Group Members:O Dwitya AribawaO Chandra Gunadi WitedjaO Velly AnatasiaO Latipah

STRATEGY FORMULATION

STAGE 3: The Decision StageQSPM

STAGE 2: The Matching StageIE Matrix

STAGE 1: The Input StageEFE Matrix IFE Matrix

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

Mission statement componentsO CustomersO Products or servicesO MarketsO TechnologyO Concern for survival, growth, and

profitabilityO PhilosophyO Self conceptO Concern for public imageO Concern for employees(Fred R. David)

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.

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.

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).

Alternative StrategyForward

IntegrationBackward Integration

Horizontal Integration

Product Development

Market Development

Market Penetration

Unrelated Diversification

Related Diversification

Liquidation

Divestiture

Retrenchment

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.

Formulation Strategy ImplementationIn

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.

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

Mission Statement

ValuesWe 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.

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.

Vision and Mission Analysis

Vision Statement Analysis Sheet

Approach In the statement Analysis

Realistic To be the largest low cost airline in Asia

Of course it’s realistic vision to be the largest low cost airline in Asia

Credible Serving the 3 billion people

That statement very inspire employee to achieve service with high level of excellence

Attractive Currently underserved with poor connectivity and high fares

Encourage employee to serve the passengers that currently underserved

Future To be the largest low cost airline in Asia

The future goal of AirAsia is to become low cost airline

Length One sentence , 24 words . Short and clearly enough to explain about AirAsia long term objective

What do we want to become?

AirAsia want to become the largest low cost airline in Asia

Decision The vision is sufficient for the company, realistic, credible, attractive and future view

Mission Statement Evaluation MixComponent Yes/

NoStatement

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 Growth/profit

NO None

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 enhance service level

Decision Fulfill six from nine mission statement criteria, that’s means mission statement of AirAsia is good to implement to the company.

Input Stage

IFE and EFE Matrix

IFE MATRIXAirAsia IFE Matrix

Strengths

Key Internal Factors Weight

Rating

Weighted-score

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 become a regional brand

0.05 3 0.15

E-booking and M-booking, quick way to book tickets

0.02 3 0.06

Almost every two week the new promo

0.015 4 0.6

First mover of low cost airlines 0.1 3 0.3

Weaknesses

AirAsia does not have its own maintenance, repair, and overhaul (MRO) facility

0.2 1 0.2

Lot of complaints from customers on their service

0.12 2 0.24

Limited human resources could not handle irregular situation

0.05 2 0.1

Total 1 3.38

Based on IFE matrix above score of AirAsia Internal condition is 3.38 that is indicate AirAsia has very strong internal

position.

WeightThe weight assigned to a given factor indicates the relative importance of the factor. Zero means not important. One indicates very important.RatingMajor weakness is represented by 1.0Minor weakness is represented by 2.0Minor strength represented by 3.0Major Strength represented by 4.0

AirAsia EFE Matrix

Opportunities

Key External Factors Weight

Rating

Weighted-score

Big market share in air transportation

0.3 3 0.9

Interaction among the industries of tourism and transportation

0.03 4 0.12

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

Threats

Key Internal Factors Weight

Rating

Weighted-score

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

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.

WeightFrom 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. RatingRating 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.

Matching Stage

Using IE Matrix

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.

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.

Decision Stage

Strategy Selection Using QSPM

Strategy Selection Using QSPM

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.

Conclusion and Suggestion

ConclusionO 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 AirAsiaFulfill 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.

ConclusionO 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.

SuggestionO 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 SelectionThe 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.

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.

Now everyone can fly