Airasia Management Essay

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Systems thinking plays a critical role in the success of organisations and needs to be incorporated and considered when it comes to the operations of any company, including AirAsia. Systems thinking can enhance knowledge management through its ability to represent complex, dynamic processes and thus has the ability to enhance understanding and the ability of knowledge management initiatives to respond to the needs of the organization (Rubenstein- Montano, et al., 2001). “A system refers to an interrelated set of elements functioning as a whole, in which the relationships between the elements are as important as the properties of the elements themselves” (Davidson, 2009). Organisations like AirAsia are immensely complex open systems, that interact with the external environment around them to transform resource inputs into product outputs with the acquisition of resources and customer satisfaction being significant requirements for overall success (Schermerhorn et al., 2014). As managers coordinate the work activities of the various parts of the organisation they ensure all parts are working harmoniously so that the organisation’s goals can be achieved. It also implies that decisions made in one organizational area, has the ability to affect others. The text suggests that Tony Fernandes has already applied systems thinking to many aspects of AirAsia’s operations and that is able to directly correlate to the success that the company has obtained over the past fifteen years. Satisfied customers were, and still remain, the goal and focus for AirAsia. It was designed to be a low-cost, long-haul route network and it correctly estimated that customers are more interested in customer safety and low fares than luxuries in such a price sensitive market and cutting costs was the way that they decided to do it. The way the company cut costs was by having no-frills in-cabin service, which meant no luggage allowance, in-flight meals, entertainment or terminal lounges for the passengers flying with AirAsia (Schermerhorn et al., 2014). AirAsia also experiences Constant overview by regulators including International Aviation Safety Standards Civil Aviation Authority and Malaysian Department of Civil Aviation (Schermerhorn et al., 2014) and any organisation has no hope in surviving if it ignores the relevant government regulations, relations with suppliers or changes in customers buying preferences. By using these different systems thinking approaches, AirAsia has been able to provide unrivalled customer service leaving most of their customers extremely satisfied from their offered services.

Throughout the years it seems as though AirAsia’s low-cost operation has perfected the constant balance between revenue producing and the necessary bureaucracy to keep the organisation efficient. It becomes quite apparent in the case study that this is not necessarily the case. Fernandes appears to neglect the classical management techniques of bureaucratic organisations to keep a very egalitarian natured employee base and also ignores some scientific management techniques, which would assist his company in improving their productivity. In the early 1900’s Max Weber developed a theory called bureaucracy. A bureaucracy can be defined as a form of organisation that is characterized by the division of labour, has a clearly defined and legitimate hierarchy, as well as enforcing detailed rules and regulations, and adopts the notion of impersonal relationships between all levels of employees within the company (Robbins et al., 2012). Fernandes comes across as being more focused on managing an organisation where all employees are all equal and are constantly working with each other in unity. He enforces equity and diversity, and allows all employees equal right to benefits irrespective of gender, race, socioeconomic background or disability (Schermerhorn et al., 2014). The defining features of Weber’s bureaucratic organisation is the clear division of labour and the clear division of hierarchy, formal rules and procedures, impersonality and careers base on merit, none of which seem to be demonstrated by AirAsia’s workforce or even by Fernandes himself. It is mentioned that AirAsia as an organisation keeps a flat structure to assist with minimizing costs and with the intent of improving internal communication (Schermerhorn et al., 2014). A flat structure refers to an organizational structure that has few or no levels of middle management between staff and executives. Weber believed that an organisation based on rational authority would be more efficient and adaptable to change because progression is related to formal structure and positions rather than to a particular person. This lack of hierarchy and non-existence of middle management means that the organisation is at high risk to the ever-changing external environment. As previously mentioned, decisions made in one organizational area, has the ability to affect others, and if each organizational area is not correctly managed the organisation can go to turmoil. A major principle to scientific management is to carefully train workers to do the job and give them the proper incentives to cooperate with the science (Schermerhorn et al., 2014). There is little to no evidence to suggest that Fernandes offered any kind of incentive for his employees to become more productive within the workplace. Human Resource Management (HRM) doesn’t seem to be a focus for AirAsia so it isn’t as strong as it could potentially be and by improving HRM, could improve the company’s productivity (Poon & Waring, 2010). Although AirAsia on the surface may seem to be productive, there are a lot of classical management techniques they could enforce to get that slight productive advantage over their competitors.

AirAsia can be referred to as a very lean organisation because it is, above all, dedicated and committed to its customers and is continually working to minimize waste by focusing a majority, to all, of its resources on producing the best possible value for its customers. This isn’t necessarily a bad thing for the company but it does leave a huge amount of room for the people in power to create certain management mistakes and to neglect many of the previous management theories mentioned. In 2012, with the tightening financial environment, AirAsia was forced to pull out of some of its unprofitable routes to Europe and India, as it had spread itself too thin (Schermerhorn et al., 2014). The removal of these routes however allowed the company to divert its attention to focusing on the most popular routes and the passengers travelling on them. Fernandes was not keeping in mind the environmental affects happening around them at the time. Historical perspectives provide a context or environment in which to interpret problems and only then does a major problem take on meaning, revealing its