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Page 1 | 24 Integrated Marketing Communication – Malaysia Airlines Executive Summary of Malaysia Airlines: MAS has certainly come a long way. For the financial period 2005 (9 months), MAS reported a loss of over RM1.3 billion the biggest in the company’s history – and it was expecting to hit an even deeper loss of RM1.7 billion for the full year 2006. The finan cial position was so precarious that we had only a few months until April 2006 before we ran out of liquidity. In the wake of the profit and cash crisis, we announced our Business Turnaround Plan (BTP 1) in February 2006. The BTP 1 was developed using the Government-Linked Companies Transformation (GLCT) manual as a guide, and targeted to cut our losses from RM1.7 billion to RM620 million in 2006, achieve a profit of RM50 million in 2007 and a profit of RM500 million in 2008. With hard work, radical changes and tough decisions, we were able to overcome the cash crisis to ensure our financial survival in 2006, achieved a record profit of RM610 million for the 9 months, year-to-date to September 2007, and we are now on track to generate further profits in 2008. We made it! We have demonstrated to our stakeholders, nation and world at large that we are a winning team. However, new challenges loom ahead of us. The single largest concern that MAS will face in the industry is overcapacity. Based on industry estimates, about 400 plus new aircraft have hit the skies of Asia Pacific, India and Middle East in 2007, and another 400 plus is expected in 2008. This phenomenon of unbridled growth will intensify competition in the market, and erode our yield and profit margins. Coupled with the liberalization of ASEAN skies and rising oil prices, MAS will, with everything else remaining equal, inevitably hit a wall and fail badly if we do not transform ourselves. Thus, as we go into 2008 and beyond, our focus will clearly need to shift to securing our future success. This phase represents the most challenging yet for MAS this is the real mountain that we need to scale. To chart our path onwards and upwards, we have developed a Business Transformation Plan (BTP 2). The plan, outlined in this document, will build on the 5 key thrusts of The MAS Way (see Exhibit 1) which served as the guiding principle for our BTP 1.

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Integrated Marketing Communication – Malaysia Airlines

Executive Summary of Malaysia Airlines:

MAS has certainly come a long way. For the financial period 2005 (9 months), MAS

reported a loss of over RM1.3 billion – the biggest in the company’s history – and it

was expecting to hit an even deeper loss of RM1.7 billion for the full year 2006. The

financial position was so precarious that we had only a few months until April 2006

before we ran out of liquidity. In the wake of the profit and cash crisis, we announced

our Business Turnaround Plan (BTP 1) in February 2006. The BTP 1 was developed

using the Government-Linked Companies Transformation (GLCT) manual as a

guide, and targeted to cut our losses from RM1.7 billion to RM620 million in 2006,

achieve a profit of RM50 million in 2007 and a profit of RM500 million in 2008.

With hard work, radical changes and tough decisions, we were able to overcome the

cash crisis to ensure our financial survival in 2006, achieved a record profit of

RM610 million for the 9 months, year-to-date to September 2007, and we are now on

track to generate further profits in 2008. We made it! We have demonstrated to our

stakeholders, nation and world at large that we are a winning team.

However, new challenges loom ahead of us. The single largest concern that MAS

will face in the industry is overcapacity. Based on industry estimates, about 400 plus

new aircraft have hit the skies of Asia Pacific, India and Middle East in 2007, and

another 400 plus is expected in 2008. This phenomenon of unbridled growth will

intensify competition in the market, and erode our yield and profit margins. Coupled

with the liberalization of ASEAN skies and rising oil prices, MAS will, with everything

else remaining equal, inevitably hit a wall and fail badly if we do not transform

ourselves.

Thus, as we go into 2008 and beyond, our focus will clearly need to shift to securing

our future success. This phase represents the most challenging yet for MAS – this is

the real mountain that we need to scale. To chart our path onwards and upwards, we

have developed a Business Transformation Plan (BTP 2). The plan, outlined in this

document, will build on the 5 key thrusts of The MAS Way (see Exhibit 1) which

served as the guiding principle for our BTP 1.

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The global airline industry is in a state of turmoil and it is increasingly clear that the

survivor and most certainly the winner will have to make radical changes to adapt to

the new environment. (MAS) reported a loss of over RM1.3 billion. This

announcement came at the same time as some of regional competitors reported

strong profits.

The result is unacceptable. A real business turnaround is an imperative of MAS. The

new environment will continue to hits MAS hard. The projections for MAS for 2006

look dismal. In fact, on its current business assumptions, course and speed, MAS

will likely fail, running out of cash in April 2006, and reporting a RM 1.7 billon loss for

2006. The management team, and staff, however, believes strongly in ability to

transform the business and, indeed last go beyond expectations. MAS have done

much to improve its performance over the 5 years and indeed last year. MAS have

much to be proud of, and this work will form the foundation of their success. With

hard work, radical changes and some tough decisions, MAS can certainly be a

survivor and a winner. Since early December 2005, the management team has

dedicated itself to the development of a plan that builds off the actions taken by the

Board 2005 to begin the turnaround.. These plan will not only reverse the loss and

return MAS to profitability, but also transform the company into a strong and vibrant

institution one that is capable of withstanding external shocks and aggressively

tackling new opportunities. Business Turnaround plan has been developed using the

GLC Transformation Manual as a guide. It takes into account the recommendations

in the manual and adapts these for implementation in MAS in the context of the

business turnaround. The plan, outlined in this document, has five central thrusts,

each symbolized by a tail of the venerable MAS symbol. By achieving the plan will

enable mas to realize a net income of RM 500 million in 2008 an all-time high profit

for MAS and to be well positioned to improve its net income even further. In the

report, certain parts have been included as briefly about Malaysian Airlines Systems

(MAS).

The main part discussed are the short history about the firm (MAS), the industrial

overviews by Porter’s five forces model to analyze the completion, the SWOT

analysis to identify specific competences. In short history, background of the

company, vision mission and future managing service quality is discussed. It is the

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mission of Malaysia Airlines System Berhad, as a corporation, to provide a safe

transport facility which now in 2014 seems hard to gain the trust after the incident of

flight MH307.

A Definition of IMC:

“Integrated Marketing Communication is a process for planning, executing &

monitoring the brand messages that create customer relationships”

(Duncan, Principles of Advertising & IMC, 2005:17)

IMC “is the coordination and integration of all marketing communication tools,

avenues, and sources within a company into a seamless program that maximizes

the impact on consumers and other end users at a minimal cost” (Clow & Baack,

2007, p. 8).

Impact of IMC:

IMC plays a role in all:

Business-to-business (B2B) interactions.

Marketing channel communications.

Customer-focused communications.

Internally directed communications.

The Goal of IMC:

As with all marketing activities, the goal of IMC is to build brands. Brands that are

well known and liked are more likely to be purchased → increase profit margins.

Brand Equity: “the intangible value of a brand – value added to a product or service

that derives from a perception in customer’s minds” (Duncan, 2005, p. 8).

Value of IMC:

The importance of Integrated Marketing Communications was until a few years back

only understood by the small business owners and growing companies but of late, its

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value has also been acknowledged by the large corporations and big companies as

well. The reasons for this trend are the following:

1) In the background of the global economic meltdown, the competition amongst

the businesses has become even stiffer and marketing has assumed a

greater importance than ever before.

2) New methods of marketing have evolved in the recent past and no business

or company can afford to ignore them.

3) Because of a flood of marketing materials and advertisements, it has become

harder for the companies to have their marketing messages imprinted in the

minds of the people.

Integrated Marketing Communication is directed to combine the marketing efforts

from the online and the offline sphere to derive maximum benefit from the whole

marketing strategy. The online components of marketing used are B2B website

design, email newsletters, pay per click advertising, search engine optimization,

Facebook marketing and many more similar strategies. The offline or the traditional

marketing strategies include direct mails, public relations management through the

public relations firms and many more traditional advertising methods. Not to forget,

the interpersonal marketing methods are not out of the scope of integration.

The core idea behind integrating the marketing communication is to help the people

internalize your marketing message by exposing them to the same message several

times through different online and offline means.

With the ever increasing trend of integrated marketing communications, many

agencies have come up that handle all the aspects of integrated marketing. These

agencies rely on a network of trustworthy service providers that handle different

aspects of marketing including printing, promotion, online marketing etc. If you opt

for the integrated marketing agencies, you can be rest assured that your marketing

campaign becomes more efficient, is carried out at a fast pace and is cost efficient at

the same time.

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One of the most important aspects of these marketing campaigns is the planning of

the marketing campaign. You should carefully select the online and offline marketing

components that you wish to use by keeping in mind your target audience and the

efficacy of each component. This would determine the cost of the whole campaign

and you would not have to care for the cost of entire plan.

Another very important aspect of integration is the link between the various

marketing components that helps in establishing a continuity which increases the

chances of retention of the marketing message in the minds of the people manifolds.

The efficiency in linking the various online and offline components is of great

importance to ensure that the marketing campaign stands out amongst the rest.

Benefits of IMC:

IMC provides greater

Brand differentiation

Accountability within a firm

Trust among consumers.

Levels of effectiveness in cutting through message clutter than single

strategies.

The Changing World of IMC:

Old World New World

“Talking At” Consumers

Focus on Winning New

Customers

Two-way Dialogue with

Consumers

Focus on Building Long Term

Relationships with Consumers

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IMC – The Evolution:

To

IMC & the need for integration:

Covers a number different media and strategies

TV, radio, Direct, PR, social media etc

Selective combination of appropriate types of communication

Meeting a common set of objectives for the brand

Integration over time with regard to customers

Integration provides synergy

The Importance of Integration:

Integration begins with the way a company and its agencies organise the process for

creating and delivering brand messages. All participants involved in creating and

delivering brand messages must work together:

Marketers Relied Primarily on

Advertising and Promotions

Marketers Use and Coordinate

Many Different Forms of

Communication with Consumers

Mass Marketing Using mass communication

Relationship Marketing Using integrated marketing

communication with a focus on interaction

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The company

Company agencies

The media

Channel members

IMC support services.

Integrated Marketing Communications Model:

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Introduction:

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MAS was founded in 1947 by Malayan Airways. With the formation of Malaysia in

1963 the airline changed its name soon after to Malaysian Airlines. MAS is the

government owned flag carrier airline of Malaysia. Flights are operated from KLIA

and Kota Kinabalu. It also operates transatlantic and transpacific flights. MAS has

received more than 100 awards in the last 10 years such as the “World’s Best Cabin

Crew” and “5-star Airline”. MAS is listed on the stock exchange of Bursa Malaysia by

the name Malaysia Airline System Berhad.

Malaysian Airlines – VISION – MISSION - STRATEGY

Present problem of MAS:

Malaysian airlines (MAS) used to be the national pride of Malaysia. It symbolisms

modernity and the vision to achieve continues growth and advancement for our

country. The company gain reputation as an airline that provided good hospitality for

the passengers. It all seems good for MAS; however MAS keep suffers a lot of

losses and declining revenue over the years. In 2011, MAS recorded a mind-blowing

loss of RM2.52 Billions. One might say that it is due to economic downturn or

recession, but other competitor airlines are actually making profi ts. Among the

airlines that recorded profits is Singapore Airlines, British Airways and Cathay

pacific, all the competitors of MAS reported a profitable year, but why MAS still

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recorded such a big loss? We need to examine the marketing mix of MAS in order to

find the problem and the solution to the problem faced by MAS. It is expected that

MAS might be bankrupt after second quarter of 2012 if no steps are taken to solve

problems faced by MAS.

Malaysia has now met with a similar removal of a passenger plane's electronic

capabilities, no distress signal and complete disablement over the ocean. It's as if a

kill switch was flicked - literally. What might be bugging the world's militaries on this

occasion, and cause them to pick out Malaysia for a bit of the treatment?

Facts at present issues:

The black box emits a signal which can be picked up hundreds of miles

away... still no sign of wreckage more than 36 hours after disappearance from

radar

No adverse weather conditions

No kind of distress signal sent

The pilot has (had) over 18,000 hours of flight experience, since 1981

The plane model has no significant history of safety or mechanical failures

This kind of thing has been going on there for a while. Blair and Bush were declared

to be war criminals by the Kuala Lumpur War Crimes Commission in 2011, which

has had a great impact on their worldwide reputations. The War Crimes

Commission has been recently attacking Israel for its treatment of the

Palestinians. That never goes down too well, especially when Israelis are involved in

managing the situation on the streets of Kiev. It's another way of raising the threat

level for Putin.

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SWOT Analysis:

It is a general examination of a business’s current position so that it can identify the

preferred decisions in the future. The following is the SWOT analysis for MAS:

Strengths: Weakness:

Brand name

Improvement in yield

Diversified Revenue stream

Low labour costs

Accreditation

Well-trained employees

Lower margins

Weak cash flow

Unprofitable routes

High Costs

Inadequate marketing skills

Ineffective utilization

Opportunities: Threats:

Launching Firefly

Expansion towards Asia Pacific

Increasing cargo traffic

Increase in fuel prices

High Competition

Foreign currency fluctuation

Terrorism & Health Awareness

Strengths:

Highly recognizable brand name established a strong brand image

domestically as well as internationally. MAS’ airlines has built a strong name

for themselves in the aviation industry.

Improvement in yield an increase in yield which is defined as revenue per

passenger kilometre.

Diversified revenue stream MAS airlines generates revenues from various

areas, such as, which deal with freighter flights and aircraft cargo hold. It has

also diversified into related industries such as aircraft ground handling, aircraft

leasing, aviation engineering, and flight catering and tour operations.

MAS have revenues coming in from non-aeronautical areas such as

maintenance, repair, overhaul and aircraft handling.

Low labour costs MAS has the lowest labour costs than other airlines.

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Accredited by international bodies MAS has won numerous awards from

international bodies and is accredited by the IOSA for its safety practices.

Well- trained employees its flight attendants undergo extensive training.

Unlike other airlines where they promote the different routes and destinations

they provide, MAS airlines use they’re flight attendants to promote the airline.

MAS branding strategy is for the general public to portray them as hospitable

and friendly.

Weaknesses:

Low margins Low margins Even though MAS has a strong revenue growth, its

operating margins are well below the industry average. This effects the

airlines growth plans and puts it at a competitive disadvantage.

Weak cash flow Weak cash flow the airline has been reporting negative cash

from its operations.

Several weaknesses were due to the RM 1.36 million loss which was caused

by the increasing fuel prices.

Unprofitable Routes Unprofitable Routes In 2000, the airline suffered further

losses, therefore lead to MAS airlines to discontinue flights to unprofitable

routes such as Brussels, Darwin, Honolulu, Madrid, Munich and Vancouver.

High costs High costs included staff costs, handling and landing fees, aircraft

maintenance and overhaul charges.

Low Productivity

Marketing skills are inefficient and are only focused on expanding to fast.

Ineffective utilization of resources and partnerships

Opportunities:

Launch of firefly Launch of firefly has to subsidiaries; Firefly and MASwings.

Firefly is Malaysia’s first community airline. It is expected to gain a potential

customer base of 100 million in the Indonesia- Malaysia-Thailand area. MAS

airlines set up Firefly as a test-bed in managing low cost operation.

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Expanding passenger traffic in Asia Pacific Expanding passenger traffic in

Asia Pacific MAS airlines covers several destinations in Asia, like China,

Japan, India and the Middle East, where the demand for travel is high. More

than 15% of MAS revenues derive from the Asian region.

Increasing cargo traffic increasing cargo traffic there has been an increase in

cargo traffic in South East Asian countries. This is due to the growth of export

related industries. Therefore, MAS airlines benefits from the increase in

demand for air cargo services.

Threats:

Increasing jet fuel prices increasing jet fuel prices the dramatic increase of

fuel prices affect most airlines. It is one of the operating expenditures for MAS

airlines.

High competition High competition Faces intense competition from other

airlines. The airline faced major competition internationally from established

airlines and new start-up operations.

Foreign currency fluctuation foreign currency fluctuation MAS’s revenue is

denominated in different foreign currencies which results in the fluctuations of

foreign exchange rate. The airline uses foreign currency borrowings as its

strategy to manage the risk of foreign fluctuations. Undertaking this risk leads

to a decline in growth.

Terrorism and Health scare Terrorism and Health scare Political and

Economic events such as the September 11th attacks and the Swine Flu

effects the aviation industry considerably. The airline also suffered losses of

RM 260 million during the Asian Crisis in 1997.

Improving MAS:

Restructuring and solving MAS ongoing weaknesses, is analysing which

routes are unprofitable for the airline and therefore discontinuing flights to

those destinations to cut its losses and focus primarily on profitable high-

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growth routes. The airlines should also maintain their existing routes which

are of high importance, thereby providing at least daily flights.

MAS should utilize and maintain alliances with other airlines. This allows it tap

into other destinations around the world, therefore allowing MAS to expand

and provide flights where there unable to.

MAS can reduce its high expenditure costs, by managing its costs and

budgeting. By training staff to be more specialized and/or to employ staff that

are able to carry out different tasks. Therefore, would minimize the problem of

overstaffing.

The airline suffered high losses over the years due to poor management. The

airline should conduct proper training to existing managers. Hence, employ

suitable candidates for the position.

Implement new Marketing Techniques to sell higher margin services and the

airline should keep in mind that the organization cannot be successful in a

day.

To boost margins is to change the mix of business by hiring new sales people

who are capable of selling, hire new staff, open new locations or update

offices.

Current situation of Malaysian Airlines:

Malaysian Airlines are in a position of crisis. The company has incurred a net loss of

RM 1.2 billion in the first three quarters of 2011 alone. Almost 40% of the total routes

in which the airline operates is incurring losses. The position of the company is even

more tenuous as compared to the crisis which the company faced in 2006. The

market of aviation is becoming competitive with the entrance of the low cost carrier

(LCC) in the market and the growth of the Middle Eastern full service carriers and

even the revival in the fortunes of Asian full services such as Garuda, Japan Airlines

and Thai Airways.

Malaysian Airlines had not focused on the premium segment of the market, even the

quality of the product has fallen. The major marketing efforts of the company were

focused on tactical sales promotion instead of brand building. Even with great efforts

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from the side of the sales team the profits generated is really low which is quite low

to cover the increasing cost structure.

Demand in the Asian aviation industry is quite strong. Throughout Asia there is a

huge growth in the disposable income of the people, access to the credit card is

increasing and a cross border trade is very popular, with well-developed

infrastructure and population of south east Asia alone is around 500 million there are

huge growth potential for the aviation industry so in order to revive from its current

status Malaysian Airlines has a great plan for success.

Malaysian Airline recovery model from 2011 crisis:

To achieve its vision of becoming a preferred premium carrier begins with some

fundamental remodeling of the core business. It is based on sheer simplicity of focus

and is very basic in nature. The company will study the strategy utilized by other

airlines to achieve success and adapt it effectively in a unique way.

1) Smaller yet profitable networks:

The airlines would include only those routes where the premium travelers would like

to go so that they can win competitive position and home advantage. The company

is planning to shrink in order to grow and the moment they are able to achieve

financial stability they will expand their network to cover world’s major economic

regions and hubs.

Malaysia Airlines (Kuala Lumpur) will drop the following seven routes in early 2012

from Kuala Lumpur according to its new business plan (as per Airlinegallery .com,

2011)

Surabaya (January 6, 2011)

Dubai (January 10, 2011)

Karachi – Dubai (January 12, 2011)

Dubai – Damman (January 13, 2011)

Johannesburg (January 31, 2011)

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Cape Town – Buenos Aires (February 1, 2011)

Rome (February 2, 2011)

2) Win back customers:

The company plans to take delivery of 23 aircrafts in the year 2012, each having

state of art passenger amenities. Anew sales and marketing plan will come enforce

which will help the airlines to win back its hard earned loyal customers, especially the

ones from Malaysia and convince them of the enhanced services provided by the

airlines.

3) Relentless cost focus:

As new aircraft would be purchased by the company it will fully utilised the

advantage of its improved efficiency which would comprise of lower fuel bills and

maintenance expense initially. The focus would be to keep the overhead and

discretionary expense to the minimum.

4) Keep it simple:

The business structure of the company has become very complex with a group of

entities operating together- core full service airline, MAS holiday, MAS aerospace

Engineering, training, catering, and ground handling. The company is planning to

remove this clutter and focus on its prime business activity flying so it is planning to

give sufficient amount of freedom to its ancillary business units so that even they can

utilize their potential to the fullest.

5) Launch of new regional premium airline:

In 2012 the company plans to launch its new short haul brand which would be flying

entirely on the new Boeing 737-800. The smaller Boeing size would enable the

airlines to fly to more places where the customer wants to travel and even

sometimes according to their convenience. A separate management structure would

be brought enforce to focus on the unique needs of the premium travel customers.

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The airlines would set new standards of product service and quality which would

include high degree of cost and operational efficiency.

6) Alliances and partnership:

The airlines plan to join the extensive global network and looks forward to increasing

traffic with the help of combined networks and infrastructure. The airline plans to

enter into material partnerships with major airlines to strengthen its international

presence.

7) Branded customer experience:

The customer would be top priority of the airlines and an improved experience would

be provided at all touch points pre-flight, in-flight, and post-flight.

8) Continuous operational improvement:

To support the vision of becoming a preferred premium carrier the airlines would be

making substantial changes at the operational level to excel on three lines:

commercial effectiveness, flight operations and cost management.

In order to determine the success of the future strategy the current market condition

of the airline industry must be brought into focus. So to analyze the market

attractiveness porter’s five force model would be best suited (Douglas).

Porter’s Five Force Model:

1) Industry competitors:

Local competitors are Air Asia, Firefly, etc

International competitors- Singapore airlines, Garuda, Cathay Pacific, Thai

International Airways

Other Low cost Airlines- Compass, Tiger Airways, Cebu Pacific, Jetstar Asia

Airways, Impulse, Virgin blue Airlines.

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The number of competitors is very high and with the emergence of low cost carrier

and deregulation the internal competition has increased and the only reason that

reduces it is the low and highly volatile profitability.

2) Suppliers Power:

Fuel prices are ever increasing affecting the cost so the supplier power is

high.

The Asian airline industry is very optimistic about the growth potential of the

Asian aviation industry so is placing huge aircraft orders thereby increasing

the bargaining power of the suppliers again

The civil aircraft industry is monopolized by two major aircrafts manufacturers

Large capital required so the leasing companies come into picture.

Highly specialized and professional employees are required to maintain the

status of five star carrier services.

The recent crisis in the overall airline industry has to some extend lead to a

reduction in the prices of the aircrafts.

3) Buyer’s power:

Local population (Malaysian)

Southeast population- Indonesia, Thailand, Singapore, etc.

There is no switching cost as the buyer can easily switch from one airline to

another so the power of the buyers increases.

There is a very low product differentiation so to succeed providing either

services at very low cost or give a five star experience so that customer pays

the price for the superior services offered.

The availability of information is really high and with the emergence of travel

portals who guarantee that they can search for the lowest fares out of all the

options available and book it for the client with just a click which even

provides the ease of purchase, the bargaining power of the buyer is

increasing

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Frequent flyer program and online duty free purchase services can create

customer loyalty and reduce the threat of customer switching over to other

airlines to some extent.

Low buyer concentration can also reduce the power of buyers.

4) Potential entrants:

Airline industry has a high barrier to entry and exit as once an airline is

operative then exist from the industry would amount to huge amount of loss.

Licensing is one of the major barrier for the industry.

JV and partnership is the most recent trend in the industry which has

increased the threat to this industry.

High unit cost makes the entry to the industry unattractive.

There are no economies of scale and scope available.

Deregulation has to some extend reduced the restriction to the entry in the

industry.

Internet has again increased the new entrant possibility in the industry.

5) The substitute:

The surface transport can be substitute.

With the advancement in technology for many thing travelling personally is not

important as with the help of web conferencing and services like online

counselling the need for travel is reduced.

The customer can switch to modes which are reasonable in terms of fare as

air travel to some extend is expensive as compared to other modes of travel.

The factor which alone reduces the attractiveness of the substitutes in the

minds of the travelers is the fastness and reliability of air travel.

With the help of Porter’s model we have the various micro conditions under which

the airline operates and now I would like to discuss the macro environment of the

airline industry with the help of Pest analysis

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PEST ANALYSIS:

To analyze the economy in the macro perspective we need to study the Political,

economic, social and technological environment of Asia as a whole.

1) Economics

The rapid growth of Asia fuels the growth of the air travel in Asia. The growth is also

because of the region being geographically dispersed and the countries having a

large population. The governments of the various countries have invested in the

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development of airlines and travel infrastructure and have made investment in the

airports to make them competitive with the rest of the world. Again with high growth

and increase in trade and business the competition has increased which has led the

full service airlines like MAS to start cost cutting. In the view of many economists

Asia would soon be on the top of the global economy growth charts.

2) Political/ Legal:

Government policies are important drives for the success of Asia. In the late1990s,

there was increase privatization and deregulation of the airline industry in Asia. It

was noticeable that some Asian countries established open-skies agreements while

others allowed the entry of private airlines. For instance, in 1997, a few LLC spouted

quickly after Malaysia signed an “open-skies” agreement with the United States.

Hence, it appears that although the travel market will be expanded, in reality MAS

would also have to operate in a more challenging environment with intense

competitions.

3) Social-Cultural:

Surveys revealed that more people were willing to compromise on food and other

services in exchange for lower prices. In fact, it was stated that price of tickets was

the single most important consideration that influenced passengers’ decision in case

of a conscious leisure passengers who are always looking to make their budgets

decrease further. This presents an opportunity for all LCC increase their revenues by

offering travelling at a much lower fare. With the entry of such low cost carriers the

competition for the full service airlines like MAS increased so the company has to

segment its market and target only those high class premium business travels for

whom service and luxury is very important and are not concerned about their budget.

4) Demographic:

In 2005, the total population in Asia stands at more than 3.5 billion. The United

Nations’ statistics also show that Asia has an astonishing demographic dividend –

where more than 35% of its population is below the age of 25 and more than 55%

hovers below the age of 35. This shows that the population of middle age is group is

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increasing thereby increasing the number of working population which results in the

increase in the overall disposable income and so the number of business and leisure

travelers is bound to increase. This therefore presents a golden opportunity for MAS.

5) Technological

The technological advancement including introduction of services like internet

telephony and use of various other telecommunication services ( like buying of

tickets online) provides MAS a new arena to boost up its sales by leveraging the new

technology. The use of e-commerce and internet based activities which includes

reserving a holiday online and even buying tickets online opens ways to derive

ancillary revenues. Technology advancements sometimes also help in reduction of

the operational cost such as savings on commissions for travel agents.

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Conclusion:

MAS though currently does not have a strong presence in the region, the macro

environment of Asia presents vast opportunities to enlarge the company’s market

shares. The Airline businesses are closely linked to economic activities in Asia and

the world. As such, MAS needs to be cognizant with the business cycle so that it can

to take full advantage of such effects especially when there are changes in

discretionary income and consumer spending patterns. The company should also

keep in mind that increases in the demand of fuel and limited supply can lead to

higher fuel price that will decrease the yield. Last but not least, the impact of crisis

such as 9/11 (2001) and SARS outbreak (2003) was able to hit the airline industry

badly and as such they continue to pose serious threat to airlines.

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References:

2014. [ONLINE] Available at: http://www.net-

temps.com/careerdev/crossroads/print.htm. [Accessed 18 April 2014].

Malaysia Airlines Unveils Major Network Restructuring Program. 2014. Malaysia

Airlines Unveils Major Network Restructuring Program . [ONLINE] Available at:

http://www.asiatraveltips.com/travelnews2001/4October2001Malaysia.htm.

[Accessed 28 April 2014].

http://www.malaysiaairlines.com/cn/en/corp/corp/info/history/our-history.aspx

SWOT analysis and for Malaysia Airlines(MAS)?. 2014. SWOT analysis and for

Malaysia Airlines(MAS)?. [ONLINE] Available at:

http://answers.yahoo.com/question/index?qid=20070509063139AAGyiLn. [Accessed

28 April 2014].

http://en.wikipedia.org/wiki/Malaysia_Airlines