It is one of the best evaluation tool company uses to get information about the External Environment. It covers all the part of external environment and through which taking decision becomes very easy (Rahman, Azad and Mostari, 2015). Similarly, in the case of Malaysian airline PEST analysis must be done by the company to get the bird eye of the world. Whether Political, Economic, Social or Technological.
The Analysis is as follows;
In the aviation industry from the border perspective it seems like political Analysis won’t be necessary to be done. However, Political Analysis consider the most important element in the aviation industry.
According to the Times Newspaper, There is a rich history of war between Pakistan and India since 1947 and both the country’s political situation among each other never be settled and calm. Therefore, both the countries never allowed each other to fly their aircraft over each other territory. Thus, political analysis is important.
Similarly, Malaysian airline must need to research about their alliance countries and the countries with whom political condition aren’t good. This will help out to calculate the route of the destination. Moreover, before establishing a regional hub political analysis must be done.
Economic Analysis lays the foundation of the business. It gives the view to the company about the country they’re considering to establish a base (Rahman, Azad and Mostari, 2015).
Hypothetically speaking, Malaysian airways considering to establish their base in UAE. Since UAE is well established developed country it would be the place to established regional head. Moreover, petroleum country as well which would give advantage over fuel consumption as well.
Social analysis is the one which gives the information about the trends, lifestyle and culture of the country to the company. Since, Malaysian airline is trying to cover the South East Asian Market for developing the hub therefore, culture in those countries are conservative in nature. Malaysian airline must learn Cross culture Literacy to interact with the country culture they would step in.
Since every field is filled with technological gadgets similarly Aviation industry is also getting the taste of it.
According to the newspaper Khaleej Times, Rizvi (2019), Fly Emirates world largest and leading Airline Company had introduced the First class area for their customers using the advance technology. They’re now giving a sort of room to their customer. A seat which eventually becomes a Bed. A side Small bar and good advance Screen for the entertainment.
Similarly, Malaysian airline must be aware of these technological advancements done by the companies. So that they can also update themselves with the pace of the industry because technology is just one factor which can gives advantage to the company to gain customers.
Before making any strategy or decision every company whether a multinational or a local company conduct a feasibility analysis or SWOT to getting the information about its own self and about the external market (Phadermrod, Crowder and Wills, 2019). Since the Malaysian airline is in the processes of redesigning itself and trying to enter into the new market. Therefore, Malaysian airline had conduct the SWOT analysis to get the international data about the internal as well as external environment of the company which are as follows;
Some are strength are as follows;
One of the strength that be consider for the Malaysian airline is the hub which they are looking for to develop over Asia. This will give them access to travel to many countries. Since, Asia is the largest continent and connecting with the European countries as well Malaysian airline could provide cheaper flights to their customer.
According to the Case Study, Japanese airline had proposed for the 25pc shareholder and providing to develop the regional headquarters of Malaysian airline in Asia. Moreover, they are also claiming to give low cost flights to the customer.
Comparing to other aviation companies, they provide high cost flights to the public for shorter routes as well. However, if merge gets successful Malaysian airline by using cost leadership strategy can gain this advantage with the help of Japanese airline.
Some are the weaknesses are as follows;
Since the mysterious vanishing of Malaysian Airline and some other terrific incidents happened in the past, regaining the trust of the people would be very difficult. Although providing good luxury travel in less price would be preferred. However, customers do want safe travel as well.
Since they’re in the redevelopment stage Malaysian airline has much less market share of the aviation industry. Therefore, this would consider as the weakness of the company because many privately owned companies had replace the national company in the industry causing them loss of the share.
Moreover, expanding themselves into the new market would also haunt them for a while to stay competitive since they have little or no share in that region.
Some are threats are as follows;
The competition stakes are so much high in the aviation market now. Emerging airlines had made the ocean Red with no leaving any space to the new entrant or even for the existing company it’s hard to sustain. With no innovation, an aviation company couldn’t sustain longer in the market. Among this level of competition, Malaysian Airlines would facing threats. Since, they’re merging with companies and entering into the South East Asia market the competition would be tough to handle.
Some opportunity are as follows;
Since, COVID 19 all the flights of the world are on hold No aircraft is flying in the sky right now. Moreover, companies are facing huge losses regarding this virus as all the countries are in the position of lockdown. Thus, this is would be the time for Malaysian airline to come back into the scene after all it ends. Since, they have nothing to lose as they can easily work hard and gain market share of it again.
Since the COVID 19 the petroleum had reached to record low. These prices were last measured in 2001 because of the Fall of World Trade centre. The Malaysian airline having the Cost leadership strategy this is the best time to ensure as many flights to fly as possible and take the opportunity of less petroleum prices. Thus, through this they can again come into scene of recognition.
Since the development of the world every company is trying to make itself more competitive in the business market. Moreover, as technology is making the way into every person life the customer engagement with the companies has also increases via mobile phone. Now, all the companies regardless of the field can be connected with its customer. Similarly, aviation industry is the most expensive industry to walk in to. Big giants alike Emirates, Qatar Airways, Qantas, etc. Already had capture a vast area of market share. However, other airline companies are also working and gaining opportunities and providing good services to their customer to stay in the market.
Similarly, in the above case Malaysian Airline had failing to be competitive in the market after some controversies. Moreover, lacking in making the perfect Business & corporate level strategies the airline couldn’t able to compete with the top private airline companies in the country (Grünig and Kühn, 2015). Thus, the downfall had occurred. However, some are the Business & corporate level strategies which can be develop by the Malaysian Airline to improve its competitiveness.
It is the strategy that comes at the top of the strategy pyramid. Most of the companies design this strategy with much focus and carefully because all of the business future decisions would be based on. This is the strategy that direct the company mission and vision whether for the small enterprises or the large one. Corporate level strategy has always a significant impact on the business ventures. They are in long term nature (Arasti, Khaleghi and Noori, 2017). Hence, corporate level strategy allows the company think about more future small strategies to gain advantage over competitors.
Following is the strategy that Malaysian Airline could develop which is as follows;
Retrenchment strategy is the way out of many companies from crises and shutdown the plants or the department which causing consistent losses (Grünig and Kühn, 2015). Moreover, Retrenchment strategy in short allows the business to redefine itself and grows again.
This strategy is uses when a company is doing poor or having the pressure from the stakeholders to increase the performance. Moreover, it gives freedom to enhance the Product line which is beneficial for the company (BENA and LI, 2014). Retrenchment strategy usually uses in layoffs, reducing R&D or marketing spending. Save money and invest in good plan is the main moto.
After Partnering with Microsoft in 2011 to make the “eco friendly” mobile phone which will compete with Apple & Samsung, Nokia never took of the flight. Thus, that decision made rapidly decreasing in the market share of the company making significant cut of in the workforce of Nokia. Moreover, that decision had caused Nokia 30,000 job cuts in 2012.
These decisions eventually hurts the organization goodwill in the market. Similarly, Malaysian Airline had controversies in the past regarding the missing airline MH 375, which caused them a huge loss in the market and decline in the goodwill as well. Using Retrenchment with expansion for the companies is quite useful in nature. The reason behind of this is stopping the non profitable operation and choose the profitable operation to gain market share again. Since, the Malaysian airline having proposal from the Air France, JAL and other airlines the Expansion is surly on the cards. However, the Malaysian airline must stop its operations which constant hitting them hard with respect to losses.
Consider one of the most important part of strategic planning because business level strategy being the middle part that joins the corporate level and Functional level strategy. It is the strategy that align the business strategic activities to gain the goals that set by the company (Mithas, Tafti and Mitchell, 2013). Moreover, having said it also helps the company to grow and gain the competitive advantage over the rival companies. Following is the strategy that Malaysian airline could develop;
Cost leadership strategy is one of the easiest way to gain advantage over competitors. Most of the MNE are trying to adopt this strategy by offering low priced product in the world by committing the internationalisation.
Apple Inc. the leader in the technology market. Providing the finest product with latest technology. However, even this huge giant of the market also commit the internationalisation by offshoring its product means; it designed its product in the California and Manufactured in China. Which allows the Apple to Gain less cost of production advantage over its Competitors.
Similarly, Malaysian airline can provide the lower cost travel by using the less for more pricing strategy for its potential customers. According to the Newspaper Khaleej Times, World leaders Fly Emirates, in the airline industry had used the loyalty program for their potential customers which allows them to travel anywhere in the world with less amount to spend on the travel. Thus, this. Creates the competitive advantage and also helps the Emirates to regain its customers. Since Malaysian airline is regaining itself and JAL is providing the opportunity of low cost flights—the cost leadership strategy would be the best one to start again.
Some are the benefits are as follows;
Company goodwill can be calculated by the amount of the potential customer it retain every time. Since, cost leadership reduces the operational cost and providing a larger volume or more facilities in less cost, its high chances that company expanding its market share and retaining their customer (Mithas, Tafti and Mitchell, 2013).
Cost leadership allows the company to mark high profit margin. The main reason is providing the similar product with less cost attracting more customer towards the product. Thus, high sales gives high profits (Mazzei and Noble, 2017).
Although merger and acquisition of the shares having minority or majority ownership brings a lot of benefits. Such are; capital benefits, expertise benefits and reduce the risk (Levi, Li and Zhang, 2014). However, mostly all the multinational mergers according to the study fails approximately 70% of it. There are mainly many reasons to blame. However, companies who do mergers must research everything before take this decision.
Similarly, Malaysian Airline must take some certain steps before choosing the company and make the merge successfully are as follows;
There are some points to consider before taking the decision of are as follow;
Many of the firms choose wrong merge partner who having different ideology of working. Most of the merge fails because both having different management styles which cause both the companies of workers in dis array thus, failures occur (Levi, Li and Zhang, 2014). Therefore, in Malaysian airline case every company need to research about each other working style, organizational hierarchy and many other aspects. The more the things in common, the more chances of the merge getting successful.
One of the major failure factor is lack of trust among each other. This happens because having no similarity among others causing both the companies to share vital information with each other. Moreover, sometimes sharing the information becomes the leakage point to the other rival company (Green, 2018). Resulting—lack of transparency in the industry. Therefore, in Malaysian airline case both the company much have compatibility among each other before sharing the information and trust factor should be high.
Companies who do past researchers on other companies merges and figure out their success and failure points always tends to lay on a good ground of merge. Whereas, no learning from the past always trouble the company in overcoming this challenge.
In operations & Supply Chain management always relies on the time series forecast. This technique helps the company to understand previous activities and event relating to the activity they would perform in the future (Green, 2018).
Similarly, in merge Malaysian airline must learn from the past and won’t commit the similar mistakes which had done by some companies and found themselves hard to recover.
An effective communication among the two parties plays very essential role in making the merge successfully. A high quality team and the legal consultant ensure that the communication between the parties must remain honest for the future. No communication among the management and employees of both the companies can lead to the negative impact on the performance. Thus, the main aim of the merge would be waived off (BENA and LI, 2014). Therefore, in Malaysian airline case both the companies whoever been chosen must have a proper honest communication among each other for the betterment.
Some are the Post Merge success factors which are as follows;
A plan should be ready to implement right after the merge. The main purpose of the merge is to collaborate with each other and help out to gain the market share without competing with each other. Therefore, everything must be designed with clarity and by considering both the parties benefits.
Similarly, in Malaysian airline case both the parties must create a win win situation between each other (BENA and LI, 2014). However, if quality plan doesn’t make then companies crumble under the pressure of merge and no outcome could be generate.
Plan of the companies must rely on the perfect strategies and logics. The implementation policy should be well strong in the execution part that no chances of error should occurs. Lack of communication between the parties makes the execution plan weaken which creates confusion among the companies employee (Grünig and Kühn, 2015). Thus, proper execution couldn’t be possible.
Malaysian airline must develop “high quality execution Implementation Policy” which covers all the points that must be follow by both the companies to ensure the success.
Working in the different geographical locations of the world companies couldn’t found any difficulty because they’re working in their base country (Zhang et al., 2014). However, bring a merge of two different companies working into different countries becomes very difficult to handle. Reasons are as follows;
These are some of the factors which causes diverse merger to be failed. Thus, in the case of Malaysian airline they need to develop a team that caters this situation and bring the best out.
There is always an area of improvement despite how healthy strategy is made or how clear pre cautions are taken before taking any decision. Some are the recommendation are as follows;
Selling products on the less price doesn’t mean that it creating a value into the customer life. Although people are always in seeking of more for less pricing however, customers are also seeking some value addition. It never said that product creates value, a company can also create value.
Fly Emirates always gives extra gadgets of Emirates or goodies to their customer which including their accessories. This always attracts their customer and they’re practicing since they came into being. Thus, this consider as the value addition.
Aviation industry is the field where expansions are necessary but expansions should be beneficial. There are numerous airlines who had covered almost every part of the world in their radar. However, some airlines doesn’t get access to fly from some certain countries because of no permit. Therefore, Malaysian airline must get more permits from the countries which make their route more shot and saves the fuel cost.
Moreover, the most important thing which they need to take care off is to evaluate the country position with respect to airline industry.
Since Malaysian airline is in redefining phase and seeking for strategic help. Grabbing every effective opportunity would be a great deal in increasing the business. Grabbing opportunities in the new market or even will help out many companies to grow much faster. However, companies who already attain their maturity stage would also can gets innovative ideas to come up with the new product or strategy to increase or even just remain stable their market share.
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