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paper ID: 156417073
BUS 488
Strategy
Assignment 3 – Individual Assignment 2
July 2010 Presentation
Name: Lin Huisheng
Student Number: K0805705
Contact Number: 90475900
Question 1
Perform an internal analysis on AirAsia and identify the core competencies of AirAsia. Based on your findings, provide possible explanation for AirAsia’s success.
As mentioned by Hitt et. al. (2009, p72), the internal analysis of a firm examines its portfolio of resources, bundle of heterogeneous resources and capabilities managers have created. These resources and capabilities will lead to the development of the firm’s core competencies.
Internal analysis will see the identification of AirAsia’s business fundamentals, followed by its resources and capabilities. Capabilities identified will be put through a test for four criteria of sustainable advantages to determine AirAsia’s competitive consequence. Further, value chain analysis of AirAsia will be carried out to determine value creating activities in the firm. Subsequently, AirAsia’s core competencies will be identified
From the analysis carried out, the success of AirAsia will be gauged based on its core competencies and strengths.
Business Fundamentals
Accounting and Financial
AirAsia has compounded average growth of 45% for sales and its cash flow has always been positive since its operations.
(Figures are comparison between 2004 and 2005)
Net profit margins increased from 0.125 in 2004 to 0.167 in 2005, shows that AirAsia is achieving higher net profits due to its strong growth in sales and its ability to contain its cost effectively.
Current ratio increased from 1.24 to 5.60, represents that AirAsia is liquid and has a strong working capital and good repaying ability.
Quick ratio increased from 1.215 to 5.57 which show its increased ability to use quick assets to pay off its current liabilities.
Debt-to-Equity ratio decreased from 0.756 to 0.16 which shows that
BUS 488
Strategy
Assignment 3 – Individual Assignment 2
July 2010 Presentation
Name: Lin Huisheng
Student Number: K0805705
Contact Number: 90475900
Question 1
Perform an internal analysis on AirAsia and identify the core competencies of AirAsia. Based on your findings, provide possible explanation for AirAsia’s success.
As mentioned by Hitt et. al. (2009, p72), the internal analysis of a firm examines its portfolio of resources, bundle of heterogeneous resources and capabilities managers have created. These resources and capabilities will lead to the development of the firm’s core competencies.
Internal analysis will see the identification of AirAsia’s business fundamentals, followed by its resources and capabilities. Capabilities identified will be put through a test for four criteria of sustainable advantages to determine AirAsia’s competitive consequence. Further, value chain analysis of AirAsia will be carried out to determine value creating activities in the firm. Subsequently, AirAsia’s core competencies will be identified
From the analysis carried out, the success of AirAsia will be gauged based on its core competencies and strengths.
Business Fundamentals
Accounting and Financial
AirAsia has compounded average growth of 45% for sales and its cash flow has always been positive since its operations.
(Figures are comparison between 2004 and 2005)
Net profit margins increased from 0.125 in 2004 to 0.167 in 2005, shows that AirAsia is achieving higher net profits due to its strong growth in sales and its ability to contain its cost effectively.
Current ratio increased from 1.24 to 5.60, represents that AirAsia is liquid and has a strong working capital and good repaying ability.
Quick ratio increased from 1.215 to 5.57 which show its increased ability to use quick assets to pay off its current liabilities.
Debt-to-Equity ratio decreased from 0.756 to 0.16 which shows that
References: Ireland R. D., Hoskisson R. E. & Hitt M. A (2009). The Management of Strategy Concepts, Eight Edition. South-Western Cengage Learning. Singh K., Pangarkar N. & Heracleous L. (2010. Business Strategy in Asia, A Casebook. Third Edition. South-Western Cengage Learning.