Current Issues Facing the Malaysian Airlines System - Case Study Example

CURRENT ISSUES FACING THE MALAYSIAN AIRLINES SYSTEM Name Institution Professor Course Date Introduction While debt, fuel prices and capacity are considered the major issues facing the airline industry, there are management issues and unpreventable disasters that slow the productivity and profitability of the firms in the industry. The international airline industry offers services to virtually all corners of the world and is a major portion of the formation of the global economy. However, some of these international airline companies are at a verge of losing their business because of loss of public confidence and increased losses. The year 2014 has been an astoundingly a very bad air for Malaysian airlines following the MH370 disaster and the ongoing search for the crew and clients lost somewhere in the Indian Ocean, and the haunting loss of MH17 in Ukraine. While the airline mourns the tragic loss of life from the two incidences, it is apparent that the incidents have taken a potentially critical toll on the Malaysia Airlines brand. This easy highlights the current situation facing the Malaysian Airlines with a particular focus on how the airline can organise human resources and other resources to repair its broken future or establish a novel future as this is the biggest strategic decisions the management faces. The paper also underlines how the company can reduced its current losses besides improving public confidence. Notwithstanding the horrendous incidents in the past few months, with an apparent strategy and cautious management based on Maslow’s needs theory, Follet’s and Fayol’s management theory that would promote employees’ motivation, productivity and job security, the carrier’s brand equity can be restored. Background of the Organisation Malaysian Airline is a major airline that operates flights from Kuala Lumpur International airport to destinations in Asia, Oceania and Europe (Gin 2010:194).The airline was established in 1947 and it celebrated its 60th anniversary in 2007. The company has a developed a brand image in both domestic and international markets and it was awarded world’s leading airline in Asia in 2011, a 5-star status in 2012 and the group was voted the Best Airline Signature Dish for its Satay and World’s Best Airline Cabin Crew in 2012 ( Market Line 2013:4). The Airline was first established as Malayan Airways Limited (MAL) but later changed its name to Malaysian airlines (Gin 2010:194).Malayan Airways Limited operated in the routes from Kuala Lumpur to Singapore, Medan, Saigon and Jakarta. However, with the establishment of Malaysia in 1963, MAL changed to Malaysian Airways Limited. In 1967, MAL became Malaysia-Singapore Airlines (MSA) with its services extending to London, Rome, Perth, Taipei and Mumbai. Although MAS favoured domestic connections, Singapore looked for more international destinations leading to an inevitable split in 1972 that led to the formation of Malaysian Airline System and Singapore International Airlines(Gin 2010:194). Assuming a new logo in 1987, MAS became the Malaysia Airlines. The company attained multiple tributes and increased profitability. By 1992, the Malaysia Airlines became a profitable and respectable international airline with a labour force of 19, 000. In 1994, the Malaysian government privatised its controlling authority. Within 6 years after privatisation, MAS experienced devastating debt amounting to RM 9.5 after four years of constant losses. In 2000, MAS was renationalised as a government-related company and in 2007, the company earned its highest profits in its history (Gin 2010:194). Currently, the company’s brand is at stake following a series of accidents that have lowered public confidence besides increasing the company’s losses. The Issue It would be difficult to call up a more disparaging set of occurrences. Two crashes facing Malaysian airlines just 4 months apart. The two events were crucial as they occupied international headlines longer than any other air crash. As the unsuccessful search for MH370 continued followed by the military disagreement that impeded the MH17 recovery, the Malaysia’s Airlines’ brand suffer negative public image (Parker 2014). The two incidences that they have badly destroyed its income stream and reputation. The company is in a crisis situation and there is something not adding up about the company’s future. In this regard, the company has a choice to try to mend the link to their future or establish a novel future. This is one of the principal strategic decisions that the company’s management is facing. While the company has begun procedure of evaluating the future shape of its business, the problematic issue is whether to rebrand or begin a new page for the company (Parker 2014). After MH370 disappearance, the company was still suffering decline in numbers of passengers and the following MH17 incidence made the situation even worse. For a company in critical financial trouble having lost 220m pounds in 2013, the combination of reduced demand, lower yields and a uncertain profit and loss ratio make the company’s long-term future drastically uncertain ( Parker 2014). Even with the so many points of views favouring rebranding of the airline, there is still a clear bashfulness to do partially on the Malaysian government side. In numerous rebranding cases, the preliminary appeal of beginning all over again can seem to be attractive at first sight, but starts to fade with more cautious reflection. In this case, there two powerful options facing the Malaysian Airline company: to rebrand or to start from a blank page. Impact of the Issue on the Company Motivation The current situation facing Malaysian Airline has negatively affected employee’s motivation. Employees’ morale has reduced because they do not know the way forward for the company given the broken future the company is facing. The image of the company has been tarnished making many people lose confidence in the company. In addition, the company is not sure whether to rebrand or to start a flesh an aspect that puts at risk the jobs of their employees as they do not know what will happen once the company start its restructuring efforts. Vlad (2008: 399) defines motivation as a process through which managers focus the energies of the employees. Motivation is the extent through which continuous effort is directed to goal attainment. The five motivation elements entail results, actions, outcome, evaluations and satisfaction of needs. According to Griffin (2012: 448), an employee’s performance is determined by ability, work setting and motivation. Motivation is essential for organisational performance and begins with a deficiency in employees’ needs. For example, when a worker feels that he is receiving low wage despite the financial difficulties the company is going through, employees look for other ways to get a more paying job, hence reduced motivation in his current job as more energy is concentrated in job search. Productivity The productivity and profitability of the company has been negatively affected by the 2014 incidences facing the Malaysian Airlines. The MH17 and MH730 incidences have great impact on the company’s practices and operations (Parker 2014). Productivity goes hand in hand with employees’ motivation and if employees’ morale is low, then the company suffers from low output. In addition, as the company ponders whether to rebrand or start all over again, all its energies are channelled on the steps to take instead of increasing productivity. The two incidences saw cancellation and a reduction in long-haul travel while sales in countries like China slumped by over 60 percent (Parker 2014). The operation costs of the airline are still high and the company has fought to slash costs and enhance output with no avail. Job Security Following the need to restructure the company and the efforts to slash costs as well as the current economic situation facing the company, employees are not sure whether the company will retain them or not. Several cabin crew and pilots approached the union requesting for special and unpaid leave (Parker 2014). In addition, the employee’s drive is very low as they are not sure of what the future holds for them. The fact that Airline industry analysts have envisaged bankruptcy or a drastic restructuring raises the concerns of job security. Solution With regard to Management Theorists The Airline contemplates on discarding or upholding its 75 years history. While apparently, there is a great challenge ahead to refurbish the image of the company, it is important not to forget the millions of money that will be needed to develop a similar brand awareness level for a novel airline (Parker 2014). With wary management and an apparent strategy the company’s brand equity can be retained. The employee morale is affected by the challenges the company is facing. Through Maslow’s needs fulfilment theory, employees are inspired by challenges and fear that affects the attainment of their goals. Pilots and cabin crew are traumatised and are seeking for special and unpaid leave for fear of what might happen to them following the two incidences where their colleagues lost their lives (Parker 2014). From the current happenings at Malaysian Airlines, the safety needs of the employees are at stake. As the manager, I would keep the employees motivated through assisting them achieve their requirements in the hierarchy, particularly, their safety needs. I would determine every worker’s needs and adapt an appropriate motivation strategy where I would implement team work and give employees interesting work to meet their social needs. Safety needs include protection against danger, deprivation and threat (Lunenburg & Ornstein 2011:81). I would provide these needs through safe working conditions, salary increases and job security. With respect to social needs I would ensure that I keep employees informed and listen to their views as regards the company’s situation and the way forward. To ensure that I maintain the employees’ self-esteem, I would respect them and recognise their efforts in the company. Henri Fayol’s theory also supports teamwork to ensure that employees remain motivated. According to Fayol, human resources and not physical facilities made the disparity amid the success of a firm (Wren & Bedeian 2009:16). In this regard, I would concentrate on managing human resources in the company to ensure that the company attains its lost glory. I would also implement employees’ training on how to deal with such incidences once they occur in order to prepare employees and prevent them from leaving the company (Wren & Bedeian 2009:16). I would also harmonise all the actions of concern in order to facilitate working and success through planning, organising, coordination and control (Wren & Bedeian 2009:17). This calls for balancing of expenses and revenues, establishing agendas and focusing my responsibilities on advancing the objectives of the firm and doing away with unproductive employees in order to increase productivity. I would also implement Fayol’s principle unity of command and Follett’s group principle to implement teamwork in the organisation as a way of motivating employees and keeping them focused on their roles. According to Follet, group membership helps employees in finding their true-self (Wren & Bedeian 2009:18). With respect to Follet, human cooperation is essential in attaining the success of the company. I would listen to the views of employees given that when employees feel like they are part and parcel of the firm, they improve their work, save time and resources once they are allowed to have the same interests as the management. I would engage Follett’s integrative unity principle where I would find solutions that are satisfactory to all employees and other stakeholders. Rebranding would be the easiest step and it will increase employee’s morale as they would be sure that their jobs would be secure rather than starting afresh. Conclusion Within an industry infamous for displeased clients and impecunious shareholders, Malaysia Airlines has survived its years of losses and restructurings. It is mainly involved in the business of air transport and it has established a brand image in international and domestic market. However, currently, the firm has an international recognition of a far more objectionable issue. The company is currently facing two incidents that have completely tarnished its image. The future of the company is uncertain given the negative publicity it has on domestic and international markets. The management contemplates on restructuring the company an aspect that has greatly affected the motivation of employees and it overall productivity. In addition, there are concerns of job security as employees do not know what would be the outcome of the restructuring or the strategy the company will implement to improve its productivity, slash cost and regain its image. Based on Maslow’s needs theory, Fayol and Follet management theories, there are several ways the company can solve its current predicament. Whether the company starts a flesh or rebrand, employees must be kept motivated. Motivated employees increase their output level and that of the company. Teamwork is essential to keep them inspired and the management and employees should share the same interests to ensure that the objectives of the firm are attained. Reference List Gin, Ooi Keat (2007) The A to Z of Malaysia. UK: Scarecrow Press Griffin, R 2012, Management, 11ed: London: Cengage Learning. Lunenburg, Fred & Ornstein, Allan (2011) Educational administration: Concepts and practices. UK: Cengage Learning. Market Line (2013) Malaysian Airline System Berhad Swot Analysis. Business source Complete.1-8 Parker, A (2014) Malaysia Airlines considers rebranding. CNBC Financial Times. Retrieved from http://www.cnbc.com/id/101870578#. Vlad, S (2012) The motivation and ways of motivating human resources: Best western hotel central Arad. Annals of the University of Oradea, Economic Science Series. 21 (2): 398-403. Wren, DA & Bedeian, AG (2009) The Evolution of Management Thought. 6th Edition. Hoboken, NJ: John Wiley & Sons, Read More