UNIVERSITI UTARA MALAYSIA

UNIVERSITI UTARA MALAYSIA

Friday, 20 November 2015

Introduction

            There are many different ways to define an entrepreneur. They are the most multi-talented and diverse people out there as they are project manager, an accountant, a salesman and so on. They monitors and controls the business activities. According to MJ Gottlieb, co-founder of Hustle Branding, an entrepreneur is someone who can take any idea, whether it can be a product or service, have the skill set, and have courage to take extreme risk to do whatever it takes to turn that concept into reality and not only bring it to market, but make it a viable product or service that people want or need. Therefore, entrepreneur can be defined as a person who exercises initiative by organizing a venture to take benefits and decides what, how and how much the product or service needs to be produced. They need to have a good understanding of their markets and find out what their customer want and modify their products in line with market requirements.

Entrepreneurship is a discipline requiring skills and skills can be developed. Entrepreneurial skills is a combination of technical skill (communication, problem solving, organizational skills, etc.), management skill (planning and goal setting, decision making, etc.) and personal skill (self-control, innovation, leadership, etc.). In order to be successful in business, entrepreneurs need to have a certain set of qualities such as open risk taker, visionary, observant, team oriented and so on. Entrepreneurial skills is important to an entrepreneur such as communication skill and personal qualities like creativity and initiative are useful to everyone neither in their working responsibilities nor daily existence. Other than that, technical and business skills also help those who choose to be self-employed or to start their own venture. Therefore, entrepreneurial traits should be applied in the business by entrepreneurs in order to get successful.

Many of history's top business leaders earned their success through entrepreneurship such as Bill Gates (Microsoft), Jack Ma (Alibaba), Mark Zuckerberg (Facebook) and so on. Loh Boon Siew (Boon Siew Honda), Lim Goh Tong (Genting), Ananda Krishnan (Astro) and etc. are some of the successful entrepreneurs in Malaysia. These are the people who have the skills and initiative to take new ideas in marketing their products and also have innovative thinking to improve the existing products to ensure their business remain successful.


Jack Ma


Bill Gates

A successful entrepreneur that we choose in this coursework is Tan Sri Tony Fernandes. He is a Malaysian entrepreneur who establish Tune Air Sdn. Bhd. and introduced the first budget no-frills airline, Air Asia. He has the largest holding in Air Asia which suffered a crash in 28 December 2014 when an Air Asia Indonesia plane carrying 162 people went into the Java Sea after trying to avoid a storm. However, he won high marks for his handling of the disaster, responding quickly and keeping the public with his one million Twitter followers well informed. He and Kamarudin Meranun built Air Asia and started the Tune Group. Fernandes began operations in India last year with Air Asia India. Besides that, Forbes Asia valued Fernandes' net worth at $530 million, ranking him at number 33 on the Forbes list of Malaysia's Richest in 2015. 

Tony Fernandes


Background Of Tony Fernandes

Tony Fernandes

Air Asia Berhad Group chief executive officer, Tan Sri Tony Fernandes is a giant in his own right as he leads Malaysia’s low-cost carrier to success. Coining the phrase “Everyone can fly”, this Malaysian mogul has made it possible for every Malaysian to experience the various cultures all over the world and expand their horizon through low-cost travel.

Anthony Francis Fernandes, better known as Tony Fernandes , was born in Kuala Lumpur on 30 April 1964 to an Indian father from Goa and a mother of mixed Indian and Asian-Portuguese descent who had been raised in Malacca, Malaysia.

Instead of following in his father's footsteps of becoming a doctor, the tycoon had other plans in mind when left Malaysia at the tender age of 12 to study in Epsom College, Surrey, England and then went on to graduate from London School of Economics. Fernandes who qualified as an Associate Member of the Association of Chartered Certified Accountants in 1991, became a Fellow Member in 1996. He was later admitted as a member of the Institute of Chartered Accountants in England and Wales (ICAEW) in 2008. His career started with Warner Group, when he was appointed the youngest managing director of Warner Music Malaysia in 1992. He was the South East Asian regional vice-president for Warner Music Group from 1992 to 2001. When Time Warner Inc. announced its merger with America Online Inc., Fernandes left to pursue his dream of starting a budget no-frills airline.

It was through Datuk Pahamin A. Rejab, the former secretary-general of the Malaysian Domestic Trade and Consumer Affairs Ministry that Fernandes came to meet with then Prime Minister, Tun Dr. Mahathir Mohamad in October 2001. Instead of starting from scratch, Mahathir advised Fernandes to buy an existing airline.  Air Asia, the heavily indebted subsidiary of the Malaysian government-owned conglomerate, DRB-Hicom, was losing money. Possessing an unwavering appetite for risk , Fernandes mortgaged his home in October 2001 after the tragic 9/11 terror attacks to acquire the bleeding low-cost subsidiary of Air Malaysia from the Malaysian government. One year after his takeover, Air Asia had broken even and cleared all its debts. Its initial public offering (IPO) in November 2004 was oversubscribed by 130 per cent.

Fernandes' biggest achievement was to open up countries within the region to new budget carriers, which previously did not have open-skies agreements. As a result of Fernandes' lobbying in mid-2003, Dr Mahathir brought up the idea with leaders from neighboring countries. Those nations subsequently granted landing rights to Air Asia and other discount carriers. In Thailand and Indonesia, Air Asia holds a minority stake in the respective local companies. Thai Air Asia, a joint venture with Shin Corporation, Thailand’s largest telecommunication conglomerate, took to the skies in Feb 2004 and has to date carried over 1 million passengers in its first year of operations. PT Awair, re-launched as a low fare airline on 8 December 2004 and subsequently renamed Indonesia Air Asia, presently serves 5 domestic destinations in Indonesia.

His work earned him various awards such as the Honor of the Commander of the Order of the British Empire, conferred by Her Majesty Queen Elizabeth II in 2011. The award was attributed to his services in promoting “commercial and educational links” between the United Kingdom (UK) and Malaysia. He was also conferred the Officer of the Legion d’Honneur by the French government in 2010, the highest award that can be conferred on a non-French national. This great man is a hero of the Malaysian airline industry, changing the way the region travels and opening up our skies to limitless possibilities. His personal credo is "Believe the unbelievable. Dream the impossible. Never take no for an answer."


Entrepreneurial Traits of Tony Fernandes - Networked


Networked is an entrepreneurial traits that give the meaning of an interconnected system of people or things. Networked business is a socioeconomic business that carried out by entrepreneur and allow entrepreneur to build new business relationship as well as generate business opportunities. There are several types of networked such as personal network, public network and business network.

Personal Network
            Tony Fernandes has parent as his personal network. His father was a doctor and his mother was a Malaysian citizen women entrepreneur from Malacca. Tony Fernandes was much influenced by his mother, who was active in selling Tupperware to faraway places. For Tony Fernandes, his mother was a wonderful woman because her remarkable ability to sell things to anyone. As such, he personally learned a lot from his mother who turned out to be so important in facing the business nature. While Tony Fernandes had his early education at Epsom College, United Kingdom, he received the news of the family in Malaysia that his mother passed away, but his could not go home because his faces financial problems. The expensive airline tickets a hindrance to his to return home. Because of it, he complained, "How wonderful if there are companies airlines offering cheaper fares." This is one of the factors that led him to have his own airline company which can be enjoyed by all, especially the lower class.

Public Network
            Tony Fernandes also said the idea to set up the airline came spontaneously while he was watching television in London. "I'm interested to see ads a low-cost airline, Easyjet. Then I rushed to Luton Airport in London and spent two days there. I'm interested in the business concept and plan to introduce it in Malaysia and keep the dream to develop the concept in the Asian region." Tony Fernandes has managed to make use internet and social networks such as Facebook and Twitter. The perfect marketing plan through internet also expand AirAsia because according research about 70% up to 80% of purchases in the internet for the Malaysia market was the purchase of a plane ticket AirAsia. Turns out that his very innovative in ensuring the AirAsia brand remains fresh, relevant, competitive and closer to the soul of the Malaysian. By simply using Facebook, AirAsia can display any promotion was conducted.

Business Network
           Tony Fernandes believes that every employee is an asset of the company. No matter where they are placed and what they do, each of them is the driving force of the company. AirAsia called its employees as ‘All Stars’ it is because the main factors that contributed to success is the role played by its employees.
AirAsia X also announced that Sir Richard Branson of Virgin Group will take a share of 20% in AirAsia X to help fund the initial operations such as the purchase of planes. Branson also predicted the possibility of establishing a close relationship between Virgin Blue and AirAsia X, such as code-sharing and frequent flyer program in the future.

Tony Fernandes also collaborates with its competitors who are able to challenge the status of AirAsia offers a low cost flight. Latest AirAsia is trying to discuss potential areas of collaboration with stakeholders Malindo Airways recently established.

Open Risk Taker

One of the characteristics of entrepreneur is willing to take risks. An open risk taker is an individual who take an action that have the potential to cause physical harm or financial loss but it also can bring benefits to the person. (Business Dictionary, 2015) Tony Fernandes is one of the examples.
Tan Sri Anthony Francis Fernandes or Tony Fernandes as the founder of Tune Air Sdn. Bhd has taken a big risk to buy AirAsia. In 2001, Tony Fernandes come out with an idea of developing Low Cost Carrier at that time. Low Cost Carrier (LCC) can also be known as no frills, no discount or budget carrier. Fernandes thought that Low Cost Carrier could work in Southeast Asia and he wanted to make all the Malaysian can afford to pay for flight. He had a meeting with the Prime Minister, Tun Dr. Mahathir Mohamad to talk about Low Cost Carrier and to persuade Mahathir to give him official endorsement to be a new operator in the Malaysian aviation industries. Mahathir suggest him to buy AirAsia instead of getting a new airline license.
AirAsia is originally the sister airlines of Malaysia Airlines. It is the subsidiary of Malaysian government-owned conglomerate, DRB-HICOM (merger between Diversified Resources Berhad and Heavy Industries Corporation of Malaysia Berhad) that founded in 1993 and operated in 1996. Fernandes bought the airline with one ringgit (USD$ 0.26 at that time) which comprised two ageing Boeing 737-300 jet aircraft but AirAsia had debts worth RM40 million (USD11 million). To support and grow AirAsia, he mortgaged his house and used his personal saving. In December 2001, Tune Air got 99.25% equity of RM 51.68million shares from DRB-HICOM.
With debts of RM40 million, no one wanted to take the risk to buy AirAsia because they thought it will not survive. While as a Low Cost Carrier, everyone also thought it could not work in Malaysia and Fernandes would not clear the debts with this no frills carrier. Tony Fernandes proved everyone wrong. One year after takeover AirAsia, he managed to clear all the debts and turned Air Asia from a failing government linked airline to a successful budget airline. He cut the cost that included use the single type of aircraft, eliminate the travel agents commission by online ticketing, charged for the meal in flight, reduced turnaround time on the ground and ensured frequent flights. The ticket price set for USD $0.99 only which it attracted the customers who could afford it.
In earlier of 2002, AirAsia took its first flight as Low Cost Carrier and it served for six destinations only. After June 2004, it managed to serve 26 destinations and had carried 2.8 million passengers. (AirAsia Websites, 2006) From these stats, we can know that Tony Fernandes’s idea worked in Malaysia. Although he took some big risk for buying AirAsia that have RM 40 million of debts and developed the Low Cost Carrier in Malaysia and even mortgaged his house, he proved that he can do it. He thought about the risk he will take and minimized it. He turned AirAsia into a profitable airline and one of the largest low budget airline in the world. 

Visionary

           Tan Sri Anthony Francis or Tony Fernandes is a Malaysian Indian Entrepreneur. One of the characteristics of Tony Fernandes is visionary. A visionary leader is a leader who having or showing a powerful imagination and clear ideas about what should be happen or done in the future.

        Tony Fernandes also can be known as a visionary leader and he also achieves a award like “ Visionary and Leadership Series ” award for his outstanding work in Air Asia. He also make a statement regarding his visionary, that is “ Dream the impossible, believe the unbelievable, and never say no for any answer ”.

           When Tony Fernandes still is a child, he had some big dreams like running an airline, owning an English football club, and owning a Formula One racing team. He also willing to take the high risks and optimistic in achieving his dreams.

        As a CEO of Air Asia, Tony Fernandes introduce the “ Low Cost Airline ”. He also perdition Dr. Mahathir to raise the idea with the leaders of neighboring Thailand, Indonesia, and Singapore and eventually successful to get the landing rights to Air Asia and other discount carriers.

           Therefore, visionary lets Tony Fernandes become sensitive towards what will happen in the business environment, so it makes Tony and his working partners will take the actions rapidly to prevent its happen and become more serious. As conclusion, visionary is a characteristics to enable him to become a young and successful entrepreneur.

Failure is an option

Failure is an option is another traits of entrepreneurial. Failure means lack of success, a failing in business, loss something or an omission of occurrence or performance. Everyone will face failure include entrepreneur itself. The different that separate entrepreneur with normal people is when facing failure, entrepreneur will not easily give up and they will see failure as an option. Entrepreneur believe that they have the ability to solve the problem themselves and create a more perfect ideas instead of giving up. 

Relegation of Tony Fernandes’s English Football Team
Tony Fernandes’s big heart was crushed when he himself watched his Queens Park Rangers (QPR) football team mauled by Manchester City for the match result of 6-0 on 10 May 2015 in the English Premier League (EPL). QPR have been relegated to the second championship league although Tony had spent much funds hoping that QPR can stay in the EPL. Tony hates failure, but he has to admit that QPR are not good enough for the EPL, like what the football pundits said. QPR seems have to stay in the second tier for a long time after this.
Fernandes became the majority owner of the Queens Park Rangers

The Embarrassing Exit from Formula One Motor Racing
Tony loves sports and ventured into the Formula One World Championship racing under the Lotus brand before moving on to Caterham. Caterham F1 team competed in the Formula One World Championships since 2012, following the acquisition of the British sports car manufacturer Caterham Cars, by Tony as the owner and team principal.
In July 2014, Tony and his partners conceded defeat and announced that they had sold the team to a consortium of Swiss and Middle Eastern investors because of its poor performance in Formula One. This made Tony no newcomer to failure.

Catastrophic Crash at Tony Fernandes’s Indonesian Airline
Tony is a globally recognized icon in the world of business who was working as a manager in a music company in Kuala Lumpur before he took over a defunct airline and transformed it into the world’s leading budget airlines (AirAsia). He became fabulously successful but has tasted the bitter end and knows what it is like to fail. Besides AirAsia, he is into budget hotels, the insurance and mobile telecommunications industries where he is being pressed hard to prosper at present.
He is highly acclaimed and seen as ‘a man with the Midas touch’ but yet he has had his fair share of failures and might perhaps be starting to look a lot more ordinary and a mere mortal after all. What goes up must surely have to come down. However, perhaps the biggest blow and come-down-to-earth for Tony was when an AirAsia plane on a flight from Surabaya to Singapore’s Changi Airport crashed into the South China Sea killing all 162 passengers and crew on board. This was probably the biggest blow or failure in Tony’s life. He had tried his hand at various businesses and was highly successful but there is evidence to suggest that he also had a fair share of failures which is rarely highlighted. But with AirAsia as their one liner goes: “Now everyone can fly,” Tony made available the opportunity for air travel to be affordable for most people and made his name as an aviation legend. But the air crash dented a heavy blow and tarnished his almost perfect reputation.
It remains to be seen in the near future if Tony will flourish or fail further and it looks as if it’s hard to say if his much coveted legacy will stand or end up in tatters like many other icons in this world who bit off more than they could chew.
AirAsia CEO Tony Fernandes In the Spotlight Following Missing Plane

Attack on Accounting Practices at AirAsia
It has been a hard year for Tony Fernandes, who is battling to keep alive his dream to build an Asian low-cost carrier that can match the success of Southwest Airlines in the US and Ryanair in Europe.
Mr. Fernandes has rejected a highly critical report by GMT, an independent equity research firm, that alleges AirAsia is “teetering on default”. The company’s shares have lost nearly a quarter of their value since the GMT report was released on June 10 and are languishing at a five-year low.
GMT claimed in the report that Malaysia-listed AirAsia has inflated group profits by recording earnings derived from leasing aircraft to its troubled, minority-owned associate airlines in Indonesia and the Philippines. At the same time, the parent group has had to extend ever more credit to these associate airlines as their losses mounted because of tough competition from dominant incumbents, GMT alleged. With the Indonesian and Philippines’ airlines unable to repay the parent, receivables owed to AirAsia by its associates, joint ventures and related parties jumped to Rm2.5bn ($665m) in 2014, from just Rm1.3bn in the previous year, according to GMT, leaving the group with a net debt-to-equity ratio of 263 per cent, the highest among its regional peers.
“Don’t be fooled by AirAsia’s fancy marketing,” wrote Gillem Tulloch, the founder of Hong Kong-based GMT, in the June 10 report. “Real profits have collapsed and AirAsia now needs a recapitalisation that will dilute existing shareholders by more than 100 per cent.” He complained about limited financial disclosures by AirAsia, Asia’s largest budget airline, saying management gave the impression of having “something to hide”.
Mr Fernandes, a former accountant who co-founded the airline in 2001 when he and his partners bought a tiny, lossmaking Malaysian carrier for Rm1 ($0.27), has been rattled by the attack. But the company has dismissed GMT’s allegations, insisting that it has a “good business outlook”, is “rich in assets” and has a “strong balance sheet”. It said AirAsia planned to address concerns about its associate airlines by injecting a total of $72.9m of new share capital into the Indonesian and Philippine units, alongside its local partners. AirAsia also plans to raise at least another $100m for each associate by issuing convertible bonds to new investors. “We’re a professionally run airline,” said Mr. Fernandes, AirAsia group chief executive, in a Financial Times interview during a trip to Indonesia and the Philippines to rally staff.
Tony insisted that AirAsia is not at risk of default and has no need for a rights issue at the group level.
“This [GMT] report is rubbish,” said Mr Fernandes. “We’re doing extremely well. Frankly I’ve been disappointed with the equity market. They’ve known us for 14 years and there’s nothing in that report that hasn’t been disclosed already.”
Mr. Fernandes, whose Tune Group is AirAsia’s largest shareholder, added: “It’s preposterous to suggest that there’s any intention to hide. The fact that we’re so transparent allowed them to write that report. We declared far more than we needed to.”
Most analysts have rallied to the defence of AirAsia, arguing that while it is facing short-term difficulties, the group’s structure is advantageous. Michael Beer, analyst at Citigroup, says accounting treatments at AirAsia are “among the best”.
But Rajani Khetan, analyst at HSBC, shares some of GMT’s concerns about AirAsia’s large intercompany debts and its business model.
“We not only view AirAsia’s recent updates on funding plans for associates with scepticism, but also argue claims of improving prospects are unvalidated,” she wrote in a note on June 22.
But she believes the group can reduce its losses, partly by scaling back its fleet expansion plans — AirAsia is one of the biggest customers of Airbus, the jet maker, with more than 300 aircraft on order.
Where did it go wrong for Mr Fernandes, who confidently told the FT just two years ago that to go into the airline business “you’ve got to have balls or you’ve got to be insanely stupid”?
His airline’s motto is “now everyone can fly” and it has sought to capitalise on the ability of Southeast Asia’s fast-growing middle class to afford cheap flights. However, expanding AirAsia across the region has involved establishing a corporate structure that complies with local rules that prohibit foreigners from owning majority shareholdings in airlines. The group therefore took minority stakes in AirAsia-branded businesses in Indonesia, the Philippines and Thailand, as well as new ventures in India and Japan, but exercises de facto control over these companies by leasing aircraft, providing maintenance and extending credit where necessary.
While Mr Fernandes enjoyed success in his home market and Thailand, he has come up against resilient, well-connected rivals in Indonesia and the Philippines. Losses at the AirAsia businesses in Indonesia and the Philippines mounted at a time when the group was aggressively buying new passenger jets and southeast Asian economies were starting to slow.
Analysts have grown increasingly concerned about airlines expanding too fast in Asia, because it puts pressure on fares and therefore profits. The situation was compounded by a demand shock last year after three high-profile incidents involving aircraft from the region: AirAsia Indonesia flight QZ8501 and Malaysia Airlines’ MH370and MH17.
Shaken, but not deterred, Mr Fernandes is trying to maintain his bullish disposition, arguing that AirAsia’s prospects are improving because of cheaper fuel resulting from lower oil prices and the reorganisation of state-owned rival Malaysia Airlines, which could see it scrap routes.
“I love proving people wrong and I’m reinvigorated by this [GMT] report,” he said. “But words are cheap. If we perform as we say we will, people will see tremendous value in AirAsia stock.

Based on Tony Fernandes cases, we can see that failure is an option, for both things we hate and things we enjoy. He chose to pursue the latter. He is willing to involve himself in fields that he has strong interest and strong desire for achievements despite there are obstacles along his journey to success.