5 FORCES BY MICHAEL PORTER

Porter five forces is a framework which analyzes the industry and business strategy
development to determine the competitive strength. Malaysia Airlines can recognise the
challenge of new entrants by using this research technique. The threat from new entrants has
therefore decreased, because the need to establish an airline business is difficult. Brand
names are also relevant these days for consumers. In addition, joining this organisation does
not require high money, but also a brand name. So the potential threat entrants will
concentrate more on the existing customer instead of introducing a new brand name. The
international airlines are the only new challenge that Malaysia Airlines must concentrate
more on.

Boeing and Airbus are two firms in the aircraft industry that compete against each other.
Since Boeing is therefore chosen by Malaysia Airlines as its key aircraft, Boeing has no
choice to raise its aircraft prices. When Boeing raises its price, Malaysia Airlines will most
likely turn to Airbus for their planes. Therefore, Malaysia Airlines will use its customer
negotiating power to negotiate the price of the aircraft. This is of course, the advantage that
Malaysia Airlines would have in saving their purchasing costs which is run Boeing, as they
are struggling to compete in the aviation industry to sell their flights to Malaysia Airlines.

The negotiating power of suppliers depends on the number of alternatives available to the
customer. For Malaysia Airlines it is difficult, as maintenance personnel are experienced in
Boeing's aircraft, to switch to another aircraft manufacturer such as Airbus. Malaysia Airlines
would invest a lot of money to train its maintenance workers by changing the aircraft
manufacturer. This means that the influence of suppliers cannot be a negative factor because
Malaysia Airlines relies solely on one aircraft manufacturer. Furthermore, where Malaysia
Airlines has its own aircraft servicing subsidiary, suppliers' strengths are negligible. For
petrol, suppliers' negotiating power is not very high because the Malaysia oil organisation is
limited and the government price is fixed.
SWOT ANALYSIS
TOWS MATRIX

STRENGTHS WEAKNESS
1. Strong brand image (well-
known airlines across the 1. High operating cost such as the
world). landing cost and airport tax.
2. Offer high quality services to 2. Change of business model very
their customers. frequently
3. Won a lot of prestigious 3. Limited market growth
awards and have a broad domestically, especially after Air
network of destination. Asia entered the market.
4. Weak financial status especially
ader having a loss of about RM 1.3
TOWS 4. Best cabin crew Billions in 2005.
5. Strong workforce with more 5. MAS suffered trust issue after the
MATRIX than 20,000 employees crisis of MH 370 and MH 17
OPPORTUNITIES SO STRATEGIES WO STRATEGIES
1. The launch of
Firefly – to compete in 1. Increase services development
the low-cost carrier strategy - New services 1. Functional strategy – provide more
market development- (S2, O2,) training to staff (W5, O3)
2. Expansion strategy - provide
products and service offering 2. Products and services development
2. Increase their cargo befitting targeted customer (S5, strategy - utilize the latest development
services. O4, O5) (W2, O2, O5)
3. Increase more
international routes to 3. Market penetration strategy -
highly demand to be the secure dominance in 3.Network strategies - collab with all
destination. existing market (S1, S3, O1) nations securities (W5,O3)

4. Revitalized fleet.
5. Improved
entertainment
onboard.
THREATS ST STRATEGIES WT STRATEGIES
1. Have no control on 1. New services development-
the highly fluctuating offer 5 star special charter 1. Network strategies- collaboration
fuel price. services (S1, S4, T3) with others stakeholders (W4,T4)
2. Cost leadership strategy-strengthen
2. The fast emergence 2. operational strategy - low cost existing skills,efficiency and cost cutting
of low cost airlines. services (S1, S2, T1, T2) (W3, W4, T1,T2)
3. Competing with
other well-known
airlines company 3. Network level strategies - Collab with
such as Emirates and competitors to develop new company
Etihad Airways. specialized in services (W1, T4)
4. Changing
government policies 4. Differentiation strategy - Develop a
and regulation of new and unique services (W1,W2,W3,
regulatory bodies. T3)
5. Terrorism and
political unrest.
Following are the potential objectives and strategies to be implemented for MAHB based on
the TOWS matrix above.