Malaysian Airline Accident on March 8th 2014 - Example

MH 370 CASE STUDY OF MALAYSIAN AIRLINE ACCIDENT ON MARCH 8TH Full Table of contents Introduction. 2. The case 2.1 the content 2.2 Data 3. Findings 4. Conclusion. Introduction Business enterprises face the risk of accidents in their daily operations. In handling a disaster, the business considers the degree of loss that occurrence. It is a process that demands critical evaluation and keen assessment of damages associated with the accidents. As such, different researchers have established theories that are helpful in assessing these occurrences. In this case study for instance, we can assess the nature of the airline accident, the parties involved, the costs involved, and the current status of the organization financially after the incident. Therefore, the research intends to employ a number of theories in the analysis. The theories include: System-oriented theories (i) Stakeholder theory (ii) Legitimacy theory (iii) Institutional theory Positive accounting theory Image restoration theory The research will use each theory to explain deeply on the different component pertinent to the case study, then draw a meaning conclusion based on the findings of the research. The system-oriented theories. The system-oriented theories provide a platform of analysis that help the organization weigh its social, public, environmental, and other human related issues (Pittroff, 2014).The community have the responsibility of influencing the organization to disclose policies (Deegan& Unerman, 2011). The following are the components of these theories: (i) Legitimacy theory. The theory ensures that the organization operates in accordance to the provisions and norms that the society stipulates. Here, the organization “…attempts to make sure that all their activities are alleged to be legitimate by outside parties” (Deegan & Unerman, 2011). Mostly, the legitimacy of the organization will keep on changing with time. According to Deegan (2000), legitimacy theory is a derivative of the political economy theory under the class categories. The stream is interested with the interactions of individuals without much concern on class boundaries, structures, or their various struggles (Deegan & Unerman, 2011). Essentially, the notion that guides legitimacy is that of a social contract. Here, the analysis considers the expectations that the society has on the way the organization carries out its various activities. Legitimacy is a state of harmony between systems of an organization and that of the society, while legitimation is the process that leads to the establishment of this agreement in the systems. In the case study, failure of Malaysian Airlines to meet legitimacy requirements had far reaching effects. The demand for airline services from the organization apparently reduced. However, the corrective action that the enterprise can take may include increased communication, and commitment in reaching legitimacy goals. (ii) Stakeholder theory. Is defined as an individual or groups of persons who are directly affected by both positive and negative occurrences of the business operations, and also, they can affect the organization. This theory is divided into two categories namely: Ethical or normative branch Positive or managerial branch. Ethical branch states that the organization should treat the stakeholders fairly (Deegan, 2000). Also, the management under this theory is supposed to carry out the following functions: Provide relevant information to every group regardless of whether the information is usable or not, and consider each group’s merits. Managerial process of the organization should seek to benefit all stockholders. The issues regarding shareholder power should not be directly relevant. The organization serves as a medium of coordination of what the stakeholders want. The business should find a fair ground on the conflicting issues (SU-Yang, 2014). Stake holders exist as either primary or secondary. The primary ones are essential for organization survival. However, the secondary ones are those who can affect, or sometimes get affected by the organization, even though they are not vital for its existence. In ethical branch, the distinction between these two categories is irrelevant. The theory insists on the right to obtain crucial information through a clear exercise of accountability. Accountability entails the following: The responsibility to give an account with connections to the actions that a person is held responsible to them. Accountability involves the process of doing something then providing an account of the outcome of the actions. The responsibilities involved are derived from the action in progress, and a clear account on the same. The responsibility of providing a report is not as a result of demand from external forces. One views it as a responsible act on the part of the organization. Managerial branch provides an account on how the actions of management can realise what the most powerful stakeholder expects. According to Deegan and Unerman (2011), the theory appears to be organization-centred. Here, one views the organization to be included in the wide array of social life in the society. The business organization identifies the stakeholders and initiates relationships that upholds the interests of the enterprise. Managerial branch enables its testing through simple analytical processes such as observation. Unlike the legitimacy theory, managerial one handles a specific group of stakeholders in the surrounding. As operations in the organization continue, stakeholders develop expectations which can later affect operations and disclosure of information. The way an organization responds to various stakeholders depend on the power they poses. The most essential information that the organization discloses include financial, business performance, the level of competence of the workers, among others. As such, the information is vital in enabling the organization gain societal approval. (iii) Institutional theory. The theory provides information on the reason for homologous character and form of organizations. The organization can achieve legitimacy through commitment to conform and practice societal expectations. Under this theory, one gets additional information on legitimacy and stakeholder theory. The theory has two plausible parts ofisomorphism and decoupling (Deegan & Unerman, 2011). According to Deegan and Unerman, isomorphism are hindrances that force units in the society to behave like others. The forces exist as mimetic, normative, or coercive (Deegan & Unerman, 2011). On the other hand, decoupling refers to practices that may appear to show organization’s commitment to uphold societal expectations. However, the enterprise may just do such activities aiming at making more revenue. Positive Accounting Theory. The theory deals with relationships between a group and groups that provide resources to the organization. Here, the organization considers delegation, authority, and resulting costs (Fiji, 2010). The organization monitors costs and losses from the activities. 2. The case 2.1 Context Malaysian airlines operations on 8th march 2014 came to a standstill after information on a lost plane went global. The flight of MH370 from Kuala Lumpur to Beijing still remains untraceable. The plane lost contact in Vietnam’s sea on 01:30am. After an intensive search of the airplane, the conclusion on the same is that it went down towards the southern region of the Indian Ocean. The report shows that the plane had 239 passengers and most of them were Dutch. The victims of this tragic occurrence are the passengers on MH370, the crew on-board and friends and families of the diseased. The reports of the accident hit the international media scenes after the loss. For instance, according to the New York Times, the report speculated on the possibility of terrorists activities that led to the demise of these innocent lives (Jane’s, 2014). Also, interviews with the Director of Engineering department shows that the plane was in good conditions and whatever happened still is a mystery. In another area of interest, the Malaysian minister and the airline CEO and chairman had a detailed board-room discussion on the topic. Various assumptionsthat lack conceptualization also were evident (“Emerging”, 2014). However, the press release had some detailed information that tried to reveal the reality of the situation. 2.2 Data. The management of the airline used certain means in the corporate disclosure of the information. Among them, use of media was the most common one. Interviews of the workers also helped disclose information to the public. The following is the data with regard to MH370. Number Date Published Type Title 1 8th-March till 10th-November 2014 About 50 Press releases Media statement by Malaysia Airlines, incident MH370 2 8th March 2014 Key personal Verbal Speech LATEST NEWS: Malaysia Airlines CEO Press Conference over MH370 missing with 239 on-board. 3 24th March 2014 Key personal verbal speech BREAKING of about: $5000/MH370 Passenger, Malaysia Airlines CEO News Conference 4 25th March 2014 Key personal verbal speech Malaysia Airlines CEO: ‘We are not hiding anything.’ 2.3 Methodology. In this section, the research will show how the Malaysian Airlines have strived to portray high level of responsibility. For instance, the corporation agreed to carry out compensation to the families as a means of image restoration. According to Benoit (1997), one can restore the image through the use of accounts, apologies, or excuses. The essential facets in this theory include the theoretical framework that these organizations employ so as to correct the mistakes during crisis. Communication that the organization makes should have a goal and the efforts to maintain a good reputation should not relent Benoit (1997). The means through which the organization use to apologize can help shape the distorted image of the organization. Apologies are meant to show the position, justification, and the action that the corporation wants to undertake (“Message,” 2014). However, the theory is only subject to opinion shaping instead of providing a lasting solution that the organization can use to correct the situation. In the case study, the Malaysian Airlines Corporation has adopted this theory by Care giving to the families, support, and counsel. Additionally, hotel accommodation for up to five family members per passenger, transportation, meals and other expenses have been provided since 8th March and that will continue. More so, the organization has set an initial compensation of $50 000 for families. A compensation of up to $170 000 is available for cases of death approval. The families can view this initiative as a way to clean the reputation of the organization which has since then worked. 3. Findings. Critical analysis of this research identified some factors pertinent to the case study. The following are some of them: The corporation was not prepared for this tragedy. Most of the passengers on-board are from Dutch land. Possibilities of terrorist activities provide a hint on the fate of the plane and people on-board. The reports from media houses were the immediate source of information about the lost plane. The compensation scheme that Malaysian Airlines adopted is successful in image recovery. The location of the plane is still a mystery and the searchers still have the hope of finding it since no one has been confirmed dead. The corporation strives to use legitimacy to show the populace its ability to meet the standards required. 4. Conclusion. In conclusion, this case study shows a great reliance on the theories of legitimacy, image restoration, institutional, stakeholder, and political cost hypothesis. To begin with, the Malaysian Airline Corporation has tried live to the expectation of the society by continuously insisting on improved maintenance. The essential stakeholders in this study include the community, government, media, investors, and other publics. The organization has learnt to balance the needs of these stakeholders. The corporation was not ready for this tragic situation and, hence, used apologies to show the stand of the organization in response to the lost plane. References. BENOIT, W.L.(1997). Image repair discourse and crisis communication. Public relation review, 23, 177-186. DEEGAN, C., AND UNERMAN, J. (2011). Financial accounting theory. 2nded. New York: McGraw- Hill Higher Education DEEGAN, C. (2000). Financial accounting theory. Sydney, McGraw-Hill. Emerging Stronger - Interview with Ahmad Jauhari, Group CEO of Malaysia Airlines. [online]. (2014, May 2) Available at [accessed December 18, 2014] FIJI, N.U. (2010), March 3). Deegan5e Ch03. [online]. 3 March. Available at < http://www.slideshare.net/joshuatuisawau/deegan5e-ch03> [accessed December 18, 2014] JANE’S, I.(2014). What Happened to Malaysia Airlines Flight 17? New York Times, [online] 23 July. Available at Media Statement & Information on Flight MH370. (n.d.). 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