving a customer ideal production which will eventually cumulate to customer satisfaction. In this quest, the Toyota Company has been producing different models of cars in order to meet the demands, taste and different preferences of its customers. Hino (2006). This has enabled the company to remain competitive and to have a wider market area. The business strategies and managerial values have been collectively convened into a single structure referred to as the ‘Toyota Way’. a. The ‘Toyota Way† The ‘Toyota Way’ was one of the strategies that the Toyota Company adopted in order to help them stay ahead in the automobile industry. It is a set of values guidelines of conducts that all the employees at Toyota are expected to embrace. The strategy had two main pillars; Continuous improvement and Respect for People. Liker Jeffrey (2011). All the conduct guidelines and values of the Toyota Company are summarized into major principles of embracing challenge, striving to improve their services and products, respect to customers, teamwork and a ‘go and see’ slogan. This is a strategy that the company has employed to ensure that the employees not deviate from the main objectives of the company thus enhancing success in business thus working as a driving force towards an achievement. Liker (2003). The strategy has also aided the formation of identity and has kept the spirit of quality and service which has helped the company to be outstanding among other automobile manufacturers. Alongside the Toyota Way are four other components that complement the strategy. These components include management decisions that are based on long term deliberations and a comprehensive problem solving process. Further, the aspect of focusing on the development of the people has added a lot of value to the organization. Consequently, the Toyota Company has embraced the art of organizational learning through solving the root problems continuously in the organization. Ono (1988) b. Worldwide establishment The Toyota Company has used a world presence strategy that has made them be a common household name in terms of automobile development. Through intensive marketing and strategic management, the company has expanded tremendously thus establishing factories in a majority areas in the world that deal with assembling and manufacturing of different types of vehicles. The Company has set branch factories in countries like South Africa, Turkey, Japan, India, The United States of America, Brazil, France, the United Kingdom, and Columbia and has recently established factories in Thailand, Mexico, Malaysia, Argentina, Pakistan, Vietnam, Russia, Egypt and Mexico. In this manner, the company has been able to meet the rising demand for automobiles and have provides a large variety of automobiles thus giving the customers the large variety to choose from. This is a strategy that has ensured that the products of Toyota Company are accessed by most people around the globe. The strategy of worldwide establishment does make a company to be widely known and become easier to be identified with. c. Electric technology Strategic management is all about exploring the possible options that can assist a company to be elevated above its competitors. This means that every implemented strategy needs to be suitable to effectively achieve the mission, feasible to ensure that it is applicable and that the strategy is accepted by the stakeholders. The management team at Toyota Company has explored the application of electric technology which is feasible, acceptable and suitable. In this respect, the Toyota Company has gone a long way in releasing hybrid electric vehicles into the automobile market. It has been the first company to introduce and sell hybrid electric vehicles, thus shaping the face of the automobile industry. In 1997, the company introduced the Toyota Prius and started producing vehicles that were smaller but maintaining the luxurious touch. Such cars like Lexus and Camry were received into the automobile industry with excitement, a sign of an effective strategic management implementation. Anderson Judy Anderson (2010). In 2012 October, the Toyota Prius became the hybrid car that was best sold in the whole world and this earned the Toyota Company about 2. 8 million units. This high sale was replicated in most parts of the world. Later in 2012 October, the company was the first to manufacture a passenger car that was hybrid and a motor vehicle hybrid that was one plug in model. This model was availed to around 80 regions and countries worldwide. The company has an aim of achieving the launch of a 20 hybrid vehicles models at the end the year 2015. Hyundai Motor Company. The Hyundai Motor Company has been a main player in the motor industry just like the Toyota Company. It is a multinational automotive company with it’s headquartering in South Korea in Seoul. Founded in 1967, Hyundai is ranked the forth in terms of automobile manufacturing having sold about 3. 6 million vehicles in the year 2010. Hyundai is the largest automobile company that is integrated with an employee base of around 75000 people working in the factories worldwide. Hyundai Company has applied strategic management in its success story. The company has set up 6 development and research centers across the world. The company has also an established center in California for designing automobiles specifically for the markets in the United States of America. Hyundai Company has applied various forms of strategy to remain equally competitive. The Hyundai Company has been able to establish a system of quality management which has gone forth to help the company achieve the status of a major player in automobile industries and machineries globally. In this sense, the company has realized a top class service provider status. Lansbury, Chung , Sok Suh, Kwon Ho Kwon (2007) a. Product development. Hyundai has strived to improve the quality levels of their products through application of unique procedures. The company has applied pilot production vis-a-vis researching by center engineers in an aim to meet the desired levels of production. The pilot production is a strategy that Hyundai Company used to avoid problems during the production of automobiles in mass. Through the large pilot plants, Hyundai Company is able to ensure there is quality in the production of its models. The company is also striving towards achieving a perfect product quality in order to be at the helm of profit making. Henry (2008) b. Outsourcing Outsourcing has been part of Hyundai’s strategy to maintain the quality of products they offer. This is a strategy that amalgamates various parts manufacturers who manufacture specific automobile parts before the parts are assembled by Hyundai to form complete automobiles. This strategy contravenes the Toyota policy whereby the manufacturing of the automobiles is done wholesomely by the company. The Hyundai Company outsources companies which make parts. The outsourced parts are sub-assembled into some modules which are further assembled into final automobiles. This strategic management aspect has made the Hyundai Motors Company to save a lot in terms of profits. Through outsourcing, the company has been able to shift its concentration more on marketing and product development and not to worry about the production of parts. This aspect of the Hyundai production model has been advantageous to the company as it accumulates more resources and channels them towards marketing and improving on its products. c. Advanced philosophy and Quality innovations strategies The achievements made by the Hyundai Motors have been as a result of quality innovations. The company, through strategic management organs, has weathered the challenges of hostile and competitive business environment through application of innovation. There has been an increase in customer satisfaction which has proved that the Hyundai Company has the ability to marshal massive shares in the market. As a result of aggressive and intensive innovations, Hyundai has come up with vehicles which meet the customers’ demands, wishes and comfort. This has been in line with the achievement of the company’s objective of meeting customer satisfaction and bringing ultimate elegance, enjoyment and creating confidence in its customers. The style and luxury that is aimed at by the Hyundai Company is thereby achieved. This strategy has ensured that Hyundai Company stands out in terms of class and design, making its products popular among people worldwide. Despite the growing fierce competition in the automobiles industry, Hyundai Company has managed to stay at the top in terms of quality and market base as a result of its management philosophy which is advanced. Its strategy has ensured that there is a clear cut for the future of the Company not leaving the customers behind. Hyundai’s philosophy has seen an increased favor among the customers due to its striving to make products of good quality and its main goal of laying emphasis on the satisfaction and efficiency of its products to the customers. Hyundai has continued to be a global brand name in automobiles. This has been boosted by the fact that the company has been creating an impression of fairness and transparency in terms of the acceptable and expected business ethics. d. Expansion of production Hyundai Company has employed the strategy of market expansion as a way to ensure it achieves its main objectives. It has increased the shares of its export in the market internationally and domestically. During the economic recession in the year 2009, Hyundai still managed to export 1. 3 million vehicles amidst a production capacity of 1. 6 million units. This strategy ensured that the company stayed at the top of automobile manufacturing and assembly industries when other players were diversely affected by the recession. Its marketing strategy and management strategy strength is further exhibited in the company’s success in increasing its market shares in the United States of America. This has gone a long way in improving on the quality of the company’s products. Hyundai has also extended its competitiveness in engaging in overseas businesses since the late 1990s. It has established its products in Alabama, Montgomery among other areas. In North America, Hyundai’s plant was ranked second in the level of productivity. e. Electric vehicles Just like the Toyota Company, the Hyundai Motor Company has embraced the use of electricity in the manufacture of vehicles. The company has introduced a hybrid electric automobile to match the increasing technological advancement. In 2008 November, the company introduced the first electric car which was facilitated by the technology of lithium polymer battery. In applying the electricity technology, Hyundai Company aimed at achieving sophistication, style and class in order to remain as competitive as possible. Chris, Masrur, Gao (2011). The strategy of applying electricity technology has ensured that the company has been at par with the other automobile producers to ensure that it does not lose its grip on the top spot in the global business. Society of Automotive Engineers (2000). Conclusion. Strategic management has been the center of interest for both the Toyota and Hyundai automobiles companies. Both have gone out of their way to establish global markets and have embraced the use of electricity in automobile development. Toyota Company manufactures its own vehicles from scratch while the Hyundai Company opts to outsource for parts manufacturers in order to reduce the costs incurred. The role of strategic management is evident in the two automobiles companies as both do have a team or a board of managers that is always tasked with the responsibility of formulating policies to help the company grow to transcendent heights. The board reviewing possible strategies in the companies does work towards actualizing the aims and objectives of the companies. The owners’ wishes can never be ignored in the strategic management process. References Allen C. Amason (2010). Strategic Management: From Theory to Practice. NY: Taylor Francis. Anthony Henry (2008). Understanding Strategic Management. NY. Oxford University Press. Arkadi Borowski (2010). Report on the Toyota Company. UK: GRIN Verlag. Barry J. Witcher, Vinh Sum Chau (2010). Strategic Management: Principles and Practice. UK: Cengage Learning EMEA. Chris Mi, M. Abul Masrur, David Wenzhong Gao (2011). Hybrid Electric Vehicles: Principles and Applications with Practical Perspectives. UK: John Wiley and Sons. Curtis Darrel Anderson, Judy Anderson (2010). Electric and Hybrid Cars: A History. UK: McFarland. David Magee (2008). How Toyota Became #1: Leadership Lessons from the Worlds Greatest Car Company. UK: Penguin Group. Jeffrey Liker (2003). The Toyota Way: 14 Management Principles from the Worlds Greatest Manufacturer. McGraw Hill Professional. Liker, Jeffrey (2011). The Toyota Way: Management Principles and Field book (eBook). NY: McGraw-Hill Professional. Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson (2009). Strategic Management: Competitiveness and Globalization: Cases. Canada: Cengage Learning. Russell D. Lansbury, Chung-sok So, Chung-Sok Suh, Sung-ho Kwon, Seung-Ho Kwon (2007). The Global Korean Motor Industry: The Hyundai Motor Companys Global Strategy. Seoul. Taylor Francis Satoshi Hino. (2006). Inside the Mind of Toyota: Management Principles for Enduring Growth. Productivity Press. Society of Automotive Engineers (2000). Hybrid electric vehicles. Society of Automotive Engineers. Nov 1. Taiichi Ono (1988). Toyota Production System: Beyond Large-Scale Production. Tokyo: Productivity Press.

Tuesday, January 21, 2020

Essay --

Shusanta Bhattarai Ms. Kelley Formal lab report The conservation of Mass and how it’s connected to chemical reactions Introduction In this lab, we were looking at the conservation of matter, chemical reactions and using mass to find the number of moles present after a reaction. We had previously studied moles (measurement system) and mass. We copiously took notes on the masses of the objects after reactions and observed how the quantity would â€Å"change† after a chemical reaction. The conservation of mass is a law that states a mass will stay consistent over time and will not change until it is not combined or removed. We performed a lot of chemical reactions in this lab. The first part of the lab was putting a coiled piece of copper in silver nitrate and washing it out with water. The second and third part was also about adding chemicals and seeing the reactions. The purpose of the experiment was to determine if the values of silver and silver nitrate would stay the same. The hypothesis was that if chemical elements and compounds react the ratio would stay the same, due to the conservation of mass and the law it has. Procedure Originally, I was supplied with 30 cm of copper wire and a test tube. First, the wire was cleaned with steel wool.The copper wire was coiled around the full length of the test tube. The copper was then weighed. Then an empty 250 ml beaker that was labeled by my partner was weighed. A vial of white silver nitrate was also weighed. After, 2/5th of the clean beaker was filled with distilled water and the solid silver nitrate was stirred in with the water until the crystals that were formed dissolved. Then the end of the copper wire was bent so we could submerge the coil in the solution and still be able t... ...s is attached and the mass must remain consistent over time. The chemical process did not change the quantity and it showed. 4. The ratios might be different because there might have been a flaw in the procedure. They all still surround 1 and no one in the class got one but we all got something close. 5. I think that the decanting process was the main source of contamination. Sometimes water doesn’t take out all the specks. We could buy a high tech decanting type-system and walk through each student individually so that there would be minimal chance of error. Conclusion We saw that no matter the chemical change we would get the same ratio. The purpose worked out in a great fashion and showed us that the quantity was almost the same. The whole class got a number that was close to one. The hypothesis was supported because the conservation of matter proved to be true.

Monday, January 13, 2020

Centered Approach Essay

Family-Centered Approach ECE 313 Collaboration with Parents & Community Kathleen Thomas October 10, 2011 Instructor Cindy Hopper The economy has hit an all time low and has caused two parent households and single parent households into the workforce. As a result of this the parents are looking for childcare centers for their children. The main concern of these parents is will the centers help with the behavior and development of their children. These parents are looking for a place that is going to help with the development of their children’s self-help skills, empowerment, pro-social skills, self-esteem and attachment. These are behaviors that are not easily controlled and because the children spend the majority of their time in the centers the parents are hoping that together they can help develop desired behavior. That is why they are looking for a center that uses the family-centered approach. As the educator you have to develop a relationship with the children and their parents, the parents have to feel that they are going to be involved in everything that goes on in the center and that concerns their child. The educator has to sit down and learn about the child from the parent so that the educator will know what the parent expects from the educator and the center. The educator has to spend time with the child so that they can start to form a relationship. Family-centered has been defined as: Focus on the children within their families. The program includes the family as an integral, inseparable, part of the children’s education and socialization. Families along with their children are the program. (Gonzalez-Mena) p. . It is very important to acknowledge the children within their families because this way, you remember that you can not do anything without involving both of them. It is important that the educators know what the parents expectations are, Teaching children desired behavior may not be easy even when the educator and the parent are using the same methods. Potty training may require the educator and the parent using the same procedure which might be putting the child on the potty several times a day. If either of them changes the procedure this might cause the child to become confused and it may take longer to train her. To encourage desired behavior from children, parents and teachers need to have a strong relationship with the children. A warm affectionate bond and a positive emotional tone in the home and center will convince the children that their teachers and parents are on the same team and promote a spirit of cooperation and understanding. (Neifert, Marianne, MD) Helping a child develop self-esteem takes a lot of work because you can not do it by saying things that are not realistic. You can not say you are the prettiest girl in the world and think that this will help her self-esteem, as a parent you have to promote self assurances, self-help, competence and being â€Å"special. † Self-esteem rises if the individual is proud to perceive herself as being in possession of these traits. (Gonzalez-Mena) p. 205. Self-esteem has four dimensions: significance, competence, power and virtue. Teaching a child about self-esteem would be difficult because hopefully the child would feel loved and cared for by her parents and she would need to feel that you loved and cared for her too. However, if the child did not feel that she was important this is not something that you can make happen. You can try by showing her that you do care about her and that she is important. You could compliment her when she has achieved a goal that was set for her but you should not over praise her. To promote self-esteem you should never have a critical attitude, label a child or use name calling. Use encouragement instead of always praising them. When they have done something better than the last time make a comparison about how much better it was this time. Never compare your child’s performance to another child’s. Children will fail at some of the things that they try to do but this will be an experience for them. Have realistic expectations; be certain that your expectations for the children’s behavior match their age and developmental abilities. You have to be prepared to show them what it is that you want them to do. Practice the skills with them so that they will be able to do them alone. It is not impossible for a two year old to put on their coats but this two year old might not be ready, you will have to practice this over and over until the child is able to do it themselves. Competence, power and virtue are a part of self-esteem and these things might be easier to teach, being competent means that you have skills that you are very good at. If you were doing these skills on a daily basis you would someday be extremely good at that skill. Power is believing that you are in charge of something other than the paper clips and that you have control over the things that happen in your life. Virtue is being a good person and knowing right from wrong. Educators can take these four dimensions and use them to help a child learn how to feel good about themselves. Teaching pro-social skills you can model the children yourself, you have to set limits and tell them why you are setting the limits. The reason is because you don’t want them to get hurt. Have children work and play together so that they will cooperate better. When children are involved in a conflict it is your responsibility to resolve it with a solving approach. Always avoid punishment as a way of discipline. There are other things that you can do when trying to teach pro-social skills; as an educator you should sincerely acknowledge children’s pro-social behavior by recognizing when they are doing things together (ex: two children have started cleaning up the art area) your response could be â€Å"that is real cooperation†. You should explain reasons for rules and help the children understand the effects of their behavior on others. This type of inductive discipline seems to encourage child to be kind and helpful. (Berman, K. L. , M. M. Torres, C. E. Domitrovich, J. A. An educator can encourage good behavior by using a reward system. Choose a behavior you would like to change. There might be a child in your classroom who will not sit still in his seat; you can tell him that if he sits still that you will reward him for staying in his seat. You can tell him that he has to earn five tokens by staying in his seat when you are teaching the class and that five tokens will get him ice cream at lunchtime. It does not have to be tokens; you might have a chart with everyone’s name on it and at the end of the week if they have receive a star for everyday they will receive extra cookies at snack time. Share your reward system with the parents and see if that helps them out with behavior problems at home.

Sunday, January 5, 2020

Airasia the Worlds Lowest Cost Airline - Free Essay Example

Sample details Pages: 5 Words: 1370 Downloads: 1 Date added: 2017/09/14 Category Advertising Essay Did you like this example? INTRODUCTION AND HISTORY AirAsia is a very successful low cost carrier. In a very short time, it became a market leader in the Asia region. The company successfully adopted cost leadership through operational efficiency and effectiveness. Using the slogan â€Å"Now Everyone Can Fly,† AirAsia positioned itself successfully in the niche LCC market. AirAsia was the creation of former music publisher Tony Fernandes. After watching a television show in a pub about easyJet successfully competing against British Airways, Fernandes decided to start his own low cost airline. He then met with former Ryanair operations director, Conor McCarthy and the two developed a plan on starting up a LCC to serve South-East Asia. The plan started with a meeting with the prime minister of Malaysia. Prime Minister Mahathir Mohammad suggested that Fernandes and McCarthy acquire AirAsia, a struggling government owned airline. With their own money, and support of investors, they purchased AirAsia for 1 Malaysian ringgit and assume debts of 40 million ringgits; approximately 11 million US dollars. ORIGINAL STRATEGY Don’t waste time! Our writers will create an original "Airasia: the Worlds Lowest Cost Airline" essay for you Create order Tony Fernandes always had his sights on cheap long haul flights, but he knew AirAsia had to become successful on short hauls before his dream would be possible. He targeted a historically underserved segment to target with his low fares. His low fares would cover a geographical area less than three and a half hours flying time between hubs in an area populated by more than 500 million people. A large emphasis was placed on marketing and brand development. AirAsia had to remove the images of a rundown government owed airline and replace them with images of a safe, reliable airline that cares for its customers. They had to show everyone that AirAsia is a low cost airline that places importance on customer service while providing an enjoyable flight experience. AirAsia invested in a large advertising campaign. They paid for television, print, and internet advertisements. Press coverage was maximized. AirAsia made image improvements through co-branding and sponsorship relationships. They sponsored the ATT Williams Formula 1 race team by painting a plane to resemble the race car. Other planes were painted with portraits of soccer players and the Time magazine logo. AirAsia has the following self described strategy: Safety first – AirAsia partners with renowned maintenance crews and complies with world airline regulations. The company does not own a maintenance shop. Everything with maintenance and repair is contracted out to keep costs down. High aircraft utilization – having the fastest turnaround time in the region, they assure lower costs and higher productivity. AirAsia has the newest and most efficient fleet flying in the Asia region. The planes have a single seating class and hold more passengers than competitors. This allows for more revenue per flight. Low fare, no frills – keeps ticket prices cheap. Customers have the ability to customize for an extra fee. AirAsia focuses on price sensitive customers. Keeping lower prices is better for both the passenger and the airline. Streamline operations – simple is good. Using all the same planes saves on training pilots, contracting mechanics, and replacing parts. Lean distribution system – book flights online or on the phone. No travel agents. Passengers do not even use tickets. They simply show photo identification and are allowed to board the plane. This saves booking/ticketing costs. Point to point network – A to B, or A to C service. No B to C service. Standardized short routes ensure quick turnaround times and high load volume. Using secondary airports saves on runway costs. Using this philosophy, AirAsia outperformed the government owned Malaysian Airline System. They had a higher seat factor, lower cost per seat, lower operating expense, lower staff cost, but still a higher debt due to taking on debt in the beginning. Porter 5 Forces Analysis Bargaining Power of Customers – Moderately High. Customers have a high sensitivity to price. There is no switching cost to use a different LCC. The internet gives the customer full information on prices of each LCC. Bargaining Power of Suppliers – High – Only two sources exist for purchasing or leasing large airplanes, Boeing and Airbus; and AirAsia only uses one source. The monopoly gives the supplier high bargaining power. Leasing planes in bulk helps AirAsia keep costs down. There are also limited suppliers of fuel. AirAsia signs fuel future contracts to help keep lower prices on fuel. Threat of New Entrants – Moderate – Start ups must have a lot of capital and political pull. There is high cost of branding and advertisement. The main threat is full service airlines developing LLCs. They can easily divert resources to the cheaper flights and they will already have established brands. ValuAir stared a LLC in 2003 followed immediately by Tiger Airways. Orient Thai Airlines started a LLC that matches any price AirAsia charges. The liberalization of ASEAN and India air travel opens up huge opportunities for all LLCs. Threat of Substitutes – Low – With numerous islands, wide spread cities, and poor road network; substitutes are not viable for long distance travel. Trains are an option, but the ticket price is higher and the trip takes longer. The most efficient and convenient mode of traveling long distance is on a plane. Industry Rivalry – High – Tough competition exists in the LLC business. As mentioned above, Orient Thai Airlines will match any AirAsia price. Thai Airways has high capacity and has been lowering costs to compete with the LLCs. The airlines realize a large price war would devastate everyone in the industry, so a peaceful competition is in place. CHANGE IN STRATEGY After successfully competing in the short haul LLC arena, Fernandes decided the time had arrived to try out long hauls. He wanted to take advantage of the rising middle class in China and India. He also wanted to offer service to the existing middle classes in Europe, Australia, and the Middle East. Careful measures were taken to spread the risk of starting a long haul operation and prevent political issues. Investors in AirAsia X came in having knowledge and expertise in the long haul business. Having foreign investors also kept AirAsia from directly competing against the Malaysian government owned long haul provider. AirAsia X was setup to use the cost advantages of AirAsia and have a high transferability of the advantages plus already having the established and respected AirAsia name. AirAsia X was going to have the low cost, no frills philosophy. They would use larger planes with higher passenger capacity. To please business travelers, the planes would have both economy seats and premium seats. Meals would be provided for the longer flights. The cost of starting up and running AirAsia X was one of the causes why AirAsia suffered its first year of losses in 2008. Fernandes believes that canceling current fuel futures contracts also contributed to the loss. Dealing with the higher fuel costs temporarily on the longer flights would allow them to make lower priced fuel contracts in the future which would allow them to save more money. AirAsia is currently one of the top LLC leaders in the Asia area. AirAsia X is gaining ground on the competition. After the first quarter of 2009, AirAsia X had a positive cash flow and a net profit of 18 million RM. The CEO of AirAsia X believes merging the two companies and running short haul and long haul as AirAsia would have benefit AirAsia X. This would allow for further operational and financial efficiencies. RECOMMENDATIONS †¢Further pursue Chinese and Indian markets. Both markets have large populations of potential LCC customers. †¢Invest in building more secondary airports. This would grant AirAsia access to untapped customers. †¢Create a frequent flyer program. This would help retain price sensitive customers. †¢Continue to lease newer and better equipment. More seats with better fuel efficiencies will raise revenues. Expand routes and frequency of flights. Exploit the growing middle class in Asia. †¢Research the highest grossing long haul flights, focus on those routes and eliminate the losers. †¢Or hold an IPO for AirAsia X to raise funds for more equipment to make a larger presence in the long haul market. †¢Read customer comments on Trip Advisor t o see what customers want. It seems there is a huge problem with stolen/missing luggage on this airline. Spend money to increase security with luggage and training for better baggage handlers. Customers will appreciate it.