This paper analyzes management issues at AirAsia. It pays special attention to the rise and expansion of the low-cost airline company. Touted as one of the best airline companies in Asia with headquarters in Japan, the company is a force to reckon with. Competition is tough due to proliferation of many airline companies in the airline industry. To stay ahead of the competition, the company needs to reassess its way of doing business; address the underlying issues that recently plagued the company. This paper discusses some general issues associated with the airline company; however, it critically focuses on the problems at AirAsia. An in-depth analysis of the company reveals that lately, it is on the downward spiral, and experiences reduced profits. Just where did the problems begin? This is an important question that the paper seeks to answer. The company operates a large fleet of low-cost airplanes that rule the Asian skies. In order to compete effectively, the management at the company needs to come up with strategies that will ensure it maintains profits and conducts its activities without so many hassles (Alvesson 2002, p45). Good strategic management entails conducting an extensive research on the weaknesses in management, failures in marketing strategies and any other management related issues. This paper focuses on the special problems that AirAsia Company has experience in the last decade.
AirAsia is a low cost carrier company, LLC. This means that the company charges low airfare in a bid to attract passengers. In fact, this is one of the issues that have greatly affected the company since it has not been able to get sustainable profits. In order to be successful eventually, the company needs to come up with an effective strategic management to achieve its visions and missions. Strategic management is important for companies due to issues such as going global so as to survive in the business (Bisen & Priya 2009 p76).
Ethics and Social responsibility
The management at AirAsia ensures that employs know their roles at the workplace. These are outlined as standard codes of ethics. Employees need to be informed of what the management expects of them; such could include, but not limited to, their communication concerning company issues, reporting time to work, finishing tasks delegated to them in time, and sticking to the company policies (Alvesson 2002, pp67-68). In a bid to have employees stick to the codes of ethics set by the management, companies and organizations put in place corrective and punitive measures such as warnings, punishments and demotions.
Simply put, corporate responsibility entails giving back to the society. Companies are charged with ensuring that they leave the world a better place than they found it. Today, the world is plagued with environmental issues such as global warming; which is brought about by the actions of man (Bisen & Priya 2009, p69). Some of the causes include use of non-renewable sources of energy that release huge amounts of carbon dioxide into the atmosphere, creating high temperatures in the environment; such amounts of carbon dioxide have adverse effects on the environment such as deaths of aquatic animals and extinction of species.
The management at AirAsia ensures that their waste effluents are properly disposed of. Also, they have to ensure that they only deal in activities that are environment-friendly. The profits they get should also be injected in development issues such as helping the needy in the society; giving out money to charities and donating money to help spur growth in the countries they operate in (Woodside 2010, p28). The company has corporate social responsibility policies in which they pledge part of their profits in development activities and charities. This not only improves their visibility, but also helps retain confidence of investors and stakeholders. Employees will be willing to work in companies with such policies. It serves to strengthen employer-employee relations all over the world since employees feel they participate in gainful activity-giving back to the society.
Politics plays a significant role in the growth of companies. When a state is volatile, investors are likely not to invest in such countries. This means that the management in such companies will not get much profit. This affects the employees since they will not get the remuneration they expected to support their families and for personal development. When investing, managers and leaders ensure that they invest in friendly countries; in states that have political stability so as to maximize returns on their investments (Halachmi 2005, p91). Luckily for AirAsia, it has not experienced any political interfere with its operations. In fact, there is need for organization leaders to conduct feasibility studies in countries they seek to invest in; they only choose countries where they are reassured their businesses will flourish.
Today, companies rely on technology in one way or another. Innovation helps AirAsia to simplify tasks such as payment to workers, feed in inventories, do cost accounting, and help track progress of their organizations (Mondy et al. 2005, p74). Every organization strives to have the relevant technology in their businesses. The benefits of technology are numerous; include reduction in expenses such as cutting back recruitment and maximizing profits. It is up to the leaders of the organizations to conduct extensive research on the best technology in the market that will help improve service delivery.
Government policies play an important role in effecting good management and leadership qualities in AirAsia Company. Where government policies encourage competitive environments, businesses flourish; there is more flexibility in the labor market and such businesses could be reassured of smooth operations (Mathis & Jackson 2003, p23-24). To reduce competition, the government ensures that companies stick to the stipulated rules. On the part of the management, they have to be innovative, ensuring that they participate in less competitive yet profitable ventures. Good management practices take place in competitive environments. To stay ahead of competitors, management at AirAsia needs to work round the clock, coming with new ideas and innovations; they ensure that employees work as a team; that they contribute in the growth of the companies; they motivate employees through promotions, recognitions and rewards (Mathis & Jackson 2003, p16).
Managers need not to be authoritative. Instead, they are good listeners and inspire growth of employees. Companies that operate in countries with flexible labor policies are better in good management practices than countries that do not. Countries that AirAsia operate in such as Malaysia and Indonesia have flexible labor laws; the company has achieved outstanding ranking in management practices; serves to show that government laws and policies can affect growth of companies (Kumar & Kumar 2010). Governments that carry out regular audits of companies ensure that the management of such companies sticks to the best business practices such as filing tax and properly remunerating employees. Government policies help to regulate the market; avoid mushrooming of businesses, and helps businesses to perform effectively (Williams & Williams 2002, p99).
To achieve the desired growth, management of organizations comes up with strategies to help them achieve their goals and missions. Strong effective management comes in handy; business leaders conduct research and surveys on what works and what does not. They learn from previous mistakes; include the employee in important decision making. There are no standard strategies to implement in ensuring optimal output. Good management involves effective communication with employees, addressing their grievances in time, encouraging them through promotions and rewards etc (Williams & Williams 2002, p71). Managers could encourage employees to come up with ideas that will boost growth of the companies they work in. In this regard, it is recommended that managers ensure diversification at the workplace.
For instance, they could put in place a department within their company to address issues of sex discrimination, underrepresentation of special groups and cultural diversity (Wysocki 2009, p52). Coming up with policies that ensure that employees from different cultures are given equal opportunities at the workplace goes a long way in improving relations at the workplace. To have a competitive advantage over competitors, business leaders must pay the best rates and appreciate their employees.
Organizational Structure and Human Resource Management
In order to improve efficiency, there is need for businesses to have effective organizational structure; to address work-related issues such as grievances. Some of the best organizational management images include coaching, working as a team and nurturing employees based on their unique talents. It is the duty of the management to come with measures that will ensure effective delivery (Wysocki 2009, p76). Employees need to know that they are simply partners in the business; that their bosses are only there to give them directions. The human resource for instance, is in charge of promotions based on an input of an employee. They track their progress and retain the best employees. To encourage employees, they give them benefits such as medical allowances, pensions, loans and health cover. A motivated employee gives their best; is innovative and contribute to the overall growth of the company (Kumar & Kumar 2010).
All players in a company will be tracking progress of accompany. For instance, companies know that they are performing well when their share prices and dividends shoot; when they do not, the implication is that the company is not doing well. Stakeholders can participate in sealing deals for mergers and acquisitions in a bid to resurrect companies that are on the downward spiral (Finch 2010, p18). They inject capital to boost growth. Managers ensure investor confidence by having the right work policies and growth strategies. Stakeholders are given a chance through initial public offers to invest in the company. The money accrued from such offers help to boost the company.
Rebranding of a company is another strategy that stakeholders can take part in; come with ideas pertaining to promotions and advertisements. Some of the companies that succeeded after rebranding include Toyota Company and Vodafone (Finch 2010, p59). Effective management ensures that stakeholders participate in developmental programs such as expansions. In fact, annual general meetings that most companies facilitate offer a platform where the stakeholders and company managements meet to discuss growth and evaluate financial reports.
Consumers play an important role in company decisions. Good managers seek their feedback on products through interviews, questionnaires and surveys (Hargie et al. 2004, p25). It is their prerogative to carry out research on products and services that sell. Issues such as pricing and advertisements lie squarely with the marketing department. Good managers use marketing platforms such as the internet to increase visibility (Hargie et al. 2004, p35). Generally, any marketing initiatives that lead to high sales are an important role of company leaders.
Current Management Issues at AirAsia
Competition in the Asian airline industry is stiff; it became especially intense from the 1990s due to proliferation of many airline industries in the Asian markets. Traffic became squeezed due to this, and AirAsia started experiencing low profits (Sen & Ng 2008). The increase in the volume of traffic means that that the airline company lost the significant market share that nit had previously enjoyed. When competition in any industry becomes intense, it is the duty of the management to come up with strategies that will ensure it stays ahead of the competition (Hartley & Bruckmann 2002, p13).
The management at the AirAsia company were slow in coming up with solutions to address competitions. This became their major undoing. Good strategic management needs critical assessment of all the internal and external problems accompany is facing. The airline company therefore needs to come up with effective competition strategies to maintain their market share and profits. To achieve its general organizational goals, AirAsia Company needs to conduct four major assessments in its planning, leadership, organization and control. This will help the company to succeed in the complex-environment world. The company has not adopted effective management to sustain its profitability by looking at issues such as defects in costs; by improving its operational processes so as to improve productivity.
AirAsia Company has without doubt, had major management issues in the last decade. Some of the challenges include stiff competition, poor management strategies and lack of maintenance facilities to help reduce cost of doing business. Globalization meant that the company invested a lot of capital in expansions; reduced profits. Logistic issues have also affected the company in terms of poor sales forecasts, failure to respond to complaints from clients in time and poor communication between different departments of the company. Overall, the company is still a leader in the airline industry, albeit with reduced margins of profit.
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