Air asia case study Essay

Awarding large government contracts to Bumiputra companies. 2. Requiring new listings on the Malaysia stock exchange to have an initial 30 per cent Bumiputra equity ownership. 3. The allocation of at least 30 per cent of government contracts for public and private works to Bumiputra contractors. 4. Requiring all private companies to offer employment opportunities to Bumiputras. 5. Ensuring that a minimum of 60 per cent of government procurements, contract work and other related projects be awarded to Bumiputra entrepreneurs. 6. Making government finance available for the exclusive use of Bumiputra business people. The Malaysian government claimed that the NEP fulfilled its goals since the nation was acknowledged as one of the ten fastest-growing economies in the world from 1970 to 1990, a period that coincided with the NEP’s implementation. This conclusion was in agreement with the research on Malaysian economic development3 conducted by the Harvard Institute for International Development (HIID) and Institute of Strategic and International Studies in Kuala Lumpur (ISIS Malaysia) (Snodgrass, 1996, p. 1). Despite this and the new policies that superseded the NEP since 1990, the affirmative action programme remains controversial. Indeed, many people believe that the NEP continues to define current government development policies in Malaysia. Critics of the NEP believe that the policy was only partially successful in, for example, reducing socio-economic disparity and encouraging the arrogance of Bumiputras (Anshar, 2008). Research by the Australian Government’s Department of Foreign Affair4 (2005, p. xiii) was also critical about the alleged business restrictions that the NEP encouraged – it criticised that these were counterproductive and may even have thwarted the development of a vibrant and resilient business community. 3 The research looks into the Malaysian economic development from 1970 to 1990. Malaysia: An Economy Transformed (2005). This report on the Malaysian business environment prepared by The Economic Analytical Unit (formerly the East Asia Analytical Unit) is part of the Department of Foreign Affairs and Trade and is responsible for publishing reports analysing major trade and economic issues of relevance to Australia. The Entrepreneurial Tony Fernandes If the NEP was restrictive of non-Malay entrepreneurship, how was it possible that Fernandes, a non Bumiputra could emerge as the most celebrated entrepreneur in Malaysia? My research suggests that the NEP did not stifle entrepreneurship and that Fernandes is not the only successful non Bumiputra business person in Malaysia. This is a complex debate, and my doctoral thesis seeks to address it in greater detail. But in this paper I will outline some of the considerations that need to be taken into account in explaining how and why Fernandes rose to become one of Malaysia’s millionaires. Fernandes was born on 30th April 1964 into a family that had no prior knowledge or experience of business; his father was a physician from Goa (India) and his mother was a music teacher of Malaccan-Portuguese descent. In other words, Fernandes came from an Indian-Malaysian family of professionals; the new middle class that emerged in Malaysia from the 1960s. Like many other middle class families, the Fernandes had sufficient wealth to send Fernandes to study in England. Fernandes, at the age of 12, went to London in 1976 to study at Epsom College and attended the London School of Economics in which he graduated in 1987 with a degree in accounting (BusinessWeek, 2009). In total, he spent some 11 years in London, a painful separation from his parents who could not afford to pay for his flights back to Malaysia. It was this experience, according to Brown5 (2010) that gave him an insight into the benefits of perhaps developing cheap international carriers. However, at this stage his career path did not take him into the airline business. Upon graduation from the London School of Economics Fernandes took the normal route of working in accounting jobs. Fernandes worked briefly at Virgin Communications, a television division of the Virgin Group of companies. What did Fernandes learn from Virgin? 5 Kevin Brown is a journalist for the Financial Times. He was appointed Asia regional correspondent for the Financial Times in September 2009, based in Singapore. Prior to this role, he was Asia news editor. Previously, he was the personal finance editor of the Financial Times. The main benefit was the experience of working in a global company, acquiring insights into the running of an international business, and developing an impressive resume which worked in his favour in being appointed to the position of Senior Financial Analyst at Warner Music International6 in London. At Warner, Fernandes showed strong business acumen. He started in 1989 as Senior Financial Analyst, and by 2001, when he resigned from Warner, he was the Vice President, ASEAN region. Within 12 years at Warner he was promoted four times; that is on average he was promoted every three years. Fernandes’ time at Warner Music was significant because it was during this period that Fernandes matured and transformed himself from being a mere accountant into a strategist with an analytical mind. Commentators such as Ionides7 (2004) believed that Fernandes’ ability to think strategically, and understand his environment from a macro perspective, was the reason why Fernandes felt compelled not to be part of Warner’s ill-fated merger with America Online Inc in 2001. This incident was said to be the catalyst for Fernandes’ decision to switch careers after 12 years with Warner. A word of caution is needed: the early history of Fernandes’ emergence as an entrepreneur is based on the business press and journals. As part of my doctoral work I will be examining these issues in greater detail, and therefore reserve the right to correct the narrative as it currently stands. 6 Warner Music International is part of the Warner Music Group which is the third-largest business group and family of record labels in the recording industry. Warner Music Group also has a music publishing arm called Warner/Chappell Music, which is currently one of the world’s largest music-publishing companies.