Organizational Change Strategy at Malaysia Airlines

This paper focuses on the strategic changes that have taken place at the Malaysia Airlines over the past decade. The discussion also outlines the challenges faced by the organization while implementing these changes. The arguments draw upon various diagnostic tools and change management models to outline how the strategic change plan has been achieved over the given period.

Running head: Organizational change Strategy 1
Change Strategy at Malaysia Airlines
Name of Student
Name of Institutions
Name of Course
Date of Submission

Organizational change strategy 2
Executive Summary
Organizational change is an essential element in ensuring the holistic development and
growth of a company. In a bid to retain a competitive edge, companies remain keen on research
and innovation which in turn raise the necessity for adjustment of certain organizational systems
to enhance the efficiency of processes. Despite the vital place of change, it consistently meets a
lot of resistance which could be associated with both the internal and external factors within an
organization. This paper focuses on the strategic changes that have taken place at the Malaysia
Airlines over the past decade. The discussion also outlines the challenges faced by the
organization while implementing these changes. The arguments draw upon various diagnostic
tools and change management models to outline how the strategic change plan has been achieved
over the given period.
Malaysia Airlines is one of the leading airline companies in the country with its
headquarters in Kuala Lumpur. Since its inception, it has grown in leaps and bounds leading its
international acclamation. However, the emergence of competitors, poor management and lack
of a decent organizational culture led to the company incurring a lot of losses while losing its
profit margin. This led to the establishment of a change plan aimed at rebranding, renationalizing
and restructuring the company to restore its return on investment. The change process involved
the use of the cultural web and open systems model to establish the specific problems and
recommend the change program. Social perspectives, economic issues and personal problems are
some of the factors that resisted the change process. However through Lewins change model, the
paper outlines how this change plan was implemented and its effectiveness evaluated over time.

Organizational change strategy 3
Table of Contents
1.0 Introduction ………………………………………………………………………….1
1.1 Overview of Malaysia airlines………………………………………………………1
1.2 Open Systems Model………………………………………………………………..7
1.2.1 Inputs………………………………………………………………………………8
1.2.2 Transformations……………………….……………………………………..……8
1.2.3 Outputs…………………………………………………………………………….9
1.3 Cultural web of Malaysia Airlines ………………………………………………….10
1.4 Challenges faced by Malaysia Airlines while implementing the change……………14
2.0 Changes required in Malaysia Airlines………………………………………………15
2.1 The change kaleidoscope model……………………………………………………..15
2.3 Sources of Resistance to change…………………………………………………….17
2.4 Kurt Lewin’s three step change mode……………………………………………….19
2.5 Measuring the success of change……………………………………………………20
3.0 Conclusion and recommendations…………………………………………………..21
References……………………………………………………………………………….24

Organizational change strategy 4
1.0 Introduction
Organizational change is an essential element in ensuring the holistic development and
growth of a company. In a bid to retain a competitive edge, companies remain keen on research
and innovation which in turn raise the necessity for adjustment of certain organizational systems
to enhance the efficiency of processes (Anderson, 2013). Despite the vital place of change, it
consistently meets a lot of resistance which could be associated with both the internal and
external factors within an organization. This paper focuses on the strategic changes that have
taken place at the Malaysia Airlines over the past decade. The discussion also outlines the
challenges faced by the organization while implementing these changes. The arguments draw
upon various diagnostic tools and change management models to outline how the strategic
change plan has been achieved over the given period (Wood, 2014).
1.2 Overview of Malaysia airlines
Malaysia Airlines is one of the leading airline companies in the country with its
headquarters in Kuala Lumpur. Since its inception, it has grown in leaps and bounds leading its
international acclamation. MAS owns a number of subsidiaries whose operations focus on both
local and international flights (Anderson & Anderson, 2011). As an indication of its good
performance both in the national and international corporate environments, the airlines received
numerous awards from the aviation industry effectively labeling it among the best airlines in
Asia. These awards came in the years 2009, 2012 and 2013 (Weick, 2015). During this period,
the organization did not only receive the best airline accolade from World Travel Awards but
was also listed by Skytax as one of “The World’s 5-Star Airlines.” However, the emergence of

Organizational change strategy 5
competitors, poor management and lack of a decent organizational culture led to the company
incurring a lot of losses while losing its profit margin.
Crisis that Affected Malaysia Airlines
In the early 2000s, there arose a good number of low cost carriers which mainly dominated the
local market hence impact the market stability of Malaysia Airlines.
2012 2013 2014
0
1
2
3
4
5
6
Column2
The graph above illustrates the projected drop in profit margin over a span of three years
after the emergence of management problems at MAS buoyed by competition from rival airlines.
Additionally, the rising fuels costs largely hindered the effective management of the
organization’s flights especially the long distance courses which in the long run proved less
profitable despite the fact that they were effective for the organization’s brand.

Organizational change strategy 6
Strategic direction at MAS and proposed change
These challenges led to the establishment of a change plan aimed at rebranding, renationalizing
and restructuring the company to restore its return on investment (Sturdy & Grey, 2013). The
main strategy in the change model involved the introduction of a new CEO to oversee the
overhauling of the traditional approaches replacing them with a new corporate culture and
structure within the organization. The management was charged with the key mandate of
identifying the root cause of the problems at the organization before recommending the most
viable mitigation strategies. The change process involved the use of the cultural web and open
systems model to establish the specific problems and recommend the change program (Ashforth
& Kreiner, 2009). Social perspectives, economic issues and personal problems are some of the
factors that resisted the change process.

Organizational change strategy 7
1.2 Open Systems Model
This is a diagnostic tool which depends on a close loop of procedures which involves addressing
the inputs, transformations and outputs in a close circle of events progress (Ashmos & Huber,
2008). The open system therefore involves the derivation of vital information regarding the
organization before analyzing the obtained data to come up with the most appropriate mitigation
strategies. This portion outlines the inputs, transformation and outputs as established from MAS
case study.
Inputs Transformation Outputs
Considerable monopoly
in the Asian and
international market
Adept engineers and
pilots
Emergence of low cost
carriers hence increased
competition
Increase in fuel costs and
management problems
leading to high loss rates
Company appoints new
CEO to oversee change
process
Fuel costs, poor revenue
management and lack of
brand presence in foreign
markets marked as the
causes of losses
Proposed idea is route
rationalizing, rebranding,
strategic alliance and
networking scheduling
Transition in leadership
enhanced the
restoration from
unprofitability
Scheduling of route
networks and creation
of alliances to enhance
brand presence in
foreign markets
The company still
faced challenges during
the implementation of
the change
More losses are
experienced 2011-2014
prompting the
appointed of a new
CEO to monitor and
further implement the
change strategy at
MAS

Organizational change strategy 8
1.2.1 Inputs
The airlines initially enjoyed a proper share of the Asian market and other international
destinations owing to the effectiveness of its services and quality of aircraft. The Engineering
body was competent and the list of pilots was adept at their work (Stone, 2015). The airline also
enjoyed minimal competition as not so many rival companies had been established by then. The
emergence of low cost carriers had drastic impacts on the company’s market grip as it became
more competitive. The steady rise in fuel prices due to the dynamic nature of economies in the
corporate business arena made the long flights less profitable. This increased the rate of losses
especially before the transition in leadership (Ashmos & Huber, 2008). The low cost carriers
mainly operated in the local market which made denationalization one of the mitigation
strategies at MAS. The change in leadership was limited by personal and environmental
challenges which explain why in a span of 3 years, the company had three different CEOs.
1.2.2 Transformations
In a bid to restore the company’s profitability, the company appointed a new CEO who
was mandated to oversee the transformation process which majorly involved executing changes
and corporate culture at Malaysia Airlines System. Fuel costs were identified among the main
causes of losses at MAS (Robert, 2011). The new team also pointed out poor revenue
management as the other potential reason behind the company’s poor financial performance.
Furthermore, lack of brand presence in foreign markets, non-coordinated sales distributions and
absence of strategic alliances were identified as the additional causes of the loss at MAS. The
mitigation strategy would specifically be directed at addressing these challenges (Bhattacherjee,
2010). The proposed ideas involved cutting the long flights especially to America and Africa and

Organizational change strategy 9
shifting attention to developing the local market as a renationalization strategy. Reconstruction
of the company’s corporate structure and repackaging the brand to a more attractive form were
the other recommended transformational ideas.
1.2.3 Outputs
The appointment of the new CEO was a better path towards recovery from
unprofitability. Route rationalizing was used as a major strategy in this case. The Airlines
reduced the number of local routes from 124 and pared them to 24. The long unprofitable routes
were also cancelled (Collings & Wood, 2009). As a mitigation strategy, emphasis was laid on
pricing, revenue management, distribution management, low season strategy, strategic alliance
and scheduling of company networks. 2009 saw another transition in leadership which led to the
appointment of a new CEO. High fuel costs continued to be a management problem and this led
to one of the largest company losses in 2011 (Reagans & Zuckerman, 2011). For the next three
years the company experienced a string of losses due to management challenges, lack of brand
presence and considerable resistance to change by the organization’s employees. This led to the
appointed of a new CEO to lead the renationalization and rebranding process.

Organizational change strategy 10
1.3 Cultural web of Malaysia Airlines
The cultural web is essential in identifying the difficulties that the organization
experience while implementing the change (Creedy, 2014). The main approach at MAS is
through transition in leadership with the core aim of enhancing the company’s corporate image
and management levels. The strategies are aimed at uplifting the diminishing brand image and
the organization’s market presence especially in the domestic market.
Stories
Competent and dedicated staff
Effective leadership styles and numerous
past company awards
Paradigm
Increased customer satisfaction
Reduction of unprofitability
Rituals/routines
Staffs open to change and learning
Clients expect entertainment at the
lounge and in flight
Managing fuel costs
Power Structure
CEO oversees most company
operations
Makes major decisions on marketing,
branding, purchases and staffing
Symbols
Golden lounge at every airport
Airbus-A350 and A380 and Boeing 737-800
for business class
Cabin crew and pilot wear uniforms
Control systems
Enhanced branding to enhance market
presence
Selection and recruitment of qualified
personnel
Maintaining competitiveness through
reconstruction
Organizational structure
Flat structure with CEO as head
Several departmental heads
Each department operates independently but
MAS embraces a shared value system

Organizational change strategy 11
Interrelatedness of the elements
Stories --- Symbols
 Competent staff both in the cockpit and engineering sectors which has led to the company
operating both in national and international arena for over 68 years without major
accidents
 The leadership approaches have been quite stable and the organizational culture at MAS
has never been definite enough since its inception.
 Malaysia Airlines prides in Airbus A350 and A380 on which first class is offered are
used for the long flights especially to America and parts of Africa. Business class is
offered on the Boeing 737-800 craft which has the company logo on its outer body.
 The cabin crew and the pilot wear uniforms with the company’s logo and brand and have
been effective which has enabled MAS to receive numerous awards in the past for being
one of the best airlines in Asia despite the challenges
 MAS has struggled to cut costs to cope with the emergence of low –cost carriers in the
domestic market
 Proper customer experience. The company has a golden lounge at the airport with bars
hence also offering catering and hospitality services. The airplane inner designed
comprise well fitted seats with power, USB ports and a preinstalled in flight
entertainment system

Organizational change strategy 12
Routines/rituals --- Control systems
 All staff are committed to quality service delivery as a strategy of maintaining the
company’s core values. Company believes in corporate competitiveness hence
constantly working on enhancing its brand in the international fonts
 Much of the company communication entails mitigation strategies to cut operation
costs and retain a competitive edge. Fuel costs are highly managed through regulation
of flight networks and rationalizing routes
 Customers expect entertainment both in the waiting lounge and during the flight.
Strong engineering networks hence best quality aircraft bodies to minimize accidents
and increase consumer comfort
 Only competent and qualified staff is incorporated and are expected to deliver within
the best quality standards. The staff have remained relatively open to change over the
past decade
Organizational structure—Power Structures
 Malaysia Airlines embraces a flat structure with the CEO and various departmental
heads. The CEO oversees the general flow of operations
 Each departmental head accountable for operations in their respective areas. The
departmental heads assist the CEO in implementing ideas based on the company’s culture
 Company relies on a shared value system. The leaders make major decisions on the
purchase of fleet, rebranding strategies and strategic alliance
 There is occasional review and evaluation of departmental performance.

Organizational change strategy 13
1.4 Challenges faced by Malaysia Airlines while implementing the change
Lewin’s Force Field Analysis
The challenges faced by the organization in its bid to implement the change can be
emphasized by Lewin’s force field model summarized above. It comprises the driving forces
managing the change and the resisting forces hindering its implementation (Patrick, 2010). The
driving forces include changes in leadership approaches and decision making processes to
enhance the corporate image at MAS. The other aspects include reduction of operation costs by
cancelling the long flights and increasing the Airline’s competitive niche in the domestic market
(Dean, 2009). However, poor revenue management, rising costs of fuels and employee resistance
are among the hindering factors. Increased competition due to emergence of low cost carriers in
Driving forces
Change of leadership
Competition in the domestic market
against the low cost carriers
Variations in decision making
approaches
Rationalization of routes,
introduction of strategic alliances
and brand enhancement
Reduction of operation costs by
cutting long routes and reducing
number of subsidiaries
Restraining forces
Company workers including
the cabin crew and engineers
Rising cost of fuel
Poor revenue management
Lack of stable enterprise
system to control major
procedures at MAS
Economic restrains as a result
of past losses
Changing market contexts due
to continued popularity of low-
cost carriers
Malaysia
Airlines
Restructuring
goal

Organizational change strategy 14
addition to economic constraints experienced by MAS have also hindered the successful
implementation of the change.
2.0 Changes required in Malaysia Airlines
The change at MAS had drastic effects on the company’s key stakeholders especially the
employees. The new CEO was to oversee the entire change process. One of the strategies
involved reduction of number of flights owing to high fuel costs hence leading to reduction in the
number of employees. Altering the flight networks also meant some of the staff members would
be required to work in a different environment. These illustrations therefore reveal how the
change affected the employees.
2.1 The change kaleidoscope model
Time:
 The increased number of losses incurred especially between 2011 and 2013
in addition to the rising fuel costs increased the urgency for change.
 In order to save the company from collapsing, the mitigation strategies
were to be implemented as soon as possible with short term goals
established
Scope:
 The change at MAS was massive and had an impact on the whole
organization.
 Transition in leadership meant the new leader came with a different
approach hence influencing processes
 The change strategies also involved introduction of new approaches which
involved employee layoff since the number of international flights were
substantially reduced.
Preservation:
 The flat structure of leadership was to be maintained
 The company’s crop of engineers and pilots were to be retained
 Malaysia’s quality service provision culture was to be maintained by the
cabin and other staff
Diversity:
 A multicultural environment was inevitable as the organization due to its
international scope of operation
 The staff attitude towards certain leadership and change approaches were
negative hence slowing down the implementation process
Capability:
 The organization appointed a qualified CEO with the required merit and
attributes to oversee the implementation of the change
 The underlying structures and the existing resources at MAS also
facilitated the implementation process

Organizational change strategy 15
Capacity:
 Loss of RM 2.52 billion in 2011
 Transition from unprofitability hindered by the limited resources
 MAS had to restructure its flight networks by eliminating long unprofitable
flights and investing more on the domestic market
Readiness for
change:
 The financial struggles created an environment where all the employees
and other stakeholders recognized the need for change
Power:
 The CEO wields much of the power and influences processes by
manipulating decision making.
 The power ought to be diversified to allow independence at the
departmental level
The change Kaleidoscope above summarizes the necessary adjustments that may need to
be made at Malaysia Airlines to enhance the effectiveness of the change. The CEO has the power
and the needed attributes to oversee and drive the main process. However, this power needs to be
diversified to other departments to enhance effectiveness (Grant & Marshak, 2011). The
continued registration of losses, rising fuel costs and emergence of low cost carriers reveal the
need for urgency (Mesly, 2017). The change’s scope covers the entire management and variation
f a number of procedures. Rationalizing routes, reduction of subsidiaries and canceling of flights
to far destinations are the aspects covered by the change. The company is to maintain its flat
structure and the resources. The aircraft models are to be preserved with their interior quality
enhance to improve consumer satisfaction. Malaysia Airliner’s operations in the international
fonts imply a diversified workforce however the management has the capacity to deal with the
whole issue (Hope, 2009). The people at the organization are however ready for the change
despite the eminent resistance from some quarters.

Organizational change strategy 16
The key features of the management’s approach in facilitating the change and their
interrelatedness have been summarized in the map below
2.2 Sources of Resistance to change
The sources of resistance to change could be disseminated into three main aspects of
resistance namely affective, cognitive and behavioral. The paring of local flights at MAS from
113 to 24 in addition to the canceling of unprofitable international flights would mean a slice on
the cabin crew to reduce the operation costs (Johnason, 2009). The job cuts in this case would be
Management approach
to change
implementation at MAS Change interventions
MAS needs to establish
corporate intervention
approaches to enhance its
brand presence and restore
the profit margin while
maintaining a good quality
culture
Change roles
The CEO is the main change
agent
Roles can be assigned to
various individuals at
departmental levels to
encourage a shared value
system while making the
change monitoring and
evaluation process easy
Change path
Evolutional change with a
transformational desired result
Top to bottom approach applied
during implementation
Change Style
A collaborative approach where
the CEO works together with the
other departmental heads and
employees to effectively oversee
the change

Organizational change strategy 17
the leading source of resistance at MAS. As a mitigation strategy, proper communication on the
need for change and the impending circumstances would be helpful in preparing employees.
Behavioral resistance would be caused by the social impacts that the restructuring plan
at MAS would have on the employees. The plan to rationalize routes and change the flight
networks in a bid to reduce operation costs would see a shift in the social environments of some
of the employees (Johnson, 2010). They are likely to resist this change. Finally the 2.52 billion
loss led MAS to embrace a transformational change model. One of the CEO had to resign citing
personal factors hence both personal and economic issues are likely causes of resistance to
change. The management ought to employ aggressive strategies to ensure the executives and
employees have the right mind set necessary to propel the change process. The explanations are
summarized below
Type of resistance Source Management
Affective  Job cuts due to reduction in
number of flights to reduce
operation costs
 Prior communication to
employees on the need for
change
Behavioral  Resistance caused the impacts
that the transition would have
on the social life and comfort
of employee
 Educating and informing
the staff on the need for
flexibility to the social
change associated with
the transition
Cognitive  Caused by personal and
economic factors at MAS
 Need for creation of the
right mindset among
executives and employees
through proper mitigation
strategies

Organizational change strategy 18
Network cooperative strategy
In order to enhance its brand presence, the management at incorporated the use of
network cooperative strategy. This approach was mainly aimed at increasing the Airlines
networks and attachments to the specific market areas which were deemed profitable and
promising. The strategy was also meant to lay the right platform for the formulation of strategic
alliances with other firms and stakeholders to aid in the reconstruction process. The strategy
proved fruitful as it played a pivotal role in increasing MAS’s brand awareness among the
customers both in the local and international market. The effort eventually led to an increase in
the number of passengers with a 2% increase in one time performance recorded between 2016
and 2017

Organizational change strategy 19
2.3 Kurt Lewin’s three step change model
Unfreeze Change Refreeze
The CEO at MAS must
communicate the need and urgency
for the change by pointing out to the
people within the organization the
past predicaments and the impacts
of these events on the performance
of the organization
The phase also prepares the workers
for the consequences which may
include social shifts and job cuts
 Establishment of positive
mindset through effective
communication
 Analyzing the noted gaps
and putting in place the
right mitigation strategies
 Clarifying the
expectations and
consequence of the
change to employees
 Offering support to
affected employees
 Effective
communication of
developments to
identify progress
 Involving all key
individuals in the
decision making
processes
The change vision is then
implemented by pointing the
specific areas of adjustment to
retain market stability and
profitability at MAS
 Highlighting the
organization’s values to
ensure the change strategy
is aligned to them.
 Creating new focus spots
to envisage the
organization’s future and
hence motivate the people
to work towards it.
 The change strategy
should be effective
enough in cultivating
positive attitudes
among employees
Developing a stable change culture
and support from key stakeholders
to deal with resistance to the
implementation of change
 Identifying key
individuals supportive to
the change idea
 Positively impacting the
current employees to
enhance the right mindset
 The key stakeholders
need to be united to
establish a stable
change coalition
 The coalition is to
enhance the
implementation of the
successive phases of
the strategic plan

Organizational change strategy 20
Lewin’s model above details the procedures that involve the change implementation. As
proposed by Lewin, the first stage involves unfreezing. In this phase, the need for change and its
urgency is communicated to workers. It also prepares them for the outcomes. A change culture
is also developed at this point (Ka¨rreman & Alvesson, 2011). The transformation phase involves
clarifying the expected outcomes and analyzing the company values to ensure they are aligned to
the change vision. Key stakeholders are identified as well. The refreeze phase involves
incorporating the change idea into the MAS’s operations to cultivate it into the organization’s
culture. This enhances continuity and sustainability.

Organizational change strategy 21
2.4 Measuring the success of change
In order to evaluate the effectiveness of the change strategy in enabling organizational
improvements, the analysis can be based on a number of factors (Marquis, 2013). To begin with,
the level of motivation among the staff members has increased tremendously since the
implementation of the change. The quality of services provided by the cabin crew based on the
numerous positive consumer feedbacks is an indication of the positive impacts of the change
process (Klerck, 2009).
There has been a steady increase in passenger yield since the loss in 2013 with a 2% increase
noted between the 2016 and 2017 fiscal years. Additionally, there has been a recorded steady on
time performance with the current value standing at 73%. This is an increase of 3% from the
previous year’s value (Lorenzi, 2011). The company has also recorded an improvement in its
revenue per available seat kilometer with an improvement of 2% recorded in comparison to last
year’s value (Knippenberg, 2010).
Actual Q4 2017 Actual Q4 2016
Passengers (m) 3.4 3.8
Passenger Load Factor
(%) 77.0% 80.9%
Passenger Yield (sen) 23.6 21.5
On-Time Performance
(%) 73% 70%
Total RASK (sen) 22.1 21.6

Organizational change strategy 22
Awards
In addition to the improvements outlined above, the performance of MAS after the
implementation of the change strategy can be gauged by the numerous awards which the
company has received between 2016 and 2017. In 2017, MAS received the Fast Travel Green
Certificate from IATA. The organization also received the Travel Personality of the Year Award-
Peter Bellew. It also received a Gold Award for Best Event given by Marketing Event Awards in
2017. In 2016, MAS received Best Airlines Meal Year 206 Award and a Bronze Award for Best
Event. It also received the Best First Class and Joint Best First Class White in 2016.
2015 2016 2017
0
50
100
150
200
250
Profit

Organizational change strategy 23
3.0 Conclusion and recommendations
The airlines profit for the years 2015 and 2016 were 40.1 and 73 million respectively.
However this value shot to a whooping 237.1 million in 2017. It can therefore be concluded that
the change has been successful in enabling Malaysia Airlines to achieve its performance
improvement objectives (Lorenzi, 2010). The recommendations for Malaysia Airlines would
mainly be anchored on the need for a stable corporate culture through effective management
approaches. The organization needs to invest on more personnel to enhance research and
innovation which would be necessary for improving the designs of the planes for proper
consumer satisfaction. The management needs to consistently explore the various market options
to consider establishing subsidiaries in locations with promising futures (Little, 2014). This
would also enhance the organization’s competitive niche. Finally, the Airlines may need to
invest more on staff empowerment and training to sustain the quality of services provided. This
would lead to improved consumer experiences and a corresponding increase in return on
investment.

Organizational change strategy 24
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