Acknowledging Mr. Haffiz's Exceptional Guidance in Hospitality and Tourism Education

Acknowledgement

I would like to take this opportunity to thanks my hospitality and tourism lecture (Mr Haffiz) for putting in 100% effort in teaching us. In this subject I learnt about the marketing environment in the social world of economic. Moreover, I would also like to thanks my classmate who is friendly and supportive. I would not be success in this subject without the guidance of them.

Introduction

What is the definition of macro environment? It is the major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies.

The Macro Environment have 6 different forces. They are demographic, economic, political, competitive, cultural and technological.

Demography is the study of human populations such as size, density, location, age, gennder, race, occupation, and many other statistic that could be calculated.

The economic environment consists of factors that affected the human's puchasing power and consumer's spending patterns. It could be calculated by the statistic of employment rate, one's income, a country's interest rate, a country's inflation rate and productivity that influnce the buying behaviours.

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Next is the political convironment, when a business man is to set up a business, they should know everything about the country's law, legal and political environment because it is made up of laws, government agencies, and pressure groups that inlunece and limit the activities of various organizations and individuals in society.

Competitive environment is the dynamic external system in which a busienss competes and fuctions with their compatitors. No company will stand alone in a business by serving and satisfying their customers.

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A direct competitors can be a company which is selling the same product or services. For example JW Marriott and Shangri-La group.

The cultural environment includes insitutions and other forces that affect sociaty's basic values, perceptions, preferences and behaviors. For example, an insurance company offers company trip to insurance agent which who is able to hit their target. This is a company benefit which can be a motivation to their staff.

Last but not least, technologies play a big role in the macro environment too. For example in the hospitality industry, technologies bring a change in it. Key cards have been replacing keys to access the room. With all this technologies, it make's everything easier.

Company Overview

Air Asia was established in 1993, and started of as one of the subsidiary for government owned company under the name of DRB Hicom. In the late 2001, when the excutive of Warner Music wanted to established an airline in Malaysia, he took the opportunity and to meet Tun Dr. Mahathir Mohammed and from there Tun Dr. Mahathir Mohammed took the opportunity to off load debt laden of Air Asia to Tony Fernandez. Tony Fernandes bought over Air Asia with a token sum of RM1 and with a partial debt of 40million. During that time, AirAsia had only two Boeing carriers. Then, it was carrying around 200,000 passengers in a year. In 2011 alone, it was carrying almost 18 million passengers.

AirAsia slogan is "everybody can fly". It highlights the low cost carrier strategy it employs. It seeks to keep cost low by offering no frills experience.

Demographic Environment

AirAsia is situated in the geographic location with over 3 billion population. Which is almost half the world population, majority of them never flew before because of high travel cost. This is AirAsia competitive advantage. Its strict adherence to its low cost business model will enable it to tap into this market. Apart from that the low cost model has worked in US and Europe despite the cyclical nature of economic growth. Asia pacific which is home of AirAsia shows the highest increase with almost 250 million additional passengers. The market outlook from Boeing shows that Asia Pacific region seeks to the highest increase in new airplane demand compared to other region. The demand for new airplanes from Asia pacific which is almost 50% of total demand in the coming twenty years underscores the increase level of growth in the Asia pacific market. This is true testament to AirAsia's potential in the Asia pacific market. This is reflected in AirAsia's aggressive approach in expanding. One of their main strategies in expanding their market is through joint venture in Thailand, Indonesia, Philippines, Japan and possibly India.

Economic Environment

Economic factors in decision making are undeniable. Kotler thinks that "economic environment effect consumer-buying power and spending patterns." Total buying power depends on current income, prices, savings and credit. The consumer-buying power also will influence the changing of consumer spending patterns. Different areas will have the different affects influenced by the economic factors. The strong and sustained growth in the entire region consisting of South Asia, South East Asia and East Asia compared to the rest of the world especially traditional markets such as North America and Europe puts AirAsia as a AirAsia exist on the need to allow people who otherwise could not fly with traditional carriers to be able to fly. Hence, it targeted the larger lower, middle and upper middle class segment.

In its early stages, it created promotional campaign that revolved around giving away 1million free tickets, and sales promotional campaign involving rock bottom sales. Malaysians was immediately attracted to it. Hundreds of thousands if not millions of Malaysians, who otherwise would not able to travel overseas, begin to travel overseas.

The strict adherence to the low cost model assisted AirAsia to acquire more market share of the aviation industry during the Global Financial Crisis. The global financial crisis is the greatest economic challenge thus far from AirAsia. It resulted the first ever net loss for AirASia Bhd ever since it went public.

Politic Environment

In South East Asia, political and legal forces play a bigger role. It started in the early stages of AirAsia whereby the anti-competitive legacy airline policy of the Malaysian

Malaysia

Malaysia's political and legal forces played a huge role in shaping AirAsia. It started with Tony Fernandez being made to acquire AirAsia by Malaysia's then Prime Minister Tun Dr. Mahathir. Apart from that, AirAsia was at a disadvantage position has it has to compete with Malaysian Airline which had preferential treatment by Malaysian government. It took intense public lobbying from AirAsia in getting the government to relax their anti-competitive legacy airline policy that was not commercially viable. The most recent is Malaysian government's decision to reverse the share swap between its state owned Malaysian Airlines and AirAsia due to political pressure.

Thailand

Airasia's joint venture in Thailand was a rather smooth sailing. This is in regards it had a rather influential joint venture partner at that time. It Shin Corporation corporation owned by the former influential Thailand Prime Minister.

Although, the Thakshin was later ousted through a military coup and continue to remain in exile. During the civil unrest in Thailand, AirAsia gained a lot of positive coverage when it launched a rescue mission for passengers stranded at the Swarnabhumi Airport. It also actively launched a regional level campaign to promote tourism in Thailand post - tsunami that adversely affected tourism in Thailand. Thailand's image as a one of the rather liberal country and, country which promises exotic location and experience to tourist presents an important growth factor to AirAsia. From October 2012 onwards , AirAsia in a bid to save cost by avoiding high airport taxes shifted from Suvarnabhumi Airport back to Don Mueang International Airport.

Indonesia

AirAsia Berhad has a 49% share in the airline with Fersindo Nusaperkasa owning 51%. Indonesia's laws disallow majority foreign ownership on domestic civil aviation operations. It is a rather common policy frame. In 1st December 2005, Awair changed its name to Indonesia AirAsia as part of a regional level rebranding exercise. This is to enable greater brand exposure and synergy between the various airline subsidiaries of AirASia in the world. In 2012, AirAsia Bhd announced that it will buy-out Indonesia's Batavia Air. Although Indonesia prevents foreign majority stake, it could circumvent the law through joint acquisition with Indonesia AirAsia. However the deal fell apart. Currently AirAsia is employing a less risky organic growth strategy though Indonesia AirAsia and the presence of the AirASia Group nerve centre AirAsia Asean.

India

The recent hike in airport tax has let AirASia to suspend flights to certain location such as Delhi, Mumbai. Apart from that, Indian government recent approval in allowing foreign based airline to acquire up to 49% in an Indian airline has allowed AirAsia to consider expansion by setting up an Indian subsidiary. However as the CEO puts it, they are opting for a wait and see approach and allow time to kill off airlines that are competing very fiercely in India before making a move. Economist recently reported that AirAsia is in talks with a new joint venture partner in India to set-up India AirAsia. Like Indonesia, India does not allow majority ownership in domestic Airlines. India presents a market of 200-300middle class families. Nevertheless, AirAsia Bhd enjoys leverage through its scale and also strong presence in ASEAN which gives it an edge in order to compete with India's domestic carriers.

Europe

The implementation of carbon tax in the Europe has caused AirAsia X to suspend flights to London and Paris indefinitely.

Competitive Environment

Rivalry among Sellers - Moderate to Strong.  Airlines primarily compete on price and service; however, to a lesser extent they do compete on frequency of flights, frequent-flyer programs, reliability of flights, and other amenities.  In recent years, pressures have somewhat eased as established carriers have stayed within their existing geographical areas of dominance, concentrating more on returning to profitability than expansion.  However, there have been pressures from low-cost carriers (Fire fly, Malindo) whom have been in a state of expansion.

Technology Environment

Technology remains the most dominant force that affect the strategy decision making at AirAsia especially in regards to marketing. As a low cost carrier, AirAsia have aggressively and taken huge risk in leveraging on technology advancement in terms of marketing and building a brand. It announces sales for instance mainly through its internet platform. AirAsia was the first airline in the world to have a mobile version of its website. It went ticketless and introduce web booking service, the year after it was taken over by Tony Fernandez. It was a bold move, since they were a new fledgling airline. AirAsia effectively made use of the internet platform in marketing and helping them reduce cost. For instance in 2004, AirAsia recorded almost half of their sale using their internet website. Apart from that, it was the first to introduce a mobile version of their website which allowed access to mobile phone.

Conclusion

The macro-environment analysis indicates that AirAsia's business model and marketing strategy. They have so far managed to handle the macro-environment forces really well. These forces are evolving, hence constant analysis is required.

Updated: Apr 29, 2023
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Acknowledging Mr. Haffiz's Exceptional Guidance in Hospitality and Tourism Education. (2019, Dec 15). Retrieved from https://studymoose.com/marketing-indi-example-essay

Acknowledging Mr. Haffiz's Exceptional Guidance in Hospitality and Tourism Education essay
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