Change Management Research: Analysis of Malaysian Airlines' Crisis

This report examines the change management strategies implemented by Malaysian Airlines in response to a period of significant financial losses and brand damage, triggered by aircraft incidents. The report analyzes the internal and external factors that drove the need for change, the challenges faced, and the recommendations to overcome those challenges. It identifies key stakeholders, evaluates the impact of the change on them, and assesses their expectations. The Kaleidoscope model is used to evaluate the scope of change, identify resistance, and outline strategies for implementation. The report also discusses the methods used to measure success, presents lessons learned from the crisis, and offers recommendations for improved business operations. The analysis covers the airline's history, the crises it faced, strategic planning, SWOT analysis, and the execution of change initiatives. This detailed case study provides valuable insights into crisis management and organizational restructuring within the airline industry.

Running head: CHANGE MANAGEMENT RESEARCH
Change Management Research
Name of the Student
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Author Note

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Executive Summary:
The purpose of this report is to specify the impact of the detrimental effects of negative brand
image of the organizations. The chosen organization for the paper is the Malaysian Airlines
which went through considerable number of non-profitable periods and experienced
significant amount of financial crisis. The paper evaluates the success of the change initiative
taken by the organization in order to return to profitability. At the initial parts, the paper is
able to specify the external and internal factors that triggered the change, the challenges faced
by the organization in managing the change and also includes the recommendation to
overcome those challenges. In the later part, the paper is able to define a stakeholder for the
organization, impact of the change on them and expectation of the mentioned stakeholder
from the organization during the change. Along with that, the paper also uses the
Kaleidoscope model to evaluate the scope of the change along with the identification of the
resistances and strategies for the change. At the end of the paper, the method of success
measurement is described and learning from the case is portrayed. Apart from that three
recommendations are also advised for the smooth conduction of the business operation of the
organization.

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Table of Contents
Introduction:...............................................................................................................................4
Overview:...................................................................................................................................5
The Crisis that affected the Malaysian Airlines:........................................................................5
Open System model:..................................................................................................................6
Inputs:.....................................................................................................................................6
Transition:..............................................................................................................................6
Output:....................................................................................................................................7
Force Field Analysis:.................................................................................................................7
Driving Forces for the Change:..............................................................................................7
Restraining Forces:.................................................................................................................7
SWOT Analysis:........................................................................................................................8
Strengths:................................................................................................................................8
Weakness:..............................................................................................................................8
Opportunity:...........................................................................................................................8
Threats:...................................................................................................................................8
Strategic planning for the management of the change:..............................................................8
Challenges:.................................................................................................................................9
Recommendation:......................................................................................................................9
Stakeholder Selection:..............................................................................................................10
Kaleidoscope Model:...............................................................................................................10
Time:....................................................................................................................................11

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Scope:...................................................................................................................................11
Preservation:.........................................................................................................................12
Diversity:..............................................................................................................................12
Capability:............................................................................................................................12
Capacity:..............................................................................................................................12
Readiness for the Change:....................................................................................................13
Power:..................................................................................................................................13
Sources of Resistance:..............................................................................................................14
Strategies used by MAS:..........................................................................................................14
Execution of the strategies Used:.............................................................................................15
Unfreeze:..............................................................................................................................15
Change:................................................................................................................................15
Refreeze:..............................................................................................................................16
Measure of Success:.................................................................................................................16
Conclusion:..............................................................................................................................17
Lessons from the crisis:........................................................................................................17
Recommendation:................................................................................................................17
References:...............................................................................................................................18

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Introduction:
The modern day organizations are observed to be subjected to significant amount of
competition with the other market competitors and the organization usually tries their level
best to manage their business operations in such a way that it provides them the much needed
space in the intensely competitive business market. The organizations formulate the relevant
strategies for managing their business operation in an effective manner which will be helpful
for them in achieving their financial goals. Along with the positives, the formulation of the
strategy also incorporates bad results for some of the organizations as well, where the
business strategy formulated by the organization did not align effectively with the resources
of the organization. Hence the strategy making is significant part for any organization. As
defective strategy is observed to be significantly affecting the financial structure of the
organizations, the change becomes much needed for the organization (Carnall, 2018). The
business organizations are observed to shift their focus with the introduction of the change
initiative to overcome the severe impact of the defective strategies of the organization. The
change initiative is a process by which the organizations try to settle their issues with
appropriate and efficient modification in the strategy of their business operations (Cameron &
Green, 2015). The paper is focused in specifying one such case where the chosen
organization, Malaysian Airlines, restructured their strategy of business conduction in order
to overcome the financial struggles and the aircraft losses that it faced in the year 2014. The
air craft crashes were significant for the organization as the brand of the organization was
getting significantly affected with these incidents. Along with the brand value, the
organization was subjected to a notable financial crisis as an effect of the disappearances of
its flights. The main triggering reason behind the change initiative was the need of rebranding
the organization so that it could be able to overcome the financial crisis (Hayes, 2018).

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Part 1:
Overview:
The Malaysian Airlines is a notable aviation group of Malaysia which was founded in
the year 1947 in the form of Malayan Airways. The organization faced several changes
throughout the 71 year of its life span where it got converted as Malaysian Airline System
and then in the year 2015 it got converted as Malaysian Airlines Berhead
(malaysiaairlines.com, 2018). The organization having Khazansah Nasional Berhead and the
Malaysia Aviation Group as the parent organization and was observed to be a part of the
Oneworld Airline Alliance (oneworld.com, 2018). The organization was having its
headquartering Kuala Lumpur.
The organization was conducting in a profitable manner at the start but in the year
1997, the organization was staring to experience significant losses. The organization suffered
repeated periods of unprofitability where the organization suffered significantly huge
amounts as losses. In the year 1997 the organization suffered a loss of RM 260 million. In the
financial year 2000-2001, the organization again faced a loss of RM 417 million which in the
following financial year increased to RM 836 million (malaysiaairlines.com, 2018). Apart
from that the organization was observed to report a loss of RM 1.3 billion.
The Crisis that affected the Malaysian Airlines:
In the year 2011, the organization again faced a series of the non-profitable periods,
where the organization was observed to report a loss of RM 2.52 billion and this was the
highest sum as loss in the history of the organization (chartnexus.com, 2018). The
organization was able to specify the reasons as the rise in the fuel cost and the
mismanagement of the organization. The organization was significantly trying to reduce the

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operational cost in order to compete with the low cost carriers in the region. One of the major
setback in that try came with the loss of RM 443.4 million in the first quarter of the financial
year 2014 and along with that disappearance of the flight 370 was instrumental in making the
situation even worse. The disappearance of the flight 370 added a loss of RM 307.04 million
which recorded a 75% increment in the loss from the second quarter statistics of the previous
year (malaysiaairlines.com, 2018). Along with that the organization suffered a decrement in
the stock by 20% as an immediate impact of the disappearance. The shot down of the flight
17 also a major reason the poor financial performance of the organization as it was observed
to result in a 33% decline in the average weekly bookings at that time. This resulted in the
decrement of the share prices of the organization and the authority was left with no option
other than requesting the CEO Ahmad Jauhari Yahya to resign. Under the circumstances, the
parent organization Khazansah Nasional Berhead forced some necessary changes in the
management of the organization and introduced Christoph Mueller as the new CEO of the
organization with immediate focus on the renationalisation and rebranding of the
organization.
Open System model:
Inputs:
The major factor that was responsible for the introduction of the change initiative was
the repetitive period of losses that the organization was facing at that time. The organization
was able to understand that the business conduction in the non-profitable business routes is
also a major reason behind the huge amount of losses (Burke, 2017). Along with that the
organization tried significantly to reduce the operating cost of their operation in order to
make sure that they be able to compete with the low cost carriers.

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Transition:
The management of the organization was able to understand that the financial crisis
was a result of the decreasing trust of their customers on their services which were pretty
evident with the disappearance of the flight 370 and the shot down of the MH17. Hence the
organization was significantly concerned with the restructuring of the organization’s brand
and that was evident with the 60% down in the ticket booking for the mentioned airlines in
China in the month of March just after the disappearance of flight 370 (Hatch, 2018). A
media report also came out after the shot down of the flight MH17 stating that the flights of
the mentioned airlines were observed to be largely empty and that was significant for the
organization to understand that the increment in the coverage is not something that will be
able to guarantee the desired increment in the profit for them.
Output:
The organization was observed to take a change initiative which was focused in
making sure that the business operation of the organization avoids the unprofitable long
overhaul routes and concentrates on the regional destinations in order to make sure that the
flights get maximum number of passengers. Apart from that the organization was observed to
cut down 6000 jobs which was 30 % of the total workforce of the organization in order to
reduce the operating cost.
Force Field Analysis:
Driving Forces for the Change:
 The repetitive losses and periods of unprofitability for the organization.
 The significant detrimental effects in the brand image of the organization (Cameron &
Whetten, 2013).
 The urge from the shareholders for the generation of the profit.

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 The reduction in the operational cost.
 The perfect utilization of the total capacity of the flights by the mentioned
organization.
Restraining Forces:
 The significant impact on the organization with the decision of the 6000 job cuts.
 The loss of the customers in the routes in which the organization will stop their
operation.
 The organizational and work culture of the mentioned organization.
SWOT Analysis:
Strengths:
 The rich infrastructure of the organization.
 The shareholder’s backing for the change.
Weakness:
 The organizational culture and the power of the government on the organization.
 The continuous financial losses that the organization was facing (Clardy, 2013).
Opportunity:
 The chance to concentrate more on the profitable regional routes.
 The chance to create a better brand image which will be able to gain the trust of the
customers.
Threats:
 The loss of the customers that the organization was getting in the routes which it will
planning to close under the change initiative.
 The tremendous competition among the regional aviation organizations.

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Strategic planning for the management of the change:
The parent organization Khazansah Nasional Berhead understood the necessity of the
change very well and along with that they were able to understand that management of the
change will not be an easy task until the mentioned airlines is in the Malaysian Stock
Exchange (bursamalaysia.com, 2018). The parent organization was planning to de-list the
mentioned organization from the stock exchange in order to manage the change in a better
manner. Along with that the parent organization had the vision to return to the profitability at
the end of the 2017 and they had the plans to relist the organization in the Malaysian Stock
Exchange by the year 2018 or 2019. Apart from that the parent organization’s strategy in the
restructuring of the image of the brand was significant with the transfer of the Malaysian
Airlines System to the newly constructed Malaysia Airlines Berhad (MAB). Hence, it can be
said that the change was revolutionary in nature (Kuipers et al., 2014).
Challenges:
The general challenges that are faced by the organization in managing the change is
the intense competition among the regional aviation organizations, the apathy of the
workforce in acknowledging the change (Goetsch & Davis, 2014). With the significant
amount of the job cuts, the workforce was observed to get demotivated in significant manner.
The significant pressure on the parent organization regarding the 6000 job cuts as the general
people of the nation were significantly upset with the decision (Van der Voet, 2014). Apart
from that the new CEO, Christoph Mueller was a German businessman. Hence the airlines
was experiencing the leadership of a non-Malaysian for the first time which was difficult to
consume for a segment of the nation. The employees were uncertain about the change and the
process was creating significant pressure on the management as they were pressurized to
force a turnaround within 3-5 years.

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Recommendation:
One of the major reason behind the financial crisis and the job cuts was the
incapability of the employees in performing in the desired manner. Hence the organization
needs to make sure that the employees are trained and developed in the desired manner so
that the performance of the employees improved. Apart from that the creation of a sense of an
urgency is much needed from the part of the organization in order to make sure that the
workforce be able achieve the desired growth that is set by the shareholders.
Part 2:
Stakeholder Selection:
The selection of the stakeholder will be the employees.
The employees are a major stakeholder in the organization. As the organization
operates in the aviation industry, the quality of the services of the employees is a major factor
in the creation of a better image of the organization in the industry. The employees of the
organization are generally the people of Malaysia. Under the change management process,
considerable number of job cuts took place and that was a genuine concern for the
employees. Hence the primary expectation of the employees will be the job security and the
assurance from the part of the organization regarding their continuation in the organization
(Verhulst & Lambrechts, 2015). Apart from that the employees do expect that the objectives
of change will be discussed with them as they are one of the important parties involved in the
fruitful execution of the change initiative. The employees also expect that the change will
incorporate some new aspects related to the operation of the organization and in that case the
appropriate training will be much needed from their point of view as the development in their
performance will be instrumental in generating increased amount of revenue (Hashim, 2013).

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This will also be significant contribution from the part of the employees in achieving the
desired growth or the much expected turnaround.
Kaleidoscope Model:
The model is significantly important for the evaluation of the change management
approach as it covers the specific parts of the change like the time, scope, preservation of the
resources, diversity, capability, capacity, readiness for the change along with power (Langley
et al., 2013). The evaluation of the scope of the change by the model specifies the mentioned
case to be compulsory
Time:
The organization was facing a series of unprofitable periods and along with that it was
subjected to significant amount losses. As mentioned earlier, the organization was observed
to face an amount of RM 2.52 billion loss in the year 2011. In the year 2012, the organization
reported a loss of RM 433 million and in the following year it was again subjected to a loss of
RM 1.17 billion. Apart from that in the year 2014, it again faced a loss of 443.4 million in the
first quarter and in the following quarter it faced a loss of RM 307.04 million. This was
creating a serious financial crisis for the organization as it was not able to generate any sort of
profit from the year 2010. Along with that the financial crisis was able to convert the
situation of the organization into an emergency state (Booth, 2015). Hence the change was
rapidly required by the organization in order to get back to profitability as soon as possible.
Scope:
The change affects the organization as a whole including the external and internal
parts of it. The training policy regarding the performance development of the employees of
the organization is a much needed internal aspect that falls under the change initiative. Apart
from that the renationalisation of the organization where it will prefer the business