The paper "Malaysia Airlines System Berhad - Porter’ s Five Forces Model" is an outstanding example of a management case study. The airline industry is an industry that constantly faces the challenge of managing the increasing growth in demand for air transport, while at the same time, minimizing risks to ensure safety (Cento, 2008). The industry is highly speculative since airlines have to consider changes in the world economy before embarking on such crucial decisions as to investments and planning. In addition, this industry is top among those that are highly regulated and subject to constant scrutiny, thus, thus exerting more pressure on participants to operate efficiently.
In most countries, most airlines operating within this industry are owned by the respective governments. However, the Asian market, in particular, has seen a surge in the number of privately owned airlines, in recent years. Malaysia Airlines System Berhad is a company operating in an environment that is both competitive and rapidly changing. In order to compete efficiently within the Asian market, Malaysia Airlines has to embrace innovation, but only after weighing both the physical and financial risks involved.
The company, established in 1947, has weathered many financial crises and stiff competition from other participants within the airline industry, to emerge into one of the most recognized airlines in the Asian market (Hephaestus Books, 2011). Increased fuel costs, poor market conditions, and increased competition from airlines, such as Air Asia, are just a handful of the challenges faced by Malaysia Airlines and others operating within the airline industry. Competition among airlines is to be expected in such a service industry as the airline industry. However, the emergence of Air Asia poses a serious threat to the operations of Malaysia Airlines (Lim, 2012).
The rival airline has a competitive advantage over the latter given that it offers air travel at prices that resonate well with those on a budget. The low prices offered by Air Asia are only possible because the company undertakes certain actions that ensure efficiency, while at the same time, minimizing costs. Such actions include the utilization of the internet to aid in ticketing and doing away with accommodation expenses for its employees while on the job. Countering competition from budget airlines Over the years, there has been an increase in the level of competition within the airline industry.
With the onset, of globalization and increased liberalization within this industry, more and more airlines have ventured into the Asian market in a bid to benefit from the increasing demand for air transportation (Jarvis, 2002). However, in order to survive in this cut-throat industry, airlines have to come up with strategies that will endear them to their intended clients, to gain an edge over their rivals. With the emergence of airlines, such as Air Asia, which offer low-budget prices, participants within the airline industry have to draw up new prices.
This they have to do considering the expenses sustained by the company and its goal of profit maximization. Therefore, to respond to such threats that result from competition from budget airlines, companies need to draw up their own unique budgets or form alliances within the industry. Other possible solutions can be for the airlines to diversify into other businesses that relate to air transport. This way, they can make sure that their client base is increased (Rosander, 2006).
Cento, A., 2008. The Airline Industry: Challenges in the 21st Century. London: Springer.
Charles W. L. Hill, G. R. J., 2007. Strategic Management: An Integrated Approach. 8th ed. Connecticut: Cengage Learning.
Gordon Betcherman, R. I., 2001. East Asian Labor Markets and the Economic Crisis: Impacts, Responses & Lessons. Washington D.C.: World Bank Publications.
Hephaestus Books, 2011. Articles on Airlines of Malaysia. Richardson, Texas: Hephaestus Books.
Jarvis, D. S. L., 2002. International Business Risk: A Handbook for the Asia-Pacific Region. Cambridge: Cambridge University Press.
Larry Dwyer, P. F. W. D., 2010. Tourism Economics and Policy. Bristol: Channel View Publications.
Lim, W. M., 2012. Air Asia: Penetrating Into the South African Airline Industry. Munich: GRIN Verlag.
Mokhtar, K. S., 2008. Privatising Malaysia airlines: a policy transfer approach. Kuala Lumpur: Penerbit Universiti Kebangsaan Malaysia.
Nanto, D. K., 2010. Global Financial Crisis: Analysis and Policy Implications. Darby, Pennsylvania: DIANE Publishing.
Rosander, Y. H. A. J., 2006. A New Organizational Model for Airlines. [Online]
Available at: http://www.mckinseyquarterly.com/A_new_organizational_model_for_airlines_1700
[Accessed 8 October 2012].
Sinha, D., 2001. Deregulation and liberalisation of the airline industry: Asia, Europe, North America and Oceania. London: Ashgate.
Sook Ching Wong, J. K. S. K. F. C., 2005. Malaysian "bail Outs"?: Capital Controls, Restructuring, and Recovery. Singapore: NUS Press.