BBHI4103

INDUSTRIAL RELATIONS

Faculty of Business & Management

May 2015

BBHI4103
Industrial Relations

MATRICULATION NO:

900626055454001

IDENTITY CARD NO.

900626-05-5454

TELEPHONE NO.

012-3494019

E-MAIL

devikannan@oum.edu.my

LEARNING CENTRE

Negeri Sembilan Learning Centre

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INDUSTRIAL RELATIONS

Introduction
For this assignment, The organization that I choose is Air Asia Berhad ( now on it
will be known as Air Asia). It is Asia's largest low-fare, no-frills airline and a pioneer of low-cost
travel in Asia. Air Asia group operates scheduled domestic and international flights to over 400
destinations spanning 25 countries. Its main hub is the Low-Cost Carrier Terminal (LCCT) at
Kuala Lumpur International Airport (KLIA). Tan Sri Anthony Francis Fernandes (also known as
Tony Fernandes) is a Malaysian Indian entrepreneur. He is the founder of Tune Air Sdn. Bhd.,
who introduced the first budget no-frills airline, Air Asia, to Malaysians with the tagline "Now
everyone can fly". Air Asia has sparked a revolution in air travel with more and more people
around the region choosing Air Asia as their preferred choice of transport. He has since founded
the Tune Group of companies. Fernandes to prominence by turning AirAsia, a failing
government-linked commercial airline, into a highly successful budget airline public-listed
company.
Their main activities are to provide air transportation services worldwide. The primary
undertakings of subsidiaries are supplying inflight repasts, trip functioning enterprise, supplying
airplane leasing amenities, newspapers proprietor with announcing division. Their secondary
activity is tune budget hotels for their flyers they can book hotel and tour packages along the
ticket with Air Asia Go. they provide sponsor ships to various event held at their destination
country but most in Malaysia, they also organize big events and customers can buy ticket from
their website along flight tickets. The primary undertakings of subsidiaries are supplying inflight
repasts, trip functioning enterprise, supplying airplane leasing amenities, newspapers proprietor
with announcing division. Other than that, Air Asia creates values through the following vision
and mission :

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AirAsia Values
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.

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

Below will be the divisional chart for AirAsia Company.

Figure : AirAsia divisional chart

From the divisional chart of Air Asia, there will be 12 departments in Air Asia
organization. Every department will be in charge by the head of the department. The departments
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will be categories into countries, quality and safety, engineering, information technology,
commercial, communication, operation, bus dev, finance and the last will be secretary. With the
divisional chart, Air Asia will be easy to operates and achieve the goal and compete with other
competitors .
WHAT IS POWER?
Power is the potential ability to influence behavior, to change the course of
events, to overcome resistance and to get people to do things they would not otherwise do. It is
the ability or official capacity to exercise control or authority over a person, group, or nation.
Power exists on all levels of life from the household to the government of a country. In some
way we all have someone who can influence our behavior or our decisions. Power is vested in us
by the dependence of othersby how much they need what we control and by how few
alternatives there are.
Power to the human race in some way resembles the food chain in the animal
kingdom. Some situations are symbiotic relationships where both parties are dependent on each
other for a particular behavior, and some are simply one-sided. Sometimes the obtaining of
power can make a person feel that they can do whatever they wish, since we know the old saying
"those with the gold make the rules," a position of upmanship may easily become out of control.
In the arena known as the corporate sector, management generally holds power. Occasionally, the
reverse may be true if a subordinate is privy to knowledge that may damage his or her boss. In
this type of situation, the boss is held in a compromising position, and may be forced to treat the
subordinate in a way that would not be usual and customary. Granting of special favors to insure
the information does not leak out may be a benefit that the subordinate may seek in his or her
own struggle to gain power.
Power can be found in many different ways in the world in which we live. It is the
structure of our lives and most people wish to have it at sometime or another. We will explore

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this issue in the following sections. First, we consider individual bases of power. Then we
examine how organizational subunits express power.
THE BASIS OF INDIVIDUAL POWER
Power can be found in the position that you occupy in the organization or the
resources that you are able to command. The first basis of power, legitimate power, is dependent
upon ones position or job. Power is a word now used by more women in the workplace with less
self-consciousness and apology. Women are less constrained by gender ideology and freer to
choose options largely because of the feminist movement. The focus of the movement is that
women must be respected and allowed to develop as full human beings.
Diversity in the workforce today has also allowed the ethnicity in management
to broaden as well as the placement of women in management positions. Although individual
power in the workplace looks quite different than it did in the1950s, men still remain dominant
in the food chain and are still today earning higher incomes for performing the same job that a
woman is performing. Unfortunately, power is not given as easily to women and minorities as it
is to the white male stereotype. This is definitely changing in the 1990s, but it is interesting to
see that power has been slowly redistributed from the white male stereotype to people who are
considered able to do an equal job.

Legitimate Power
Derives from a persons position or job in the organization. It comes with title or
position such as a police officer, teacher or CEO. Authority is given to an individual by
an organization to influence the department or persons that the direct authority must
govern. People have been socialized to accept the power system of boss and
subordinate. The power that is inherent in any position is power vested by the majority.
The consent of the governed.

Reward power
Is the power to give or withhold rewards such as money, promotion, recognition or
anything of perceived value.
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Coercive Power
Is available when the power holder can exert influence using punishment and threat.
Coercive power is generally not that effective in the workplace. when it is used in a
way that may embarrass an employee or bring them perceived harm, resistance of the
employee to conform may be a side effect Today, hierarchy and authoritarianism are
out of fashion and participation and democracy are in. The cooperation of others is new,
knowledge based organizations is a must. Also, what if authoritarian is wrong?

Referent Power
Exists when the power holder is well liked by others. In this sense, charismatic leaders
will have referent power. This type power is interesting in the way that the followers
are easily influenced due to the genuine respect they hold for their leader. The leader
who is popular and well liked is more apt to gain favorable response without the use of
power or coercion. Networking in the workplace can be extremely beneficial for this
type of individual, since he or she can form a basis for calling in favors in time of need.

Expert Power
A person has expert power when he or she has special information or expertise that the
organization values. This type of power can come from extensive background and
education or an area where an individual displays extremely proficient skills. Expert
power can be very beneficial to a manager. Of all the bases of power, expertise is most
consistently associated with subordinate effectiveness.

Porter 5 forces
Porter 5 forces are a model which used by the company for industry analysis
andcorporate strategy development. This 5 forces include supplier strength,
competition,customer power, the potential for new companies join the industry and threat of
substitute products.

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Figure : Porter 5 Forces diagram

Bargaining power of customers
Bargaining of buyers will be the ability of customers to put the firm under
pressure. There are 2 types of buyer power which are customers price sensitivity and
negotiating power. The Revenue Management System was the only system which used by Air
Asia. This system had made the airline understands, anticipates, and react to the behavior of
customer to maximize income from organization. This takes account into the operating costs and
Air Asia has to optimize prices and distribute amount to maximize the expected income. Seat and
route will be the 2 levels which optimize to be done in Air Asia. Seats are available at various
prices in different points of time. Reservation will be charged once consumer changed the
previous booking time to the earlier or late after the days. While for the route, it can be done by
adjusting the prices for destinations that have higher demand when compare with others.
Combination of these 2 levels for all flight will be the best effective method.
Bargaining power of suppliers
Bargaining power of supplier can describe as market of input. Supplier can be a
source of power over the firm. To overcome the problems of bargaining power of suppliers, Air
Asia has opted for the full-fledged ERP system in year 2005. By implementing the package, Air
Asia is looking into well retain process incorruptness, reduce financial month-end closing
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processing times, and speed up reporting and data restoration processes. For the aircraft supplier,
the power of supplier will be strong. Other supplier like food supplier and fuel supplier, the
supply will base on the market condition. Prices could not be increasing too much as this may
become the risk for the long term business. The second problem will be the high switching costs.
Most of the Air Asias aircraft are Airbus models. Besides, the technology which used by the
Airbus is the most progressive if compared with the previous Boeing model. This is why
bargaining power of suppliers is strong.
Threat of new entrants
Threat of new entrance can be the profitable market that give high return and attract the
new firms. There is a high barrier entering the airline industry since they postulate high resource
to set up everything such as purchase or rent the aircraft, set up office, hire the new employees
and etc. this may help in reducing the threat to Air Asia. Brand awareness will be important for
industry. To enter the industry is not only ask for the high capital and at the same times create the
brand awareness. Consumers will just choose the products and services which they most trust on.
Brand loyalty can help in reducing threat to Air Asia too. Leading role and favorable brand
awareness had made to become a first choice among the competition.
Threat of substitutes
Threat of substitute will be the existence of products outside the area of the common
products boundaries increases the propensity of customers to switch alternatives. For the
substitute products of Air Asia will be train, busses and cruise. But, busses and cruises are not
viable due to the geographical factor. Besides, business travelers telecommunication and video
conferencing was also seen as the substitute. Cisco Webex offers unlimited meeting as low as
USD 19 per month and the substitute is moderate.

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Rivalry among existing competitors

For most industries, the intensively of competitive rivalry is the major stator of
competitiveness of industry. The main competitors of Air Asia will be MAS and Firefly.
Through the agreement in August 2011 between Air Asia and MAS, Firefly will be full abroad
airline and MAS will focus on the strength and not directly compete with Air Asia.
Leadership
Leadership will be the activity of guiding a group of people or an organization to
achieve the goals. Leader will provide the clear information, knowledge and method to the group
of members until the vision had been achieved. On 24 March 2009, Tony Fernandez mentioned
that there is nothing more powerful that inspirational leadership that unleashes principled
behavior for a great cause. To makes accompany or government supportable, employees and
citizens are impelled by the values and principles to do the right things no matter how arduous
the situation. Law will tell people what to do and values will affect people what should do. And,
thats the leaders job. Emotional intelligence will be part of the leadership. The components of
emotional intelligence which can link into Air Asia will be motivation. Tony Fernandas keeps
motivate his employees by encourage employees to pressure the passions. Air Asia works hard
for creating the environment which can learn, grow and do what turns them on. Besides,
employees in Air Asia should be clear about the Air Asia mission which is Now Everyone Can
Fly.
Conclusion
The competition among airplane industries is very tough. Each Of Airplanes Company
in the world trying to conduct some strategies to compete with another competitor in their
industry. To compete with their competitor in the business environment, a company needs to
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make a strategy to achieve their long terms objective and can be successful for doing their
business. The strategic management becomes important due to the following reason such as
globalization to survival their business, and than e-commerce become the critical success to the
company nowadays. a company needs to consider the company ability and how to integrating it
with the as well as main factor in the internal and external factor. Air Asia will be the best airline
company as having the cheapest price tickets and letting everyone can fly around the world. To
make the company become better and better, Air Asia was recommended to provide more
choices of foods and drinks in order to reach the satisfaction of passengers. In addition, Air Asia
can think of giving extra luggage allowance to 25 Kg to the passengers. A good leadership style
can be affecting the entire company and employees to become motivate and innovate. With the
motivation and innovation, consumers believe that Air Asia can be the successful airline
company.

References
1) https://en.wikipedia.org/wiki/Industrial_relations
2) http://ebooks.narotama.ac.id/files/Organizational%20Behavior%20%285th%20Edition
%29/Chapter%2010%20%20%20Power%20and%20Influence%20in%20the
%20Workplace.pdf
3) http://www.slideshare.net/NikhilSen2/air-asia-final-nikhil-sen-16710117
4) http://www.academia.edu/6792185/A_Study_on_LowCost_Leadership_Strategy_The_Case_of_AirAsia
5) https://en.wikipedia.org/wiki/AirAsia

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