Mas Strategic Analysis

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Strategic Audit Report Strategic Management 313 Unit Index No. 3522 Semester 2, 2011

Malaysian Airlines

PREPARED BY:

Alfonso Di Tullio Andrew Dellaposta Philip Podgorski Sebastian Michael

14078282 13947899 13949206 14224933

SUBMITTED:

23/09/2011

1

1.0

Executive Summary

The aim of this report is to analyse Malaysia Airline System Berhad (MAS) in regards to its competitive position in the South East Asian (SEA) airline industry, and provide recommendations to help MAS counter the threat of Low Cost Carriers (LCCs). Analysis is limited to the major airlines operating within the SEA airline industry. Firstly, the report begins with an external analysis of the SEA airline environment highlighting significant opportunities and threats. The most notable opportunity is an increased demand for low cost travel in SEA, while the growing market share of LCC AirAsia is an emerging and significant threat. Secondly, an analysis of MAS's internal resources, capabilities and core competencies is carried out highlighting significant strengths and weaknesses. MAS‟s most prominent strengths are its high brand recognition and reliable MRO facility. However, poor management of costs and high capital intensity prove to be the organisations main weaknesses. Finally, these characteristics are cross matched in a TOWS matrix to develop a number of possible strategies from which an evidence based recommendations are formed. It is recommended that MAS form a corporate strategy to diversify and offer low cost budget air travel as well as existing premium services. This can be achieved by horizontal integration into the related LCC airline segment through the formation of an alliance with existing SEA LCC leader AirAsia via an equity swap arrangement. In support, MAS shall also divest its fledgling LCC subsidiary Firefly. This strategy will counter the growing threat of LCC AirAsia while also providing the benefits of economies of scope/scale, transfer of core competencies and infrastructure sharing, and thus help MAS create and sustain a competitive advantage in the SEA airline environment. 1

Table of Contents
1.0 2.0 3.0 4.0 Executive Summary ................................................................................................................ 1 Introduction ................................................................................................................................ 3 Malaysian Airlines - Main Strategic Issues ................................................................... 5 Malaysian Airlines in the SEA Environment ................................................................. 7

4.1 General Environment Analysis .................................................................................................... 7 4.1.1 Political Environment ................................................................................................................................... 7 4.1.2 Economic Environment................................................................................................................................ 8 4.1.3 Socio-cultural Environment ....................................................................................................................... 9 4.1.4 Technological Environment ....................................................................................................................... 9 4.1.5 Environmental Environment .................................................................................................................. 10 4.1.6 Legal Environment ...................................................................................................................................... 10 4.1.7 Summary ......................................................................................................................................................... 11 4.2 Industry Environment Analysis...
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