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3.0 Discussion and Recommendation
3.1 Advantages and Disadvantages of Business Practice
Based on the theory generalship of commander, Tan Sri Tony Fernandes is forming a management team in the company in order to settle down the debt and eventually become a profit earning company. One of the advantages is the clarify level in the decision making process. (Anatasia, 2018) This system sets out a benchmark of which action to be carry and measure of. While the leader have the plan and vision on the company direction, he or she can guide the employees to move together toward the goal. With the cooperation between the employees under the leader, it can remove or least limits the possibility that the organisation have internal conflict. The 250 staffs during 2001 need to work together under Tony lead in order to get out from the difficult situation. Besides that, the leader can also create plan that have a clear objectives and tasks. (Anatasia, 2018) This plan can measure the performance and the progress of the work, then they can understand whether they are doing it in the right way or not. They can also understand the limitation and then improve it. Furthermore, according to Jan Sauermann (2016) study, measuring performance can also improve the productivity then not measure performance. Air Asia can understand the customers’ feedback towards the company performance such like the services and the choice of flights frequency in order to further improve their services and then the competitive ability in the industry.
Besides on the advantages, they may also be some error in this generalship of commander system which is rely on predicting future in order to create a plan. (Anatasia, 2018) The leader will try to evaluate what might happen in the future, which is very difficult because the possibility of the future is varied. Besides that, the leader also need to consider different elements in the company to evaluate the plan in the future which have the ability to fulfill it has increase the difficulty to develop an effective plan. Next, the leadership system may also be inflexible. (Anatasia, 2018) As the plan is usually have established routines which can lead to the slow responses of the organisation to the changes. The set vision and strategy could also limit the potential of new opportunities which because of non-suitable under the vision of the company.
The second theory is moral influence adopt by AirAsia which is form a new culture in the company and the industry and also fulfilling corporate social responsibility (CSR) to the society. AirAsia is trying to provide low cost fly which can be affordable by most of the consumers. This cost leadership strategy helps the company to producing the airline services in a lowest cost possible. One of the advantages by this strategy is higher profitability which is because the cost is lower, the company can get a higher profit margin than other companies. (Hassan, 2015). Another advantage of this strategy is they have more capital in the growth of the company. (Hassan, 2015) The company have save the cost in the production which can allow them to use the fund to invest in other aspect such as improve the product or service quality. Brand differentiation can be one of the benefits for company to adopt CSR. (Forbes, 2012). Doing CSR program can first allow the consumers to have a different opinion about the company itself. As the AirAsia is carry out the charity event which can be used to improve the society.
The disadvantages of the cost leadership strategy is that the company may have a lower quality in customer service to save cost. (Hassan, 2015). This can reduce the number of customers which are more emphasize on good customer service quality. In Dec 2017, one of the complaint by the customers is that the customers keep on getting error pops up while he try to book the ticket online. He also cannot get help from the customer service hotline regarding the problem he faced. Another drawbacks which is lack of potential innovation. (Hassan, 2015). This is because research and development of new product and service need a huge amount of cost which is conflict with the strategy of the company that operate in a lowest cost possible.
The third theory adopted by AirAsia is theory of weather. For this theory, Tony Fernades has use the discount strategy to improve the airline industry in the Southeast Asia region. The advantages of discount is increasing sales in short term. (Miksen, 2018). This is because the discount will attract more customers to the product and services, eventually will buy it because of the lower price. Besides of increase sale, it also lead to meet the sale goals in a short term period. AirAsia also adopt the joint venture strategy to operate the business in other countries such as Indonesia and Thailand. Joint venture can bring benefits such as the both parties can share the resources, risks and costs together in order to success in the corporation. (Moroney, 2016).
The disadvantages for discount strategy is that the focus is shifting to price aspect. (Lee, 2016). Discount will made the customers to focus on the price of different similar product regardless of the quality. The product with the lowest price will tend to be buy by customers. The second disadvantages is that reduce in the profit because the selling price decrease will cut down the profit that can be earn for the particular product. According to Kokemuller (2017), the disadvantages of joint venture strategy can be the different of culture between the two different companies. Both of the AirAsia and the local company need to solve the difference in the management culture as well as the country culture in order to success in the corporation.
The last theory adopted by AirAsia is the terrain theory. Some of the application is that the AirAsia allow customers to online buy tickets to increase the efficiency and save time. The technology used by them can help the customers to buy the ticket at anytime and anywhere with the support of online services. They can also save the time for them to buy the ticket in the airport physically.
The drawbacks of the terrain theory is that they need to use a huge amount of costs when they adopt the digitalisation. They need the capital to research and develop the system that allow the customers to use it. After that, they need to open it for trial and error before they introduce it officially.