Malaysia Airlines Underperformance: A Management Analysis Report

This report provides a comprehensive analysis of the factors contributing to the underperformance of Malaysia Airlines. It delves into key areas such as employee motivation and training, the work environment, and the quality of customer service. The report highlights how employee turnover, stemming from issues like low profitability and inadequate compensation, significantly impacts the airline's performance. It discusses the importance of employee training and its role in improving performance, while also emphasizing the need for a positive work environment that fosters collaboration and leadership. Furthermore, the report examines the critical role of customer service in maintaining customer satisfaction and the airline's reputation. The study underscores the need for Malaysia Airlines to address these factors through strategic management approaches to regain its status in the airline industry. The report also includes a literature review, research questions, objectives, and a research framework to support the analysis.

Running head: MANAGEMENT
A study of factors leading to Malaysia Airlines underperformance
Name of the Student
Name of the University
Author’s Note

1
MANAGEMENT
Table of Contents
1.0 Introduction..........................................................................................................................2
1.1 Background of the company.............................................................................................2
1.2 Purpose and problem statement........................................................................................2
1.3 Significance of research...................................................................................................3
2.0 Literature review..................................................................................................................4
2.1 Factor 1: Motivation and training of the employees........................................................4
2.2 Factor 2: Work environment............................................................................................6
2.3 Factor 3: Customer service...............................................................................................7
2.4 Factor 4: Lack of innovation............................................................................................9
3.0 Conclusion..........................................................................................................................11
3.1 Implications of further research......................................................................................11
3.2 Research Questions........................................................................................................11
3.3 Research Objectives.......................................................................................................11
3.4 Research framework.......................................................................................................12
Bibliography.............................................................................................................................13

2
MANAGEMENT
1.0 Introduction
1.1 Background of the company
Malaysia Airline operates flights from Kuala Lumpur International Airport along with
secondary hubs in Kota Kinabalu and Kuching. The destinations travelled by the Airline
Company ranges between Asia, Europe and Oceania (Malaysiaairlines.com 2019). The
characteristic that defines Malaysia Airline is that it is considered as a flag carrier of
Malaysia and is a member of the one world airline alliance. The company was established in
1947 with the focus city being Penang International Airport (Malaysiaairlines.com 2019).
Malaysia Airlines owns two subsidiary airlines that include Firefly and MASwings.
The history of Malaysia Airlines can be traced back to Malaysian Airways Limited
that was founded in Singapore in 1930 (Malaysiaairlines.com 2019). Malaysia Airlines is
considered as one of the largest airline fleet in the world with a fleet size of 81 and travels to
over 64 destinations across the world (Malaysiaairlines.com 2019). The employees of the
Airline are about 14,000 comprising of a net income of MYR 60 million
(Malaysiaairlines.com 2019). However, despite its success in the airline industry, Malaysia
Airlines has been hit with criticism due to the low performance rate (Malaysiaairlines.com
2019). The focus of the research is to analyse the factors that lead to the low performance at
Malaysia Airlines.
1.2 Purpose and problem statement
The purpose of the research is to study the factors that lead to the underperformance
in Malaysia Airlines. The main reason for conducting the study is that Malaysia Airlines is
one considered as one of the best airline services in the world. However, as observed by
Bailey et al. (2018) recent issues have provided the airline company with a disadvantage in

3
MANAGEMENT
the market and consequently have led to the rise of issues within the business. Issues such as
customer service, employee turnover as well as restriction within the business are considered
as problems in the research.
Hence, after analysing the issues it can be said that the Malaysian Airlines need to
consider the factors that can help in its development and at the same time ensure that
customer satisfaction is maintained within the business. Along with this, research about the
manner in which the airlines company can contribute to the growth of the industry is also
undertaken. As stated by Hill and Brierley (2017) these factors are analysed based on its
effectiveness in the market so that Malaysia Airline can continue to grow in the industry
keeping in mind its level of customer satisfaction and the reputation it had held previously.
Thereby it can be said that for Malaysia Airline to ensure proper development of its resources
and factors, it is necessary that precautions be taken for maintaining the necessary policies.
The research also focuses on the severity of the problems so that link between the
factors can be made for gaining success in the business. In this regard, as stated by Lepper
and Greene (2015) for Malaysia Airlines, it is necessary that the company continue to
develop its reputation so that its status in the airline industry can be re-instated. Therefore, the
research tries to develop the reputation of the company by analysing the factors that have led
to its underperformance in the business.
1.3 Significance of research
The significance of the research is that it can help in analysing the factors that lead to
underperformance in Malaysia Airlines. The reason behind this being of significance is that
the factors identified are usually common in form of business. At the same time, Miner
(2015) is of the opinion that these factors are often related to one another and for this reason
it is necessary that each of the factors are addressed so that development of proper strategies

4
MANAGEMENT
related to the business can be made. The research also provides an understanding of the
success that Malaysia Airlines had in the past and the manner in which these issues have led
to the loss of the success and reputation of the airlines.
Another significance of the research is that it can help in understanding the mitigation
techniques that can be taken into account for countering the factors. The use of the mitigation
techniques can not only help Malaysia Airlines in developing its potential in the market but
also ensure that the techniques can be applied in every area of the business world. At the
same time, the research conducted can be linked with the objectives and questions so that
validity of the analysis can be maintained. It has been seen that for Malaysia Airlines, to
address the factors that lead to its underperformance, the company need to develop a proper
mitigation technique so that it can reclaim its status as the leading airline industry in the
world (Pandey 2016). Thus, the significance of the research can be associated with the
development of Malaysia Airlines and its factors that lead to the development of the business.
2.0 Literature review
2.1 Factor 1: Motivation and training of the employees
In order to maintain the confidence as well as the morale of the employees, it is
necessary to keep the employees motivated. At the same time, training is also required in
order to ensure that performance based on the speciality of the organisation is also
maintained. In this regard, Peters (2015) observed that a link can be made with the
underperformance of Malaysia Airlines in a way that motivation of the employees can be
considered as one of the main reason for the rise of the issue. As seen previously, one of the
reasons for the underperformance of the airline company is related to the high rate of
employee turnover.

5
MANAGEMENT
The reason for this is the low profitability of the airline company. This leads to less
payment of the employees and consequently led to the failure to retain the employees. In this
regard, application of theories such as Maslow’s hierarchy theory or theory of motivation and
hygiene proposed by Herzberg can be taken into consideration (Herzberg 2017). Malaysia
Airlines need to motivate the employees by identifying the needs so that the performance can
be improved. One such motivation factor that can be undertaken by the company is that of the
training of the employees. Although Wlodkowski and Ginsberg (2017) pointed out that
training could not be considered as an effective motivation factor, it can lead to the
development of competency among the employees.
This may lead to enhancing the performance of the employees and consequently help
in improving the performance of the organisation. However, as observed by Fiaz, Su and
Saqib (2017) it is to be kept in mind that the training need to be provided based on the
requirements of the organisation and need to be within the budget. As stated earlier, the cost
structure is one of the factors that lead to underperformance in the company. Hence, for
Malaysia Airlines to provide training to the employees, it is necessary that it maintain proper
balance in terms of costs that can help with the growth of the organisation. The manner in
which the impact of the factor can be mitigated includes understanding the needs of the
employees and to motivate them by applying the theories in a proper manner.
As stated by Graves and Sarkis (2018) one such application of the motivation theories
can be associated with Maslow’s hierarchy theory. Every employee need to be provided with
stages of growth so that continuous improvement in the organisation can be guaranteed. At
the same time, Saeidi et al. (2015) is of the opinion that the training of the employees needs
to be provided such that every customer can be provided with proper service.

6
MANAGEMENT
Thus, Malaysia Airlines can ensure that the application of the motivation theories as
well as proper training can help in mitigating the underperformance of the employees. This
factor can be considered as important that leads to the underperformance at the Malaysian
Airlines.
2.2 Factor 2: Work environment
For an employee or business organisation to be successful, it is necessary that the
work environment be properly maintained. As stated in the previous discussion, motivation is
an essential factor that is cause for underperformance in the Malaysia Airlines. Agnihotri et
al. (2016) is of the opinion that work environment can be considered as a form of motivation
that provides the employees with the purpose of being productive and loyal towards an
organisation. In this regard, it can be said that association of the work environment can be
related to the hygiene factor of the Herzberg model that defines the work environment at a
work place (Blut et al. 2015).
In this regard, it can be said that for maintaining a proper work environment,
collaboration between the employees as well as the employers is necessary. Ren et al. (2016)
is of the opinion that the employers need to be the leaders of the people so that they can
motivate and guide the employees towards organisational success. In the case of Malaysia
Airlines, the company need to find leaders that can take control of the employees as well as
the cost that is incurred from the companies. At the same time, Ramanathan, Subramanian
and Parrott (2017) are of the opinion that restructuring of the company can be considered as
an important factor that lead to the development of the work environment within the
company.
In this regard, it can be said that for Malaysia Airlines to address its
underperformance issues, the work environment of the company need to be taken into

7
MANAGEMENT
account (Malaysiaairlines.com 2019). The work environment consists of identifying the level
of motivation provided as well as the support from the managers. It has already been seen
that employee turnover is an important reason that leads to underperformance among the
employees. Thus, as stated by Kaura, Prasad and Sharma (2015) the work environment needs
to address the support gained by the employees so that proper performance can take place.
As seen from the earlier analysis that restructuring of Malaysia Airlines is being
considered as an important factor for the development of the company (Malaysiaairlines.com
2019). It is necessary that by the restructuring of the company, the aim is to rebrand the
airline so that it can gain more fame at the airline industry. Hence, the present work
environment that can be associated with less training of the employees on technical issues
such as engineering of the airline parts can be considered as poor working conditions at
Malaysia Airlines (Malaysiaairlines.com 2019). It is for this reason that the
underperformance of the company exists which often leads to the dissatisfaction of the
customers.
Therefore, the organisational change is required for the development of Malaysia
Airlines so that work environment can be taken into consideration. It is necessary for the
airline company to address the issue associated with the work environment as factors leading
to motivation and training can be linked with proper workplace condition. Therefore, it can
be said that the work environment plays a negative role in the underperformance of the
Malaysia Airlines.
2.3 Factor 3: Customer service
For a service industry, it is necessary to maintain the satisfaction of the customers so
that productivity, profitability as well as the reputation of the companies can be maintained.
For Malaysia Airlines, the company need to maintain its customer service so that it can

8
MANAGEMENT
address its issues in the business (Malaysiaairlines.com 2019). Elsmore (2017) is of the
opinion that customer service is considered as one of the factors that lead to the
underperformance of an organisation mainly because without proper customer service it can
be difficult for an organisation to gain profit. For Malaysia Airlines, the customer service
need to be provided based on the identification of the needs of the customers
(Malaysiaairlines.com 2019).
It has been seen that the customer service of Malaysia Airlines have dropped
considerably. This is mainly because of the restructuring of the infrastructure of the company
and the cut in costs. The customer service of Malaysia Airlines can be associated with
providing the customers comfortable travelling facilities (Malaysiaairlines.com 2019). It has
been seen that the customers consider the routes taken by the airline company to make its
trips as long and uneventful (Malaysiaairlines.com 2019). This is in comparison with its
competitors such as Jet Airways or Frankfurt flights in which cases the people travelling are
provided with an opportunity to reach their destinations in a short period
(Malaysiaairlines.com 2019).
Long destinations that include travelling to the America or African countries are
usually not preferred by the customers by being associated with Malaysia Airlines. Crane
(2017) is of the opinion that short business trips are usually preferred with Malaysia Airlines,
which leads to less profitability and thereby cause issues between the employers and the
customers. As observed by Anitha (2016) despite having subsidiaries, the company fails to
complement its services with the satisfaction level of the customers. In this regard, it can be
said that the customer service can be considered as an important factor that can be used to
denote the reason for the underperformance of Malaysia Airlines (Malaysiaairlines.com
2019).

9
MANAGEMENT
In this regard, recommendation can be provided for Malaysia Airlines so that it can
improve its performance of maintaining the satisfaction of the customers. As stated by Al
Saifi (2015) the customer satisfaction can be improved by considering the requirements of the
business and by analysing the competitors. It can increase the frequency as well as services of
the flights by providing the customers chances of entertainment. The entertainment can be
provided in terms of providing the customers’ choices related to view movies or by providing
continuous food service. However, as pointed out by Killett et al. (2016) in order to
implement this practise, it is necessary that Malaysia Airlines maintain its cost structure.
Hence, from the analysis, it can be said that customer service is another important
factor that can lead to the underperformance of Malaysia Airlines (Malaysiaairlines.com
2019). The customers can also be disappointed with the type of work environment and the
lack of employees to provide the required service. Therefore, a link can be made with the
previously identified factors and it can be pointed out that each of the factors is related to one
another for the underperformance of Malaysia Airlines.
2.4 Factor 4: Lack of innovation
In the modern world, innovation plays an important role for the development of an
organisation and its business. Noe et al. (2017) is of the opinion that without innovation, it
can be difficult for an organisation to continue its growth and at the same time lead to
underperformance from the employees. Monotonous work culture lead to being predictable
among the stakeholders and the competitors and thus, the business can suffer major loss. In
the case of Malaysia Airlines, the lack of innovation in terms of its flight routes can be
considered as an important reason for the underperformance of the company
(Malaysiaairlines.com 2019).

10
MANAGEMENT
It has been seen from previous analysis that the customer satisfaction rests on the
services provided by Malaysia Airlines. As stated by Cascio (2015) the services need to be
innovative so that the company can compete with the changes in the business environment. In
this regard, it can be said that innovative nature of the company can be developed by
improving the flight rate and the facilities that are offered to the customers. As pointed out by
Bratton and Gold (2017) this particular factor is important in the modern world as it helps in
the development of a business. Therefore, without proper cost incurred from the services,
Malaysia Airlines cannot provide innovative services that can help in the satisfaction of the
customers.
The reason for innovation being an important factor for the underperformance of
Malaysia Airlines is that the company has been running at a loss since 2011
(Malaysiaairlines.com 2019). Therefore, any form of technical innovation or service
improvement can be considered as a far-fetched idea for Malaysia Airlines. At the same time,
as stated by Bratton and Gold (2017) reducing the route required to travel from Malaysia to
South Africa can be risky as the rare customers that make the long travel commitments may
be deprived of the luxury of lengthy flights. Hence, the underperformance of the company
based on this particular factor can be considered as important and at the same time may have
a huge negative impact on the development of the airline company (Malaysiaairlines.com
2019).
Hence, based on the analysis of the factors, it can be said that every factor that lead to
the underperformance at Malaysia Airlines can be linked with one another. Chelladurai and
Kerwin (2018) pointed out the fact that the common reason or issue that binds the factors is
the cost incurred by the company through its recently perceived mediocre services. Therefore,
recommendations are provided by which these factors can be mitigated and lead to restoring
the reputation that Malaysia Airlines once possessed in the airline industry.

11
MANAGEMENT
3.0 Conclusion
3.1 Implications of further research
In the future, the factors that lead to the underperformance in the commercial business
sector of Malaysia can be undertaken. This can help in the relating the commonality of the
factors and lead to conducting future research that help in understanding the methods
required to mitigate the factors.
3.2 Research Questions
The research questions associated with the research include:
 What are the factors that lead to the underperformance at the Malaysia Airlines?
 What is the impact of the factors that lead to the underperformance at Malaysia
Airlines?
 What recommendations can be provided for mitigating the factors that lead to the
underperformance at Malaysia Airlines?
3.3 Research Objectives
The research objectives that are associated with the research include:
 To study the factors that lead to the underperformance at the Malaysia Airlines
 To investigate the impact of the factors that lead to the underperformance at Malaysia
Airlines
 To provide recommendations for mitigating the factors that lead to the
underperformance at Malaysia Airlines