UGB202

Introduction to Strategic Management

Individual Report on the Application of the Strategic Management Process
Module Leader: Mathew Teale
Module Tutor: Adeline Sim
Student Name: Adrian Eu Suk King
Student ID: SCSWBABM 1111003
Submission Date: 11 May 2013

Executive Summary
This assignment requires a writer to write a report of any organisation which is involved in
transportation and communication industry. The aim and purpose of this report is to examine the
strategic management process to one of the industries. The strategic management process will be
more emphasise in this report where its importance in the organisation play an important factor
in order for the organisation to grow and expand. Malaysia Airlines (MAS) have been chosen as
an organisation for this report. Malaysia Airlines is a commercial air travel organisation where
they provide transportation service throughout the world, specifically 850 destinations in 150
countries. The organisation company profile will explain more about the history of the
organisation itself which are the founder of the organisation, the year it start its services,
location, service range, revenue and turnover report. After that, a strategic analysis of the
Malaysia Airlines will be explained more which includes general environment, internal
environment and competitive environment. In general environment, the weakness of the
organisation needs to analyse before the problems and weaknesses itself will take toll towards
the organisation. The tool which is going to be used to overcome the weaknesses are pest
analysis and swot analysis which consecutively serve its purposes to analyse internal and
external factors. In internal environment, a situation that can impact Malaysia Airlines business
will be evaluated. It is divided into two categories, value chain analysis and resource based view.
Value chain analysis will be used to add value to the organisation itself while resource based
view will be use to explain how the resources of the organisation can be use to become an
advantage, competitively. After done doing that, strategic formulation is needed for Malaysia
Airlines. A proper plan and strategy are needed to achieve the organisation main objectives.
Business level strategy and corporate level strategy will be use to explain the competitive
advantage and how corporate parent helps its subsidiary company to grow and expand.
International strategy is also in included in the strategic formulation in order for Malaysia
Airlines to develop its level of competencies and future potential in international arena.
Implementation of that international strategy will take to action after evaluation and analysis. In
the implementation strategy, a leader with a broad scope of vision and mission is needed in order
for the action plan to become reality. With a great leadership skill, the employees will be inspired
to work more efficient to achieve the objective that had been set. All the explanation above are
supported with proper references using journals, books, internet, articles and updated data from
Malaysia Airlines from its company report. Lastly, a conclusion will be made to conclude all of
the information from the report.

TABLE OF CONTENT
Executive summary.........................................................................................................................i
1.0 Introduction..............................................................................................................................1
1.1 Company Profile.......................................................................................................................1
2.0 Strategic Analysis.....................................................................................................................2
2.1 General Environment................................................................................................................2
2.1.1 Scenario Planning...................................................................................................................2
2.1.2 Pest Analysis........................................................................................................................3-4
2.1.3 Swot Analysis........................................................................................................................5
2.2 Competitive Environment.........................................................................................................6
2.2.1 Porters Five Forces.............................................................................................................6-7
2.2.2 Strategic Groups....................................................................................................................7
2.3 Internal Environment................................................................................................................7
2.3.1 Value Chain Analysis.............................................................................................................8
2.3.2 Resource Based View............................................................................................................8
3.0 Strategy Formulation................................................................................................................9
3.1 Business Level Strategy............................................................................................................9
3.1.1 Industry Life Cycle................................................................................................................9
3.1.2 Differentiation...................................................................................................................9-10
3.2 Corporate Level Strategy.........................................................................................................10
3.2.1 Growth Strategies.................................................................................................................10
3.2.2 Corporate Parenting..............................................................................................................11
3.2.3 Strategy Evaluation...............................................................................................................11
3.3 International Strategy...............................................................................................................12

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4.0 Strategy Implementation.......................................................................................................13

4.1 Strategic Leadership...........................................................................................................13-14
4.2 Change Management.............................................................................................................14
4.3 Role of Systems.....................................................................................................................14
4.3.1 Organization Structure........................................................................................................15
4.3.2 Organizational Process........................................................................................................15
4.3.3 Strategic Control Systems...............................................................................................15-16
4.3.4 Corporate Governance........................................................................................................16
5.0 Conclusion.............................................................................................................................17
6.0 List of References...............................................................................................................
7.0 Appendices

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1.0 Introduction
Malaysian Airline System Berhad is the primary airline of Malaysia. Malaysia Airlines (MAS)
operates flights from Kuala Lumpur International Airport mainly and with a secondary hub
at Kota Kinabalu and Kuching. From the report, the strategic management of Malaysia Airlines
is analysed. The report is produced for Mr Mathew Teale. Most of the resources in this report are
based on report and journal. Besides, articles and newspapers are also being used as the
secondary resources. Gather from latest data, Malaysia Airlines has revenue worth as much as
RM13 billion. In stategy management, there are Strategy Analysis, Strategy Formulation and
Strategy Implementation which are the process to overcome that external factor which consist of
objective to fulfil(Hambrick, 2007). Under the effect of globalization, the world has changed in
every sector and those changes had influenced most of the corporation activities with obstacles to
execute their strategy. A company's finances will be affected if their management fails to
formulate and implement the most efficient and suitable strategy. Strategy analysis, strategy
formulation and strategy implementation are the fundamentals to solve negative factors
regardless what is the problems.

Company Profile
Malaysia Airlines was founded in 1937 through an idea by the Alfred Holt's Ocean Steamship
Company in liverpool work together with the Imperial Airways in from Britain and Straits
Steamship Company in Singapore.

This had build the outcome of Malayan Airways

Limited(MAL) on the same year. As usual, this airline faced different types of industrial
challenges throughout these seven decades. Therefore, the company had improved and
repackaged their image and services. Malaysia Airlines started their flight services originated in
Subang Airport and later relocate to Kuala Lumpur International Airport (KLIA). Malaysia
Airlines serve different class of customers in society pyramid. Therfore, Malaysia Airlines
provide different class of seatings which are first class, business class, and economic class.
According to Malaysia Airlines Annual Report on 2012, incredible loss of RM481,457,000 was
hit after the loss on 2011 which was two billion. This shows the incapabilities of management in
Malaysia Airlines to manage the company. Therefore, the management needs to be rearranged
and restructured. Besides, Malaysia Airlines are facing more competitors in the industry such as
Airasia. To overcome this challenge, Malaysia Airlines tried to upkeep with their competitors by
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providing high quality of services in order to win customer's faith and loyalty so that they could
have stable coming back customers. Their strategy was a success and this can be seen when
several awards are awarded by Skytrax UK and World Travel Awards. The awards are the Asias
Leading Airline(2011), Asias Leading Business Class Airline (2010) and Five Star Airline
(2012). Malaysia Airlines built up their image as the top airline in Malaysia by winning those
award.

2.0 Strategic Analysis

The process of helping a company to have further understanding regarding their external
environment is what we call strategy analysis. Strategy analysis can maximize an organization's
potential, capability and interation between environment. Profit can be achieved if Malaysia
Airlines execute the three strategic processes which are analysis, formulation and
implementation. By doing the analysis of external evnironment and evaluating the internal
environment, we are able to use the chances and discover the industrial potential in the future.

2.1 General Environment

In order to help Malaysian Airlines in fitting itself to conquer the weaknesses, several analysis
such as PEST, scenerio planning and SWOT are carried out. Besieds, general environment acts
as a tool to identify the weakness in Malaysia Airlines which may lead to external environment
that changes rapidly (Henry, 2008:41).

2.1.1 Scenario Planning

Scenario planning is defined as procedure of visualizing what upcoming situation or events are
probable, what their effects would be like, and how to respond to, or benefit from,them(Business
Dictionary, n.d.). Scenario planning not only can help to identify future oppoturnity, but also
helps an organization to make critical decision. This can help an organization to utilize
opportunity and stay away from the threat. The scenario planning is mention by Henry (2008) as
a method to find changes and uncertainty in their industry and promote systematic thinking and
even decision making under spontaneus situation. However, Malaysia Airlines did not do proper
scenario planning which make them faced great loss as stated in their annual report 2012. As a
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way to stop this situation continue to grow, Malaysia Airline should really consider and think
deeply of their scenario planning. Besides, the ultimate growth of Airline industry shows
influence to Malaysia Airline scenario planning. Therefore, Malaysia Airline should make use of
PEST and SWOT analysis to identify deeply their market environment.

2.1.2 PEST analysis

PEST analysis most commonly is used to measure a market. By doing the PEST analysis,
Malaysia Airlines will link the entire four factors that may affect their business in general and
competitive environment. As a Malaysian national flag airlines, it is compulsory and a must for
them to follow and obey the political decision and governmental policies. Being an airline
company in Malaysia, always need to cope with the taxes which have been a big obstacles
especially during economy crisis. According to Malaysia Airlines annual report 2011, Malaysia
Airlines had experienced a huge loss as RM400 millions even before taxation is done. This
shows how pathetic and badly the situation of the company was. Furthermore, our current Prime
Minister Datuk Seri NajibTun Razak announced that the minimum wage of private sectors in
Penisular has been set for RM900 and RM800 for those in Sarawak. This increases the burden of
Malaysia Airlines which has approximately 18,000 workers. As a way to overcome the new
policy and adapted to it, Malaysia Airliens hence introduced a new rewarding plan to their
workers. t. In coping with the new policy, Malaysia Airlines has announced on their strategy to
offer permanent staff a maximum two years of unpaid leave only and excluding their subdiaries
which are Maswings and FIrefly.

Airlines biggest expenses will be the crews wages and fuel expenses. As global fuel price is
increasing, it influenced Malaysia Airlines operating cost for sure which will directly result the
loss in their profit. Besides, unstable fuel price that influenced economy will affect their shares
price in stock exchange too. (sharif, Ranjbar and Arumugam , 2011). Furthermore, Malaysia
Airlines had increased their flight ticket fares as a way to cover up the administration and
operating cost. As the increment of ticket fares occurred, local citizens with lower or medium
income holders to lessen their frequency to travel on flight. Besides, one of the undeniable
factors is inflation which causes the value of money to be lowered extra money from the wages
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unable to do much extra occasion planning. Prior to the Asian Financial Crisis in 1997, Malaysia
Airlines suffered in the massive losses of RM260million. As a way to overcome the crisis, the
airlines cut a lot of routes which are unprofitable such as Brussels, Darwin, Honolulu, Madrid,
Munich and Vancouver. Besides, approximately a decade later in 2011, frightening loss of
RM2.52billion was achieved by Malaysia Airlines and breaks its historical record. This
incident had push the management to terminate the flight to Surabaya, Karachi, Dubai,
Johannesburg in January of the same year. The action was unable to calm the managements who
later ceased the routes to Cape Town, Buenos Aires and Rome in February 2011.

For social factor, we know that there are different types of people with different preference in
this country, so with different culture and thinking in society, not everyone would like to use
flight as their transportation option. This is due to the fear factor that stuck in their heart to feel
insecure with the flight transportation. Therefore, safety is always one of the main feature to be
concerned and make sure the society feel safe with their services. Safety instructions are being
briefed before the flight depart every time and this can prevent chaos to occur if there is any
accident occurs. Besides, insurance is also one of the option for customer to purchase in their
flight ticket. This can relieve the insecurity of passengers when they choose to use Malaysia
Airlines.

In terms of technology, Internet has lead our world to globalization and information explosion
era. Malaysia Airlines sees this as an opportunity to promote their company services to the youth
conveniently. The customers can purchase the flight tickets easily from their website rather than
drive to their branches and queue up which will be even more expensive and time consuming.
Hence, Malaysia Airlines is able to deduct and decrease overhead cost and their budget in extra
offices and infrastructure. However, not everyone are well-skilled in using the internet and some
of the rural areas in our country still lack of such services which seems common in most of the
city. Besides, credit or debit card is a necessity in order to purchase from online ticketing system

which also will be a obstacle for some of the senior citizens. Lastly, we shall concern about the
stability of Malaysia Airlines proxy server which is overloaded sometimes.

2.1.3 SWOT Analysis

SWOT analysis is a method where a structured planning can be done by evaluating the 4 factors
which are strengths, weaknesses, opportunities and threats (Humprey, 2005). Malaysia Airlines
can use SWOT at their own benefits to understand more about the external environment.
Malaysia Airlines is a well known brand name which has become strength of this company to
exploit. With its 70 years of experiences in the airline industry, this brand name has won the
heart of the customers wheres loyalty is important to them. In addition, Malaysia Airlines are
highly recognized by the international organisation. Plus, Malaysia Airlines are also has been
supported by the Malaysian government for years. With this, they can depend on the government
if they are having a financial problem or other difficulties which can benefit them. Malaysian
Airlines won a lot of prestigious awards in the past 10 years and their broad network of
destinations also has become their strength that led the potential and loyal customers to choose
them. Thereby, with this entire strength combine, chances of Malaysia Airline to win and take
control of the industry are higher.
Malaysia Airlines and other companies are not excluded from the organisational weaknesses.
The increasing fuel price had cause Malaysia Airlines huge loss as much as RM1.36
million.Other than that, their operating cost such as landing fees ishigherthatin which are
affecting their financial. This entirely affected their profit and thus giving them problem to be
dealt with. Price war with Air Asiaalso has affected their target in controlling the local
market.Since Malaysian income per capita is lower than other countries, therefore Malaysia
Airlines are now focusing more with the middle and upper class customers.
Malaysia Airlines has analyse its opportunities in the market. Aircraft passengers have been
growing as much as 13.5% every year. By this, Malaysia Airlines are going to take this
opportunity to expand their services in other countries such as China and Japan where the people
over there always travel abroad. The increasing numbers of cargo industry also have become a
profitable sector for Malaysia Airlines. In 2010, the increasing numbers of air cargo service has
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risen to 26.5%. As a result of that, Malaysia Airlines can manage to get a lot of profit in this
growing industry by exploiting the opportunities and turn it into a profit.
In threats, fuel price have been a problem for Malaysian Airlines for years. Inevitably, Malaysia
Airlines operating cost may also increase if the fuel prices increase. Not only that, international
airlines such as Cathay Pacific Airways, Singapore International Airways and Garuda Indonesia
Airways are competing with Malaysia Airlines internationally and Air Asia domestically. The
threat of new entrant also be a factor for Malaysia Airlines to deal with if financial institution
policy changes. Lower interest rate and credit loan willallownew airliners to enter the industry.
The more new airliners enter the industry; the likelihood of Malaysia Airlines to struggle in the
business will be higher. In order to cope with that, Malaysia Airlines need to be more prepared.

2.2 Competitive Environment

According to Mack (2010), competitive environment is defined or explained as a dynamic
system for the business to compete positively in. At such, analysis technique of Porter Five
Forces Framework is executed to understand the environment.

2.2.1 Porters Five Forces Framework

Porter five forces is a framework which analyzes the industry and business strategy development
to determine the competitive strength (Porter, 1979). By using this analyzing technique,
Malaysia Airlines can identify the threat of new entrants. Since the needs to start an airlines
company are hard, consequently, the threat of new entrants has reduced. Furthermore, brand
name is important to the customers these days. Adding to that, to go into this business not also
need high capital but also need an establish brand name. Thus, rather than start an establish brand
name, the new threat entrants will focus more on the loyal customer. The only new threat
entrants Malaysia Airlines need to focus more are the international airlines.

There are two companies that are competing against each other in the aircraft manufacturing
industry which are Boeing and Airbus. Since Malaysia Airlines are choosing Boeing as their
main aircraft, therefore, Boeing has no option to increase their aircraft prices. If Boeing increases
their aircraft price, most probably Malaysia Airlines will change their aircraft to Airbus.
Consequently, Malaysia Airlines can use its bargaining power of consumer to bargain the aircraft
price. This undoubtedly will be an advantage to Malaysia Airlines to save their buying cost that
led Boeing with no other choice to sell its aircraft to Malaysia Airlines since theyre having a
tough time in competing in the aircraft manufacturing industry.
The bargaining power of suppliers is depending on the numbers of alternatives the consumer has.
For Malaysia Airlines, it is difficult to change to another aircraft manufacturer such as Airbus
since their maintenance staff areexperienced with Boeings aircraft. By changing the aircraft
manufacturer, Malaysia Airlines need to spend a lot of money to train their maintenance staff
which and switching cost is high.Therefore, the power of suppliers cannot be a negative factor
since Malaysia Airlines only rely on one aircraft manufacturer. Plus, the power of suppliers is
insignificant where Malaysia Airlines has their own aircraft maintenance subsidiary company.
For fuel, the bargaining power of suppliers is not really high since in Malaysia there is only little
petrol organization and the price is set by the government.

2.2.2 Strategic Groups

Strategic groups are used to classify or identity the companies that are having the similar
business model or mixture of strategies applied. (Porter, 1980). As a well known 5 stars airlines
company, Malaysia Airlines always offer various place of destinations throughout the world
where Airasia only provide certain well-known and popular destination. However, Airasia as the
low cost carrier, has advantages in competition as they can always attract customers in Asia that
always go for cheaper option.

2.3 Internal Environment

An internal environmental analysis is an extensive review of all aspects of a company's
operations, internal guidance and mission. (wiseGEEK, n.d.). Value-chain analysis and resourcebased view can be used as analysis tools.

2.3.1 Value-chain Analysis

Malaysia Airlines primary income is based from logistics services and secondary activities are
aircraft maintenance and technology development. By coordinate these value chain analysis
activities, Malaysia Airlines can have a lower cost structure and increase the value of outcome
product. By increasing the value of outcome product, Malaysia Airlines can compete better in
the industry by understanding the connection between each of the value-chain activity.
Additionally, a proper coordination with their union, customers and suppliers can reduce cost
and adds up the bonding between customers and company itself. As its outcome, improvement of
the performance in Malaysia Airlines primary and secondary activities can be achieved and
higher profit can be gained in the process. .

2.3.2 Resource-based View

Airline industry was slammed pretty hard globally in previous years. Terrorists attack on 11st
September 2001 still horrified the hearts of passengers globally. The strong competitive
environments by low cost carriers such as Airasia in Malaysia is also causing the national flag
carrier to restructure their operations. Their resources such as airplanes and crews quality need to
be concerned and look into deeply. As the oldest flight carrier company in Malaysia, they shall
use this advantage to continue to stay at the frontline in airline industry by using its available
sufficient resources efficiently with the help of government and come up with efficient strategies
as a way to compete and stabilize its own potision in airline industry. .

3.0 STRATEGY FORMULATION

Formulation of strategies is necessary in order for Malaysia Airlines to achieve its mission and
objectives. An excellent structure and organize strategies will beneficiary to Malaysia Airlines in
competing in the airline industry.

3.1 Business Level Strategy

Business level strategy is very important where it will be use as a method to develop the strategy
at a maximum level. In addition, it is crucial for Malaysia Airlines to implement and adapt to this
strategy because its a way for them to make use all of their resources and competency in the
airlines industry to accomplish its corporate level strategy.

3.1.1 Industry Life Cycle

In any industries, introduction, growth, maturity and decline development stages have to go
through including industry products. Malaysia Airlines has gone through the introduction phase
where they had been through a lot of difficulties and up and down since 1937. But unfortunately,
Malaysia Airlines financial report has shown that the company is suffering from internal and
external environment where they are facing profit losses. Malaysia Airlines is now in the growth
stage where they are trying to impose a new efficient strategy to cover up their losses from 2008
to 2012. Malaysia Airlines profit are at the highest in 2008 as much as RM15,570,141 and
decreasing slowly in the past 5 years and the lowest is in the year 2009 that decline as much as
RM11,605,111. Factors that cause this financial downturn are the increasing price of the fuel,
competitiveness of other airlines, poor marketing strategy and high operating cost. In coping
with this matter, Malaysia Airlines is now broadening their flight destination and suspend some
flight from a destination that give less profit, improve quality of service in order to create
customer demand and thus progressing in the growth stage.

3.1.2 Differentiation
Malaysia Airlines impose differentiation strategy by creating various types of seat class such as
Economic Class, Business Class and First Class. This is to ensure that all the variety of services
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that being offer are affordable for the different type of customers. It is also to increase the
advantages in competing by delivering the value added product to differentiate Malaysia Airlines
services from other airline competitors. Adding to that, by letting the customers choose what
type of services they want, the loyalty of the customer would be increased. This shows that
Malaysia Airlines are coping with price sensitivity, switching cost, higher entry barriers and
threat of substitutes, in the five forces. As a result, Malaysia Airlines has successfully competed
in the airline price wars that let the company to gain back profit in 2011.

3.2 Corporate Level Strategy

Corporate strategy signifies actions for Malaysia Airlines to take in gaining its competitive
advantage. Specifically, to help Malaysia Airlines in an advantage where they can control the
market and maximise profit for a long period of time. Thus, this strategy helps Malaysia Airlines
to improve its strategy and at the same time giving them a great position in controlling the
market.

3.2.1 Growth Strategies

Any company can practice four strategies specifically for the growing process. By now,
Malaysia Airlines are targeting to penetrate the international control the local market. Malaysia
Airlines are trying to use its existing services and products to increase their sales. Malaysia
Airlines achieve it by strengthening the bond with their customer to keep using its airlines and at
the same time bringing new customer. For that reason, Malaysia Airlines are now starting to
increase their promotion using social and mass media. Other than that, Malaysia Airlines are also
improving their website to become more convenient and easy with less procedure for all the
customers that wish to book a ticket.
In surviving in the mature market, Malaysia Airlines should prepare more for its opportunity to
expand its growth. Malaysia Airlines as a pioneer and leading the local airlines industry should
increase more their competitiveness in competing in the international market. Taking ASEAN
countries as a first step, Malaysia Airlines should understand more each of the country
geographically, culture and religions. By developing this understanding, customers will tend to

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choose Malaysia Airlines that in the end would increase their sales, profit and penetrate the
international market.

3.2.2 Corporate Parenting

Malaysia Airlines as parent company of MAS Cargo, MASwings, MAS Aerotechnologies and
etc. Malaysia Airlines as the corporate parent can achieve a lot of profit if they integrate all of its
subsidiaries company as an individual business unit. Malaysia Airlines can save cost in
managing all of its subsidiaries company. Not just that, a proper integration between the
subsidiaries company can help Malaysia Airlines to derive its economic scale that will further
move them in accomplishing their goals. Concurrently, Malaysia Airlines can help its
subsidiaries company and put them into an advantage where they can make use ofMalaysia
Airlines expertise and resources. As a result of that, Malaysia Airlines subsidiaries company
will be enhance in controlling their budget, making decision and planning process. Nevertheless,
if any economic catastrophes occur, therefore, it will become disadvantage for Malaysia Airlines
if its subsidiaries company is in the economic crisis.

3.2.3 Strategic Evaluation

In following the variety formulation strategic plan, strategic evaluation is the most important part
before implementing all of the strategies that been plan. The strategies will be evaluate and
assess to find out its efficiency. In addition, the consistency of the strategies must be in a long
term where the use of the strategies itself can benefit Malaysia Airlines in the coming years
rather than being a yearly plan. Its obvious that not all of the strategies will become a success,
but at least an initiative to evaluate the plan been done in order to minimize the risk. Thus,
Malaysia Airlines need to select a proper and the best strategies that can help them in realizing
their goal and objectives.

3.3 International Strategy and Globalization

Globalization is a worldwide issue where customers needs and wants are being standardized. It
can cause positive and negative effect on any organization depending on how they cope and
make use of the globalization itself as an advantage to them. For instance, the globalization on
fuel price, landing fees and aircraft spare part prices are now standardized accordingly. But
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luckily Malaysia Airlines have their own resources for these three needs where they have their
own aircraft maintenance subsidiary company and support from Malaysia government.In
marketing their product, Malaysia Airlines can use its global brand name to maximize marketing
efficiency. For this reason, Malaysia Airlines should use this opportunity to expand their wing in
the international market. Nonetheless, Malaysia Airlines also need to be aware and choose the
right strategy if they want to penetrate the market.

4.0 STRATEGY IMPLEMENTATION

Well plan strategies are not going to work well with an organization if its implemented
inadequately. In getting success in implementing the strategies, Malaysia Airlines need to
increase their efficiency in communication, managing their resources and improve their
employees morale. Leadership also playsits role in making Malaysia Airlines to gain success in
implementing the strategies. Therefore, all the staff in Malaysia Airlines should work together in
realizing the strategies to become reality.

4.1 Strategic Leadership

The leader is the only one that can determine the future of any company. Without them, the
chances of any company to collapse and bankrupt will be high. That is because the needs of a
leader in a company affect the path of the company whether it can generate income and be
victorious or it can only make profit losses and bankruptcy in the end. Not a lot of people can be
a great leader but everyone can have the traits of a leader which are visionary, inspire and drive
their followers to achieve success.

It can be said that Malaysia Airlines leadership has weaknesses in scenario planning that causes
market share and revenue losses. For this reason, leadership of Malaysia Airlines should apply
the vision trait in order to cope with changes and for the sake of the company continuity. When
leaders are able to master the vision trait, it will be easier for them to collaborate, motivate, trust,
and interdependence amongst their staff. Plus, the coordination and path of Malaysia Airlines
will be in the same direction of achieving common objectives that may lead Malaysia Airlines to
a bigger industry.
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Malaysia Airlines is now operating in a competitive environment. So, the vision of leadership
cant be sluggish. Leader task is not just dealing with external factors but also playing an
important role on observing employees attitude. Therefore, a leader should know and oblige to
inspire and motivate employees if theyre lacking with something that will affect the vision of
the company. Giving the employees rewards are the best thing to do in making the company
vision to become a reality.

Leader needs to be proactive in handling situation. The needs of keeping the vision on the right
track and the same time monitoring its progress is necessary so that Malaysia Airlines will be
more prepare in enduring and responding towards the changes that happen. Moreover,
democratic leader is important where the leaders itself can put themselves with the employees
and communicate with the employees. Encouragement and understanding can be developing
with the employees if any conflict happen and then settle together as a team. By doing this, the
work rate and performance of Malaysia Airlines will improve and in the end will increase the
profit and maximizes the resources that they have.

4.2 Change Management

Competitiveness in airlines industry has become fiercer than before. Due to that, Malaysia
Airlines should be ready to embrace and adapt to changes in order to compete in the market. In
achieving this, Malaysia Airlines should improve their state division management. This is
because every state division especially in Sarawak is having trouble with the competitiveness
from low cost airlines such as Air Asia and the new low cost airline, Malindo Air. Therefore,
Malaysia Airlines should take a strategic change to their state division in coping with the
external environment.

Poor leadership has been one of many factors that cost their profit losses and customer loyalty.
By implying a proper marketing strategy, Malaysia Airlines will be able to challenge the local
airline industry. Adding to that, improvement in every managing structure in each state division
is a must since the capabilities and set of skills of each employee can be outdated under some

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circumstances. Thus, changes and improvements are needed in order to comply with customers
needs and achieving goals.

4.3 Role of Systems

Excellent plan strategies wont work unless leaders and human resources play their role in
implementing the strategies.

4.3.1 Organizational Structure

Organizational structure is a fundamental that can affect the strategy implementation. Effective
use of labor by giving specific task can contribute an advantage in competing in the industry. In
general, the four organizational structures are functional, divisional, entrepreneurial and matrix.

Malaysia Airlines are now using divisional structure to conduct their corporate parenting by
dividing resources in each division. It is essential for them in order to gain profit. Using this
structure, Malaysia Airlines are decentralizing the power of making decision to each division and
that give a clearer goal to the employees to achieve. Nevertheless, the plentiful number of
divisions will cost a lot and sharing of knowledge will be lesser. To respond to that, Malaysia
Airlines should manage all the division under one command center by using network structure
and all the information gathered need to be transmitted to headquarter.

4.3.2 Organizational Process

Malaysia Airlines organizational processes are of consist of entrepreneurial and competencebuilding. In entrepreneurial process, employees will bemotivated by delegating some tasks to
them that of course will increase their discipline and efficiency compared to strict control. In
building competency, employee differences of capabilities will be given a specific task to them
in order to gain trust amongst the Malaysia Airlines and the employees itself. By implementing
this, a more proactive and efficient workforce can be produced in the process of achieving the
goals.

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4.3.3 Strategic Control Systems

In improving the employees performance and at the same time retaining their performance,
control and reward systems are a must. Well rewarded employees undoubtedly will perform very
well. By implementing this, Malaysia Airlines can manage to deliver consistent services to their
customers. Plus, motivated work force surely will lead Malaysia Airlines to gain profit. As a
result of that, employees that perform with excellence and if the satisfaction towards their job are
high, the probability of staying longer with Malaysia Airlines are also high. Thus, this will surely
eliminate the cost of looking for new employees.

Malaysia Airlines as corporate parent also need to use control and reward system in order to
increase the motivation of the employees to achieve goals that being set. By means of giving
them reward based on their performance, the employees tendency of performing at their best
most likely will be high. By doing this, a more standardize employee performance can be
achieved. In addition, controlling the employees is not necessarily being strict with them but
being understanding is the greatest option to choose where employees automatically will increase
their work rate that will lead Malaysia Airlines to compete vigorously in the industry.

4.3.4 Corporate Governance

Corporate governance is where business is managed for the shareholder according to the right
and wishes of the stakeholder. It is also where an organization is responsible for the
stakeholders interest in the organization itself. Corporate governance ensures that the
stakeholderreceives something in the forms of money or others.Malaysia Airlines should take the
approach in implementing what they want to do to the stakeholder so that the stakeholder will
feel secure. Openness with stakeholder is a must where companys finance and planmust be
share to win their trust. Any decisionsare made by Malaysia Airlines can affect stakeholder trust.
Hence, leadership and management of the organization are responsible in balancing the needs of
stakeholders. Finally, a more synchronize and efficient corporate governance is necessary in
planning strategies which can fit the organizational structure that in the end getting control of the
market.

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Conclusion
Strategic management is very important for every organisation. Small organisation to giant
organisation requires strategic management to expand and improve their managing ability.
Adding to that, it can also help them to compete in the industry where all the strategies can be
used to cope with the industry competitiveness itself. Strategic analysis, scenario planning,
PEST and SWOT analysis, Porter five forces, strategic formulation, strategic implementation;
and other strategies are important to imply within the organization. Not just for the sake of
getting profit, but also for long term future. All of the strategies mentioned above can help
Malaysia Airlines to increase their profits and cover their losses. Not just that, the strategies also
can help dealing with the external factors such as competitors, policies, and most importantly the
internal environment itself. Efficiency, cost saving and opportunity exploitation can be achieved
if the strategies are carried out with proper planning. In conclusion, strategic management are not
just a strategy but it can make as a stepping stone to achieve success where it can be used to
analyze strengths and weaknesses that surely will put Malaysia Airlines at great advantages.

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