MALAYSIAN AIRLINE

SYSTEMS (MAS)
SWOT ANALYSIS, TWOS
ANALYSIS, PEST ANALYSIS,
PORTERS FIVE, BCG
MATRIX AND STRATEGIC
MAP

Introduction
Malaysian Airline System Berhad is theprimary airlineofMalaysia. Malaysia
Airlines (MAS) operates flights from Kuala Lumpur International Airportmainly
and with a secondary hub atKota KinabaluandKuching. 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.

Background
Malaysia Airlines was founded in 1937 through an ideaby the Alfred Holt'sOcean
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. Therefore, Malaysia Airlines provide different class of
seating's 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 in capabilities 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 Air Asia. To overcome this challenge,
Malaysia Airlines tried to upkeep with their competitors by 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 Sky-trax UK and World Travel Awards. The awards are
the Asias Leading Airline(2011), Asias Leading Business Class Airline (2010) and Five

SWOT
Analysis

Strengths

1. Strong Backing of Malaysian

Govt
2. It has extensive operations in
South Asia, Middle East,
Australia and other global
destinations
3. One of the most popular
airlines across the world
4. Strong brand recall and
visibility due to excellent
advertising and marketing
5. The company has a strong
workforce of over 20,000
employees
6. It covers over 50
international and 35
domestic
destinations
with a
1. Increasing
Global Presence.
fleet
size Routes
of over internationally
100
2. More
to
popular destinations.
3. More services and choices to
customers at airport facilities.
4. Acquisition of other airlines to
enhance market position.

Opportunitie SWOT
s
Analysis

Weaknesses

1. Relying Heavily on
International Onward Moving
Traffic.
2. Very Little Domestic Traffic
and limited market share
growth.
3. Malaysia Airlines exercised a
financial restructuring which
resulted
badly and thus
Threats
company bared huge costs of
1. Rising Fuel Costs.
that which was the biggest
2. Changing govt, Policies and
weakness of
it ever
had. bodies.
regulations
regulatory
3. Competitive Pricing of the
competitors are lowering profit
margins.
4. Increasing Competition in SE
Market.
5. Share Price decrease 11% and
market price of the company
40% in July 2014. Natural
Calamity affect a big think for
this industry example
5 Malaysia
Airlines Flight MH370.

OPPORTUNITIES

EXTERNA
L

INTERNA
L

STRENGTHS
1.
2.

3.
4.
5.

Strong Backing of Malaysian

Govt.
It has extensive operations in
South Asia, Middle East,
Australia and other global
destinations.
One of the most popular
airlines across the world.
Strong brand recall and
visibility due to excellent
advertising and marketing.
The company has a strong
workforce of over 20,000

THREATS

1. Increasing Global
Presence.
2. More Routes
internationally to
popular destinations.
3. More services and
choices to customers at
airport facilities.
4. Acquisition of other
airlines to enhance
market position.

1. Rising Fuel Costs.

2. Changing govt, Policies and
regulations of regulatory
bodies.
3. Competitive Pricing of the
competitors are lowering
profit margins.
4. Increasing Competition in SE
Market.
5. Share Price decrease 11%
and market price of the
company 40% in July 2014.
Natural Calamity affect a big
think for this industry
example Malaysia Airlines
Flight MH370.
6. Global Terrorism like
Malaysia Airlines plane MH17
'shot down' in Ukraine.

SO STRATEGIES

ST STRATEGIES

1. Using strong brand to 1. Use strong back up of govt. to get

expand its operations, more
subsidy on fuel as suppliers is not
routes and back up by
really high since in Malaysia there
Malaysian Govt (S1, S2,
is only little petrol organization
S4, O2)
and the price is set by the govt.
2. Use its strong workforce to
(S1, T1)
offer more services and 2. Maintain good relations with
choices to its customers.
customers and best cabin crew
(S5, O3)
(strong workforce) to gain more
profits.(S3, S4, T3)

BCG MATRIX
MEDIUM

HIGH

LOW

Good market share

Market penetration
Market
development
Product
development

MEDIUM

STAR
II

Investment
Market
penetration
Market
development
Product
development

QUESTION MARKS
I

LOW

INDUSTRY SHARE GROWTH RATE

HIGH

RELATIVE MARKET SHARE POSITION

Diversification
Deployment
CASH COW
III

Retrenchment
Liquidation

DOGS
IV

 Brand recognition is
important.
High capital required.

Bargaini
ng
Power
of
Supplier
s: High
Numbers of alternatives the
consumer.
MAS maintenance staff are
experienced with Boeings aircraft.
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.

Threat
of New
Entrant
s: Low

Rivalry
Among
Established
Companies
: High
- Rival: Air
Asia, SIA,
Thai Airways
Competitive

Pricing

Substitut
e
Products
: Medium
to High

Porter 5 Forces
Strong brand name
grant pricing power in
most markets.
Brand loyalty

Bargaini
ng Power
of
Buyers:
Medium
to High
Malaysia Airlines can use its
bargaining power of consumer to
bargain the aircraft price.
Competing in the aircraft
manufacturing industry.

PESTLE ANALYSIS
Political

Taxation - an obstacle during recession.

Increasing operational cost due to newly imposed wage policy by government.

Economics

The rapid growth of fuel cost.

The exchange rate is fluctuating which results deviation on revenue earnings.
Differentiated need - Luxury OR Necessity.

Social/Cultural

Psychological issue - flight phobia.

Greater concern on safety for incidents like - plane crash.
Youth among the highest number of travellers as their favourite holiday activity.

Technology

Increasing practice of online purchase.

Application of debit & credit on air ticket purchase.
Integrated Communication System, Interactive Voice Response System & Knowledge Portal for
reducing operational cost

Legal

Expensive landing charges at gateway airports like - Bangkok, Beijing, Hong Kong and Singapore.
Tightly regulated aviation market by bilateral air rights agreements

Environmental

Reduction of polution (carbon dioksida).

Growing practice of CSR activities.
Flight failure or delay caused by natural hazards.

Political

Macroenvironments
Micro-environment
and industry

Economi
c
Social

en
nm
ro
vi
En l
ta

ol
n
h
Tec
y
og

Legal

Justify the application of PESTLE and Porter 5 Forces

in this
10
study and how are they interrelated.

STRATEGY MAPPING
EXTENT OF
SERVICE
DIVERSITY
MAS provides
various
services:
Airline
Service
Aircraft
Maintenance
Service
Repair and
overhaul
(MRO)
Aircraft
Handling

EXTENT OF
MARKET
PENETRATION
MAS operates
flights in various
routes and
country:
Southeast Asia
North Asia
South Asia
Middle-east
Australia
Europe

EXTENT OF MARKET
SEGMENTATION
MAS focused on the
following segments:

Business Segment
Government &
International
Organisations
Leisure Travellers
Migrated Personal &
Leisure Travellers
European Personal &
Leisure Travellers
Seasonal Holiday
Travellers

EXTENT OF MARKET
GROWTH

DISTRIBUTION CHANNELS
USED

MAS has achieved prestigious

ranking for their truly
consistent and high
quality of product and
service to gain customer
trust and loyalty - profit.
Asia's leading airline
Skytrax World Airline
Awards
The Most Promising
Brand Awards
Enlarge the companys
market shares.
The Airline businesses
are closely linked to
economic activities in
Asia and the world.
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.

Malaysia Airlines has two

airline subsidiaries:
Firefly and MASwings.
Firefly operates
scheduled flights from
its two home bases
Penang International
Airport and Subang
International Airport.
The airline focuses on
tertiary cities.
MASwings focuses on
inter-Borneo flights.
MAS has a freighter
fleet operated by
MASkargo, which
manages freighter
flights and aircraft
cargo-hold capacity for
all Malaysia Airlines'
passenger flights.
MASCharter is another
subsidiary of Malaysia
Airlines, operating
charter flights using
Malaysia Airlines'
aircraft