Management 110: Assessment 2
1. Case study
I choose Malaysia Airline System (MAS) because the whole world is focusing on Malaysia recently and especially Malaysia Airline due to the miserable crash of MH370. According to international newspapers and articles, I have found that MAS has plenty of debts and it occurred because of wrong management. Some presses refer to MAS is able to be bankrupted by the tremendous compensation of MH370. Therefore, I choose MAS in order to revive and overcome from poor management.
2. Contemporary management issue in relation to this article
Issue: Poor management leads Malaysia Airline to billions of debt, MAS needs government rescue.
Background and context of the company: Malaysia Airline System (MAS) is the home base of Malaysia and it was established in 1947. Nowadays, Malaysia Airlines secures a variety of routes such as Europe, North America and Asia continent. These days, Malaysia Airline has recorded the minus of Operating Cash Flow (OCF) over the past three years. Free Cash Flow (FCF) which minuses capital expenditure from OCF was negative for six years. (Tengku Bahar,2014) The financial issue presses the airline and about 19,000 employees.
Key issues for the company: Before being the crash of MH370, MAS already faced their financial pressures, which is approximately 4.2 billion ringgit loss. The disappearance of MAS MH370 boosts the financial loss and it can be a critical damage for MAS. Furthermore, the main issue for MAS is its legacy cost structure and the union makes a strong stand, which postpones cost reducing plans. Besides, the most significant point is not only the financial disaster but also the reliability of corporation and the loyalty of customer, which cannot easily count and overcome.
Relevant Management Theories and the key issues relating to them:
Franchising: In Malaysia airline industry, there are