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Company Background

Name

Starbucks Corporation

Logo

Industries served

Restaurants (Coffeehouses)

Geographic areas served

Worldwide (25,085 coffeehouses in 75 countries)

Headquarters

Seattle, Washington, United States

Current CEO

Howard Schultz

Revenue

US$21.316 billion (2016) 11.2% increase over US$19.163 billion (2015)

Profit

US$2.818 billion (2016) 2.1% increase over US$2.757 billion (2015)

Employees

254,000 (2016)

Main Competitors

Caribou Coffee Company, Costa Coffee, Dunkin' Brands Group, Inc., Green Mountain Coffee Roasters, McDonald's Corporation, Nestlé S.A. and many other restaurant chains and coffeehouses.

Starbucks Corporation's business overview from the company's financial report:

"Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 75 countries. We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a variety of fresh food items, through company-operated stores.

We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, grocery and national foodservice accounts. In addition to our flagship Starbucks Coffee brand, we also sell goods and services under the following brands: Teavana, Tazo, Seattle's Best Coffee, Evolution Fresh, La Boulange and Ethos.

Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To achieve this, we are continuing the disciplined expansion of our global store base, adding stores in both existing, developed markets such as the U.S., and in newer, higher growth markets such as China, as well as optimizing the mix of company-operated and licensed stores in each market.

In addition, by leveraging the experience gained through our traditional store model, we continue to offer consumers new coffee and other products in a variety of forms, across new categories, and through diverse channels. We also believe our Starbucks Global Responsibility strategy, commitments related to ethically sourcing high-quality coffee and contributing positively to the communities we do business in, and being an employer of choice are contributors to our objective.

Starbucks® company-operated stores are typically located in high-traffic, high-visibility locations. Our ability to vary the size and format of our stores allows us to locate them in or near a variety of settings, including downtown and suburban retail centers, office buildings, university campuses, and in select rural and off-highway locations. We are continuing the expansion of our various store formats, including Drive Thru and express stores, to provide a greater degree of access and convenience for our customers.

Starbucks employed approximately 254,000 people worldwide as of October 2, 2016."[1]

Starbucks SWOT Factors

Strengths

1. Operating efficiency and strong growth leading to superior financial performance.

2016 marked continuing Starbucks growth both financially and physically. The company had yet another great financial year. The company's revenue grew by 11.2% and 2,042 new stores were opened. Starbucks' operating profit margin increased and its cash flow grew to a record high of US$4.575 billion, despite the company's enormous expansion.

Figure 1. Starbucks' consolidated revenue 2011-2016

Source: Starbucks financial report[1]

Figure 2. Starbucks' operating profit margin 2012-2016

Source: Starbucks financial report[1]

Figure 3. Starbucks store count 2011-2016

Source: Starbucks financial report[1]

Starbucks' balance sheet has remained strong. In 2016, debt-to-asset ratio remained the same, while cash reserves increased significantly. The company's net profits increased only slightly from US$2.757 billion to US$2.818 billion, but the operating profit margin grew to 19.6% highest in Starbucks' history. Overall, Starbucks' financial position has never been stronger.

What does this mean for the company? Despite its huge growth, growing the operating profit margin while also increasing its net profits means that Starbucks is managing its operations very efficiently. In addition, the company's healthy financial numbers provide confidence for investors and allow the company to engage in speculative investments that wouldn't otherwise be feasible.
2. Fast growing store network in China.
Currently, Starbucks has 2,382 restaurants in China, which is more than Dunkin' Donuts (22) [2] and Costa Coffee (383)[3] combined, and second only to McDonald's (2,640).[4] The number of Starbucks locations has grown significantly over the past few years. In 2011, the company had only 570 coffeehouses in China. Since then it grew its presence by 1,812 locations or 418% in just 5 years.

Source: Starbucks' financial report[1]

China is the second fastest growing Starbucks market behind the U.S. and the company is well positioned to compete in it. For years Starbucks has been strengthening its tea offerings, which is the favorite Chinese drink. The company currently owns 2 tea brands, Tazo and Teavana, and serves brewed tea, single-serve tea, packed tea and other related tea products. Therefore, unlike its rivals, Starbucks is better prepared to satisfy Chinese tastes and to attract Chinese customers to its coffeehouses.

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Name Starbucks Corporation Logo Industries served Restaurants (Coffeehouses) Geographic areas served Worldwide (25,085 coffeehouses in 75 countries) Headquarters Seattle, Washington, United States Current CEO Howard Schultz Revenue US$21.316 billion (2016) 11.2% increase over US$19.163 billion (2015) Profit US$2.818 billion (2016) 2.1% increase over US$2.757 billion (2015) Employees 254,000 (2016) Main Competitors Caribou Coffee Company, Costa Coffee, Dunkin' Brands Group, Inc., Green Mountain Coffee Roasters, McDonald's Corporation, Nestlé S.A.

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This article analyses the strategy of Microsoft through the SWOT Tool and discusses the match between the internal dynamics and the external business drivers. The key theme in this article is that Microsoft has one more chance to set right the misreading of the internet wave, the mobile wave, and the recent appointment of Satya Nadella as the CEO must be viewed in this perspective.

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Company Background

Name

McDonald's Corporation

Logo

Industries served

Restaurants (McDonald's, McCafé, McExpress, McStop)

Geographic areas served

Worldwide (36,899 restaurants in 120 countries)

Headquarters

Oak Brook, Illinois, United States

Current CEO

Steve Easterbrook

Revenue (US$)

24.622 billion (2016) 3.1% decrease over 25.413 billion (2015)

Profit (US$)

4.687 billion (2016) 3.5% increase over 4.529 billion (2015)

Employees

375,000 (2017)

Main Competitors

Burger King Worldwide, Inc., Darden Restaurants, Inc., Doctor's Associates, Inc. (Subway), Domino's, Inc., Dunkin' Brands Group, Inc., Yum! Brands, Inc. (KFC), Starbucks Corporation, Wendy's Company and many other restaurant chains.

McDonald's Corporation's business overview from the company's financial report:

" General

The Company operates and franchises McDonald's restaurants, which serve a locally-relevant menu of quality food and drinks sold at various affordable price points in more than 100 countries. McDonald's global system is comprised of both Company-owned and franchised restaurants. McDonald's franchised restaurants are owned and operated under one of the following structures - conventional franchise, developmental license or affiliate. The business relationship between McDonald's and its independent franchisees is of fundamental importance to overall performance and to the McDonald's Brand. This business relationship is supported by an agreement that requires adherence to standards and policies essential to protecting our brand.

The Company views itself primarily as a franchisor, with the vast majority of McDonald's restaurants (approximately 85%) owned and operated by independent franchisees. Franchising enables an individual to own a restaurant business and maintain control over personnel, purchasing, marketing and pricing decisions, while also benefiting from the strength of McDonald's global brand, operating system and financial resources.

Conventional franchisees contribute to the Company's revenue stream through the payment of rent and royalties based upon a percent of sales. The conventional franchise arrangement typically lasts 20 years, and franchising practices are generally consistent throughout the world. Over 70% of franchised restaurants operate under conventional franchise arrangements.
Products
McDonald's restaurants offer a substantially uniform menu, although there are geographic variations to suit local consumer preferences and tastes. In addition, McDonald's tests new products on an ongoing basis.

McDonald's menu includes hamburgers and cheeseburgers, several chicken sandwiches, wraps, french fries, salads, oatmeal, shakes, desserts, sundaes, soft serve cones, pies, soft drinks, coffee and other beverages. In addition, the restaurants sell a variety of other products during limited-time promotions.

McDonald's restaurants in the U.S. and many international markets offer a full or limited breakfast menu.

Quality, choice and nutrition are increasingly important to our customers and we are continuously evolving our menu to meet our customers' needs.
Customers
The Company's business is not dependent upon either a single customer or small group of customers."[1]

McDonald's SWOT Factors

Strengths

1. The second-largest restaurant network serving customers in more countries than any other competitor in fast-food industry

As of 2017, McDonald's operates the second-largest restaurant network in the world. In total, the company and its franchisees operate 36,899 restaurants in 120 countries.

Source: The respective Companies' financial reports and official websites [1][2][3][4][5]

In terms of sales, McDonald's outrivals any other QSR chain in the world with US$24.622 billion in sales in 2017 alone. The sheer size of the company's restaurant network is a strength that provides many advantages over competitors, including:

Economies of scale. The company can share its fixed costs over many restaurants locations, which makes McDonald's one of the cheapest places to eat at.

Huge gains from implementing best practices. The company can identify better ways of performing tasks, managing restaurants or hiring new employees and can achieve huge gains by implementing these best practices in its vast network of restaurants.

Market power over suppliers and competitors. Due to its size, McDonald's can exercise its market power over suppliers by requiring lower prices from them. The company clearly demonstrates this with The Coca Cola Company. Because of McDonald's and The Coca Cola Company's agreement, no other restaurant chain can sell Coca Cola drinks for lower prices than McDonald's, even if it means losing the business to PepsiCo. The Coca Cola Company could easily get out of such agreement if McDonald's wouldn't be so huge and would generate less income for The Coca Cola Company.
McDonald's can also use its size to affect the competition by underpricing some of its items or driving them out of the best locations.

Wide audience reach. McDonald's restaurant network allows the chain to reach more customers than most of its rivals could reach. According to the Company's CEO[6], in five of its largest markets, 75% of population lives within 3 miles of McDonald's restaurants. Wide audience reach does not only help the company to target more customers and increase brand awareness, but also to introduce new services, such as home delivery.

2. The most recognizable brand in restaurant industry

McDonald's opened its first restaurant in 1940.[7] Since then, the company has become the world's largest restaurant chain in terms of revenue with the most recognizable brand in the market. According to Forbes[8] and Interbrand[9], McDonald's brand is 9th and 12th most valuable brand in the world, worth US$40.3 billion and US$39.381 billion, respectively. No other restaurant brand, except Starbucks, is included in the list of the top 50 most valuable brands.

The brand value is closely related to the brand recognition and reputation. Usually, the more valuable a brand is the better it is recognized worldwide. McDonald's, which operates in 120 countries, where billions of people live, enjoys some of the greatest brand awareness among all global corporations. Only KFC operates in more countries (128)[4] than McDonald's and can compare in brand awareness with it. Brand awareness also helps to introduce new products or sell the current ones faster as the company needs to spend less money on advertising.

While, McDonald's reputation has suffered a lot during the years, the company is still recognized for its innovations in fast-food industry and the American business values it brings to other countries.

Figure 2. McDonald's brand value 2000-2016

Source: Interbrand [9][10][11][12][13]

Few direct competitors have such a valuable and recognizable brand, which strengthens the company.

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Name McDonald's Corporation Logo Industries served Restaurants (McDonald's, McCafé, McExpress, McStop) Geographic areas served Worldwide (36,899 restaurants in 120 countries) Headquarters Oak Brook, Illinois, United States Current CEO Steve Easterbrook Revenue (US$) 24.622 billion (2016) 3.1% decrease over 25.413 billion (2015) Profit (US$) 4.687 billion (2016) 3.5% increase over 4.529 billion (2015) Employees 375,000 (2017) Main Competitors Burger King Worldwide, Inc., Darden Restaurants, Inc., Doctor's Associates, Inc.

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Nestle S.A. (OTC: NSRGY) is a multinational packaged foods and beverage manufacturer headquartered in Switzerland. It is widely considered to be the world's largest food manufacturer, with more than 2000 brands and operations in 197 countries.[1]

Nestle reported revenues of $99.09 billion on December 31, 2015, and estimated sales of $92.62 billion for the current fiscal year. Nestle had a market capitalization of $245.71 billion, according to YCharts.com; because the company is based in Switzerland, it does not have to report its enterprise value like an American company would.[2]

Currently Nestle operates in 12 different segments of the consumer products market, including baby foods, bottled water, cereals, candy, coffee, prepared and prepackaged foods, dairy, drinks, food service, healthcare and nutrition, ice cream and pet care. Its staple of brands includes some of the best-known names in the industry, such as Stouffer's, Dreyer's, Haggen-Daz, Purina, Aero, Butterfinger, Gerber, Maggi and Perrier.

Strengths

Nestle is a highly-diversified company operating in many different markets and sectors of those markets.

The variety of brands gives Nestle a strong ability to weather economics because it serves many different segments of the market.

Much of its sales depend upon a few well-recognized brands. This makes the company vulnerable to any sudden changes in consumer behavior.

Grocery sales in some major markets are increasingly concentrated in the hands of a few giant retailers such as Walmart and Kroger in the United States and Tesco in the United Kingdom. These companies have the ability to force sharp reductions in price. Some of these retailers are intent on supplementing name brand products with more-profitable house brands.

Growth in online retail could open up new distribution channels such as Amazon Prime that can bypass traditional retailers.

Growing middle classes in nations such as China and India create larger and broader markets for Nestle's products.

Retailers such as Walmart, Kroger and Aldi are increasingly promoting house brands, which are more profitable for them. House brands are often sold at a lower price and given greater visibility on shelves. Some retailers such as Aldi and Trader Joe's emphasize house brands at the expense of traditional products.

There is pressure from large retailers such as Walmart to cut prices.

The growing use of new retail channels such as Amazon Prime and dollar stores may not favor traditional retail products.

They have experienced disruption of the traditional grocery industry in countries like the United States by new players such as Whole Foods Market and online retailers.

There is a growing ineffectiveness of traditional advertising as new technologies such as streaming video supplant traditional broadcast and print media.

Consumers in some countries are eating fewer meals at home, which means less demand for some Nestle products. Bloomberg reported that Americans' spending on restaurant meals overtook spending on groceries for the first in April 2015.[3]

A growing suspicion of prepackaged foods as unnatural and unhealthy in Europe and North America is becoming common. This increases the demand for fresh and natural foods in some markets. It also increases the demand for organic and other alternatives.

There is a possibility of increased government oversight and regulations in some markets, such as India. India's government ordered billions of dollars of Maggi instant noodles be pulled from the shelves in the summer of 2015 because of allegations of excessive levels of lead in the product.[4]
Image "Nestle" by JDGfromMTL is licensed under CC BY 2.0
Increased disposable income in countries like China could increase the demand for luxury items like bottled water, ice cream and pet food.

Changes in lifestyle, such as longer work hours, more women in the workforce, and more single-person households, increase the demand for prepackaged foods.

Increased mobility and car ownership increase the demand for candy, bottled water and snack foods in nations like China.

Increased interest in health and nutrition could increase demand for some Nestle products, such as energy drinks.

Some of its brands, such as Carnation milk, are not tailored to modern lifestyles and are seen as old-fashioned by some customers.

The company is heavily dependent upon advertising to shape consumer opinion and drive traditional sales. This can lead to high marketing costs with a questionable return on investment.

There is a high cost for launching new brands to supplement older, less-fashionable food products.

It has well-established relationships with other powerful brands, including Coca-Cola, Colgate Palmolive and General Mills.

Nestle owns some of the world's most recognized and trusted brands. Some families have used its products for generations. Gerber has historically been one of the most trusted brands of baby food in the United States.

It has strong research and development capabilities that are growing.

Nestle has strong relationships with retailers.

It includes well-established brands with a large amount of market share in some of the largest national economies, including Europe and the United States.

Weaknesses

Opportunities

Threats

Despite the threats, Nestle still owns some of the world's best-recognized and most profitable food brands. Unfortunately, it faces a dramatically-changing grocery market in which traditional brands are losing much of their effectiveness. Such brands are heavily dependent upon traditional advertising and marketing strategies such as television commercials, which are often ineffective in today's world.

Changing patterns of consumer behavior, such as the demand for more natural food in Europe and the United States and increased spending on take-out and restaurant food, could be a greater threat to Nestle. It might have to create products or revamp brands simply to maintain market share.

Nestle's prospects in a radically-changing consumer marketplace are good because of its strong brands, reputation with consumers, good relationships with retailers and research and development capabilities. This company should remain one of the dominant names in packaged food and beverages for decades to come.

[1] http://www.nestle.com/aboutus

[2] https://ycharts.com/companies/NSRGY/key_stats

[3] http://www.bloomberg.com/news/articles/2015-04-14/americans-spending-on-dining-out-just-overtook-grocery-sales-for-the-first-time-ever

[4] http://www.theguardian.com/business/2015/jun/16/nestle-takes-instant-hit-from-indias-maggi-noodle-ban-amid-lead-scare

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SWOT Analysis of Nestle, the popular food brand

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Nestle S.A. (OTC: NSRGY) is a multinational packaged foods and beverage manufacturer headquartered in Switzerland. It is widely considered to be the world's largest food manufacturer, with more than 2000 brands and operations in 197 countries.[1] Nestle reported revenues of $99.09 billion on December 31, 2015, and estimated sales of $92.62 billion for the current fiscal year.

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Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

1.1Background

AirAsia was set up by Dato' Tony Fernandes in 2001. In December 2001, Fernandes and his partners set up Tune Air Sdn Bhd (Tune Air), an airline holding company then bought over AirAsia. Now, AirAsia has become one of the most successful airlines in the Southeast Asian region and the pioneer of low cost and no frills travel in Malaysia.

The leading low fare airline in the Asia - AirAsia has been expanding rapidly since 2001, to become an award winning and the largest low cost carrier in Asia. With a fleet of 72 aircrafts, AirAsia flies to over 61 domestic and international destinations with 108 routes, and operates over 400 flights daily from hubs located in Malaysia, Thailand and Indonesia. To date, AirAsia has flown over 55 million guests across the region and continues to spread its wings to create more extensive route network through its associate companies, Thai AirAsia and Indonesia AirAsia. AirAsia believes in the no-frills, hassle-free, low fare business concept and feels that keeping costs low requires high efficiency in every part of the business. Efficiency creates savings which are then passed on to guests so that affordable air travel can become a reality. Through our philosophy of 'Now Everyone Can Fly', AirAsia has sparked a revolution in air travel with more and more people around the region choosing AirAsia as their preferred choice of transport. As AirAsia continuously strives to promote air travel, we also seek to create excitement amongst our guests with our range of innovative and personalized service.

The aim of the investigation

The aim of this analysis is to conduct a PEST and SWOT analysis in the context of AirAsia's international business operations, identifying the major variables involved and the impact of the specific threats and opportunities confronted by AirAsia .Besides that, The purpose of this report is to identify its stakeholders and core competencies, carry out a investigation of its external environment, review a strategic analysis of Airasia to identify opportunities and threats it might face, and to isolate key strengths and any weaknesses that need dealing with. Moreover a SWOT analysis will be carried out to assess the extent to which its strategies are suitable to what is happening in its present environment. Finally, after identifying competitive strategy a Strategic plan will be made to gain competitive advantage.

Chapter 2

DISCUSSION

2.1 Company Overview

AirAsia is currently one of the leading low cost airlines in South East Asia which has expanded rapidly and it's still the second largest air carrier in Malaysia. It dynamic nature of business is based on domestic and international flights, holiday and business arrangements for its customers domestically and internationally around the region with the low fare, safe and convenience means of transportation. (www.airasia.com).

AirAsia's vision

To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares.

AirAsia's mission

To be the best company to work for whereby employees are treated as part of a big family

Create a globally recognized ASEAN brand

To attain the lowest cost so that everyone can fly with AirAsia

Maintain the highest quality product, embracing technology to reduce cost and enhance service levels

AirAsia's values

AirAsia make the low fare model possible through the implementation of the following key strategies:

SafetyFirst:

Partnering with the world's most renowned maintenance providers and complying with the with world airline operations.

High Aircraft Utilisation:

Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity.

Low Fare, No Frills:

Providing guests with the choice of customizing services without compromising on quality and services.

Streamline Operations:

Making sure that processes are as simple as possible.

Lean Distribution System:

Offering a wide and innovative range of distribution channels to make booking and travelling easier.

Point to Point Network:

Applying the point-to-point network keeps operations simple and costs, low.

Products and Services offered By Air Asia

In-flight services:

â€¢ Air Asia offer food and drinks on board programme .

â€¢ In-flight services customise meals and merchandise package upon request e.g. caps, T-shirts, and pants.

Online services:

â€¢ Online booking makes it more convenient for its customers to book online anywhere anytime.

â€¢ Flight information is available to help customers make enquiries on flight schedules arrival and departure time and date.

â€¢ Chatter -flight: Created for a group of people, business travellers for purposes like meetings, conventions, leisure or even exhibition.

Channels of distribution

A number of alternate 'channels' of distribution may be available:

Selling direct:

â€¢ Outbound sales forcer

â€¢ Via mail order, Internet

â€¢ Telephone sales

Selling indirect:

â€¢ Agent, who typically sells direct on behalf of the producer

â€¢ Distributor (also called wholesaler), who sells to retailers

â€¢ Retailer (also called dealer or reseller), who sells to end customers

Sales and Marketing

AirAsia is an international company, and going global invites a lot of competition. AirAsia has to deal with the competition of local companies in the same field- Airline services. Competition for AirAsia would also be encountered in the virtual world-the internet. As they entered into the use of modern technology such as the public domain would invite competition on the global scale. Different localities and countries have different technological standards, and quality control policies, which AirAsia would have to adhere to, by adherence to these policies; certain intended developments may be possible in certain communities but not acceptable in others.

According to CEO's of the company, Mr. Fernandez, there are a lot workers or low pay salaries earners who would like to travel often to meet their families especially during special occasions but due to how expensive it was that time, their desire are not fulfilled. By introducing a low fare will give all those people opportunity to travel if not more than once in a year. This enables them to identify their target market. Reduced price sales is one of the basics of securing a target market for AirAsia. They reduce their price to suit their class of customers

Branding

AirAsia went into intensive General advertisements and other high profile activities, which contributed to the high offering of their company's image. They came with a brand " Now every one can fly" These points of contact with their target customer help them to build their image, which in turn created loyalty from their customers.

Group Discounts and Offers

Discounts or other offers can help exposure business to new customers, resulting in a sales increase . AirAsia is a ticketless Airline that allows customers to purchase their ticket online with at a discounted rate. They also have a scheme of group discount and this help to get more target market, especially internet based customers.

2.2Core competencies:

Computer Reservation System (CRS)

AirAsia's CRS (Open Skies by Navitaire) has helped it to grow at a dramatic pace in the past couple of years. Tony Fernandes, CEO AirAsia described that Navitaire's Open Skies technology has truly enabled Airasia's growth from 2 million passengers to 7.7 million passengers in less than two years. Open Skies scaled easily to accommodate our growth.

It is an integrated web-based reservation and inventory system. It includes Internet, call center, airport departure control and more. It is a direct sales engine that effectively eliminates the middleman (travel agents) and the sales commissions that need to be paid to them.

Enterprise Resource Planning System (ERP)

AirAsia has recently (May 2005) opted for a full fledged ERP system implemented by Avanade consultants. By implementing this package AirAsia is looking to successfully maintain process integrity, reduce financial month-end closing processing times, and speed up reporting and data retrieval processes.

Self Check In

With the use of the new self check in service a quicker and more convenient way to check in using mobile phones, laptops etc, connecting to the internet. This system is easier and faster for customers and their family to check in at or before they get to the airport without having to queue up at the counter to check in.

Air Asia credit card

Air Asia offers a choice of credit card facilities to fit in their customers travel life style be it business, leisure, training or holidays. With an Air Asia credit card a customer can purchase any goods or services while travelling anywhere in the world online.

Go Holiday services

Air Asia has a product called Go Holiday, with the help of E-commerce Air Asia is able to display their coverage maps, holiday resorts, first and average class hotels, car rental services, and activities in different countries with their different rates and prices on Air Asia's web page.. Using E-commerce, customers are able to select and make a holiday and travel arrangement with a hotel of their choice and class, a pick up car and even medical services. And payments for all this can be done on the internet using credit cards or other online E-payment methods ahead of travel time.

Foreign workers and Contractors strategy

AirAsia also target most foreign workers from Indonesia, Singapore, Thailand, China, Macau who may not afford the expensive flight home and offer them the cheap fare which attracted most of them as would go home very often without paying much.

2.3 The Competitors

Companies in all industries have direct as well as indirect competitors. Direct competitors in the aviation industry are companies that offer flights to similar destinations on comparable terms of travel. Direct competitors include:

Malaysia Airlines: offering flights in same routes .

Singapore Airlines: offering flights on same routes between London and Kuala Lumpur.

Thai Air : operating flights between Bangkok an Kuala Lumpur.

Air Srilanka: operating flights between Colombo and Bangkok.

AirAsia are facing strong competition with major international and national airlines on the market shares In contrast to other airlines ,AirAsia offers better value for money

2.4Analysis of Environmental Factors

In analyzing the macro-environment, it is important to identify the factors that might affect a number of vital variables that are likely to influence the organization's supply and demand levels and its costs (Kotter and Schlesinger 1991).

The external environment of any organization can be analyzed by conducting a PEST analysis. The acronym PEST is used to describe a framework for the analysis of a range of macro environmental factors including the Political, Economical Social and Technological environment.

PEST Analysis for AirAsia:

Political

Flying outside Malaysia is difficult. Bilateral agreement is one of the main obstacles in the way of low cost carriers. Landing charges is also another big influencing factor on costing of low fare airlines. The low- cost airline industry in south-east Asia has been underdeveloped because the aviation market is tightly regulated by bilateral air rights agreements.

Threat of terrorism, people is afraid to fly after the September 11 terrorist attacks incident.

Economic

In spite of strong competition from Malaysian Airline (MAS), AirAsia's low-cost carriers offering cheap tickets and few in-flight services are gaining attraction in the region.

Current recession hit the aviation business. But with this economy slowing down, more people will want to enjoy its cheap tickets.

Oil prices is another regulatory factor for this type of airlines. If oil prices go high, it is very difficult to control cost of operation.

Social

Passengers are reluctant to board a no-frills airline for a long-haul flight.

Increasing world's population, tourists and number of educated people helpful for the growth of aviation industry.

Outbreak of the Severe Acute Respiratory Syndrome (SARS) has scare people to fly. AirAsia commit to "Safety First"; comply with all regulatory agencies, set and maintain consistently high standards; ensure the security of staff and guests.

Technology

AirAsia provides online service that combines air ticketing with hotel bookings, car hire and travel insurance. To help keep costs in check, Air Asia has pushed internet booking services.

AirAsia also recently introduced GO Holiday, the airline's online programme where guests can book holiday packages online in real time

AirAsia has bought in A320 to replace Boeing 737. The Airbus A320's improved fuel efficiency and extra capacity which leads to better performance and reliability.

SWOT analysis for AirAsia

Strengths

Low operational and maintenance cost by having a single aircraft type fleet i.e. from Boeing 737 to Airbus A-320. Economy of scales benefits.

Low operating cost due to being No Frill, online reservations system, quick check in etc.

There is huge untapped market in the region, especially for business travellers and "for-the-first-time-flying" segment.

As it is low cost airlines, it can target customers who are currently using non-aircraft modes like, Bus, Trains, car to travel to distances.

Weakness

Huge investment to purchase air planes and implementing latest technologies there is high amount of operational cost.

Rising fuel price. Increased the operational cost.

The flight times are more or less limited to 2.5 hours. So they cannot operate flights of longer duration without any Frill, so No-Frill becomes impossible to implement for passengers.

Opportunity

Low fares offer by AirAsia has encourage people from all walks of life style to fly. Especially, during economy down turn.

Airbus A320 would encourage greater passenger capacity and offer comfortable service to customers.

Introduction of SMS booking allows customer to book their seat at anytime and anywhere.

With the commitment in ensuring the security of staff and customers, customer will have more confident to fly via AirAsia.

Threats

There are more no-frills airlines may take off in Asia to meet increasing consumer demand following the success story of Malaysia's budget carrier AirAsia.

Singapore Airlines plans to launch a budget carrier, they see the success of AirAsia. They know how big the market is and how good the opportunity is in Asia.

Travelers may not choose AirAsia if they are to travel long distance flight. They will prefer airlines such as MAS or SIA which provide better services.

Demand to fly decreased via terrorism and outbreak of the SARS.

2.5 Marketing Plan

Cost advantages activities:

AirAsia already introduced cost advantages activities. Some of them describe below:

Utilising one type of aircraft (Boeing 737-300 which will be fully replaced with Airbus A320) results in reduction of maintenance cost (one of the major expenses in airline industry), scheduling cost, administrative cost, and inventory of parts.

Creative and low-cost advertising significantly reduces marketing cost. On the other hand, AirAsia direct sales through internet, call centres, walk-in airport sales, and sales offices significantly reduce the commission fee to travel agents as AirAsia only assigned its sales to

limited travel agents

AirAsia assigned multi-skilled cabin crews (2-3crews/flight), cost-effective training, performance based reward and incentives systems

Target Market:

Low- income Customers and tourism segment

Malaysia emergence as a regional business and tourism hub has provided AirAsia plenty of room for growth and has fuelled regional air passenger traffic.

Transit passengers

Kuala Lumpur is the operational hub for AirAsia, which is the best connection point between Europe and Asia/Australia has supported the growth of their business. AirAsia has been using this "connection point" to promote their business.

2.6 Proposed Strategy for further expansion of AirAsia

Extending New Routes:

Extending current services into new markets may be helpful to further growth of this company. It is possible to achieve this strategy by launching existing services into new geographical area or new market segments.

Adding new routes and destinations are possible; especially there is growth Malaysia and East Asia tourism.

Activities related to this strategy:

Marketing research

Feasibility Study

Contract with hotels and tourist agency at new destinations

Finding out strategic partner

Marketing new routes and destination

Time frame and cost:

It will take 1 to 2 years to start a new route and estimated cost around $200 million to new aircraft and for marketing cost.

Organizational change:

Recruiting new employees

Arranging training for new employees

Opening new office in new destination

Evaluation criteria:

New destinations are implemented to achieve new market development. Flight number in new destination is the best way to measure result of this strategy.

Private Suite for business customer:

Introducing new services into existing markets implies product development. This strategy involves the development of fresh competencies and requires business to expand customized services which can apply to current markets. That's why Emirate Airlines introduce high quality first class private lounges to attract business travelers.

Activities related to this strategy:

Technical and feasibility Study

Allocated budget

Contract with a company to install new facility.

Installation and modification of aircraft's onboard facilities

Time frame and cost:

It will take 6 months to 1 year to complete installation new facilities in a single aircraft and estimated cost around $0.2 million to new aircraft and for marketing cost.

Organizational change:

Recruiting new employees to serve business customer

Contract with new or existing company for catering service for business customer.

Evaluation criteria:

Quantitative measurement of this product would be number of booking or occupancy.

Chapter 3

CONCLUSION

3.1 Conclusion

By studying PEST, SWOT and marketing analysis, it could be said that AirAsia is situated in standard cycle markets where it get competitive advantage for its business policy and strategy. Providing customers with superior products and services with low fare is synonymous to the AirAsia brand. However, it is necessary that Airasia should re-evaluate its strategies and focus on core values and competencies. For this why, AirAsia should reconsider their market and specific routes to obtain value other than price and survive the competition. From this study, it is possible to say that still there is some other option to expand this company. Adding new route and introducing business class suite may be suitable option for AirAsia for further growth.

3.2 Recommendations

To remain leader in the market in serving customers, AirAsia has to re-evaluate their current strategy. Recommendation for improvement can be outlined as follows:

AirAsia should make any major changes to their strategy after proper technical and feasibility study to avoid unnecessary risks.

Oil price is a big factor to low fare airlines. So this company should make longer contracts with fuel suppliers for more stability

As Airasia operates their fight very frequently, so they should have a spare aircraft at each location to avoid delays.

AirAsia should consider environmentally friendly operation system as such as carbon offsetting to save environment.

REFFERENCE

Daniels, J. D. & Radebaugh, L. H. (1998), International Business 'Environments and Operations, 8th edition, Addison-Wesley, USA.

Peng Mike W, 2006, Global Strategy, Thompson, United States

Porter Michael E, 1998, Competitive Advantage, The Free Press, United States.

Websites:

www.airasia.com

www.navitaire.com/res

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PEST and SWOT analysis of AirAsias international business operations

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Published: This essay has been submitted by a student. This is not an example of the work written by our professional essay writers. AirAsia was set up by Dato' Tony Fernandes in 2001. In December 2001, Fernandes and his partners set up Tune Air Sdn Bhd (Tune Air), an airline holding company then bought over AirAsia.

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Much to the delight and relief of investors, Apple ( AAPL) shares are finally regaining their luster, and are currently trading near their 52-week high just north of $100. (The stock had a 7-for-1 split in early June.) This marks a big change from a year ago, when Wall Street appeared to sour on the tech giant amid heightened competition and a short-lived bottom-line retreat. And we see the momentum persisting through fiscal 2014 (ends September 27th) and into next year, as the company benefits from a powerful upgrade cycle, including the likely launch of a next-generation smartphone, the iPhone 6, sometime this fall. Indeed, double-digit earnings advances look to be back in the cards for this behemoth, which should keep the mega-cap stock heading in the right direction. With this in mind, is now a good time for investors to initiate or add to their positions? Or do the risks outweigh the possible rewards of holding the equity long term? In this brief article, we will attempt to address these questions by taking a look at Apple's business and performing an easy-to-follow SWOT analysis of the company, evaluating its Strengths, Weaknesses, Opportunities, and Threats.
The Business
Apple, incorporated in 1977 and headquartered in Cupertino, California, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, and sells related software, services, peripherals, networking solutions, and third-party digital content and applications. Top revenue-generating product lines include Macintosh notebook and desktop PCs, as well as the iPhone, iPad, and iPod franchises. These devices are sold predominantly through the company's online and retail stores, and through third-party cellular network carriers around the globe. Applications and other digital content are also available via the iTunes and App Stores.
Strengths
Innovation: Apple, which rose to prominence behind the visionary leadership of Steve Jobs, has had a knack for staying ahead of the fast-moving technology curve. This was notably evident when the company launched its first iPhone (June, 2007) and iPad (April, 2010) mobile Internet devices. And while questions linger about whether CEO Tim Cook possesses the magic touch of his legendary predecessor, we believe that innovative new products will remain a hallmark of Apple. Next up should be the iPhone 6 (an October release date is rumored), which is expected to come in different display sizes to better enable the company to compete with Samsung's popular smartphone offerings. An iWatch is probable sometime this year, as well, likely followed by an iPad Air 2, an iPad Mini 3, an iPad Pro, new Macbooks, and an updated mobile operating system. These new products ought to create a powerful tailwind, and should contribute to a nice acceleration in earnings growth in the coming quarters.

Rock-Solid Finances: The company has been nothing short of a cash cow since the first iPhone was launched. In fact, it has amassed quite a war chest, including about $38 billion in cash assets and $127 billion in long-term marketable securities on its balance sheet (as of June 28th). This is supporting strategic acquisitions, like the recent $3 billion deal for Beats Electronics, as well as an ambitious capital return program. Apple, under pressure (from billionaire activist investor Carl Icahn, among others) to be a bit more shareholder friendly, has been paying a cash dividend since early 2012, and just upped the quarterly payout by 8%, to $0.47 a share. (The yield is now around 1.9%, pretty close to the Value Line median.) What's more, the company has been an aggressive buyer of its own stock. To this end, the board of directors, back in April, raised the repurchase authorization from $60 billion to $90 billion. This buyback effort should help to bolster share net as we head toward late decade.
Weaknesses
Premium Pricing: Apple's computing devices are typically among the pricier ones on the market, even though the company did attempt to expand into the large value segment when it launched its scaled-down iPhone 5C smartphone in September of 2013. (That product, unlike the higher-end 5S model, has not been met with great commercial success.) This luxury positioning has made it difficult for Apple to make big inroads overseas, in countries where the pressures on ordinary consumers are considerable. It also renders the company vulnerable to price competition, not just from South Korea's Samsung but from up-and-coming OEMs, like China's Xiaomi, which has grown at a blistering pace over the past few years.

The iPad: The tablet PC franchise, a huge initial success and still the second-largest product line behind the iPhone, has been something of a disappointment lately relative to Apple's own high standards. In fact, iPad shipments fell 9% during the June interim, to 13.3 million units, with particular weakness in the U.S. and Europe. (The product line is faring considerably better in the emerging BRIC nations.) We attribute the slowdown to softness in the broader tablet space and to stiff competition from Google's ( GOOG) Android-powered devices that often retail at much lower price points. The recent sluggishness may well persist, too, unless the company can begin to make strides in the vast enterprise market. It's now endeavoring to do just that, as evidenced by a new partnership with IBM ( IBM - Free IBM Stock Report). Together, the two tech titans, long at odds with each other, will work to develop business-focused apps for both the iPad and iPhone.
Opportunities
Market-Share Growth: Despite a historic growth spurt over the past several years, Apple still has plenty of room to extend its share of the traditional computing space. It currently has an almost-20% piece of the global PC/tablet pie (ahead of such rivals as Lenovo and Samsung), but we see this number increasing in the years ahead, especially as the company gains ground in China and the rest of the Asia/Pacific region. iPhone penetration should also rise in the important BRIC geographies, as Apple inks more deals with influential local wireless carriers. The company called its recent, long-awaited distribution agreement with China Mobile a "watershed" moment (China Mobile has a huge network of roughly 760 million subscribers), and it should pave the way for similar OEM tie-ups down the road.

Beats Electronics: This giant deal (the largest in Apple's storied history), completed in early August, left some Wall Street analysts scratching their heads. The company looks to have paid a hefty price tag, it seems, given that a 2013 investment by the asset management firm Carlyle Group had valued Beats' assets, including its high-end headphone line and streaming music services, at around $1 billion. The acquisition makes strategic sense upon closer examination, however. The up-and-coming music properties will likely prove to be a nice complement to Apple's free iTunes radio service, which has generally garnered mixed user reviews and is going up against popular streaming offerings from Pandora ( P) and Spotify. And Beats' electronics unit should prove helpful when it comes to developing the iWatch and other smart, wearable devices. Notably, Beats, founded by respected music industry veterans Jimmy Iovine and Dr. Dre, has a highly creative management team, so the talent infusion will probably go a long way toward allowing Apple to maintain its status as the sector's leading innovator.
Threats
Competition: This is the main threat to most tech outfits, considering the relentless product cycles, the typically rapid move toward commoditization in the sector, and the fickle nature of today's consumers. And Apple, as we've already suggested, is especially susceptible to price discounting by low-cost rivals from China and elsewhere. Cannibalization is a concern here, as well, with the company continuing to expand its platform of mobile Internet devices. Indeed, this may be one of the things hurting iPad sales lately.

Gross Margin Pressures: These could stem from stepped-up competition (and the resulting loss of pricing power), product shortages (which often wreak havoc in the tech sector), or rising component prices. An unfavorable mix shift away from the dominant iPhone line could also squeeze profits. This may explain why the company is working to broaden its suite of high-margined software and service-oriented offerings.
Conclusion
In sum, though there are sure to be challenges ahead, we think that Apple's positives easily outweigh its negatives at present. The stock remains something of a bargain in this frothy market, too, notwithstanding its recent rally. Indeed, trading at about 16 and 14 times the consensus share-net estimates for fiscal 2014 and fiscal 2015, respectively, the good-quality issue still looks to have room to run. Dividend growth will likely be healthy, as well, with the company now looking to return more of its cash hoard to shareholders. And Apple's excellent finances make its shares suitable for most accounts.

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apple; aapl; tech; technology; innovation; iphone; ipad; siri; ibm; mobile; smartphone; samsung; lenovo; spotify; pandora; itunes

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Much to the delight and relief of investors, Apple (AAPL) shares are finally regaining their luster. And double-digit earnings advances look to be back in the cards for this behemoth, which should keep the mega-cap stock heading in the right direction. With this in mind, is now a good time for investors to initiate or add to their positions?

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KFC is known to be a favorite of meat and chicken lovers, and this segmentation is the main success factor of KFC. However, due to its franchise business model, the firm faces a lot of competition from other franchise's like McDonalds and Burger kind. Besides burgers, indirect competition in the form of Italian and fast food is ever present. Some of these competitors are Pizza hut and Domino's. Let us have an internal analysis of KFC to know what strategic initiatives can be taken by the company.
Strength in the SWOT analysis of KFC

1. Global Presence: KFC is the world's 2nd largest restaurant chain with more than 18,000 KFC outlets in 120 countries and territories around the world. It is market leader in Non-veg food joints categories in majority of countries it is in.

2. Strong parent company: It is the subsidiary of Yum! Brands, a restaurant company that also owns the Pizza Hut and Taco Bell . Yum! Brands, the fortune 500 company, is one of the world's largest fast food restaurant companies in terms of system units-more than 41,000 restaurants around the world in over 125 countries & it help individual brands in optimizing its resource usage.

3. Veg & Non veg offerings: Although KFC is known for its finger licking Chickens menu but recently they ventured out in Vegetarian category which is helping them in increasing their business & attracting both veg & non-veg preferred customers.

4. Secret Recipe: Sanders' Original Recipe of "11 herbs and spices" is one of the most famous trade secrets in the catering industry. A copy of the recipe, signed by Sanders, is held inside a safe inside a vault in KFC's Louisville headquarters, along with eleven vials containing the herbs and spices.

Weaknesses in the SWOT analysis of KFC

1. Unhealthy fats: Use of unhealthy fats & unhygienic calories is creating problem for the fast food chains to which KFC is not an exception.

2. Managing franchisees: Franchisee management is one of the critical issues in the success of the fast food chains and due to conflicting operational issues between KFC and its franchisees many of its outlets got closed since its inception.

Opportunities in the SWOT analysis of KFC

1. Market expansion: Emerging economies and their changing lifestyle resulting into more of outings with family/friends, corporate parties will result in the high growth of the industry. Furthermore, the presence and popularity of McDonalds is anytime more daunting for KFC.

2. Specializing into vegetarian Menu: Although KFC recently entered in vegetarian fast food category but they have limited menu items as compared to other chains like subway, Pizza-hut, Mac Donald's, who are already an established player in the segment. So specializing into Veg. items like they have in Non-Veg will help the company in its overall global growth.

3. Rise in health conscious population: Designing its menu for the health conscious population will be the driving force for the whole industry in the future because due to changing lifestyle people are getting less time for themselves due to which health issues are raising.

4. Penetration: Strengthening its outlet network by further penetrating the current market will help KFC in increasing its revenues & become no.1 player in fast food chain market given that now they have presence in both Veg. & Non-Veg. menu in the selected market.

Threats in the SWOT analysis of KFC

1. Competition: KFC is not a leader in the fast food chain industry so it has to compete with all other well established fast food companies who all are flourishing in the market.

2. Changing Consumer Eating habits: With government & NGO's health awareness campaigns people are becoming more aware of what to consume & what to not which is affecting the business of fast food Industry as a whole.

3. Raw Material prices: Rise in the raw material prices may affect the industry, of which KFC business is not an exception.

4. Closure of current Franchisees: Rise in channel conflict resulting into closing of the franchisees is affecting its brand image & resulting into negative word of mouth.

Related Posts:

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SWOT analysis of KFC - KFC swot analysis

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KFC is known to be a favorite of meat and chicken lovers, and this segmentation is the main success factor of KFC. However, due to its franchise business model, the firm faces a lot of competition from other franchise's like McDonalds and Burger kind.