Malaysian Airlines Systems - Case Study Example

Malaysia Airlines Table of Contents Executive Summary 3 SWOT analysis 4 Strength 4 Weakness 4 Opportunities 5 Threat 5 PEST Analysis 6 Political 6 Economic 6 Social 6 Technological 7 Communication Strategy 7 Identifying Target Audience 7 Determining Communication Objectives 8 Designing Message 9 Choosing media for communication 9 Summary of desirable outcomes 10 Press Release 11 Reference List 13 Executive Summary Malaysian Airlines Systems, based in Kuala Lumpur is the national airlines of Malaysia. The company offers domestic and international air transport services of passenger as well as cargo. The company has recently faced two consecutive tragic incidents involving the crash of two airlines, MH17 and MH370. These incidents have severely degraded the company’s reputation and passenger traffic, leading to severe financial loss. The communications manager has decided to send a strong message with the assurance that the company is dutifully responding to these incidents by improving the security and safety features of the aircrafts. This paper is divided into three sections; the first section covers the current situational analysis of the company’s status by using SWOT analysis. The second section is focused on setting the goal of designing a proper communication strategy for its stake holders and passengers, which will allow the company to gain their trusts. The third section includes a press release from the company which is targeted at the passengers in order to assure them that Malaysian airlines are safe and secure as before. SWOT analysis The current situation of the Malaysian Airlines has been discussed in this section in the light of SWOT analysis. Strength Malaysian airlines hold a strong reputation, which acts as a competitive advantage for the company. The company serves a very large customer base of 37,000 on a daily basis over 60 global destinations (CAPA, 2014). It has boosted its brand value even further by winning several awards over the past decade. In 2013, the company has received the prestigious award of being the leading Airlines of Asia, and it was also awarded with World’s five star airlines award. MASkargo, the subsidiary responsible for cargo transportation, was awarded “Cargo Airline of the year” for six consecutive times (Malaysia Airlines, 2014). Thus it can be stated that the high reputation of the company poses a serious threat to its competitors and at the same time owing to its efficient operational processes, it attracts a lot of customers which leads to higher revenue generation. The company operates in a diverse geographic area (Malaysia Airlines, 2014a). As a result, it helps the company to reduce risks of financial collapse. Any loss made in a particular region can be compensated by the profits made in other regions, thus the overall Malaysian airlines group can have a stable revenue generation. Malaysia alone contributes to more than 22.6 % of the company overall revenue. Middle East and Europe accounts for 24.8 % of the revenue, which is followed by North America (18%), New Zealand and Australia (15%) (Marketline, 2014). Weakness Malaysian airlines have faced a substantial loss of around $178 million in its operating profit in the fiscal years 2012 and 2013. Moreover the net loss of the company increased from $137 million in 2012 to $371.5 million in 2013 (Malaysia Airlines, 2014b). This drastic downfall in profit margin can eventually put negative effect in the company’s long term sustainability. The primary reason for these losses is due to the staggering economic conditions in the developing countries. The depreciation of Malaysian currency resulted in the high operating costs, thus reducing the profitability of the company. The recent mishaps of 2014, involving the shooting down of MH17 and the mysterious disappearance of MH370 has severely affected the business operations of the company. These consecutive incidents have infused fear among the passengers and most of the Malaysian flights are flying with very less passengers. The severe decline of the consumer preference has led to significant loss for the company (Gordon, 2014). Opportunities After the financial crisis of 2008, the air freight business has shown significant signs of growth and recovery. The increased affordability among consumers has lead to the growth in international trade, which shows promising potential for the air freight business. Malaysian airlines also have growth opportunities in the near future, as the air traffic has increased by 64 % in the past decade, and are likely to increase by three times in the next two decades (Marketline, 2014). The widely expanded international network of Malaysian airlines can provide opportunities to further diversify its network in to other geographic areas, owing to the company’s strong brand awareness. Threat Malaysian airlines operate in a highly competitive industry, saturated with established players like British Airways, Virgin Atlantic Airways, Air Asia, etc. As a result there exists a battle to secure the maximum market share possible. Owing to its large international and domestic network, the company faces a strong competition from both international and local players of most of the geographic regions. Due to the rapid increase of business travels, multinational firms have adopted travel via private jets. This has resulted in reduction in business class travelling in public airlines. The fluctuations of fuel prices also put a negative impact on the profitability of Malaysian Airlines (Marketline, 2014). Moreover, the airlines industry is severely regulated by several government regulations, strictly abiding by them may incur added cost to the company. PEST Analysis The external environmental assessment has been done using PEST analysis. Political The political environment of a region acts a major influencing factor for a business operation. It controls the taxes levied on the airlines companies (Kotler and Keller, 2011). The international passenger tax imposed on Malaysia airlines increased to RM65, has increased the company’s operating cost, thereby reducing its profitability (The Malaysian Insider, 2014). Moreover, the price of fuel is also affected by the global political environment (The Economist, 2011). As a result, the Malaysia Airlines had to face a severe loss of RM1.28 billion in the fourth quarter of 2012, mostly due to the rise of fuel price (The Malaysian Insider, 2012). The minimum wage policy implemented by the Malaysian government, has also led the Malaysia Airlines to increase the salary of the blue collar employees, which eventually increased the operating cost of the company (Seman, 2014). Economic The economic crisis of Ukraine has set a chain reaction, which has severely hiked the fuel prices in Europe, thereby affecting the profitability of Malaysia Airlines in the region (Tulett, 2014). Malaysia Airlines operates in a global perspective in more than 60 countries (CAPA, 2014). This as a result exposed the company to exchange rate fluctuation risks. The economic condition of a nation is often reflected in the valuation of its currency. Thus the fluctuation of the economic condition affects the currency exchange rates, which in turn impacts the overseas trading of Malaysia airlines (Papaioannou, 2006). The European crisis of 2008 has negatively impacted the affordability of the consumers, which as a result had reduced the passenger traffic in the passenger traffic in the business class (The New York Times, 2012). Thus it can be stated that the economic condition of a region has significant effect in the business operations of Malaysia Airlines. Social The socio cultural trend also affects the business activity of an organization (Kotler and Keller, 2011). The Crash of flight MH17 and MH370 has resulted in a wide spread panic in the society, thus as a result the passengers are avoiding Malaysia Airlines, which in turn has drastically reduced the consumer preference for Malaysia Airlines. As a result it has severely reduced the revenue generation of the company (Gordon, 2014). According to the reports of World Tourism Organization (2014), the there is a significant rise in the number of international tourists travelling across the worlds. This as a result has increased the international air traffic of all teh airlines companies, including Malaysia Airlines. Technological The technological availability acts as major factor in the success of an organization (Kotler and Keller, 2011). The growing trend in information technology has allowed the company to introduce mobile apps in order to connect to the customers. Moreover, it has allowed the customers to buy tickets much easier. The technological advancement has also allowed the company to improve the service provision and safety features of the airlines (SITA, 2013). Communication Strategy Identifying Target Audience The two incidents of Malaysian Airlines aircraft crashes, has severely shattered the reputation and financial status of the company. The crashing of MH17 and MH370 has caused a serious drop in passenger traffic in Malaysian airlines. The frequent flyers have started to avoid travelling in Malaysian airlines as much as possible. Moreover, these incidents have also declined the share prices of the company (Gordon, 2014a). Thus in order to improve the company’s image to its former glory, the senior communications officer must make sure that any communication made from the company’s end should attract more customers by removing the fear from their mind. However, communicating with the customers is not enough; the company must gain the trusts of its stakeholders as well. Thus it can be stated that the target audience of Malaysia Airlines’ communication activities are the frequent flyers, travel agencies with whom the airlines commences frequent business deals, and the investors and the shareholders. The company should also communicate with its suppliers and service providers in order to ensure that the operations process can continue seamlessly. The tragic incident has also led several employees and cabin crews to leave their jobs. So in order to restore to its former workforce, the communication should also target the new job seekers (Gordon, 2014a). Determining Communication Objectives The objectives of the communication have been broken down by SMART goal setting model (Locke and Latham, 2006). The SMART goal setting theory clarifies an objective by breaking it down by five parameters, which are as follows. Specific: The objectives should be defined in a specific manner, by ensuring that there are no ambiguities or overlapping of roles and activities (Locke and Latham, 2006). Malaysian airlines will launch extensive communication activities, which will target all of its stakeholders including passengers, investors and potential employees. The communication will bear a message which will assure that these incidents will never repeat in the future (Gummesson, 2009). Measurable: The set objectives should be measured in terms of quantifiable data. This will allow the company to monitor its progress over time (Locke and Latham, 2006). The effectiveness of the communication strategy of Malaysia Airlines will get reflected over the passenger traffic, stock prices, etc. Thus the communications officer should monitor these parameters to ensure that the communication activities have successfully attracted new customers and gained shareholders’ trust. He will also monitor the recruitment process and the attrition rate of the company, which will allow him to ensure that the communication process has successfully convinced the employees to stay in the company and at the same time it has attracted the potential candidates (Jarzabkowski and Spee, 2009). Achievable: The objective of this communicational activity is well within the company’s current resource and time availability. The company’s communicational venture can be successfully achieved by allocating the required activities to achieve the goal among the marketing communication team members. The project will be broken in to smaller tasks like monitoring consumer behaviour, identifying the right media vehicle for broadcasting, designing the communication message (Gabriel, Kottasz and Bennett, 2010). Result Oriented: The goal should be pursued while keeping the primary outcome in mind. This will ensure that the progress is directed towards the desired goal (Locke and Latham, 2006). The communicational venture will be implemented by keeping in mind that it is carrying the right message to the right receivers. As a result the communication officer can make sure that the company’s activities and resources are targeted at the desired direction. This can be ensured by constant monitoring and reviewing of the ongoing activities (Kover, 2007). Time bound: The activities needs to be finished within three weeks from the planning stage. Any further delay will degrade the company’s reputation even more. The team needs to collect consumer data within the first week. In the second and third week, the team will communicate with the media companies and launch the message with in the stipulated time (Hyvönen et al, 2009). Designing Message According to Eagle et al (2014) designing a communicational message is based on three primary themes, Rational, Emotional and Moral. The message designed by Malaysia Airlines will be designed over a moral appeal that will highlight Malaysia Airlines’ strategies to improve the passenger flights, so that further tragic incidents can be avoided. It will allow the customers to realize that the company is morally responsible for the safety of its passengers. As a result it will gradually remove the fear from the customer’s minds, enabling them to trust the company. According to the theories proposed by Ballantyne and Varey, (2009), a message which is trying to change the mental setup of the audience, needs to have a clear conclusion with a strong sense of final opinion from the communicator. Thus Malaysian Airlines will design its message so that it will contain a definite conclusion that Malaysian airlines are still safer to travel with. Based on the AIDA model described by Kotler and Keller (2011), the marketing communication process can be broken in to four steps, Attention, Interest, Desire, and Action. The attention of the customers will be acquired by stating the practical value addition for the customers, like addition of more safety features and incorporating new regulations which will ensure further in-flight safety. Highlighting the safety features will make the customers interested in the company’s proposal. The proposal in the message will be justified by highlighting the company’s activities in order to achieve the promises made to the customers. This as a result will influence the customers to use Malaysian airlines again. Choosing media for communication The success of a communication process mostly depends of the choice of the right communication medium. The message for the passengers will be communicated through television, PR activities, Newspapers, etc. These mediums will make the message more credible because the audiences consider them to be authentic. This will allow the company to have maximum exposure of their communication. The message for the stakeholders will be communicated through the board of directors and via the company’s website and also in the financial statement of the company. The company will communicate with its employees circulating emails and verbal communication via supervisors. Summary of desirable outcomes The venture of launching the communicational activities will eventually bring back the trust and erase the fear from the customers’ minds. This as a result will increase the passengers’ preference of Malaysian Airlines. The shareholders and investors will gain faith over the company’s financials and future returns, thus the communication will ensure more inflow of investments which will eventually increase the revenue and profitability of the company. The communication will also attract new employees in the company, which as a result will improve its workforce and service quality. Press Release PRESS RELEASE For Immediate Release Contact: Malaysia Airlines Marketing Department Office: 1 300 88 3000, +603 7843 3000 (outside Malaysia) Rejuvenating Malaysia Airlines Malaysia, January 2, 2015 Malaysian Airlines have geared up to rejuvenate its image, which has been tarnished by two consecutive flight mishaps in 2014. The company has decided to incorporate several new regulations and technological changes so that these incidents are not repeated in the future. The crash of flights MH17 and MH370 has severely scared the passengers and shareholders alike. The company has promised its customers, that it has started to take drastic measure to improve their flights’ systems by investing more in research and development. Amidst the drastic downfall of Malaysian Airlines, the company has started to take several steps to rejuvenate its position to its former glory. This will eventually make their flights safer and will avoid any further tragic incidents. The company’s CEO, Christoph Mueller (Mangla, 2014) further added that although the two tragic incidents occurred due to separate reasons, but the company has gives full assurance that such tragic incidents will not occur in the future. He also mentioned that the company has decided to change certain regulations in its operations process, so that it ensures safety for the customers. In order to bring back its loyal frequent flyer, Malaysian Airlines has decided to offer discounts and privileges for them. The company mentioned that right now their primary focus is to gain the passengers’ trust by increasing the safety features in the aircraft. Mueller has also mentioned that the company has recently collaborated with some of the best aircraft engineering and security companies. The primary objective of this alliance is to develop better black boxes and improved navigation system. This new black box will allow the controller team to constantly monitor every activity in the aircraft’s system in real time. Thus any system malfunction will be immediately communicated to the pilot and he can be guided properly to avoid any aircraft crash. Moreover, the newly improved GPS navigation system will allow the control room to monitor the flights’ trajectory at all times even under the harshest weather conditions. The company has also started working on the new fail safe mechanism. This will allow the controller team in the base to take control of the flight and send it to auto pilot under unforeseen circumstances. Malaysia airline is one of the biggest airlines companies which operate in a global perspective. The company provides air transportation services to both passengers and cargo. It also provides maintenance services to third party companies. Malaysia airlines fly to over eighty destinations with 37,000 passengers daily. The company also owns three subsidiaries, Firefly, MASwings and MAS engineering. These subsidiaries operate as different business units in sectors like passenger transport, commuter airline services and maintenance services, thereby making the company a diversified business firm. ############## Reference List Ballantyne, D. and Varey, R. J., 2009. Creating value-in-use through marketing interaction: the exchange logic of relating, communicating and knowing. Marketing Theory, 6(3), pp.335-348 CAPA, 2014. Malaysia Airlines System. [online] Available at: [Accessed 2 Jan 2015] Eagle, L., Dahl, S., Czarnecka, B. and Llyod, J., 2014. Marketing Communications. London: Routledge. Gabriel, H., Kottasz, R. and Bennett, R., 2010. Advertising planning, ad-agency use of advertising models, and the academic practitioner divide. Marketing Intelligence & Planning, 24(5), pp. 505-527. Gordon, S., 2014. Malaysia Airlines to sack 6,000 staff following twin disasters: We need to rebuild after these two awful incidents says carrier. 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