Analyzing Strategic Changes and Challenges for Malaysia Airlines

This report provides an in-depth analysis of Malaysia Airlines' international business strategies, focusing on the challenges and opportunities the airline faces. It begins with an executive summary and an overview of the company, followed by a detailed SWOT and PESTLE analysis to evaluate its strengths, weaknesses, opportunities, and threats, as well as the political, economic, social, technological, environmental, and legal factors impacting its operations. The report then explores force field analysis to understand the dynamics of downsizing and resistance to change. It examines perspectives on change, sources of resistance, and the strategies employed by Malaysia Airlines, including interventions and the application of Lewin's change model. The study highlights the importance of strategic alliances, cost-cutting measures, and change management programs in rebuilding the airline's corporate image and ensuring its sustainable future within the competitive airline industry. The report also discusses the management of stakeholders, particularly employees, during the change management process, emphasizing the need for effective communication and organizational restructuring to improve financial performance and maintain a competitive edge. The analysis underscores the importance of adapting to market changes and adopting new technologies to enhance customer satisfaction and sustain long-term profitability.

Running head: INTERNATIONAL BUSINESS MANAGEMENT
International Business Management
Name of Student
Name of University
Author Note

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Executive Summary
The study is mainly focusing on the development of the new strategies so that they can be able to
track and eliminate the challenges faced by Malaysian Airlines. It is summarized that cutting
costs and the strategic alliances with Emirates helps them rebuild their corporate image and
branding so that they can be able to excel in future. The study is also highlighting that how they
are measuring the success of change with the effective implementation of the change
management program and the development of the change strategies for sustainable future of
Malaysia Airlines operating within the airline industry.

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Contents
Executive Summary.........................................................................................................................1
Overview of Malaysian Airlines......................................................................................................3
SWOT analysis of Malaysian Airlines............................................................................................3
Pestle analysis of Malaysian Airlines..............................................................................................4
Force field analysis of Malaysian Airlines......................................................................................7
Forces against downsizing...............................................................................................................7
Perspectives of change for Malaysia Airlines.................................................................................7
7. Sources of resistance to change.................................................................................................13
8. Strategies uses by Malaysia airlines..........................................................................................14
Interventionsstrategy......................................................................................................................15
9. Execution of the strategies used (Lewin’s model).....................................................................16
10. Conclusion...............................................................................................................................16

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Overview of Malaysian Airlines
Malaysian Airlines Berhad is now known as Malaysia Airlines. This is the flag carrier of
Malaysia and this is the member of the one world alliance. It should be operating the flights from
Kuala Lumpur International Airport and from the secondary hubs. They offer the best services,
on time and the hassle free operations at the cheapest prices. It has around 69 fleets which
composed of Airbus and Boeing fleets. They provide services to around 16 domestic destinations
and 43 international destinations across Asia, Oceania and Europe. It is seen that the airlines flies
around 40,000 guests daily which is inspired from the diverse richness of Malaysia. It captures
culture and integrates its rich culture traditions and warm hospitality on board. They are trying to
develop destinations in the routes which are quite remote and complex. It has 2 airline
subsidiaries known as Firefly and MASwings in 2007. It has established in 1947.
SWOT analysis of Malaysian Airlines
Strengths  Strong support from the federal
government,
 Wide spread business in the market of
Australia, Middle East, Southern Asia
and some other areas.
 Immense reputation in the international
market.
Weaknesses  Intense competition.
 frequently changing needs of both
domestic international market of

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operation
Opportunities  Excellent customer service, changed
governmental policies and regulations
that favors the company. enormous
popularity among the target customers
 Expanded service choices for the
customer base
 Skillful and structured workforce that
includes more than 13000 employees
 Skillful marketing team that
significantly contribute to the
profitability of the business
organization
Threats  Some changes in the policies of
international airlines industry
 Increasing competition in Asian market
Table: SWOT analysis
Source: Created by author
Pestle analysis of Malaysian Airlines

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Political:
As indicated by Rose, Awang & Yazid, (2017), Malaysian Airlines is recently have
various opportunities in both their international and domestic market of operation as the land of
Malaysia is known as peaceful and harmonious nation. The country generates significant amount
of tourism due to numerous attractive tourist destinations which are actually safe to travel. It is a
matter of fact that the government of Malaysia’s new regulations and policies regarding airlines
are actually favoring the management of the business organization immensely and that is what is
significantly helping the management of the business organization to flourish at least in their
domestic market of operation.
Economic factors
Over the last ten years the financial crisis took place in a significant manner and that has
majorly affected the business of numerous airlines companies that includes Malaysian Airlines
also. As indicated by Moore-Copple, Climek & Pritchard, (2015), the competition in both
domestic and international market has become stronger and that is where the management of
Malaysian Airlines is experiencing some threats. In this co text it is worthwhile to mention that
the management of Malaysian Airlines has lowered their costs after getting a strong support from
the Malaysian Government and that has helped them to negate some major competition in their
market of operation. This low cost strategy of the company has been beneficial for them to
sustain their profitability and productivity in the most adverse economic situation in their country
and also in the international scale.
Social issues:
It can be said that social factors that involves ctural and demographic considerations
actually affects the market of the company and the requirements of the customer base of the

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airlines company. As indicated by Rose, Awang & Yazid, (2017), these elements include
ecological, cultural, ethnic and religious issues. The government of Malaysia has implemented
some policies to give a boost to the tourism of the country and that is enormously helping the
Malaysian Airlines to experience more productivity along with the profitability.
Technological issues:
As indicated by Moore-Copple, Climek & Pritchard, (2015), the managerial body of
Malaysian Airlines uses the latest technologies to make sure that their customer base does not get
dissatisfied with the services they are providing them. As the company operates in the service
industry, reputation is vital for their sustenance. Thus the management always intends to utilize
the latest technologies to secure the safety and the satisfaction level of their customers in order to
sustain their reputation. It can be said that in the contemporary times if the company lose their
reputation it would be hard to regain that position in both domestic and international market of
operation. As stated by Sukri, Abdullah and Waemustafa, (2014), the management of the
company thus have upgraded their operation by adopting various technologies like Passenger
Service system (PSS) that eases the company’s dealings with the customers and that significantly
makes the customers more loyal towards the organization and it is a known fact that repetitive
customers are the ones who majorly contributes to the financial success of any company
operating in the service industry (Rose, Awang & Yazid, 2017).
Environmental issues:
The management of Malaysian Airlines knows the fact that in contemporary times they
will have to find a way of operation that would not harm the environment. thus the management
of the organization is always open to adopt latest technologies that can effectively lower the
harms to the environment for which the company is liable. As stated by Zweck (2016), It is a

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matter of fact that the fuel emission of the flights affects the environment majorly and for that the
management of the company has been engaged with various CSR activities that are helping the
mother nature to replenish after the harms. This is actually helping the company to gain a huge
reputation in the international market and the favors from both Malaysian government and the
governments of their operational markets in foreign countries.
Force field analysis of Malaysian Airlines
Driving forces to the downsizing
1. Decisions taken by the management
2. Enormous market competition in both domestic and international markets
3. Financial crisis at times
Forces against downsizing
1. Resistance from interest groups
2. Indirect cost of downsizing
3. Direct cost of downsizing
4. Fear of the employees regarding being laid off
Perspectives of change for Malaysia Airlines
The management of Malaysian Airlines should imply some changes in their organization
to effectively increase the productivity and profitability of the company in the adverse situations
(Sukri, Abdullah & Waemustafa, 2014). The management of the company is nowadays stressing

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on effective training and developmental programs for the general workforce of the company so
that they can compete in the market where the needs of the customers gets frequently changed
and in the market where the competition is getting fierce day by day to numerous new entrants.
Not only that, in contemporary times, has it been seen that the administrators of the company is
looking for drastic adoption of the latest technologies in order to get level with the strong market
competitors in their international market of operation (Zweck, 2016). It can be said that the
management of the organization can also imply some effective changes in their policies so that
they can attract more customers to experience more profitability. The management is also aiming
to lower the costs so that they can attract more customers. Thus it can be said that there are
various areas of improvement for the management of the business organization in order to
sustain their productivity along with the profitability (Moore-Copple, Climek & Pritchard, 2015).
It is important to constantly going through a process of development in the current market
scenario as it can only save a company from losing productivity or profitability in the most
adverse situations in the market of operation.
Part-B
Types of change
Based on the analysis of the internal and external environment it can be said that the
change required for Malaysia Airlines can be analysed by applying the four square example of
change. According to Doppelt (2017), the four square change model can help in analysing the
trigger point of the change management process and the manner in which Malaysia Airlines can
use it to ensure that the loss of revenue and planes can be reduced. It has been seen that the status

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of the missing flight MH370 is yet to be discovered by the Malaysian Airlines. The search for
this particular flight for the past four years has resulted in huge loss for the company. During the
time of disappearance of the flight, the company was struggling on a financial basis with a loss
amounting to over RM17 billion recorded in 2013. The aftermath of the disappearance saw a loss
of RM307 million (Malaysiaairlines.com, 2018). Therefore, it can be said that Malaysia Airlines
can undergo an evolution change so that transformation can take place in the company (Hayes,
2014). The transformation required to be based on improving the financial structure of the
company and to reduce the excess spending of capital.
The stock of the company fell by 80% after the disappearance and thus it became the
main reason for the implementation of the evaluative change in the company. It can be said that
the downsizing of the company of the company is mainly based on the transformational plan,
which focused on the investment in the areas required for improvement. For example, one of the
major areas of improvement for Malaysia Airlines is to develop its finances. Hence, the decision
to restructure the company was adopted so that quicker decisions can be made regarding the
communication between employees and employers. According to Kuipers et al. (2014), adoption
of a flat organisational structure can help Malaysia Airlines to maintain the communication
process between the different managerial levels. Therefore, it can be said that the application of
the change process in the airlines have resulted in the vast improvement of the company.
Analysis of the current report show that the revenue of the company increased to RM60 million,
suggesting profit despite the setback of the missing airline (Malaysiaairlines.com, 2018). This is
considered as the best result for Malaysia Airlines as the company managed to innovate its
structure.

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Figure 1: Four square model
(Source: Roos et al., 2016)
5. Managing stakeholders
During the change management the most difficult stakeholder to manage are the
employees. This is mainly because employees provide the maximum resistance to the changes
implemented in a company. In the case of Malaysia Airlines, the changes in the company can
have a severe impact on managing the employees. This is because the transformational change
often brings about reshaping the entire organisational factors. Therefore, it can be said that
Malaysia Airlines need to deal with the dissatisfaction of the employees concerning the changes
in the restructuring of the company (Missonier & Loufrani-Fedida, 2014). The reason for the
choice of employees as the important stakeholder is mainly without the assistance from the
employees Malaysia Airlines cannot gain the necessary support for rebuilding the company. The

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loss of the flight has created a huge loss for the company as the downsizing of the company
needed to be done to lower the capital expenses. Hence, it can be said that the difficulty faced by
Malaysia Airlines while trying to manage the employees during the change process is convincing
them about the benefits of the change.
According to Eskerod and Larsen (2018), the changes in the Malaysia Airlines are mainly
due to increasing the finances after its loss for the past 4 years. Therefore, managing the
employees can come as a huge challenge for the company as the employees may want to leave it
due to lack of motivation. Hence, implementation of changes may have a negative consequence
for the company, as it cannot afford to encourage the employees to remain in the organisation
(Yang, 2014). The major difficulty can come in the form of resistance from the employees, as
they would want to maintain the consistency of work. The employees need to be given with more
training so that they can develop themselves in the organisation. This however, may incur costs
as well as resistance from the employees as they need to maintain the consistency of work and
any training programme may hamper the continuous flow of work that they undertake. The
involvement of the Malaysian Government or forming strategic alliances with other airline
companies can have a negative impact as other authorities may command the employees about
their work force. Hence, the liberal way of work may be cut short that can act as a negative
impact for the company. Hence, it can be said that the applicaton of relevant change models such
as Lewin’s change model can be adopted to mitigate the resistance of the employees and manage
effective changes in the organisation.
6. Kaleidoscope model

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Hailey & Balogun developed the theory so that effective organizational change can be
maintained. In the case of Malaysia Airlines, the company can use this model to make strategic
adjustment by analysing the specific contextual issues based on the selection and interferences
obtainable in the change management process (Mantere, Schildt & Sillince, 2012). It has been
seen that the changes has been mostly based on the emergencies that has arose due to the
disappearance of the flight. Therefore, the company has been mostly concerned mainly with the
advancement of the company (Rosenbaum, More & Steane, 2018). The change can help in
influencing the progressive structure of the company and based on the changes a composed and
authoritative structure can be formulated. Malaysia Airlines can split the management group so
that every department can be managed in a proper manner. This can help Malaysia Airlines to
continue with the progress in the service industry by making effective changes. Therefore, it can
be said that the application of the Kaleidoscope model can help Malaysia Airlines to cope up
with the situation that exists in the market (Fink et al., 2015).
For example, the cost cutting implication is one of the changes that Malaysia Airlines can
adopt so that the company can rectify its financial position. The capacity and diversity of the
airline company can be aligned with the fact that Malaysia Airlines can maintain the changes in
the company in a proper manner. Hence, it can be said that the company can implement
revolutionary changes so that it can improve the performance of the employees and manage the
financial wellbeing. The weakness of the company that is the limited scope of the workforce can
prevent it from making any type of progress in the international market. Therefore, as pointed
out by Hayes (2014) the current change management technique of Malaysia Airlines can be
based on the implication and effectiveness gained by the application of Kaleidoscope model.
With the freedom to oppose changes in the organisation, the employees can prevent

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transformational changes but at the same time ensure that the performance is maintained so that
benefits to the organisation can be provided.
Figure 2: Kaleidoscope model
(Source: Roos et al., 2016)
7. Sources of resistance to change
The challenges faced by Malaysia Airlines could be their brand image. They have the poor safety
record and there were two accidents occurred in 2014. They have the challenge of enhancing
services and experiences on existing customers. They have to rebuild their brand and gaining
back the trust of the customers. They also face the challenge of bad corporate image and

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corporate reputation as well. The trust and confidence of the stakeholders involved in the
business which mainly involves the employees and the customers (Doppelt, 2017). They have to
bring back the trust in order to gain good reputation. They are facing the loss in the market share.
In 2014 the MAS market share was decreased by 75 percent. The customer trust and confidence
level to be brought back and for gaining competitive advantage, they need to increase the market
share.
The sources of resistance for Malaysia Airlines has been given below
Job Cuts- This is important that due to the low market share they have to reduce the cost of
expenditure. So for reducing the operational and the overall costs of the airline, they were cutting
the jobs of the employees.
Restructuring Plan- There is the need of the restructuring of the entire organization which
involves the organizational hierarchy so that the level o communication and effective operations
could be involved (Hayes, 2014).
8. Strategies uses by Malaysia airlines
The organization should be hiring the well experienced CEO with turnaround operations
to be made. The company should be leading under new management. Malaysian Airlines has
reduced 30 percent of their workforce for cutting the costs. They are providing extensive training
to their employees for the development of the new culture. They are also improving the safety
and customer service. They are downsizing the expenditure by cutting unprofitable flights. They
also get the support from the Malaysian government. They have the alliance with Emirates for
expanding in the markets (Doppelt, 2017). They have shifted focus on regional airlines. They

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also focus on quality control for improving customer satisfaction. They use KPT to record
performance and controlling costs. They apply aggressive sales strategy by reducing the prices of
the tickets.
Interventionsstrategy
TQM- The total quality management is the approach by which the improvement in the
services to be delivered to the customers. This is the management approach by which the
continual improvement in the approaches in developing the new strategy has been influenced
(Doppelt, 2017).
Integrated Strategic Change- The ISC is the intervention strategy which is useful in the
development of the new strategic planning for Malaysian Airlines in order to rebuilt the branding
and the corporate image of the company (Hayes, 2014). They have been devising set plans for
the development of the strategies and for the intervening any issues which should be resolved.
Scenario Planning-The scenario planning is useful for planning the future goals which is
needed by Malaysia Airlines to implement in the future.
BPR- In this model of strategy there is the need of the identification of the customer
needs of Malaysia Airlines. The study and comparison of the existing process and the models
used in Malaysia Airlines and the redesigning of the core process and layouts helps in setting of
new strategy for the operations of Malaysia Airlines.

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9. Execution of the strategies used (Lewin’s model)
In accordance with the scenario, it is indicated that there is the need of urgent change to
be introduced. There are three stages by which change occurs in an organization. The three
stages are unfreeze, Change and Refreeze. So the analysis of Lewin’s Model has been described
below.
Unfreeze- In this stage, MAS should be developing and reintroducing a new mission.
They should be persuading trade unions and the cutting of around 30 percent of the workforce.
They need to have financial support from the government and the alliance with Emirates takes
place.
Change- The reduction in the workforce, reducing the pay rolls for cutting cost is the
changes. The next could be the development of the two way feedback policy. The introduction of
KPI for measuring the performance is given below. They need to focus on regional airlines and
improving the safety and quality of services provided.
Refreeze- The development of the attractive reward system for the employees is
important for the change to be implemented successfully. The renegotiation with the business
partners helps in the expansion of the services. The company also provides minimum
development program. The investment on innovated technology and the customer safety as well
is needed to be implemented.
10. Conclusion
From the study it is evident that the measurement of success for the study should be the
awards and recognition to be gained by the company. The measurement of success should also
be the development of the rankings and the position Malaysian Airlines should be in within the

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airline industry. It is concluded that Malaysian Airlines need to be redeveloping its strategy for
getting success within the airline industry. It concludes that corporate image and branding are the
most important criteria for establishing and fulfilling the goals.

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