What are the micro and macro environmental factors that have contributed to the early success of airasia?

Answer 1

moderately high due to almost no switching cost for customers to switch from

one LCC to another. In addition, the access to the internet allows customers to

have close to full information on prices charged by the LCCs. Threat of

substitutes is moderately low; there are several substitutes such as cruises, rail,

bus, and car. However, the archipelago geographical structure of Asia has made

air travel the viable, efficient, and convenient mode of transportation. Threat of

new entry is moderate; high capital requirement and government barrier such as

air service agreement can act as barriers to entry. However, the deregulation of

aviation industry in Asia Pacific region has resulted in more competitors entering

the market. Furthermore, many full service airlines enter the LCC industry by

launching their LCC version. For example, Nok Air set up by Thai Airways is a

part of LCC industry in Thailand. Finally, industry rivalry is moderately high due

to price as the basis of competition and high exit cost. However, market

participants tend to realize that price war is destructive for them thus they avoid

direct price competition and they turn into 'friendly' competitors. Appendix 3

summarises Porter's five forces specific to LCC industry.

Based on the environmental scanning performed, the demand for LCC is

expanding thus LCC industry will keep growing rapidly. The LCC industry

attractiveness and profitability will attract many full service airlines to launch its

LCC version adding the degree of rivalry in this industry. As the implication,

AirAsia, current market leader of LCC in Malaysia, Thailand, and Indonesia, will

face competition from both existing and new players. In order to sustain its

competitive advantage, AirAsia needs to leverage its competency in creating cost

advantages across multiple value chains.

Answer 2

i think that it may have contributied but i now i have changed my mind