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Business in Asia

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Submitted By erodrigu
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Research Assignment:

“Asia’s performance during the global financial crisis has highlighted its flexibility. This flexibility, in part, arises from transformations undertaken in response to the Asian financial crisis a decade earlier.”

Student Name: Eric Rodrigues

Student Name: Mehmet Edib Unal

Introduction

The Asian Financial Crisis occurred during the year 1997-1998, and is explained well in brief by Galina Hale “East Asian countries experienced severe banking crises. Nonperforming loan ratios skyrocketed because of prior excessive risk taking and most banks had to be recapitalized by their governments.” (Hale 2011, p.3) After ten years, The Asian Financial Crisis was followed by The Global Financial Crisis in 2008. “The precise genesis of the global crisis remains subject to debate. (Lin 2012, Treichel 2012, p.3) “We will argue that global imbalances were the result of the large excess demand in the U.S. over an extended period—the financing of which was made possible by the reserve currency status of the US dollar. “This excess demand resulted from both the public debt” and “the overconsumption by households.” (Lin 2012, Treichel 2012, p.3) “As shock waves of the global financial crisis (GFC) reached East Asia in autumn 2008 immediately after the collapse of Lehman Brothers in September, the region faced the task of evaluating and reassessing the economic cooperation efforts of the previous ten years” (Katada 2011, p.274) Thus by evaluating and reassessing the economic cooperation of those previous ten years East Asia was able to maintain its flexibility during the Global Financial Crisis.

The aim/purpose of this assignment is to show how the Asian economies have performed during and after the Global Financial Crisis, in relation to the structural transformation, in the role of the state/government, businesses, labour relations and regional integration, that took place as a result of the Asian Financial Crisis.

This Assignment will start by explaining the first structural transformation, the role of the state/government, by Creating and promoting manufacturing industries, and limiting involvement. Then the second structural transformation, the role of businesses, this depicts how business are becoming self- reliant, the shifting from bank loans to equity as the source of financing, the rise of influence and power of outside shareholders, and Foreign Acquisitions. Thirdly, Labour relations will focus on why the Asian countries are growing in skilled workforce, and the increase demand for skilled workers. Lastly, Regional Integration will focus on the benefits on the creation of regional blocs. The assignment will also look at possible risks and opportunities that the Asian economies could experience in 2012. In order to analyse the implications of these structural transformations in Australia, I have explained the Opportunities and Challenges for Australia.

State

Creating and promoting manufacturing industries Through the experiences of the Asian Financial Crisis, in the year 1997 - 1998, many Asian countries, have developed, a structural transformation to recover their country and to prevent it from happening again. The Structural transformation included creating and promoting manufacturing industries. This can be noted in the example of a newspaper article. “In recent years the Indonesian economy has seen a structural transformation, marked by an acceleration of growth in investments, which has led to a revitalization of manufacturing industries. (Arman 2011). In addition, to the investments in capital expenditure, some companies also invested in human capital. Skilled workers were needed to operate new equipment and technology, thus some companies offered training for its employees. A special Report on the Economist says “What Shenzhen has to offer on top is 30 years’ experience of producing electronics. It has a network of firms with sophisticated supply chains, multiple design and engineering skills, intimate knowledge of their production processes and the willingness to leap into action if asked to scale up production.” (The Economist, 21 April 2012) One of the main advantages of operating in Asia is the vast availability of resources at a cheaper price. “Much of China’s cost advantage is thought to come from cheaper raw materials, lower wages and the lower cost of capital.” (The Economist, 21 April 2012) Therefore with the vast amount of capital expenditure, human resources, raw materials at a cheaper cost, it becomes attractive for countries like Australia to operate, and manufacture products in. Limiting involvement In Japan “to reduce its debt, Prime Minister Junichiro Koizumi has been trying to sell government-held assets and break up money-losing public companies that have outlived their usefulness.” In addition “Analysts are also encouraged that the government is moving more aggressively to cut back its role in the economy.” As they feel privatizing will boost efficiency and more tax revenue “the state-owned company set up to dispose of the national railway's assets, the Japan Railway Construction Corporation, will use the money to pay railway workers' pensions and other obligations that the government would otherwise have had to make good sooner or later.” Therefore by involving the private to own previously government owned industries, helps the state in this case Japan to reduce its debts and to remove sectors that were not doing well, by selling the sector (Belson 2002) to private investors.

Business Businesses in Asia “no longer can rely on massive state support; rather they are pushed by the state to be self-reliant. Shift from bank loans to equity as the source of financing. This means that businesses sell stocks/shares in the foreign exchange market for investors, who invest for a positive return. Increase equity finance led to dependence on both domestic and international shareholders and hence the rise of influence and power of outside shareholders” (Azmat 2012)
In order to see how businesses in Asia performed after the Asia Financial Crisis, we can look at India’s Structural Transformation in Business. GDP refers to the production of the final goods produced. The “Share of Services exports to the Gross domestic product (GDP) ratio currently stands at around 9 per cent. Further, it is expected that India will continue its growth in trade and economy, rendering the country a more significant role in the world, especially as China’s future expansion may be constrained by rising costs. Notably, during the time global financial crisis, India’s export performance was satisfactory compared to other Asian economies (China, Japan, South Korea, Malaysia, Taiwan and Thailand). In fact, Indian merchandise exports grew the fastest in 2008-09 with Korea a close second. India’s exports increased from US$ 44 billion in 2002-03 to US$ 163 billion in 2008-09 (CAGR of 24.5 per cent). However, in October 2008, India’s exports growth rate turned negative (-12.1 percent) which continued till October 2009 (negative export growth rate for 13 months.) (Singh 2011, p.70) However with the experience from the Asian Financial Crisis, India was able to recover faster.” With the recovery of global economy and strong initiatives of government of India, exports growth rate turned positive in November 2009 and continue till date” (Singh 2011, p.70)

The report, “Perspectives on Global Development in 2012: Social Cohesion in Shifting World” noted that China stands out for its remarkable rise in its private and public savings rate, from 33.3 and 5.7 per cent of GDP in 1992 respectively, to 44.7 and 6.2 per cent in 2008. However the report also said “China is not alone,” in particular adding that “India possesses high and rising levels of national savings, which include rapidly growing corporate savings.” (Lakshman 2011) Some Economist believes that saving is equal to investment. Thus, we can see the potential of investment in business in China and India increasing. Which means more goods and services can be produced.

Labour relations Asia has the biggest population in the world. In this high population, there are many people compete and thus possess different skills. In one of the reports of the Organisation for Economic Cooperation and Development said that, “With sustained high growth over several decades the depth of structural change in large Asian economies such as India is remarkable and without historical precedent.” (Lakshman 2011) This could also refer to the transfer for labour between different countries. “Citing the rapid rise in labour productivity as a key factor driving this growth the study noted that in the case of India structural transformation in labour markets had made the services sector a key source of employment unlike China, where manufacturing appeared to dominate.” (Lakshman 2011)

Labour is Asia especially China is now becoming expensive. “With increasing prosperity Chinese workers want more pay, shorter hours and more benefits, Labour costs in China have recently been growing by around 20% a year. (The Economist 2012) Yet for some manufacturers low wage costs are becoming less important because labour represents only a small part of the overall cost of making and selling their products. Researchers for the Personal Computing Industry Centre at the University of California, Irvine, found that a 16-gigabyte 2010 iPad priced at $499 contained $154-worth of materials and parts from American, Japanese, South Korean and European suppliers. The researchers estimated the total worldwide labour costs for the iPad at $33, of which China’s share was just $8. If China accounts for such a small share of the overall labour costs, surely Apple could afford to make iPads in America? It turns out that low wages are not the only attraction. The other factors would be the exchange rate and the skilled workforce. “Cheap labour has entrenched exploitative labour practices which are now being exported to different countries around the world, some of which have poor labour records of their own. China is no longer just exporting mainly cheap goods, but also cheap labour practices.” (Marima 2012)

Regional Integration Regional integration (RI) mainly refers to the creation of regional blocs in a continent. It has become important to Asian countries after the Asian financial crisis. The Asian continent believed that by promoting free trade and investments between the Asian countries, they would be able to face any future crises. Asia has a diverse population. This diversity creates new knowledge/ skills, thus by the regional integration, transfer of these assets can be seen as a positive impact on the success of the Asian economy. However, there could be problems with the regional integration, such as wage difference. While China is moving towards changing its growth strategies and not relying on exports and FDI, it is planning to increase the minimum wages. This will result in a larger consumer base with the buying power required to continue the economic growth. The downfall is that such changes create wage difference in different areas of the country as well as the region in general. In addition there seems to be number of trade barriers for ‘all manner of domestic controls on foreign services suppliers, discriminatory government procurement contracts, trade-restricting product standards and red tape and corruption in customs administration. These are much bigger obstacles to regional commerce than tariffs per se.’ (Sally 2009) ‘An Asian regional bloc covering as much as half the world's population and one-third of global output would be the third pole in the global economy’(Sally 2009). A practical example would be a company investing `in several factories in different East Asian countries and then ship components between them to be eventually assembled into a final good for export to the U.S. or Europe. Thus East Asian integration is tightly linked to global integration.’ (Sally 2009) This can provide great opportunities for countries like Australia, to be more integrated in the Asian economy and benefit from trade and investment

Risks ahead for Asian economies in 2012
Many of the Asian economies rely heavily on exports and Foreign Direct Investment, with economic struggles in Europe and the recovery attempts in US draw an unpredictable and volatile International market. Also predicted by the ‘Asian Development Bank that there will be “much greater downside risks” in 2012 because the threat of recession in the U.S. and Europe remains, as does the prospect of destabilizing capital flows.’ (Feigenbaum 2012).

Being one of the worlds ‘three principal growth engines’ (Feigenbaum 2012) China will carry an important role in maintaining a stable economy. A risk here will be in China’s plan as outlined in its 12th Five Year Plan (Harris 2011) to move towards a more ‘slower but more balanced growth’ (Feigenbaum 2012). Such a decision by China will have major effects on World economy if put into action while the World economy is facing a downward slope. This situation could be turned into an opportunity by China both for Asia and the World economy through a push towards an ‘even faster growth’ (Feigenbaum 2012). Meanwhile, others, such as South Korea, will also be vulnerable in 2012. They have relied, in part, on Chinese demand to power their economies, so even a modest slowdown in China would have contagion effects elsewhere in Asia. (Feigenbaum, 2012)

Opportunities ahead for Asian economies in 2012

Regional Integration provides opportunities for Asian countries. For example China and Japan would benefit greatly from Regional Integration as they complement each other. With Japan’s ageing population; high and efficient technology; and China’s relatively low labour, poor technology, inefficient work practices, these countries will be able to specialise in things they are good at. Moreover, by training China’s low paid labour to use Japan’s high and efficient technology they would be able to gain advantage in the region by strengthening their economy.

The economic downfall in the US and the continuing financial crisis in Europe have caused many companies in the West to increase their interest in the Asia-Pacific region for the opportunities. Most countries in the Asian region are competing with each other to benefit from such opportunities. By attracting foreign direct investment into their country in order to have an advantage in the region and strengthen their economic growth.

From a macroeconomic point of view, better balance is Asia's most urgent priority. Central to that rebalancing will be the long-awaited emergence of the Asian consumer. For a region steeped in a culture of saving, this will not be an easy transformation. (The Evolution of Asia 2009) Asia will need to find the right balance and has to see an increase of its consumer population. It is also evident that this will be a long process and ‘China undoubtedly holds the key’ (The Evolution of Asia 2009) and to play its role successfully China will have to have ’more aggressive initiatives in the areas of social security, pensions, medical care and unemployment insurance.’ (The Evolution of Asia 2009)

China has the right tools to turn this period into opportunities. In China ‘the average savings rate as a percentage of income is around 50%’ (Chien, Shih & Chu 2005, p.42) which is ‘one of the highest in the world.’ (Chien, Shih & Chu 2005, p.42) The government will need to make careful plans in relation to higher education, which ‘can lead to an abundant supply of educated labour and high-quality engineers.’ The passion for high level of education could also be seen from the following example that ‘Chinese universities turn out about 400,000 scientists and engineers each year.’ (Chien, Shih & Chu 2005, p.42)

By rebuilding the pre – colonial arteries of trade and commerce, created the Asian identity. This ‘has means to led to a renewed energy and optimism, and the reduce poverty and connect Asian citizens to opportunities in the global economy. Asia’s economies will need to be watchful, and policy makers must continue to pursue sound macroeconomic policies and continued structural reforms to sustain growth and weather potential economic shocks.’ (Chidambaram 2006)

The ADB report posits two Asian futures. One, “the Asian century”, assumes the boom continues more or less uninterrupted. This is shown in chart 1, by 2050 Asia will account for more than half the global economy. In a gloomier “middle-income trap” scenario, it will make up less than a third. To achieve the former outcome, Asian governments need to make difficult reforms now. (The Economist 2011)

Increased demand for skilled labours Asian countries like for example, Thailand, Malaysia, Indonesia, China and Vietnam are trying to adjust their system of education, to increase the supply of skilled labours "Higher investments in infrastructure, education and social security systems can help countries increase productivity and move toward higher value added production," said senior economist Ekaterina Vostroknutova

“Second, there is need to diversify the destinations, and making exports to emerging economies like Africa, Latin America, Oceania and CIS countries are more viable. Third, India has potential to significantly increase its exports from the current level (potential products) or start exporting the new product. As a first step in harnessing this potential, it may be useful for the industry and government to identify specific reasons why India’s comparative advantage in these products has not translated into export gains. As India is in the process of negotiating free trade agreements with most of these countries, this opportunity could be used to address border and behind-the-border trade related constraints identified in the importing country.” “There is a need to understand the fact that India’s exports depend less on the value of rupees and more on the quality and reputation of products.” “For merchandise export, it is suggested that India needs to map out its technological gaps and invest heavily on R&D so that it makes products and sells goods & services of supreme quality so that Indian products can create space for themselves” (India progress)

Opportunities for Australia arising from Asia’s structural transformation
‘China is now Australia’s largest trading partner for exports of goods and of services and for imports of goods. It is best known as our largest and fastest growing export market for minerals, energy and wool, the buoyancy of which made an important contribution to the sustenance of growth through the recession in other developed countries following the Great Crash of 2008. (Ross Garnaut 2011) China’s economic growth and structural change are principal determinants of Australian terms of trade. They shape the conditions under which Australia obtains capital and skilled migrants in global markets. They have a major influence on the level and sectoral composition of Australian business investment and a significant influence on the nature of growth of the Australian labour force. (Ross Garnaut 2011)
Challenges for Australia arising from Asia’s structural transformation
‘The Qantas crisis is an exemplar of how Asia's economic transformation is affecting Australia. But it certainly won't be the last.’ (Wade 2011) Alan Joyce, the boss of Qantas states that “Qantas's survival depends on it developing a bigger stake in Asia's enormous and fast-growing aviation market.” (Wade 2011) Similar to the national interests of Australia “the fate of the national carrier is intimately interconnected with Asia. The challenges for Australia are significant, the structural adjustments forced on us are real," (Wade 2011) she said. "The economic opportunities are enormous as well." (Wade 2011). Australia relies exceptionally on foreign borrowing abroad for funding domestic investment and its heavily indebted private sector is likely to find that structural change in China increases the costs of debt. While this effect will be felt first within the private sector, it will affect public revenues through reduced private 12 profits. This will be a moderately negative influence on growth prospects. It will increase the risk that future financial crises that have their origins in the global private financial sector will have severe effects in Australia, unless there is change in Australian corporate financing, especially in the financing of bank lending within Australia (Ross Garnaut 2011)

Conclusion Through our analysis we can conclude that the statement being discussed carries substantial value and truth. 'Just as the financial crisis of the late 1990s was a wake-up call for the region to put its financial house in order, the global crisis and recession of 2008-09 is a strong signal for Asia to refocus the basic structure of its economic-development model' (The Evolution of Asia 2009)

‘Following the GFC many countries were struggling to increase the recovery progress of their economies’ (The Evolution of Asia 2009) however Asia managed to recover and continue its growth through the change in role of the state, business, labour, regional integration and ‘had become even more tightly tethered to foreign markets than was the case a decade earlier.’ (The Evolution of Asia, 2009)

It’s an important point to note that 'Change is never easy — especially on a scale that the Next Asia requires. But change has been at the core of all the Asian miracles of the post – World War II era.' (The Evolution of Asia 2009). Asia has proven to make good use of the opportunities and avoids major risks that will affect the economic growth in the region. This is evident in the resilience it has shown through the Asian financial crises and once again when faced with the global financial crises.

Word Count: 3,368

References
Arman, H 2011, ‘Indonesia in 2012: Sustaining the transformation’, The Jakarta Post’, 23 December, retrieved 22 April 2012, < http://www.thejakartapost.com/news/2011/12/23/indonesia-2012-sustaining transformation.html >
Azmat, F 2012, ‘Structural Transformation of the State and Business in Asian Economies’ MMM385, 14 March Burwood Campus.
Bhardwaj, S 2011, ‘Asia less reliant on US and Europe, but not decoupled’, ‘The Economic Times ’ 3 October, retrieved 22 April 2012, < http://economictimes.indiatimes.com/personal-finance/et-wealth/asia-less-reliant-on-us-and-europe-but-not decoupled/articleshow/10194204.cms >
Capannelli,G, Lee,J & Petri,P 2010, Economic Interdependence in Asia: Developing Indicators for Regional Integration and Cooperation’, The Singapore Economic Review, vol.55, no.1, pp 125 – 161
Chidambaram, P 2006, ‘The Asia, Pacific Region and the ADB’ , ‘Finance India’ , vol XX, no.2, pp 465 – 469
Feigenbaum, EA 2012, ‘What to Expect in Asia in 2012’, retrieved 25 April 2012, < http://blogs.cfr.org/asia/2012/01/03/asia-in-2012/>.
Garnaut, R 2011, ‘Australian Opportunities through the Chinese Structural Transformation’, The Australian Economic Review, vol 44, no.4, pp 437-445
Hale, G 2011, ‘Could We Have Learned from the Asian Financial Crisis of 1997–98?’, FRBSF Economic Letter, San Francisco
Harris, D 2011, ‘China’s 12th Five Year Plan. Infrastructure, Infrastructure, And More Infrastructure. Did We Say Infrastructure?’, retrieved 29 April 2012, <http://www.chinalawblog.com/2011/03/chinas_12th_five_year_plan_infrastructure_infrastructure_infrastructure_did_we_say_infrastructure.html>.
Katada, S 2011, ‘Seeking a place for East Asian regionalism: challenges and opportunities under the global financial crisis’, The Pacific Review, vol.24, no.3, pp.273-290
Lakshman, N 2011, ‘India can do better, suggests OECD’ , ‘The Hindu’ 24 November, retrieved 22 April 2012,< http://www.thehindu.com/todays-paper/tp-international/article2654662.ece>
Long, S 2011, ‘Tiger traps’ , The Economist, 17 November, retrieved 22 April 2012, < http://www.economist.com/node/21536964>
Marima, T 2012, ‘Outrage over brutal Chinese labour practices’ , Zimbabwe Independent,12 April, retrieved 22 April 2012, <http://www.theindependent.co.zw/local/35047-outrage-over-brutal-chinese-labour-practices.html>
Singh, S 2011, ‘Export Trade Performance of Indian Economy during and Following the Global Financial Crisis’, Journal of Global Analysis, vol. 2, no. 2.pp.51-71
The Economist, 2012, Comparative advantage: The boomerang effect As Chinese wages rise, some production is moving back to the rich world. Retrieved 22 April 2012, < http://www.economist.com/node/21552898>
The World Bank 2012, The Unexpected Global Financial Crisis - Researching Its Root Cause, Retrieved 22 April 2012
The World Bank 2012,’ Strong growth in developing East Asia faces risks from global uncertainty and natural disasters.’ Retrieved 22 April 2012 < http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:23052248~pagePK:64257043~piPK:437376~theSitePK:4607,00.html >
Time Magazine 2009, ‘The Evolution of Asia’, retrieved 28 April 2012, <http://www.time.com/time/magazine/article/0,9171,1927137,00.html>
Wade, M 2011, ‘The flip side of the resources boom’, The Sydney Morning Herald, 1 November, retrieved 22 April 2012, < http://www.smh.com.au/business/the-flip-side-of-the-resources-boom-20111031-1ms75.html>

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...Evaluation of air asias response to tourism Executive summary Air Asia, the market leader of low cost carriers in Asia, shown on the good record of bringing about innovative idea into the industry. The industry itself, especially in the Asian region, is observing a higher growth rate of passenger and profitability. The report examines the organization’s key business structure and operation, products and provides summary analysis of its key revenue lines and strategy. The analysis looks at the impact of external and internal factors on the organization, and evaluate it responses. Essentially SWOT and PESTLE analysis provide a simple framework through which strategic options can be identified in which Air Asia operate. The SWOT process will start by examining the strengths of the Air Asia of today. One of the most dominant strengths possessed by Air Asia is the adding of new Airbus A320 aircraft to its fleet. Airbus A320 gives Air Asia the largest, youngest and most modern fleet in the region. Another strength of Air Asia is the upgrading of the online booking system, in which will offer the ability to passenger to check in online and printing out boarding passes. An opportunity available to Air Asia is fastest growing market in China and India. Both countries give a huge opportunity for Air Asia to expand its business in the region. In the threat part of the analysis is concerned with identifying parts of the Air Asia that might affect its business performance. In recent years...

Words: 4791 - Pages: 20

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Air Asia

...Introduction Air Asia has successfully been xpositioned itself in the market as one of the leaders in the airline industry in Asia with its technical strategies. It has a route network that spans through over 20 countries and is one of the low cost aviation services in Asia. The Business level strategy adopted by air Asia is cost leadership strategy. To gain its market share they focused on specific markets like domestic services, short and long haul regional services and selling their products below the average industry prices. Air Asia adopted a number of actions to compete in the industry. It launches the values added services which are to provide ticketless travel and implement a free seating policy. In 2007 air-Asia became the first airline in Malaysia to offer internet checking services that allowed all the passengers to print their own boarding passes and pay extra money to board first. So, by doing this the passengers can choose their seats easily. In addition, they can also pre-book their checked baggage and meals. This paper describes Air Asia’s each xstrategies that maintain its effective control of low cost/focus business level strategy. Air Asia’s structure, cultures and systems that are used to create loyalty of the customers and satisfied them to lead the organisation to be profitable. SWOT analysis is conducted to focus aspects of Air Asia and business sector. It also evaluates the current business, future prospects and the economic climate. Porter's five force...

Words: 2816 - Pages: 12

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...STRATEGY PROCESS MODELS 1.0 STRATEGIC ANALYSIS Business Process And Operation Air Asia has fostered a dependency on Internet technology for its operational and strategic management, and provides an online ticket booking services to traveler online. The following shows the home page of Air Asia.com as the company key channel of marketing and sales. Exhibit 1 – Air Asia.com Home Page To book a flight with Air Asia, customers can either choose the following channels or simply visit the Air Asia.com home page and follow the below 5 steps. 1. Call centre 2. Sales office and airport sales counter 3. Authorized travel agents 4. Mobile booking via mobile.Air Asia.com or 5. Online (http://www.Air Asia.com) in 5 easy steps as shown below. Step 1 - Search Step 2 - Select Step 3 - Guest & Contact Step 4 - Payment Step 5 – Itinerary The Product Life Cycle (PLC) Air Asia, Airlines Company with 58 flight destination is in the growth phase position of Product Life Cycle (PLC) stage. The growth phase is when loyalty begins to be built up. Some products or services can be taken up by the customer base very quickly and achieve rapid growth. Sales of Air Asia Airlines grew tremendously in every country in which they were available. It is during the growth phase that the product will begin to recover its development and launch costs and slowly move through the break – even mark to begin to make a profit for the organization. During the growth stage of a new...

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Strategic Planning & Management

...assignment, a well-known organisation within the hospitality, events and tourism industry – Shangri-La Asia Limited (SLA) is chosen to conduct a SWOT analysis and potential strategic through the use of TOWS matrix. To further accomplish the learning outcome of this assessment, external and secondary research had been carried out through the use of internet, books and journal in completing the report. The SWOT analysis of Shangri-La Asia Limited is further divided into sections. In strength and weakness, it described the brand reputation of the company and its difficulties in expansion on different culture market respectively. Moreover, opportunities and threats is further been analysed into the growing demand of market and increasing labour cost in Mainland China. Furthermore, a TOWS matrix is created and potential strategic is strongly analysed based on the SWOT analysis. As such, it also look into strategic for Shangri-La Asia Limited (SLA) in overcoming the difficulties in culture difference and taking advantage of its brand reputation for expansion. Lastly, strategic such as being cost effective and revising job description of position is been look into. Table of Contents Executive Summary 1 Introduction 3 Analysis 4 Company Overview 4 Company History 4 SWOT 5 Strength 5 Strong brand image and reputation 5 Business geographically diversified in Asia-Pacific 6 Weakness 7 Difficult in expanding market across different culture market 7 Increasing...

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Air Asia

...Introduction……………………………………………………………………. 2 Air Asia Current Business Strategies…………………………………………..3 Possible Alternative Strategies Evaluation……………………………………. 7 Air Asia Resources Evaluation………………………………………………. 11 Possible Future Strategies For Air Asia Indonesia…………………………… 12 Air Asia Indonesia vs. Adam Air…………………………………………….. 14 Targets For Achievements of The Strategies………………………………… 16 Appendix……………………………………………………………………... 17 Bibliography………………………………………………………………….. 18 2 Introduction Air Asia Indonesia is an originally Malaysian airline company, which started to operate in Indonesia in year 2006. The report is about Air Asia Indonesia and strategies to make it a major player in the Indonesian airline market. 3 Air Asia Current Business Strategies Air Asia wants to be the lowest short-haul airline in every market it goes in. To achieve the goal, it has some strategies such as lean cost structure, different ways of promotion, keeping safety, satisfying guests, and developing human resources (AirAsia.com, 2007, Internet) . Air Asia always tries to keep the operations simple and efficient to keep the costs low, for example by simple and efficient online ticket booking. According to Fu Sen, an ex employee of Awair – the airline company bought by Air Asia , the tickets that have been booked online can printed by the customers or the customers can just remember the booking code and show their identity card for checking-in, so Air Asia can also save some...

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Air Asia

...As stated in the chapter 4, in the section of business model reconstruction had explained enough on how Air Asia make their name available to customers and they can enjoy the profit without abandon the existing name which is Malaysia Airlines. Herewith, what can be explained is it still the same organization, but they changed the business to the new ones which just focusing on the new while they are not abandoning the existing business and bring in new business which there was no one as the first mover? Business model reconstruction can be explained as whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. Malaysia Airlines are once a privilege to fly where the firm applies entrepreneurial thinking to the design or redesign of its core business models in order to improve operational efficiencies or otherwise differentiate itself from industry competitors in ways valued by the market. And now, Air Asia are been introduced to everyone where the business come out with a new business model of Now Everyone Can Fly that lower the cost that are not necessary. To fly, it is obviously not a need but a want. Air Asia introduced a low cost concept which enhanced travelers to easily travel without stressing their mind about money just for the accommodation which include ticketless travel, online ticket sales, no international...

Words: 591 - Pages: 3