Executive summary:

MAS has certainly come a long way. For the financial period 2005 (9 months), MAS

reported a loss of over RM1.3 billion – the biggest in the company’s history – and it

was expecting to hit an even deeper loss of RM1.7 billion for the full year 2006. The

financial position was so precarious that we had only a few months until April 2006

before we ran out of liquidity. In the wake of the profit and cash crisis, we announced

our Business Turnaround Plan (BTP 1) in February 2006. The BTP 1 was developed

using the Government-Linked Companies Transformation (GLCT) manual as a

guide, and targeted to cut our losses from RM1.7 billion to RM620 million in 2006,

achieve a profit of RM50 million in 2007 and a profit of RM500 million in 2008.

With hard work, radical changes and tough decisions, we were able to overcome the

cash crisis to ensure our financial survival in 2006, achieved a record profit of

RM610 million for the 9 months, year-to-date to September 2007, and we are now on

track to generate further profits in 2008. We made it! We have demonstrated to our

stakeholders, nation and world at large that we are a winning team.

However, new challenges loom ahead of us. The single largest concern that MAS

will face in the industry is overcapacity. Based on industry estimates, about 400 plus

new aircraft have hit the skies of Asia Pacific, India and Middle East in 2007, and

another 400 plus is expected in 2008. This phenomenon of unbridled growth will

intensify competition in the market, and erode our yield and profit margins. Coupled

with the liberalisation of ASEAN skies and rising oil prices, MAS will, with everything

else remaining equal, inevitably hit a wall and fail badly if we do not transform

ourselves.

Thus, as we go into 2008 and beyond, our focus will clearly need to shift to securing

our future success. This phase represents the most challenging yet for MAS – this is

the real mountain that we need to scale. To chart our path onwards and upwards, we

have developed a Business Transformation Plan (BTP 2). The plan, outlined in this

document, will build on the 5 key thrusts of The MAS Way (see Exhibit 1) which

served as the guiding principle for our BTP 1.

The global airline industry is in a state of turmoil and it is increasingly clear that the

survivor and most certainly the winner will have to make radical changes to adapt to

the new environment. (MAS) reported a loss of over RM1.3 billion. This

announcement came at the same time as some of regional competitors reported

strong profits. This result i s u n a c c e p t a b l e . A r e a l b u s i n e s s

t u r n a r o u n d i s a n i m p e r a t i v e f o r M A S . T h e n e w env i ronment

w i l l con t inue to h i t MAS hard . The p ro jec t ions fo r 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 s ta f f , however ,

be l i eves s t rong ly i n ab i l i t y to t rans fo rm 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 plan tha t bu i lds o f f the

ac t ions taken by the Board in 2005 to beg in the tu rnaround.

Th is turnaround plan will not only reverse the loss and return MAS to

profitability, but alsot rans fo rm the company in to a s t rong and v ib rant

ins t i t u t ion one tha t i s capab le o f  withstanding external shocks and

aggressively tackling new opportunities. BusinessTurnaround Plan has been

developed using the GLC Transformation Manual as a guide.I t t a k e s i n t o

a c c o u n t t h e r e c o m m e n d a t i o n s i n t h e m a n u a l a n d

a d a p t s t h e s e f o r   implementation 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 even fu r the r . In th i s

repor t , cer ta in par ts have been inc luded as br ie f l y abou t

Ma lays ian Airlines 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 , v i s ion , m iss ion and fu tu re

manag ing se rv ice qua l i t y i s d iscussed . I t i s the mission of Malaysia

Airlines System Berhad, as a corporation, to provide a transport

A Definition “Integrated Marketing Communication is a process for planning, executing &

monitoring the brand messages that create customer relationships”

(Duncan, Principles of Advertising & IMC, 2005:17)

IMC “is the coordination and integration of all marketing communication tools,

avenues, and sources within a company into a seamless program that maximizes

the impact on consumers and other end users at a minimal cost” (Clow & Baack,

2007, p. 8).

Impact of IMC

IMC plays a role in all:

Business-to-business (B2B) interactions.

Marketing channel communications.

Customer-focused communications.

Internally directed communications.

The Goal of IMC

As with all marketing activities, the goal of IMC is to build brands. Brands that are

well known and liked are more likely to be purchased → increase profit margins.

Brand Equity: “the intangible value of a brand – value added to a product or service

that derives from a perception in customer’s minds” (Duncan, 2005, p. 8).

Value of IMC:

The importance of Integrated Marketing Communications was until a few years back

only understood by the small business owners and growing companies but of late, its

value has also been acknowledged by the large corporations and big companies as

well. The reasons for this trend are the following:

1. In the background of the global economic meltdown, the competition amongst the

businesses has become even stiffer and marketing has assumed a greater

importance than ever before.

2. New methods of marketing have evolved in the recent past and no business or

company can afford to ignore them.

3. Because of a flood of marketing materials and advertisements, it has become

harder for the companies to have their marketing messages imprinted in the minds of

the people.

Integrated Marketing Communication is directed to combine the marketing efforts

from the online and the offline sphere to derive maximum benefit from the whole

marketing strategy. The online components of marketing used are B2B website

design, email newsletters, pay per click advertising, search engine optimization,

Facebook marketing and many more similar strategies. The offline or the traditional

marketing strategies include direct mails, public relations management through the

public relations firms and many more traditional advertising methods. Not to forget,

the interpersonal marketing methods are not out of the scope of integration.

The core idea behind integrating the marketing communication is to help the people

internalize your marketing message by exposing them to the same message several

times through different online and offline means.

With the ever increasing trend of integrated marketing communications, many

agencies have come up that handle all the aspects of integrated marketing. These

agencies rely on a network of trustworthy service providers that handle different

aspects of marketing including printing, promotion, online marketing etc. If you opt

for the integrated marketing agencies, you can be rest assured that your marketing

campaign becomes more efficient, is carried out at a fast pace and is cost efficient at

the same time.

One of the most important aspects of these marketing campaigns is the planning of

the marketing campaign. You should carefully select the online and offline marketing

components that you wish to use by keeping in mind your target audience and the

efficacy of each component. This would determine the cost of the whole campaign

and you would not have to care for the cost of entire plan.

Another very important aspect of integration is the link between the various

marketing components that helps in establishing a continuity which increases the

chances of retention of the marketing message in the minds of the people manifolds.

The efficiency in linking the various online and offline components is of great

importance to ensure that the marketing campaign stands out amongst the rest.

Benefits of IMC

IMC provides greater:

Brand differentiation.

Accountability within a firm.

Trust among consumers.

Levels of effectiveness in cutting through message clutter than single strategies.

The Changing World of MC

Old World New World

IMC – The Evolution

To

“Talking At” Consumers

Focus on Winning New Customers

Marketers Relied Primarily on

Advertising and Promotions

Two-way Dialogue with Consumers

Focus on Building Long Term

Relationships with Consumers

Marketers Use and Coordinate

Many Different Forms of

Communication with Consumers

Mass Marketing Using mass communication

Relationship Marketing Using integrated marketing

communication with a focus on interaction

IMC & the need for integration

Covers a number different media and strategies

TV, radio, Direct, PR, social media etc

Selective combination of appropriate types of communication

Meeting a common set of objectives for the brand

Integration over time with regard to customers

Integration provides synergy

The Importance of Integration

Integration begins with the way a company and its agencies organise the process for

creating and delivering brand messages. All participants involved in creating and

delivering brand messages must work together:

The company

Company agencies

The media

Channel members

IMC support services.

Integrated Marketing Communications Model

INTRODUCTION MAS was founded in 1947 by Malayan Airways. With the formation of Malaysia in

1963 the airline changed its name soon after to Malaysian Airlines. MAS is the

government owned flag carrier airline of Malaysia. Flights are operated from KLIA

and Kota Kinabalu. It also operates transatlantic and transpacific flights. MAS has

received more than 100 awards in the last 10 years such as the “World’s Best Cabin

Crew” and “5-star Airline”. MAS is listed on the stock exchange of Bursa Malaysia by

the name Malaysia Airline System Berhad.

Malaysian Airlines – VISION – MISSION - STRATEGY

Present problem of MAS:

Malaysian airlines (MAS) used to be the national pride of Malaysia. It symbolisms

modernity and the vision to achieve continues growth and advancement for our

country. The company gain reputation as an airline that provided good hospitality for

the passengers. It all seems good for MAS; however MAS keep suffers a lot of

losses and declining revenue over the years. In 2011, MAS recorded a mind-blowing

loss of RM2.52 Billions. One might say that it is due to economic downturn or

recession, but other competitor airlines are actually making profits. Among the

airlines that recorded profits is Singapore Airlines, British Airways and Cathay

pacific, all the competitors of MAS reported a profitable year, but why MAS still

recorded such a big loss? We need to examine the marketing mix of MAS in order to

find the problem and the solution to the problem faced by MAS. It is expected that

MAS might be bankrupt after second quarter of 2012 if no steps are taken to solve

problems faced by MAS.

Malaysia has now met with a similar removal of a passenger plane's electronic

capabilities, no distress signal and complete disablement over the ocean.  It's as if a

kill switch was flicked - literally.  What might be bugging the world's militaries on this

occasion, and cause them to pick out Malaysia for a bit of the treatment?

FACTS:

The black box emits a signal which can be picked up hundreds of miles

away... still no sign of wreckage more than 36 hours after disappearance from

radar

no adverse weather conditions

no kind of distress signal sent

the pilot has (had) over 18,000 hours of flight experience, since 1981

the plane model has no significant history of safety or mechanical failures

This kind of thing has been going on there for a while.  Blair and Bush were declared

to be war criminals by the Kuala Lumpur War Crimes Commission in 2011, which

has had a great impact on their worldwide reputations.  The War Crimes

Commission has been recently attacking Israel for its treatment of the Palestinians.

That never goes down too well, especially when Israelis are involved in managing

the situation on the streets of Kiev.  It's another way of raising the threat level for

Putin.

SWOT Analysis is a general examination of a business’s current position so that it

can identify the preferred decisions in the future. The following is the SWOT analysis

for MAS:

Strengths:Brand name

Improvement in yield

Diversified Revenue stream

Low labour costs

Accreditation

Well-trained employees

Weakness: Lower margins

Weak cash flow

Unprofitable routes

High Costs

Inadequate marketing skills

Ineffective utilization

Opportunities:Launching Firefly

Expansion towards Asia Pacific

Increasing cargo traffic

Threats:Increase in fuel prices

High Competition

Foreign currency fluctuation

Terrorism & Health Awareness

S T R E N G T H S

Highly recognizable brand name Established a strong brand image

domestically as well as internationally. MAS airlines has built a strong name

for themselves in the aviation industry.

Improvement in yield An increase in yield which is defined as revenue per

passenger kilometer.

Diversified revenue stream MAS airlines generates revenues from various

areas, such as, which deal with freighter flights and aircraft cargo hold. It has

also diversified into related industries such as aircraft ground handling, aircraft

leasing, aviation engineering, and flight catering and tour operations. MAS

have revenues coming in from non-aeronautical areas such as maintenance,

repair, overhaul and aircraft handling.

Low labour costs MAS has the lowest labour costs than other airlines.

Accredited by international bodies MAS has won numerous awards from

international bodies and is accredited by the IOSA for its safety practices.

Well- trained employees Its flight attendants undergo extensive training.

Unlike other airlines where they promote the different routes and destinations

they provide, MAS airlines use they’re flight attendants to promote the airline.

MAS branding strategy is for the general public to portray them as hospitable

and friendly.

W E A K N E S S E S

Low margins Low margins Even though MAS has a strong revenue growth, its

operating margins are well below the industry average. This effects the

airlines growth plans and puts it at a competitive disadvantage.

Weak cash flow Weak cash flow The airline has been reporting negative cash

from its operations. • Several weaknesses were due to the RM 1.36 million

loss which was caused by the increasing fuel prices.

Unprofitable Routes Unprofitable Routes In 2000, the airline suffered further

losses, therefore lead to MAS airlines to discontinue flights to unprofitable

routes such as Brussels, Darwin, Honolulu, Madrid, Munich and Vancouver.

High costs High costs Costs included staff costs, handling and landing fees,

aircraft maintenance and overhaul charges.

Low Productivity

Marketing skills are inefficient and are only focused on expanding to fast. •

Ineffective utilization of resources and partnerships

O P P O R T U N I T I E S

Launch of firefly Launch of firefly Has to subsidiaries; Firefly and MASwings.

Firefly is Malaysia’s first community airline. It is expected to gain a potential

customer base of 100 million in the Indonesia- Malaysia-Thailand area. MAS

airlines set up Firefly as a test-bed in managing low cost operation.

Expanding passenger traffic in Asia Pacific Expanding passenger traffic in

Asia Pacific MAS airlines covers several destinations in Asia, like China,

Japan, India and the Middle East, where the demand for travel is high. More

than 15% of MAS revenues derive from the Asian region.

Increasing cargo traffic Increasing cargo traffic There has been an increase in

cargo traffic in South East Asian countries. This is due to the growth of export

related industries. Therefore, MAS airlines benefits from the increase in

demand for air cargo services.

T H R E A T S

Increasing jet fuel prices Increasing jet fuel prices The dramatic increase of

fuel prices affect most airlines. It is one of the operating expenditures for MAS

airlines.

High competition High competition Faces intense competition from other

airlines. The airline faced major competition internationally from established

airlines and new start-up operations.

Foreign currency fluctuation Foreign currency fluctuation MAS’s reveunue is

denominated in different foreign currencies which results in the fluctuations of

foreign exchange rate. The airline uses foregin currency borrowings as its

strategy to manage the risk of foreign fluctuations. Undertaking this risk leads

to a decline in growth.

Terrorism and Health scare Terrorism and Health scare Political and

Economical events such as the September 11th attacks and the Swine Flu

effects the aviation industry considerably. The airline also suffered losses of

RM 260 million during the Asian Crisis in 1997.

Improving MAS Improving MAS

Restructuring and solving MAS ongoing weaknesses, is analyzing which

routes are unprofitable for the airline and therefore discontinuing flights to

those destinations to cut its losses and focus primarily on profitable high-

growth routes. The airlines should also maintain their existing routes which

are of high importance, thereby providing at least daily flights.

MAS should utilize and maintain alliances with other airlines. This allows it tap

into other destinations around the world, therefore allowing MAS to expand

and provide flights where there unable to.

MAS can reduce its high expenditure costs, by managing its costs and

budgeting. By training staff to be more specialized and/or to employ staff that

are able to carry out different tasks. Therefore, would minimize the problem

of overstaffing.

The airline suffered high losses over the years due to poor management. The

airline should conduct proper training to existing managers. Hence, employ

suitable candidates for the position.

Implement new Marketing Techniques to sell higher margin services and the

airline should keep in mind that the organization cannot be successful in a

day.

To boost margins is to change the mix of business by hiring new sales people

who are capable of selling, hire new staff, open new locations or update

offices.

References:

• http://www.net-temps.com/careerdev/crossroads/print.htm?id=1894

• http://www.asiatraveltips.com/travelnews2001/4October2001Malaysia.htm

• http://www.malaysiaairlines.com/cn/en/corp/corp/info/history/our-history.aspx

• http://answers.yahoo.com/question/index?qid=20070509063139AAGyiLn

• http://en.wikipedia.org/wiki/Malaysia_Airlines