MALAYSIAN AIRLINE SYSTEMS (MAS)

MALAYSIAN AIRLINE SYSTEMS (MAS)SWOT ANALYSIS, TWOS ANALYSIS, PEST ANALYSIS, PORTERS FIVE, BCG MATRIX AND STRATEGIC MAPIntroductionMalaysian Airline System Berhad is theprimary airlineofMalaysia. Malaysia Airlines (MAS) operates flights from Kuala Lumpur International Airportmainly and with a secondary hub atKota KinabaluandKuching. From the report, the strategic management of Malaysia Airlines is analysed. The report is produced for Mr Mathew Teale. Most of the resources in this report are based on report and journal. Besides, articles and newspapers are also being used as the secondary resources. Gather from latest data, Malaysia Airlines has revenue worth as much as RM13 billion. In stategy management, there are Strategy Analysis, Strategy Formulation and Strategy Implementation which are the process to overcome that external factor which consist of objective to fulfil(Hambrick, 2007). Under the effect of globalization, the world has changed in every sector and those changes had influenced most of the corporation activities with obstacles to execute their strategy. A company's finances will be affected if their management fails to formulate and implement the most efficient and suitable strategy. Strategy analysis, strategy formulation and strategy implementation are the fundamentals to solve negative factors regardless what is the problems. BackgroundMalaysia Airlines was founded in 1937 through an ideaby the Alfred Holt'sOcean Steamship Company in Liverpool work together with the Imperial Airways in from Britain and Straits Steamship Company in Singapore. This had build the outcome of Malayan Airways Limited(MAL) on the same year. As usual, this airline faced different types of industrial challenges throughout these seven decades. Therefore, the company had improved and repackaged their image and services. Malaysia Airlines started their flight services originated in Subang Airport and later relocate to Kuala Lumpur International Airport (KLIA). Malaysia Airlines serve different class of customers in society pyramid. Therefore, Malaysia Airlines provide different class of seating's which are first class, business class, and economic class. According to Malaysia Airlines Annual Report on 2012, incredible loss of RM481,457,000 was hit after the loss on 2011 which was two billion. This shows the in capabilities of management in Malaysia Airlines to manage the company. Therefore, the management needs to be rearranged and restructured. Besides, Malaysia Airlines are facing more competitors in the industry such as Air Asia. To overcome this challenge, Malaysia Airlines tried to upkeep with their competitors by providing high quality of services in order to win customer's faith and loyalty so that they could have stable coming back customers. Their strategy was a success and this can be seen when several awards are awarded by Sky-trax UK and World Travel Awards. The awards are the Asias Leading Airline(2011), Asias Leading Business Class Airline (2010) and Five Star Airline (2012). Malaysia Airlines built up their image as the top airline in Malaysia by winning those award.

SWOTAnalysisStrong Backing of Malaysian Govt It has extensive operations in South Asia, Middle East, Australia and other global destinations One of the most popular airlines across the world Strong brand recall and visibility due to excellent advertising and marketingThe company has a strong workforce of over 20,000 employeesIt covers over 50 international and 35 domestic destinations with a fleet size of over 100Relying Heavily on International Onward Moving Traffic.Very Little Domestic Traffic and limited market share growth.Malaysia Airlines exercised a financial restructuring which resulted badly and thus company bared huge costs of that which was the biggest weakness it ever had.

OpportunitiesIncreasing Global Presence.More Routes internationally to popular destinations.More services and choices to customers at airport facilities.Acquisition of other airlines to enhance market position.Threats

Rising Fuel Costs.Changing govt, Policies and regulations of regulatory bodies.Competitive Pricing of the competitors are lowering profit margins.Increasing Competition in SE Market.Share Price decrease 11% and market price of the company 40% in July 2014. Natural Calamity affect a big think for this industry example Malaysia Airlines Flight MH370.Global Terrorism like Malaysia Airlines plane MH17 'shot down' in Ukraine.

Strengths

Weaknesses

SWOT Analysis5OPPORTUNITIESIncreasing Global Presence.More Routes internationally to popular destinations.More services and choices to customers at airport facilities.Acquisition of other airlines to enhance market position.THREATSRising Fuel Costs.Changing govt, Policies and regulations of regulatory bodies.Competitive Pricing of the competitors are lowering profit margins.Increasing Competition in SE Market.Share Price decrease 11% and market price of the company 40% in July 2014. Natural Calamity affect a big think for this industry example Malaysia Airlines Flight MH370.Global Terrorism like Malaysia Airlines plane MH17 'shot down' in Ukraine.STRENGTHSStrong Backing of Malaysian Govt.It has extensive operations in South Asia, Middle East, Australia and other global destinations. One of the most popular airlines across the world.Strong brand recall and visibility due to excellent advertising and marketing.The company has a strong workforce of over 20,000 employees.It covers over 50 international and 35 domestic destinations with a fleet size of over 100.SO STRATEGIESUsing strong brand to expand its operations, more routes and back up by Malaysian Govt (S1, S2, S4, O2)Use its strong workforce to offer more services and choices to its customers.(S5, O3)

ST STRATEGIESUse strong back up of govt. to get subsidy on fuel as suppliers is not really high since in Malaysia there is only little petrol organization and the price is set by the govt. (S1, T1)Maintain good relations with customers and best cabin crew (strong workforce) to gain more profits.(S3, S4, T3)

WEAKNESSESRelying Heavily on International Onward Moving Traffic.Very Little Domestic Traffic and limited market share growth.Malaysia Airlines exercised a financial restructuring which resulted badly and thus company bared huge costs of that which was the biggest weakness it ever had.WO STRATEGIESCollabration with other airlines through several alliances in order to have more routes and customers. (W1, O1, O2) Cut costs and seeks for joint venture with other domestic airliness (BIMPEAGA) to enhance market position. (W2, O3,O4)WT STRATEGIESEnlarge its market share.(W2,T2,T4)Increase privatization and deregulation of the airline industry in Malaysia. (W1, W2, T2, T3, T4)INTERNALEXTERNAL6BCG MATRIXGood market shareMarket penetrationMarket developmentProduct development STAR IIInvestmentMarket penetrationMarket developmentProduct developmentQUESTION MARKSIDiversificationDeploymentCASH COWIII Retrenchment LiquidationDOGSIVRELATIVE MARKET SHARE POSITION HIGH MEDIUM LOW

INDUSTRY SHARE GROWTH RATE

LOW MEDIUM HIGH

Threat of New Entrants: LowRivalry Among Established Companies : High - Rival: Air Asia, SIA, Thai AirwaysCompetitive PricingBargaining Power of Suppliers: HighBargaining Power of Buyers: Medium to HighSubstitute Products: Medium to High Brand recognition is important.High capital required.Numbers of alternatives the consumer. MAS maintenance staff are experienced with Boeings aircraft.For fuel, the bargaining power of suppliers is not really high since in Malaysia there is only little petrol organization and the price is set by the government.Malaysia Airlines can use its bargaining power of consumer to bargain the aircraft price.Competing in the aircraft manufacturing industry.Strong brand name grant pricing power in most markets.Brand loyaltyPorter 5 Forces9PoliticalTaxation - an obstacle during recession. Increasing operational cost due to newly imposed wage policy by government. EconomicsThe rapid growth of fuel cost. The exchange rate is fluctuating which results deviation on revenue earnings.Differentiated need - Luxury OR Necessity. Social/Cultural Psychological issue - flight phobia.Greater concern on safety for incidents like - plane crash.Youth among the highest number of travellers as their favourite holiday activity.TechnologyIncreasing practice of online purchase.Application of debit & credit on air ticket purchase.Integrated Communication System, Interactive Voice Response System & Knowledge Portal for reducing operational costLegalExpensive landing charges at gateway airports like - Bangkok, Beijing, Hong Kong and Singapore.Tightly regulated aviation market by bilateral air rights agreementsEnvironmentalReduction of polution (carbon dioksida).Growing practice of CSR activities.Flight failure or delay caused by natural hazards.

PESTLE ANALYSISMicro-environment and industryMacro-environmentsPoliticalEconomicSocialTechnologyLegalEnvironmentalJustify the application of PESTLE and Porter 5 Forces in this study and how are they interrelated.10

STRATEGY MAPPINGEXTENT OF SERVICE DIVERSITYEXTENT OF MARKET PENETRATIONEXTENT OF MARKET SEGMENTATIONEXTENT OF MARKET GROWTHDISTRIBUTION CHANNELS USEDMAS provides various services:

Airline ServiceAircraft Maintenance ServiceRepair and overhaul (MRO)Aircraft HandlingMAS operates flights in various routes and country:

Southeast AsiaNorth AsiaSouth AsiaMiddle-east AustraliaEurope MAS focused on the following segments:

Business SegmentGovernment & International OrganisationsLeisure TravellersMigrated Personal & Leisure TravellersEuropean Personal & Leisure TravellersSeasonal Holiday TravellersMAS has achieved prestigious ranking for their truly consistent and high quality of product and service to gain customer trust and loyalty - profit.Asia's leading airlineSkytrax World Airline AwardsThe Most Promising Brand AwardsEnlarge the companys market shares. The Airline businesses are closely linked to economic activities in Asia and the world. MAS needs to be cognizant with the business cycle so that it can to take full advantage of such effects especially when there are changes in discretionary income and consumer spending patterns. Malaysia Airlines has two airline subsidiaries: Firefly and MASwings. Firefly operates scheduled flights from its two home bases Penang International Airport and Subang International Airport. The airline focuses on tertiary cities. MASwings focuses on inter-Borneo flights. MAS has a freighter fleet operated by MASkargo, which manages freighter flights and aircraft cargo-hold capacity for all Malaysia Airlines' passenger flights. MASCharter is another subsidiary of Malaysia Airlines, operating charter flights using Malaysia Airlines' aircraft