IS Strategy to be implement in Malaysia Airlines

Porter’s Framework of Competitive Strategy

- Customers (Very Strong)

- Substitute Products (Very Weak)
- Suppliers (Strong)
- Competitive (Strong)
- Potential Entrants (Weak)

1. Customers

Customers is a very strong component affecting Malaysia Airlines in the Porter’s framework. The
power of customers is very essential in this airline industries because the quality of services provided
to the customers, the price of the airline tickets and its product on plane, the convenient of how
customer felt from preparing to go onboard until checkout the luggage is the sub-component which
affecting this ‘Customer’ component. Malaysia Airline’s overall pricing is quite high if compare to
low-cost carriers, but relatively the price is lower compare to international carriers. With many
alternatives flourish beyond the industry, customers have the rights to choose airlines which fulfill
their needs and budget, which completely related with the phrase, “The customer is always right.” In
instance, airlines like Singapore Airlines (SIA) and United Arab Emirates (UAE) providing their best
services to their customers in order to compete to market segment, while Air Asia gave inexpensive
rate for its airline ticket. Malaysia Airlines have been providing best services beyond domestic
airlines, so in our opinion, MAS could lower down their price for airline tickets concerning to achieve
cost leadership. By having a good airline services with a worthy price would increase the rate of
customer’s second glance and keeping their loyalty towards MAS.

2. Substitute Products

The substitute product elements in the Five Porter Force is very weak towards Malaysia Airline. For
traveling internationally, where time is constraints, alternatives for airlines is not really exists. Even
though land and water transport can be an alternatives choice to travel, but the convenient and time
saving is an irreplaceable factor which only air transport could be the only choice to pick for the final
result. Therefore, Malaysia Airline have no reason to be worry about the existent of substitute
products when it comes to traveling internationally. Comparatively, for domestic short journey
travel, people with their own vehicles usually prefer land transport because cost saving is the main
element to be concern in this point. In instance, it is cheaper to travel inter states in Malaysia by car
than airplane. Malaysia airlines could provide a lower price or special packages targeted just for
domestic travels beyond the Peninsular Malaysia.

3. Suppliers

The Supplier component of Five Porter Forces is strong. The aircraft used by Malaysia Airline (MAS) is
majorly the Boeing series which the main supplier that provide the aircraft parts have dominated the
whole industry. The Malaysia Airline (MAS) have been utilizing Boeing services and products in the
past decades. This means if the suppliers demand a higher price on the aircraft parts, Malaysia
Airline will not have an alternative supplier to choose during maintenance or aircraft breakdown.
Therefore, Malaysia Airline could probably consider an alternatives model of aircraft to purchase
which consists of a wide selection when it comes to the aircraft’s parts or services but not only
Boeing.
 4. Competitive

The Competitive component in Five Porter Forces of Malaysia Airline is strong. In the regional
market, Singapore Airline (SIA) is one of the biggest and strongest competitors which gave huge
impact on MAS. As for the global market, the US and European airlines have merged their business
because of the cost inflation and the loss of margin. The result of this merging caused the existing of
the biggest airline group in the world. Not to say Malaysia Airlines should follow the footsteps and
merge with other airlines, although it may not be bringing 100% profits and benefits on the merge,
but MAS could consider collaboration with other products which related to airline services for
example, bringing in fast food products into their airplane meal as one of the choices, in order to
attract customer’s eyeball. Otherwise, team up with regional industries which provide same air way
and come out with seasonal budget airline tickets to achieve cost leadership.

5. Potential Entrants

The potential entrant component in Five Porter Forces of Malaysia Airline is weak. Generally, the
airline industry has a low-level threat on potential entrants. The barrier of entry is extraordinarily
high compare to other industries. In addition, the operating cost of an airline company is very big
and also vital government laws and regulation based on this industry. Consequently, it is safe to say
that the potential entrants of airline industry is very low.