INDEPENDENT UNIVERSITY, BANGLADESH

Spring 2018

Course: MGT490

Section: 02

Submitted by:

Name ID
MD shirajul Islam Shaker 1330346
Marjanul Jannat 1410626
Nasim Haidar 1310331
Asika Akter 1431190
Frahana Akhter Marin 1431306
Tasnim Ahmad 1330715
Imran Chowdhury 1431302

Submitted to:
Sumita Das

Lecturer Department of Management

School of Business

Independent University, Bangladesh

Date of submission: 29th march 2018

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Letter of Transmittal

27th March 2018

Sumita Das
Senior Lecturer, Department of Management
Independent University, Bangladesh
Bashundhara R/A, Dhaka.

Subject: Report on Porter’s 5 forces model.

Dear Sir,
With due respect. This is to inform you that we are the student of your Mgt490 section-02. It
gives us pleasure that we have completed the pare work on working report successfully. We tried
our best to utilize and use the knowledge that we got through this course. While working for this
report, we have faced many hurdles and pleasant experiences and have tried our level best to
include all the necessary information. This experience will definitely help us in the near future
and assist us towards a better understanding to create report.

We hope that our assignment will be able to meet the expectation that you want from us. And if
there any errors and mistakes are found, we wish it will be considered with sympathy.

Therefore, we would like to request you to accept our report and oblige there by.
Sincerely yours,
On behalf of
Marjanul Jannat

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 Acknowledgement

At the very beginning we would like to express our sincere gratitude to Almighty God for giving
us patience & hope to finish the task within the scheduled time. We are feeling very thankful and
therefore special thanks to our honorable teacher who gave us the opportunity to use our
knowledge and skill and made us to practice this type of work so that we can do well in future.
Therefore, our sincere gratitude goes to our honorable teacher Sumita Das, instructor of Mgt490,
Independent University Bangladesh. Without his support and encouragement and such an
attempt to enhance our practical knowledge about the real situation, this assignment would not
be possible. We tried our best to implement our knowledge and skill that we learnt from our
teacher, study materials, internets, etc. Mainly Google were always there for us. At the last but
not the least we are thankful to all our friends and well-wishers who have been always helping
and encouraging us throughout this whole assignment.

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 Executive summary:

The report stands for “porters five forces” of the Malaysia airline company. Porters five force
plays a vital role in allover performance of the company. Rivalry among the existing
competitors, threats of new entrants, bargaining power of buyer, bargaining power of suppliers,
and threats of substitutes product and the service id identified through the porters five forces.
First of all, we identified the porters five force of Malaysia airline company. Find out the threats
of new entrances competitive rivalry, their background.
We have explained Porters value chain and its 2 major activities and Malaysia airlines income
through the value chain. The company also have SWOT analysis, so we have find out their
strengths, weakness, their opportunities, and threats.
We have find out the macro and micro level of market attractiveness and industries attractiveness
as well from these value chain.

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Table of Contents
Introduction: ................................................................................................................................................. 6
SWOT Analysis............................................................................................................................................... 6
WHAT IS PORTER’S 5 FORCES MODEL?......................................................................................................... 8
OBJECTIVES OF PORTER’S 5 FORCE MODEL .................................................................................................. 8
PORTER’S 5 FORCES MODEL: AIRLINES INDUSTRY (MALAYSIA AIRLINES) .................................................... 9
MALAYSIA AIRLINES BACKGROUND ............................................................................................................ 10
COMPETITIVE RIVALRY ................................................................................................................................ 11
WHAT IS PORTER’S VALUE CHAIN? ............................................................................................................ 14
For efficient value chain analysis, it can be focus in 2 major activities .................................................... 14
McKinsey 7s Framework: ............................................................................................................................ 15
Market attractiveness at the macro level: .................................................................................................. 17
Market attractiveness at the Micro level.................................................................................................... 17
Industry Attractiveness at the Macro level................................................................................................. 18
Sustainable Advantage............................................................................................................................... 18
Aspirations, Mission and Propensity for risk .............................................................................................. 19
Critical Success Factor ................................................................................................................................. 19
The Test of connectedness ......................................................................................................................... 20
Conclusion: .................................................................................................................................................. 20
References .................................................................................................................................................. 21

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 Introduction:
Malaysia Aviation Group (MAG) is a global aviation organization with subsidiaries and equity
investments organized into four distinct business segments:
✓ Air Transportation Services,
✓ Ground Services,
✓ Aircraft Leasing and Talent Development.
Malaysia Aviation Group Corporate Structure as of 19 May 2016
This group structure was created to drive better transparency and focused management across the
respective operating subsidiaries, creating profit center subsidiaries of the company’s separate
businesses. This ensures profit and loss accountability and unlocks the value of the various
assets by driving new levels of operational efficiency.
Apart from ensuring better transparency and governance, the business segments will have
flexibility to explore collaborative opportunities for raising capital, making the subsidiaries more
competitive and responsive, thus strengthening our position in the market.
The largest contributing segment of the Group is their Air Transportation Services which houses
Malaysia Airlines Berhad, Firefly and MA Swings, network carriers serving the global and
domestic markets and all passenger segments. Also under the umbrella is the division MAB
Cargo providing standard, express and special cargo.
The Group also includes ground handling services, engineering, training facilities as well as a
dedicated aircraft leasing company to provide customized and competitive aviation leasing
solutions.

SWOT Analysis
Strengths:
The Malaysia Airlines enjoy high brand recognition in the domestic as well as in the global
market. The company has always tried to maintain high standards with respect to its service
across all its operating segments. As far as the Personnel of the airlines is concerned, they are
representatives of friendliness and hospitality. In 2010, it was awarded three prestigious awards
by World Travel Awards, United Kingdom (Chang and Lee 2016). The Malaysia Airlines has a
well-organized management structure. The Malaysia Airlines fleet is also one of its kind with
AVOD facility even in economy classes.

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Weaknesses:
When compared to other airline companies, Malaysia Airlines travelling tickets are more
expensive than what its competitors cost. Air Asia had completely taken over its domestic routes.
The revenue of the company has been low with the profit margin coming to 2.3 percent which is
below the average of the industry which is 4.9 in the year 2011. Such a margin puts the company
in a state of competitive disadvantage. Employee inefficiency was reported recently which lead
to 1.3 billion ringgit worth loss in the year 2012 due to poor maintenance, route and repair
planning. The sales and distribution, pricing and planning departments also face many troubles
with respect to efficiently operating its business. The company is also suffering from the lack of
brand presence (Homosombat et al. 2014).
Opportunities:
The opportunities lie in enhancing the satisfaction of the customers with respect to the change in
their preferences. The customers prefer low cost carriers and decent in-flight services. They try
to get the best deals in terms of traveling cost. In accordance to keep up with the competition
from Air Asia, Malaysia Airlines has introduced Firefly Airlines, which helped the company
regain its domestic customers to a considerable extent (Mehdi 2015).Malaysia Airline has strong
brand recognition in the Asian continent. Favorable opportunities also lie in improved fleets with
respect to fuel efficiency, better technology, and outstanding in-flight services.
Threats:
The changes in the economy probably pose a huge threat to the airlines in various aspects.
Global economic changes are likely to effect Malaysia Airlines pertaining to the connections it
has across the planet. The unpredictability calls for detailed planning of its operations by the
management of Malaysia Airlines to be prepared for the alternative situations that may arise.
Intense competition is also a potent threat to the company as it is not the sole Airline company
operating in the South East Asian region. The main competitors are Air Asia, Thai Airways,
Malindo Air and Jet star. Political unrest and terrorism are also causing a downward shift in the
level of tourism and ultimately in the revenues of the airline (Nel 2014).

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 WHAT IS PORTER’S 5 FORCES MODEL?
Is a framework to analyze level of competition within an industry and business strategy
development. It captures key elements of industry competition Threats of new entrants Rivalry
among the existing competitors Bargaining power of buyers Threat of substitute products or
services Bargaining power of suppliers.

Threat of
new
entrants

Rivarly
Bargaining Bargaining
among the
power of power of
suppliers existing buyers
competitors

Threat of
substitute
product or
services

OBJECTIVES OF PORTER’S 5 FORCE MODEL

To identify the behavior factors of the competition to manage the long-term business
attractiveness in the industry to analyze and access industry attractiveness structured To explain
the relationship between the 5 dynamic forces and the business performance.

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PORTER’S 5 FORCES MODEL: AIRLINES INDUSTRY (MALAYSIA
AIRLINES)

Threats of new entrances

(National Airlines
Foreing Airlines)

Competitive
Bargaining power of Rivalry Bargaining power of
buyers (Budget travelers
suppliers (Fuel companies
Catering suppliers Airasia Pleasure travelers
Business travelers)
Aircraft companies)

Malindo
Threat of substitute
product and services
(Traveling alternative:
Bus,Train,Car.
Techonology alternative:
Video conferencing)

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Threats of new entrances Competitive Rivalry:
• AirAsia
• Malindo Bargaining power of buyers Threat of substitute products or services Bargaining power
of suppliers
• National airlines
• Foreign airlines
• Budget Travelers
• Pleasure Travelers
• Business Travelers
• Travelling alternative: Bus, car, train
• Technology alternative : Video Conferencing
• Fuel Companies
• Catering supplies
• Aircraft companies

MALAYSIA AIRLINES BACKGROUND

Founded: 1 May 1946; 68 years ago (as Malayan Airways)
Commenced operations: 1 October 1972; 42 years ago
Hubs: Kuala Lumpur International Airport Kota Kinabalu International Airport
Secondary Hubs: Kuching International Airport
Frequent-flyer program: Enrich
Subsidiaries: Firefly MASwings MASkargo
Destination: 60 exl. codeshare and subsidiaries`
Parent Company: Penerbangan Malaysia Berhad (Government Holding Company)
Headquarters: Sultan Abdul Aziz Shah Airport Subang, Selangor, Malaysia
Company Slogan: More than just an airline code. MH is Malaysian Hospitality
Website: www.malaysiaairlines.com

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 COMPETITIVE RIVALRY
Threats of new entrances Competitive Rivalry:
• AirAsia
• Malindo Bargaining power of buyers Threat of substitute products or services Bargaining power
of suppliers Competitive Rivalry:
• The main driver is the number and capability of competitors in the market. Many competitors,
offering undifferentiated products and services, will reduce market attractiveness.
• The airline industry is extremely competitive because of a number of reasons which include entry
of low cost carriers, the tight regulation of the industry wherein safety become paramount leading
to high operating expenses.
• It seems to be in the mature stage of the business cycle. The number of competitors stays the
same in the long run and it doesn’t seem to be under or over capacitated. The fixed costs are
extremely high in this industry. This makes it hard to leave the industry because they are probably
in long term loan agreements in order to stay in business. The products involved or the planes are
highly complex which also heightens the competition.
• The competition is lessened by the brand identities of different firms. As for example; Malaysia
Airlines is worldwide known giving the best hospitality to the passenger, while Air Asia formerly
known for its low price.
COMPETITIVE RIVALRY
Threat of new entrances:
• Profitable markets attract new entrants, which erodes profitability. Unless incumbents have
strong and durable barriers to entry, for example, patents, economies of scale, capital requirements
or government policies, then profitability will decline to a competitive rate.
• Airline industry has a high barrier to entry and exit as once an airline is operative then exist from
the industry would amount to huge amount of loss.
• Since the needs to start an airlines company are hard, consequently, the threat of new entrants
has reduced. Furthermore, brand name is important to the consumers these days. Adding to that,
to go into this business not also need high capital but also need an establish brand name. Thus,
rather than start an establish brand name, the new threat entrants will focus more on the loyal
customer.
• Malaysia Airlines has a good history as the safest airlines and an excellent hospitability service.
Unfortunately, after the sad tragedy of MH17 & MH 370 it affected the company's reputation and
an establish MAS brand name
• Now, the new threat entrants Malaysia Airlines need to focus on the international (foreign)
airlines.
• National airlines

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• Foreign airlines Threat of new entrances Bargaining power of buyers Threat of substitute
products or services Bargaining power of suppliers Competitive Rivalry:
• AirAsia
• Malindo
COMPETITIVE RIVALRY
Bargaining power of buyers
• An assessment of how easy it is for buyers to drive prices down. This is driven by the: number
of buyers in the market; importance of each individual buyer to the organization; and cost to the
buyer of switching from one supplier to another. If a business has just a few powerful buyers, they
are often able to dictate terms.
• As for Malaysia Airlines buyers can be categorized by type of travelers: i. Budget Travelers ii.
Pleasure Travelers iii. Business Travelers
• It a big challenge for Malaysia Airlines to have business attractiveness for budget travelers
compare to pleasure travelers and business travelers.
• Frequent flyer programmed and online duty free purchase services can create customer loyalty
and reduce the threat of customer switching over to other airlines to some extent. Bargaining power
of buyers Threat of new entrances Threat of substitute products or services Bargaining power of
suppliers Competitive Rivalry:
• AirAsia
• Malindo
• Budget Travelers
• Pleasure Travelers
• Business Travelers

COMPETITIVE RIVALRY
Threats of substitute products or services:
• Porter’s threat of substitutes definition is the availability of a product/services that the consumer
can purchase instead of the industry’s product/services. It also as an alternative way for consumer
to go to other option with different approach. According to Porter’s 5 forces, threat of substitutes
shapes the competitive structure of an industry.
• Consumers can choose other form of transportation such as a car, bus, train, or boat to get to their
destination.

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• There is however a cost to switch because plan ticket can be more expensive. For Malaysia
Airlines to win domestic traveler is quite challenge because of this alternative and pricey cost to
the consumer.
• But, the main cost is time. Planes are by far the fastest form of transportation available and also
convenience way for oversea destination.
• With the development of technology today, consumer also have a choice for not travelling. Video
conferencing can save time & money especially for business traveler. Threat of new entrances
Threat of substitute products or services Bargaining power of suppliers Competitive Rivalry:
• AirAsia
• Malindo Bargaining power of buyers
• Travelling alternative: Bus, car, train
• Technology alternative : Video Conferencing

COMPETITIVE RIVALRY
Bargaining power of suppliers
• An assessment of how easy it is for suppliers to drive up prices. This is driven by the: number of
suppliers of each essential input; uniqueness of their product or service; relative size and strength
of the supplier; and cost of switching from one supplier to another.
• For fuel, the bargaining power of suppliers is not really high since in Malaysia there is only little
petrol organization and the price is set by the government.
• The 25 years catering contract with Brahim’s Holdings Bhd is a bailout for Malaysia Airlines.
Brahim’s Holdings Bhd paid 170 million upfront and took over the accumulated losses. So, this
25 years contract can be long term threat to Malaysia Airlines.
• There are 2 companies that are competing against each other in the aircraft manufacturing
industry which are Boeing and Airbus. Since Malaysia Airlines are choosing Boeing as their main
aircraft, therefore, Boeing has no option to increase their aircraft prices. But it a big risk for
Malaysia Airlines, to change to another aircraft manufacturer since their maintenance staff are
experienced with Boeing’s aircraft. By changing the aircraft manufacturer, Malaysia Airlines need
to spend a lot of money to train their maintenance staff which and switching cost is high. Therefore,
the power of suppliers cannot be a negative factor since Malaysia Airlines only rely on one aircraft
manufacturer. Bargaining power of suppliers Threat of new entrances Competitive Rivalry:
• AirAsia
• Malindo Bargaining power of buyers Threat of substitute products or services
• Fuel Companies

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• Catering supplies
• Aircraft companies

WHAT IS PORTER’S VALUE CHAIN?

It’s a chain of activities that a firm operating in a specific industry performs in order to deliver a
valuable product or services for the market.
Value chain analysis is a powerful tool for managers to identify the key activities within the firm
which form the value chain for that organization and have the potential of a sustainable competitive
advantage for a company.

For efficient value chain analysis, it can be focus in 2 major

activities:
1. Primary Activities: Related with production
2. Support Activities: Background need for the effectiveness & efficiency of the company
includes planning and control systems, such as finance, accounting, and corporate strategy
• E.g.: Financial Department, Legal Department Value Chain Activities Inbound logistics -
Involved material management. From the upon of receive the material from supplier, stored and
handling it for production –
E.g.: Supplier scheduler (fuel, airlines food catering) Operation - Related to the production of
products and service. This operation can be split into more department in certain companies.
- E.g.: Aircraft Maintenance work Outbound logistics - Involved activities that can be delay &
intrude final product or service to the customer - E.g: Purchasing airplane ticket Marketing & Sales
- To analyses the needs & demand of customer and responsible for creating awareness among the
target customer –
E.g.: Market research Firm Infrastructure
• Involved recruiting, training, motivating and rewarding the workforce of the company. Human
Resource Management
• an area that is concerned with technological innovation, training and knowledge that is crucial
for most companies today in order to survive
• E.g.: Marketing Testing, R&D Product & Technology Development
• responsible for purchasing the materials that are necessary for the company’s operations. An
efficient procurement department should be able to obtain the highest quality goods at the lowest
prices.

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• E.g.: Machinery, Subcontracting, Supplier management Procurement S U P P O R T P R I M A
R Y Services - Related to the production of products and service. This operation can be split into
more department in certain companies. –
E.g.: Complaint Handling

VALUE CHAIN OF MALAYSIA AIRLINES

• From this value chain analyses we can conclude Malaysia Airlines income is based from good
services (Primary Activity-Services)
• On the other hand, to reduce expenses, Malaysia Airlines need to focus more on product &
technology development (Support Activity); such as research of reducing spending on material
services, but at the same time maintain the premium quality services. Besides that, operation
(primary activities) such as aircraft maintenance need to more efficient.
• As such, MAS needs to be cognizant with the business cycle so that it can to take full advantage
of such effects especially when there are changes in discretionary income and consumer spending
patterns.
• By coordinate these value chain analysis activities, Malaysia Airlines can have a lower cost
structure and increase the value of outcome product. By increasing the value of outcome product,
Malaysia Airlines can compete better in the industry by understanding the connection between
each of the value-chain activity.
• Additionally, a proper coordination with their union, customers and suppliers can reduce cost
and adds up the bonding between customers and company itself. As its outcome, improvement of
the performance in Malaysia Airlines primary and secondary activities can be achieved and higher
profit can be gained in the process.
• Last but not least, the impact of tragedy of MH370 & MH17, was able to hit the Malaysia Airlines
business badly and as such they continue to pose serious threat to the business

McKinsey 7s Framework:

Strategy: Malaysia Airlines follows an extensive strategy which aims to sustain earnings and
ensure high level performances of each unit involved in the operation of the company. The
Malaysia Airlines adopted a strategic move in the year 2002, which regained the airlines position
in terms of powerful financial standings (Myhre and Pilskog 2014). It also aims to contribute to
the socio-economic development in the South East Asian region by indulging in Corporate Social
Responsibility activities.

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Structure: The Organizational structure of Malaysia Airlines is a Bureaucratic one similar to that
of a pyramid where the board of directors is at the top of the management structure and the
sequence of commands pass through various departments and its employees. There are different
levels of hierarchy, which reflect the status of the authority. The management director has control
over a span of operations and thus is often is into a lot of pressure (Mehdi 2015).
Systems: The employees of the Malaysia Airlines work according to a given schedule which is
assigned according to the tasks to be undertaken by the respective departments. The supervisor
prepares the required database for the airplanes, the destination and departure points, time of the
operations, and other specific information (Ostelwader et al. 2015).
Shared Values: The Malaysia Airlines prioritizes the safety of its passengers above all. It considers
the well-being and comfort of its passengers as its greatest responsibility. The employees of the
Malaysia Airlines across all departments ensure that they pay attention to every detail that
ascertains the safety of its customers (Rothermel 2015). Apart from the safety of the passengers,
the employees also make sure that all the operations are carried out in time, abiding by the
deadlines assigned to them.
Style: Idris Jalal, the CEO of the Malaysia Airlines follows the pertinent management guidelines
similar to the game of impossible. This means that he sets unachievable targets so that he has to
fight the fear of disappointment and failure. He is of the opinion that the leaders should be more
focused towards the actions rather than theories relating to work. He follows the model of
situational leadership which outlines the importance of the know-how factor. If a person knows
how to deal with a situation, he will be able to come out of any adversities (Myhre and Pilskog
2014).
Staff: The staff at Malaysia Airlines at the ground level, as well as in-flight attendants, is highly
efficient in carrying out their responsibilities. They are heavily trained before they start their actual
job. This gives them enough knowledge about the responsibilities that they are supposed to
undertake so that they do not make mistakes while the discourse of their work (Rothermel 2015).
The staff at the Malaysia Airlines are also aware of the work ethics and try their best to abide by
them.
Skills: The employees at the Malaysia Airlines have been appreciated by its customers for having
good communication skills. They are always ready to listen to the queries, suggestions, and
grievances of the customers. They are highly professional in their attitude towards handling the
issues that appear during the discourse of their job (Ostelwader et al. 2015).
Observing the current financial and organizational condition of the Malaysia Airlines, the one
probable way it could revive its brand positioning in the minds of its customers is by breaking
away from its present industry to new market opportunities. If the company makes use of its current
resources that are available in approaching a new market rather than wasting them in the present
business structure, it will prove to be a lot beneficial to the company. Malaysia Airlines with regard
to the above strategy, can follow Mullins’ Seven Domains model which analyses new business
opportunities (Sohel et al. 2014)

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When entering a new market, in which a company has no previous knowledge or experience, many
risks are involved. The Malaysia Airlines has already been suffering huge losses since years and
hence if it enters new territories without proper evaluation of the scenario, the whole existence of
the Malaysia Airlines could be at risk. The airlines need to examine the strategies in a proper
manner before investing money and expertise into it. Switching to a new industry and exploring
new market opportunities is the last resort of Malaysia Airline for which the strategies need to be
implemented carefully so that the past mistakes are not repeated, and the new venture proves to be
profitable for the company.

Market attractiveness at the macro level:

This domain focuses on measuring the attractiveness of a market scenario keeping a macro
perspective. Malaysia Airlines should consider the whole market, for instance, how big the market
is with respect to the demand of that product or service, what is the value of sales and how many
quantities of the units are sold. The company should analyze the probable growth of its new venture
under the given market conditions. For instance, if Malaysia Airlines want to expand its operations
towards the hotel industry, it should study well the demand that is prevalent within the customers,
the value of the sales, etc. before venturing into the industry.

Malaysia Airlines should evaluate its each step before entering a new market territory because it
had already been suffering huge losses and had been on the verge of obsolesce. The Malaysia
Airlines also need to study the demographic, the socio-cultural stimulations, the economic
conditions of the market sector, the natural and the regulatory trends which are prevalent in the
proposed new industry which the Malaysia Airlines is about to enter (Teh and Corbitt 2015). These
are the most important factors which should be included in the considerations while planning to
expand or enter new market territories.

Market attractiveness at the Micro level

Malaysia Airlines if it enters a new market is not likely to love up to the demands of everyone in
the market. The smartest way is to chalk out a particular segment of customers and direct all its
sources towards them (Singh 2013). While measuring the market attractiveness at the micro level,
it would be advisable for the Malaysia Airlines to ask themselves the following set of questions.
Which is the segment, which is likely to benefit the most from the new business adventure which
the Malaysia Airlines is about to undertake? How is this product or service different from the
others that are already available in the industry? What are the recent trends that are developing in
the industry and whether the new line of products and services offered by the Malaysia Airlines
cater to them.
To evaluate the market attractiveness at the micro level, Malaysia Airlines will have to gather
quantitative as well as qualitative data. The customers need to be spoken to about the likes, dislikes
and expectations that they keep pertaining to the industry. A quick analysis of the rival companies
with respect to how superior or better they are in providing the services better than Malaysia
Airlines, how fast, better or cheaper do they offer the same services in the price the customers are

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ready to pay. This will help Malaysia Airlines to construct a business which stands out among the
rest of the companies operating in the market (The and Corbitt 2015).

Industry Attractiveness at the Macro level

This strategy suggests using Michael porter’s five forces model in order to access factors which
might effect the profitability of the new line of business which the Malaysia Airlines are about to
venture into. The company should first ask itself whether it is technically convenient to enter into
this industry. If it is an easy task, the company will be facing a huge number of competitors in no
time at all. The main aspect of this domain is to look at the competition that exists in the industry
(Bazargan et al. 2015). If the pattern of market rivalry fierce or a civilized one. Whether the
companies are stealing business ideas from each other is another point, which must be considered.
The Malaysia Airlines will have to closely study its rivals in order to understand the type of
industry it is about to operate in.
Special attention needs to be paid to the buyers and suppliers of the industry. An evaluation needs
to be done regarding their power in the particular business arena. The terms and conditions that
they set before the company in question makes a huge impact on its operations and eventually its
profitability. There is also a threat from the substitutes, which needs to be kept into consideration.
The Malaysia airlines will need to evaluate its new line of business very carefully before it looks
for new market opportunities. It needs to set itself differently from its competitors in the market
so that it makes an identity of its own in the minds of its customers which will also ensure brand
loyalty on the long run.

Sustainable Advantage
Once the Malaysia Airlines has looked up at the probable new industry from the macro level, it
will become imperative on it to examine the industry very closely. This can be done by starting off
with conducting a USP analysis of the company itself. USP stands for Unique Selling Proportion,
which sets the company in question apart from the others in the market or the industry. What
special attributes of the products or service offered by the company are unique enough to appeal
to its customers. The factor which matters here is that the company should not be only having a
USP, but also should know how to sustain it to ensure long term profitability (Rotharmel 2015).
The next step is to identify the new Company’s core competencies. The core competencies refer
to the development of a unique expertise in spheres that re important to the target market. Due to
this, the company will be able to reap advantages and rewards that come as a result of this expertise
(Sukri et al.2014). The Malaysia Airlines will be able to develop new skills that pertain to the new
market opportunities that they are looking for, which will complement its core skills and
competencies. The company will command respect in the new market territory by the customers
as well as the competitors in the long run.

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 Aspirations, Mission and Propensity for risk

In this domain, The Malaysia Airlines are going to analyze the commitment of the Company and
its team to farewell in the new business or market territory. The Company will have to introspect
whether they are passionate enough to go along with the idea. If the answer is positive, they will
have to further reconsider as to why they are passionate towards it (Nel 2014). What are the
company's values and goals and how do they align with the products and services offered by the
company? This can be better understood by considering the following questions:

With respect to the mission of the business endeavor:

Is the company aiming to cater to a particular market?

Or is the company wants to sell a particular product?

Is the company really passionate about its business idea?

With regard to the willingness of undertaking a risk:

Is the company willing to risk its capital and for how long?

Is the company willing to risk the level of control of its business venture?

Is the company willing to compromise the time spent with family and friends for the sake of the
business mission?

Critical Success Factor

It can become really exhaustive for the Malaysia Airlines if it is trying to get everybody to work
towards the company mission especially when it is entering a new market arena. It is important for
the company in such a situation to concentrate on its core essentials. This is where the Critical
Success Factors can prove to be helpful. These factors determine the most important tasks that are
to be carried out if the Malaysia Airlines are to achieve Success in the new market territory. This
will help constructing a benchmark to help the company measure the success of its new business

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project (Alessandri and Seth 2014). The company will also need to study which decisions will
bring them extraordinarily high profits or polish their performances even when the rest are not
faring well. The final step is to study the skills and knowledge of the staff and team that Malaysia
Airlines has put together to ensure that the company is strong on the skill front and can live up to
the defined Critical factors for success.

The Test of connectedness

This domain concentrates on the company’s connections and how significant are they for the
success of the company. First of all, the vendors and suppliers need to be taken into account. The
rapport and relationship that Malaysia Airlines will share with these people is going to matter a
lot. If the relationship is good, it will bring positive results for the company and vice versa. The
next step will be to prioritize the distributors and customers on the basis of their potentials. This
will indicate how much the company can capitalize on the relationship with the buyers and
suppliers in the new market scenario (Abdi et al. 2014). Finally, the Malaysia Airlines will have
to consider whether it knows any of its competitors in the market, and if the answer is in positive,
how can this probably help or impede with the Malaysia Airlines decision to break away from its
current business to a new market arena. If the competitors in the field, can further prove to be
friends in the future also needs to be considered.

Conclusion:
The relationship between air transportation and economic activity is complex. Over the last
several decades, both air transportation usage and economic activity have been growing around
the world. Between 1970 and 2005 the total number of air passengers carried by the world’s
airlines increased 6.5 times "from 310 million to 2 billion passengers. &during the same time
period, the worlds gross & domestic product {GDP} tripled from 12 to 36 trillion us $ the air
transportation usage grew, it came to play an important role in the global economy in 2004, 40%
international tourists traveled by air while air cargo accounted 40% of inter-regional goods exports.
air transportation is the only feasible long-distance transportation mode for high value perishable
commodities and time-sensitive people and is often the only means of access for geographically
isolated areas.

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 References
➢ porters-five-forces-analysis-of-airlines-industry-in-united-states.htm
➢ Threat-of-substitutes-one-of-porters-five-forces
➢ Malaysia Airlines Annual Report
➢ Shahren, “Brahim’s Willing to Sell AC stake; New Straits Times Online, 21 August 2014
MALAYSIA_AIRLINES_UNDER_STRATEGIC_MANAGEMENT
➢ business- porter-value-chain
➢ strategy-Michael-porter
➢ strategic-management-
➢ value-chain-analysis-at-air-Asia-management-essay

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