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Executive Summary

Executive Summary

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Published by Devagi Deva

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Published by: Devagi Deva on Jul 04, 2010
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 Project 1 Problem Based Learning  PMN 3023 Strategic Management 
1.0 EXECUTIVE SUMMARY
The global airline industry is in a state of turmoil and it is increasingly clear thatthe survivor and most certainly the winner will have to make radical changes to adapt tothe new environment. (MAS) reported a loss of over RM1.3 billion. This announcementcame at the same time as some of regional competitors reported strong profits. This resultis unacceptable. A real business turnaround is an imperative for MAS. The newenvironment will continue to hit MAS hard. The projections for MAS for 2006 look dismal. In fact, on its current business assumptions, course and speed, MAS will likelyfail, running out of cash in April 2006, and reporting a RM1.7 billion loss for 2006. Themanagement team, and staff, however, believes strongly in ability to transform the business and, indeed, to go beyond expectations. MAS have done much to improve its performance over the last 5 years and indeed last year. MAS have much to be proud of,and this work will form the foundation of our success. With hard work, radical changesand some tough decisions, MAS can certainly be a survivor and a winner. Since earlyDecember 2005, the management team has dedicated itself to the development of a planthat builds off the actions taken by the Board in 2005 to begin the turnaround. Thisturnaround plan will not only reverse the loss and return MAS to profitability, but alsotransform the company into a strong and vibrant institution one that is capable of withstanding external shocks and aggressively tackling new opportunities. BusinessTurnaround Plan has been developed using the GLC Transformation Manual as a guide.It takes into account the recommendations in the manual and adapts these foimplementation in MAS in the context of the business turnaround. The plan, outlined inthis document, has five central thrusts, each symbolized by a tail of the venerable MASsymbol. This plan will enable MAS to realize a net income of RM500 million in 2008 anall-time high profit for MAS and to be well positioned to improve its net income evenfurther. In this report, certain parts have been included as briefly about MalaysianAirlines 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 competition,the SWOT analysis to identify specific competences. In short history, background of thecompany, vision, mission and future managing service quality is discussed. It is themission of Malaysia Airlines System Berhad, as a corporation, to provide a transport1
 
 Project 1 Problem Based Learning  PMN 3023 Strategic Management 
service that ranks among the best in terms of safety, comfort and punctuality,distinguished and loved for its personal touch and warmth. We aim to set new worldstandards continually with our enhanced in-flight services, reliable ground support andexcellent infrastructure and to respond to consumer demand for worldwide coverage.While in the industrial overview the Porter’s five forces are about the threat of newentrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products and services and the intensity of rivalry among competitors in MAS. Besidesthat, in SWOT analysis we have included the strengths weaknesses, opportunities, andthe threats of MAS. Two tables of strategic audit have been also added to explain theinternal factors analysis and the external factors analysis. Lastly, we have given somesuggestion and concluded the report.2
 
 Project 1 Problem Based Learning  PMN 3023 Strategic Management 
2.0 SHORT HISTORY OF MAS
Over the past 50 years, Malaysia Airlines has grown to become Southeast Asia'slargest airline, and one of the world's premier international carriers. Flying the mosttechnologically advanced jetliners in the sky, our vast global network serves over 110cities across 6 continents.Malaysia Airlines' humble origins began in the golden age of travel. A jointinitiative of the Ocean Steamship Company of Liverpool, the Straits Steamship Companyof Singapore and Imperial Airways led to a proposal to the government of the ColonialStraits Settlement to run an air service between Penang and Singapore. The result was theincorporation of Malayan Airways Limited (MAL) on 1937.Then, British Overseas Airways Corporation (BOAC - now British Airways), atechnology pioneer and a majority shareholder of MAL, provided technical services suchas repairs, spares and training, even initiating training for local crew members inthe United Kingdom. The presence of BOAC also facilitated MAL's entry as a member of IATA.In 1966, following Singapore's independence, the Governments of Malaysia andSingapore became the majority shareholders in the national carrier. Within 20 years,MAL had grown from a single aircraft operator into a company with 2,400 employeesand a fleet operator using the latest Comet IV jet aircraft, six F27s, eight DCs and twoTwin Pioneers. In 1967, a new branding exercise saw MAL changing its name toMalaysia-Singapore Airlines (MSA). That proved to be a watershed year apartfrom expanding its international routes to Manila, Perth, Sydney and Taipei, MSA alsotook delivery of three pioneering Boeing 707s and two F27s to service these new routesand finally set up its new corporate headquarters in Robinson Road, Singapore. In the1980s, Malaysian Airline System became the first major government agency to be privatized. In 1985, Malaysian Airline System entered the corporate sector by offering 70million shares for sale.Today, Malaysia Airlines has clearly established itself as a carrier of internationalstanding and it is still going strong in its journey to ever greater excellence. Through its‘Moving Forward’ initiative, it is now embarking on ‘A Drive for Change’.3

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