many aircrafts on order (Centerforaviation.com, Southeast Asia Airline 2019 Outlook). Lion Air Group is the largest airline group in Southeast Asia which has held the highest number of aircraft in the region since 2014, surpassing both AirAsia X and AirAsia combined. Lion Air of Indonesia is also the first choice of people from thousands of islands due to its wide network of flights with domestic flights and up to 36 points. Hold the 2nd position is AirAsia Aviation Group with
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the fleet growth of 13% in 2018 , owning 211 aircraft. AirAsia X, the traditional non-service brand of this group, plans to increase its fleet to 30% for the three affiliated airlines operating in the region with the mainstream aircraft is A330.
Besides, AirAsia with six other airlines are exploiting the routes in Southeast Asia using mainly the A320 series. After adding 17 aircraft to the fleet, Vietnam's leading low-cost carrier - Vietjet Air is ranked at the 3rd position in terms of the growth in the number of aircraft after Lion Air and AirAsia. However, in terms of the total number of existing aircraft according to the statistics as of January 2018 from CAPA, Vietjet has not been able to appear in the Top 10 .
Figure 2.5: Number of Aircrafts of Southeast Asia LCC
Southeast Asia has had a good growth story for several years. Seat capacity in Southeast Asia has more than doubled over the past decade, from slightly over 200 million seats in 2008 to close to 530 million seats in 2018, resulting in Southeast Asia’s LCC penetration rate increasing from less than 30% to nearly 50%.
However, domestic growth in Southeast Asia has slowed significantly as the markets have started approaching saturation after several years of rapid growth
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driven . Fares are already very low, and with a large portion of the population having already started to fly in recent years, the opportunity for more rapid domestic growth is limited. Indonesia, Thailand, Vietnam, Malaysia and Philippines are now experiencing faster international than domestic growth.
All of the LCCs based in these markets have shifted their focus to international expansion. LCCs now account for 30% to 40% of the international seat capacity in Singapore, Indonesia, Thailand, Vietnam and the Philippines. In Malaysia LCCs account for a remarkable 50% of the market, giving it one of the highest
international penetration rates in the world. LCCs also now account for more than 30% of capacity in Singapore, which is Southeast Asia’s second largest
international market (after Thailand) but does not have a domestic market. LCCs account for nearly 30% of international seat capacity in the smaller markets of Cambodia and Myanmar. Even in tiny Brunei and Laos there is a decent LCC presence, with LCCs operating 15% and 22% respectively of international seat capacity.
According to the latest edition of IATA’s 20-Year Air Passenger Forecast, China will replace the US as the world’s largest aviation market (defined by traffic to, from and within the country) around 2024. Alright, Southeast Asia-China growth has been enormous . In particular, China has become a focal point for Southeast Asian LCCs (and to some extent FSCs) as Chinese visitor numbers to Southeast Asia have been increasing rapidly. There are now 12 Southeast Asian LCCs operating at least 20 weekly frequencies to China. AirAsia is the largest foreign airline group in China and Lion is the third largest. Southeast Asia-China seat capacity has quadrupled over the past seven years. LCC capacity has increased tenfold and FSC capacity has tripled. Over the past two years, LCC capacity in the Southeast Asia-China market has doubled and FSC capacity has increased by close
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to a third. However, China can be a fickle market, with growth that is hardly linear.
Chinese visitor numbers can suddenly contract, impacting Southeast. There are many other low-cost carriers in the region that have directly and indirectly contributed to the transformation of the aviation and tourism sectors in these ASEAN nations. Companies like Lion Air (Indonesia), Nok Air (Thailand) and Cebu Pacific Air (the Philippines) are the change-makers in Southeast Asia while traditional carriers have also jumped on the low-cost airline bandwagon through their subsidiaries like Scoot (Singapore Airlines) and Jetstar (Qantas).
Up to now, Vietnam has made amazing progress, there are innovations on the way of modernization. The wings of Vietnam now not only reaches most of domestic airports, but also reaches many continents in the world with modern airplanes.
Airports have more passenger facilities, more terminals, runways, aprons are expanded. Vietnam currently has five commercial airlines, Vietnam Airlines, Vietjet Air, Jetstar Pacific, Vietnam Air Services Company (Vasco) and Bamboo Airways (New brand in Jan 2019) . AirAsia is also planning on entering the market through a joint venture with Hanoi-based Gumin Company Ltd and Hai Au
Aviation Joint Stock Company. AirAsia will own 30 percent in the venture, a subsidiary of Thien Minh Group, to establish a new Low- Cost Carrier.
Vietnam is considered one of the fastest growing aviation markets in the world , growing by 17.4 percent in the last decade . Which was driven by a rise in domestic and foreign travelers as well as the emergence of low-cost carriers.
However, this rapid growth has started to put a strain on the airport infrastructure.
The government has started to invest in infrastructure but more needs to be done in terms of capital and investment regulations to achieve a sustainable growth.
( Dezan Shira & Associates ).The Ministry of Transport has recently submitted to the Prime Minister the draft to revise the country’s aviation transport development
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plan till 2020 with a vision to 2030, which is aimed at help Vietnam among the top four leading nations in air traffic in ASEAN . Both the world's largest aircraft manufacturers, Boeing and Airbus, have greatly appreciated the growth potential of the commercial aviation market in Asia, especially in Southeast Asia. The income of the people has increased, the diversification of air transport services has become more and more convenient, leading to the boom in tourism and travel needs of people in this area in recent years. However, rapid development must be accompanied by the ability to control the appropriate growth rate if it does not want to fall into the financial crisis because of too much investment compared to the demand of the airline. The competition is increasingly fierce in terms of ticket prices among rivals on the same route overcome if they want to survive and grow in the current air transport market.
2.4 SWOT Analysis , TOWS Analysis & 4P Analysis
SWOT Analysis
Today, in the classrooms, departments , offices, enterprises from students, staffs to senior leaders, SWOT analysis becomes no stranger. People talk, discuss, analyze and debate with each other about SWOT but did you really understand this
effective analytical method?
The term "SWOT" is an acronym for the words "strengths", "weaknesses",
"threats" and "opportunities". Indeed, SWOT analysis as an effective tool for strategic planning purposes because it provides a good all-around view of the company's current and forward-looking situation. SWOT analysis is an integral part of strategic planning process . In a book : “Strategic Management and Competitive Advantage ” is written by Barney & Hesterly (2006), two authors presented strategic planning model following the picture below:
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Fingure 2.6.: Strategic planning model
Over the past decade, SWOT analysis has been extended beyond companies to countries and industries and is used in virtually every business case . Furthermore, use of SWOT is as teaching tools by consultants, trainers and educators.
That’s right, SWOT analysis model supposedly developed by Albert Humphrey in the 1960s and 1970s.This is the result of a research project conducted by Stanford University, USA. This project used data from the 500 largest US’s Companies ( Fortune 500) to find out the reasons for failing in the planning of these
businesses. Albert and his colleagues initially produced an analysis model with a SOFT name: Satisfactory (Satisfactory) - Good thing in the present, Opportunity (Opportunity) - Good future, Fault (Fault) - Bad thing in the present; Threat (Threat) - Bad things in the future. However, until 1964, after this model was introduced to Urick and Orr in Switzerland, they changed F (Fault) to W (Weakness) and SWOT was born there.
The first version was tested and introduced to the public in 1966 based on research at Erie Technological Corporation. In 1973, SWOT was used at JW French Ltd and really developed from here. In early 2004, SWOT was perfected and showed its effective ability to deliver and unify the objectives of the organization without depending on advice or other costly resources (Saga ).
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SWOT analysis (or SWOT matrix) is a useful strategic planning tool used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning. SWOT analysis can help them gain insights into the past and think of possible solutions to existing or potential problems, either for an existing business or for a new venture (USDA, 2008; Nouri et al., 2008). According to David (Fred R. David, 2008: 8), all organizations have strengths and weaknesses in the functional areas of business. No company is as strong or weak in all business areas. Internal strengths and weaknesses combined with external opportunities and threats and a clear mission statement, became the basis for determining the strategy and goal. Objectives and strategies set by leveraging internal strength and overcome weaknesses.
Specifically, SWOT is a basic model that assesses what a business can and cannot do, as well as its potential opportunities and threats. Users of SWOT analysis often ask and answer questions to generate meaningful information for each category to make the useful tool & identify their competitive advantage. Once this is
completed, SWOT analysis determines what may assist the firm in accomplishing its objectives, and what obstacles must be overcome or minimized to achieve the desired results (Singh, 2010). SWOT has been described as the tried-and-true tool of strategic analysis (Dess & Gregory, 2018).
SWOT is made of two parts: The strengths (S) and weaknesses (W) sections
provide a look at the company's current position. The opportunities (O) and threats (T) sections help the company project possibilities and challenges going forward.
Internal factors : The strengths and weaknesses internal to the organization External factors: the opportunities and threats presented by the environment extmernal to the organization
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Fingure 2.7: Components of Swot Analysis
Strengths refer to core competencies that give the firm an advantage in meeting the needs of its target markets. Strengths describe what an organization excels at and what separates it from the competition: a strong brand, loyal customer base, a strong balance sheet, unique technology, and so on.
Weaknesses are factors stop an organization from performing at its optimum level.
They are areas where the business needs to improve to remain competitive: a weak brand, high levels of debt, an inadequate supply chain, or lack of capital.
Weaknesses are factors stop an organization from performing at its optimum level.
They are areas where the business needs to improve to remain competitive: a weak brand, high levels of debt, an inadequate supply chain, or lack of capital.
Opportunities are favorable conditions in an organization’s environment that can produce rewards if leveraged properly. Opportunities must be acted on if the organization wants to benefit from them.
Threats are barriers presented to an organization that prevent them from reaching their desired objectives.
SWOT Analysis
Internal Factors Strengths
& Weakness
External Factors Opportunities
& Threats
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Factors that affect the four basic components included in the SWOT Analysis:
Fingure 2.8: Swot Analysis templates (source by Edrawsolf.com) Internal Factors (S & W) may include all of the 4Ps as well as personnel, manufacturing capabilities, resources owned, finance, excess or lack of internal organization, the experiences of the previous organization.
External Factors (O & T) may include trends, cultural, social, politics, ideology, capital resources, government regulations , economy ,current events, environment, technological development.
The internal analysis is a critical stage in identifying the resources, capabilities, core competencies and competitive advantages, using a functional approach to review finance, management, infrastructure, procurement, production, distribution, marketing, reputational factors and innovation.
The external analysis identifies market opportunities and threats by looking at the competitors' environment, the industry environment and the general environment...
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The result of SWOT analysis is presented in the form of a matrix consisting of 2 rows of 2 columns and divided into 4 parts. Each part corresponds to strengths, Weaknesses, Opportunities, and Threats. SWOT is structured as follows:
HELPFUL factors that take away from the organization or leaves it at a disadvantage. that could cause trouble to the organization
Table 2.9: Swot Matrix
TOWS Analysis
Next, the TOWS matrix is derived from the SWOT analysis model, analyzing the strengths and weaknesses within the enterprise as well as the external opportunities and challenges that businesses face. TOWS is a variant of the SWOT model and
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developed in a book " The TOWS Matrix: A Tool for Situational Analysis" by American international business professor: "Heinz Weirich 1982"
The TOWS matrix is designed to develop strategic choices by analyzing both internal and external factors . TOWS is a very practical tool, particularly in the field of business administration and marketing. Whereas SWOT Analysis starts with an internal analysis, the TOWS Matrix starts the other way around, with an external environment analysis; the threats and opportunities are examined first.
From that standpoint, an organization gets a clear picture of its environment and the opportunity to think about strategy and what direction the company will go in.
Next the company’s strengths and weaknesses are considered; what it’s good at internally and what it’s not so good at. The external analysis is linked to the analysis and the resulting TOWS Matrix can help an organization to make
decisions better, seize opportunities and protect itself better against threats (Tools Hero, Tows Matrix).
The TOWS Matrix helps businesses to identify their strategic options. An
organization gets the opportunity to make the most of its strengths and get around its internal weaknesses and learn to deal with them properly. Externally, an
organization learns to carefully look for market opportunities and recognize possibilities. And they learn how to control and overcome potential threats.
The TOWS Matrix can also help with brainstorming and developing great ideas to generate effective marketing strategies and tactics. Furthermore, the model goes beyond merely finding out the strengths and weaknesses within an organization and what opportunities and threats there are in its environment. It forces
organizations to really think about how they can improve themselves, how they can guard against threats and become more aware of their expertise and potential
shortcomings.
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EXTERNAL FACTORS INTERNAL FACTORS
S-STRENGTHS W-WEAKESSES O-OPPORTUNITIES SO - STRATEGIES
Use internal strengths
T-THREATS ST – STRATEGIES Use strengths to
SWOT analysis combined with a TOWS analysis play a important stage in the strategic planning . They offer a good starting to asses the current situation and to evaluate potential next steps.
Marketing Mix Analysis
Marketing is crucial job to the success of a business, with its main focus on customer satisfaction, quality, and consumer value. Marketing Mix is one of the most commonly used strategies. The Marketing Mix (also known as the 4 Ps) is a foundation model. The Marketing Mix has been defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the target market"
( Kotler). Marketing Mix describes the set of tools that management can use to influence sales. To begin with, an organization may decide on its target group of customers to be served. Once the target group is decided, the product is to be
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placed in the market by providing the appropriate product, price, distribution and promotional efforts. These are to be combined or mixed in an appropriate
proportion so as to achieve the marketing goal. Such mix of product, price, distribution and promotional efforts is known as ‘Marketing Mix’.
According to Philip Kotler “Marketing Mix " is the set of controllable variables that the firm can use to influence the buyer’s response”. The controllable variables in this context refer to the 4 P’s [product, price, place (distribution) and
promotion]. Each firm strives to build up such a composition of 4P’s, which can create highest level of consumer satisfaction and at the same time meet its
organizational objectives. Thus, this mix is assembled keeping in mind the needs of target customers, and it varies from one organization to another depending upon its available resources and marketing objective.
The origins of the 4 Ps can be traced to the late 1940s. The first known mention of a mix has been attributed to a Professor of Marketing at Harvard University, Prof.
James Culliton. In 1948, Culliton published an article entitled, The Management of Marketing Costs in which Culliton describes marketers as 'mixers of ingredients'.
Some years later, Culliton's colleague, Professor Neil Borden, published a retrospective article detailing the early history of the marketing mix in which he claims that he was inspired by Culliton's idea of 'mixers', and credits himself with popularizing the concept of the 'marketing mix'. According to Borden's account, he used the term, 'marketing mix' consistently from the late 1940s. For instance, he is known to have used the term 'marketing mix' in his presidential address given to the American Marketing Association in 1953. Although the idea of marketers as 'mixers of ingredients' caught on, marketers could not reach any real consensus about what elements should be included in the mix until the 1960s. The 4 Ps in its modern form, was first proposed in 1960 by E. Jerome McCarthy; who presented
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them within a managerial approach that covered analysis, consumer behavior, market research, market segmentation, and planning. Phillip Kotler, popularised this approach and helped spread the 4 Ps model. McCarthy's 4 Ps have been widely adopted by both marketing academics and practitioners.
Marketing Mix is an useful tools used by businesses to achieve marketing goals in the market. McCarthy's marketing mix has since become one of the most enduring and widely accepted frameworks in marketing. Marketing Mix or 4Ps is
categorized according to 4P model, including: Product (product), Price (price), Place (distribution), Promotion (promotion) are used in goods marketing activities (McCarthy, J. 1960). Below will be 4P model in traditional marketing mix
Product (Product) : Product is one of the first marketing mix components in 4p series. It could be a tangible product or some intangile service. Examples of tangible products can be motor vehicles, a smartphone, or a production machine, etc. Examples of intangile products (services) are services like industry,
restaurants, hotels, spas, travel services or bank credit services, ...
Price ( Price): The product price is the cost that the customer has to pay to own / use the product or service ( including market share, competition, material costs, product identification and emotional value of the customer to product). Valuation in today's fiercely competitive environment becomes extremely important and challenging. If product prices are set too low, businesses will have to focus on selling in larger quantities to earn profits. If the price is too high, customers will gradually turn to competitors products. Key factors in price strategy include initial price point, list price, discount rate, payment period, ...
Place (Distribution): Distribution channels are representative of where a product can be traded, displayed, introduced. Distributors can be retailers or e-commerce
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stores on the internet. Owning a distribution system is an important factor to bring products to customers. If businesses do not invest, develop proper distribution channels can waste effort to advertise, produce products without making the
stores on the internet. Owning a distribution system is an important factor to bring products to customers. If businesses do not invest, develop proper distribution channels can waste effort to advertise, produce products without making the