Malaysian Airlines Aircraft Lost - Example

MH 370, Malaysian Airlines’ Aircraft Lost Contents Introduction 3 The case 4 2 Context 4 2.2 Data 5 2.3 Methodology 6 Findings 7 Conclusion 8 References 8 Introduction The Malaysian airlines flight MH370 took off from Kuala Lampur on March 7th 2014 bound for its destination in Beijing which it was to reach at 6.30 am the next morning after flying overnight. However the flight disappeared in the midcourse soon after it took off and generated a lot of attention worldwide. To analyze the reaction of company personnel to this particular incident one can do so based on several theories. One of the theories the reaction can be analyzed on is the stakeholder theory. The earlier view about the company was that the company management was only responsible to the shareholders of the company. However, Mr. Freeman said that the company and its management is not only responsible to the shareholders but to different groups of stake holders including employees customers, govt. bodies, communities etc (Phillips, 2011). On the other hand legitimacy theory states that the company has the moral obligation to make voluntary social and environmental disclosures to the society at large in order to fulfill the unwritten social contract that exists between the organization and the society at large (Deegan, Rankin and Voght, 2000). Institutional theory attends to the deeper and resilient societal structures present in the society. It considers the process by which structures, schemas, rules, norms and routines get established as authorized guidelines for social behavior (Tihanyi, Tihanyi, Devinney, Devinney, and Pedersen, 2012). The positive accounting theory is a theory that attempts to make good prediction of real life events. Positive accounting theory seeks to make predictions regarding the particular accounting method that that a company would adopt in a particular scenario (Griff, 2014). The political cost hypothesis says that the companies move their earnings to the future. Political cost hypothesis can be used to measure social and environmental disclosures (Mohammad, 2010). The political cost hypothesis like other hypothesis of the PAT may not be equally valid in all cultures. In response to the crisis of the loss of the flight MH370, Malaysian has taken several steps. Benoit has underlined several strategies that the company can use in such crisis conditions to restore image of the company (Coombs, and Holladay, 2012). The case 2.1 Context On March 7th 2014 a Malaysian airlines flight MH370 carrying 239 passengers and crew took off from the Kuala Lampur International Airport. The flight took from this airport on the given date carrying 227 passengers. The flight was to fly overnight and reach at Beijing its slated destination at 6.30 AM. The flight after security checkups are completed takes off at 12.40 AM. The flight path was to take it over the Vietnam air space. There are international protocols that involve the handling over the flight from the area of operation of one ATC to the next ATC. The flight was advised by ATC of Malaysia to contact with ATC of Vietnam and signed off. The last communication received from the pilot was Goodnight Malaysia three seven zero. But the pilots never actually communicated with Vietnam ATC and were virtually untraceable from that point of time. Within 2 minutes of the stop of verbal communication the transponder on the aircraft that keeps contacts with the ground radar stops with working. In addition to transponder another instrument that the aircraft uses to communicate with the ground ATC, the ACARS also stops working. After the transponder and ACARS stopped working the flight started acting like a blind man and deviated from its coast westwards. The absence of these two devices, plus the fact that verbal communication with the pilot was broken cumulatively led to the sudden disappearance of the aircraft. 2.2 Data The company uses several corporate disclosure vehicles to disclose information to the general public. There are various types of corporate disclosure vehicles available. However in the case of analysis for this particular report press releases have been sought after. After the flight MH370 was lost Malaysian Airlines made several disclosures. Here is a brief timetable of those disclosures. Number Date Published Type title 1 March 8 5 Media statements Media statements issued by the company to inform family members of the victim regarding the incident and provision of toll free number 2 8th March 2014 Key personal Verbal Speech LATEST NEWS: Malaysia Airlines CEO Press Conference over B777 Missing with 239 on Board 3 March 9 3 Media statements Caring for the family members of the victims and accommodating them. Providing initial financial assistance to the families. 4 10th march 2014 2 Media Statements Care for the families and information about search operations 5 18th March 2014 Press conference Operational update on the ongoing rescue operation, ACARS, police investigations (Malaysian Airlines, 2014). 6 24th March 2014 Key personal Verbal Speech BREAKING: $5000/MH370 Passenger, Malaysia Airlines CEO News Conference 7 25th March 2014 Key personal Verbal Speech Malaysia Airlines CEO: Were not hiding anything 2.3 Methodology The sudden disappearance of the flight MH370 was a great loss to the Malaysian Airlines company in terms of financial and reputational damage. The company however has taken a proactive position to handle the situation and has devised strategies and corrective measures to prevent further reputational damage. The company seems to have accepted that they are highly responsible for the incident (Hart, and Roderick, 2014). In addition to that it also seems that profit seeking and shareholder’s wealth maximization is not the only goal that the company seems to follow. From its reaction to the incident it seems that the company is concerned with the well being of all the stake holders. The company has not forgotten the legitimacy theory and knows full well its obligations to the society at large (Lu, and Abeysekera, 2014). The company has promised to pay the family members of the deceased $50000 as initial compensation and compensation up to $175000 if the families can provide proof of death. The company has also provided care givers to look after the families of the deceased during the period of search operation. In addition the families have been provided with free travel to Kuala Lampur, lodgings, medical facilities during their stay at Kuala Lampur from 8th March and will be continued. Findings It is a common knowledge that the disappearance of the Flight MH370 was a great loss for the Malaysian Airlines company in terms of both financial and reputational damage. However the way the company responded to the crisis situation deserves some credit. The flight flew on 8th March 2014 from Kuala Lampur airport at 12.40 AM and was scheduled to reach Beijing the same day at around 6.30 AM the same day. The flight carried 227 passengers including 2 infants and 12 crew members taking the total toll to 239. However, soon after the take off the flight disappeared. Most of the passengers were Chinese nationals. Malaysian airlines on its part took proactive measures to address the situations. It came out with frequent media briefings of the incident. The follow up to the event also witnessed Malaysian airlines financing the rescue efforts under taken by several international governments. The Malaysian airlines regularly coordinated with the different government agencies regarding the rescue operations. In addition to coordinating rescue operation the Malaysian airlines provided all types of helps possible to the families of the lost ones. It issued media briefings from time to time to keep them updated on the latest happenings in the issue. In addition to that it arranged for flights so that the family of the lost can travel to Kuala Lampur. Once in Kuala Lampur the families were given financial assistance to stay in the city. In addition to that the families were provided with lodgings, medical facilities, food during their stay at Kuala Lampur where they wait for their beloved. In addition to doing all these, the company is also providing the families with $50,000 currently and will provide financial compensation up to $175,000 provided they can prove the death certificate of their loved ones killed in the incident. Additionally trained caregivers have been arranged at one per family to take care of them and provide them proper counsel to help them cope with this situation of personal grief. The incident that gained a lot of media coverage world wide as everybody expressed their concerns can be said to have been dealt well by the Malaysian Airlines. The Malaysian Airlines has dealt well with the crisis situation (Heath, 2013). Conclusion The case of the disappearance of the flight MH370 was dealt with peculiar efficiency by the Malaysian airlines. The way Malaysian airlines management dealt with the event can be analyzed on the basis of crisis management techniques as given out by Benoit. Benoit spells out several strategies that the companies can use to mitigate reputational damage that is caused by a crisis. The company has used compensation technique to cope with the situation. The company has accepted high level of responsibility for the crisis and that is why as a remedy to the situation the company has gone for financial compensation. The company can also be said to be driven by the need to take care of the needs of different members of society rather than just shareholders. The company by its action has shown that it cares for its customers a lot and respects its relationship with the customers as given by the legitimacy theory. In all the response of the company to the crisis situation can be said to be commendable. References Coombs, W. T. and Holladay, S.J. 2012. The handbook of crisis communication. London: John Wiley and Sons. Deegan, C., Rankin, M. and Voght, P. 2000. Firms’ Disclosure Reactions to Major Social Incidents: Australian Evidence. Accounting Forum, 24(1), pp. 101 - 130. Griff, M. 2014. Professional accounting essays and assignments. London: Miracel Griff. Hart, and Roderick, P. 2014. Communication and Language Analysis in the Corporate World. Hershey: IGI Global Heath, R. L. 2013. Encyclopedia of public relations. California: SAGE Publications. Lu, Y. and Abeysekera, I. 2014. Social and environmental disclosure in chinese firms. NY: Routledge. Malaysian Airlines, 2014. Malaysia airlines mh370 flight incident - mh370 press conference on 18 mar. [Online]. Available at http://www.malaysiaairlines.com/mh370. [Accessed 16th December 2014]. Mohammad, K. 2010. Positive accounting theory and science. Journal Of Centrum Cathedra, 3(2), pp.136-149. Phillips, R. A. 2011. Stakeholder theory.Massachusetts: Edward Elgar Publishing. Tihanyi, L., Tihanyi, L., Devinney, T. M., Devinney, T. and Pedersen, T.2012. Institutional theory in international business and management. London: Emerald Group Publishing. Read More