Malaysia Airlines Change Strategy: Analysis & Implementation

This report provides an analysis of the strategic changes implemented at Malaysia Airlines over the past decade, examining the challenges faced during the process. It utilizes diagnostic tools such as the cultural web and open systems model to identify specific problems and recommend change programs. The report discusses the company's efforts to rebrand, renationalize, and restructure in response to increasing competition, poor management, and a weak organizational culture, which led to significant financial losses. Factors that resisted the change process, including social perspectives, economic issues, and personal problems, are also outlined. Furthermore, the report leverages Lewin's change model to explain the implementation of the change plan and evaluate its effectiveness over time, highlighting the various strategies employed by Malaysia Airlines to restore its profitability and market presence.

Running head: Organizational change Strategy 1
Change Strategy at Malaysia Airlines
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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.

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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

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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

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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
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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.

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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.

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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

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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

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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.

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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

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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

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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.