Reasons for Change

The modern day organizations are observed to be subjected to significant amount of competition with the other market competitors and the organization usually tries their level best to manage their business operations in such a way that it provides them the much needed space in the intensely competitive business market. The organizations formulate the relevant strategies for managing their business operation in an effective manner which will be helpful for them in achieving their financial goals. Along with the positives, the formulation of the strategy also incorporates bad results for some of the organizations as well, where the business strategy formulated by the organization did not align effectively with the resources of the organization. Hence the strategy making is significant part for any organization. As defective strategy is observed to be significantly affecting the financial structure of the organizations, the change becomes much needed for the organization (Carnall, 2018). The business organizations are observed to shift their focus with the introduction of the change initiative to overcome the severe impact of the defective strategies of the organization. The change initiative is a process by which the organizations try to settle their issues with appropriate and efficient modification in the strategy of their business operations (Cameron & Green, 2015). The paper is focused in specifying one such case where the chosen organization, Malaysian Airlines, restructured their strategy of business conduction in order to overcome the financial struggles and the aircraft losses that it faced in the year 2014. The air craft crashes were significant for the organization as the brand of the organization was getting significantly affected with these incidents. Along with the brand value, the organization was subjected to a notable financial crisis as an effect of the disappearances of its flights. The main triggering reason behind the change initiative was the need of rebranding the organization so that it could be able to overcome the financial crisis (Hayes, 2018).

The Malaysian Airlines is a notable aviation group of Malaysia which was founded in the year 1947 in the form of Malayan Airways. The organization faced several changes throughout the 71 year of its life span where it got converted as Malaysian Airline System and then in the year 2015 it got converted as Malaysian Airlines Berhead (malaysiaairlines.com, 2018). The organization having Khazansah Nasional Berhead and the Malaysia Aviation Group as the parent organization and was observed to be a part of the Oneworld Airline Alliance (oneworld.com, 2018). The organization was having its headquartering Kuala Lumpur.

Challenges Faced during the Process

The organization was conducting in a profitable manner at the start but in the year 1997, the organization was staring to experience significant losses. The organization suffered repeated periods of unprofitability where the organization suffered significantly huge amounts as losses. In the year 1997 the organization suffered a loss of RM 260 million. In the financial year 2000-2001, the organization again faced a loss of RM 417 million which in the following financial year increased to RM 836 million (malaysiaairlines.com, 2018). Apart from that the organization was observed to report a loss of RM 1.3 billion.

In the year 2011, the organization again faced a series of the non-profitable periods, where the organization was observed to report a loss of RM 2.52 billion and this was the highest sum as loss in the history of the organization (chartnexus.com, 2018). The organization was able to specify the reasons as the rise in the fuel cost and the mismanagement of the organization. The organization was significantly trying to reduce the operational cost in order to compete with the low cost carriers in the region. One of the major setback in that try came with the loss of RM 443.4 million in the first quarter of the financial year 2014 and along with that disappearance of the flight 370 was instrumental in making the situation even worse. The disappearance of the flight 370 added a loss of RM 307.04 million which recorded a 75% increment in the loss from the second quarter statistics of the previous year (malaysiaairlines.com, 2018). Along with that the organization suffered a decrement in the stock by 20% as an immediate impact of the disappearance. The shot down of the flight 17 also a major reason the poor financial performance of the organization as it was observed to result in a 33% decline in the average weekly bookings at that time. This resulted in the decrement of the share prices of the organization and the authority was left with no option other than requesting the CEO Ahmad Jauhari Yahya to resign. Under the circumstances, the parent organization Khazansah Nasional Berhead forced some necessary changes in the management of the organization and introduced Christoph Mueller as the new CEO of the organization with immediate focus on the renationalisation and rebranding of the organization.

The major factor that was responsible for the introduction of the change initiative was the repetitive period of losses that the organization was facing at that time. The organization was able to understand that the business conduction in the non-profitable business routes is also a major reason behind the huge amount of losses (Burke, 2017). Along with that the organization tried significantly to reduce the operating cost of their operation in order to make sure that they be able to compete with the low cost carriers.

Impact of the Change on the Organization

The management of the organization was able to understand that the financial crisis was a result of the decreasing trust of their customers on their services which were pretty evident with the disappearance of the flight 370 and the shot down of the MH17. Hence the organization was significantly concerned with the restructuring of the organization’s brand and that was evident with the 60% down in the ticket booking for the mentioned airlines in China in the month of March just after the disappearance of flight 370 (Hatch, 2018). A media report also came out after the shot down of the flight MH17 stating that the flights of the mentioned airlines were observed to be largely empty and that was significant for the organization to understand that the increment in the coverage is not something that will be able to guarantee the desired increment in the profit for them.

The organization was observed to take a change initiative which was focused in making sure that the business operation of the organization avoids the unprofitable long overhaul routes and concentrates on the regional destinations in order to make sure that the flights get maximum number of passengers. Apart from that the organization was observed to cut down 6000 jobs which was 30 % of the total workforce of the organization in order to reduce the operating cost.

• The repetitive losses and periods of unprofitability for the organization.
• The significant detrimental effects in the brand image of the organization (Cameron & Whetten, 2013).
• The urge from the shareholders for the generation of the profit.
• The reduction in the operational cost.
• The perfect utilization of the total capacity of the flights by the mentioned organization.

• The significant impact on the organization with the decision of the 6000 job cuts.
• The loss of the customers in the routes in which the organization will stop their operation.
• The organizational and work culture of the mentioned organization.

• The rich infrastructure of the organization.
• The shareholder’s backing for the change.

• The organizational culture and the power of the government on the organization.
• The continuous financial losses that the organization was facing (Clardy, 2013).

• The chance to concentrate more on the profitable regional routes.
• The chance to create a better brand image which will be able to gain the trust of the customers.

• The loss of the customers that the organization was getting in the routes which it will planning to close under the change initiative.
• The tremendous competition among the regional aviation organizations.

The parent organization Khazansah Nasional Berhead understood the necessity of the change very well and along with that they were able to understand that management of the change will not be an easy task until the mentioned airlines is in the Malaysian Stock Exchange (bursamalaysia.com, 2018). The parent organization was planning to de-list the mentioned organization from the stock exchange in order to manage the change in a better manner. Along with that the parent organization had the vision to return to the profitability at the end of the 2017 and they had the plans to relist the organization in the Malaysian Stock Exchange by the year 2018 or 2019. Apart from that the parent organization’s strategy in the restructuring of the image of the brand was significant with the transfer of the Malaysian Airlines System to the newly constructed Malaysia Airlines Berhad (MAB). Hence, it can be said that the change was revolutionary in nature (Kuipers et al., 2014).

The general challenges that are faced by the organization in managing the change is the intense competition among the regional aviation organizations, the apathy of the workforce in acknowledging the change (Goetsch & Davis, 2014). With the significant amount of the job cuts, the workforce was observed to get demotivated in significant manner. The significant pressure on the parent organization regarding the 6000 job cuts as the general people of the nation were significantly upset with the decision (Van der Voet, 2014). Apart from that the new CEO, Christoph Mueller was a German businessman. Hence the airlines was experiencing the leadership of a non-Malaysian for the first time which was difficult to consume for a segment of the nation. The employees were uncertain about the change and the process was creating significant pressure on the management as they were pressurized to force a turnaround within 3-5 years.

One of the major reason behind the financial crisis and the job cuts was the incapability of the employees in performing in the desired manner. Hence the organization needs to make sure that the employees are trained and developed in the desired manner so that the performance of the employees improved. Apart from that the creation of a sense of an urgency is much needed from the part of the organization in order to make sure that the workforce be able achieve the desired growth that is set by the shareholders.

The selection of the stakeholder will be the employees.

The employees are a major stakeholder in the organization. As the organization operates in the aviation industry, the quality of the services of the employees is a major factor in the creation of a better image of the organization in the industry. The employees of the organization are generally the people of Malaysia. Under the change management process, considerable number of job cuts took place and that was a genuine concern for the employees. Hence the primary expectation of the employees will be the job security and the assurance from the part of the organization regarding their continuation in the organization (Verhulst & Lambrechts, 2015). Apart from that the employees do expect that the objectives of change will be discussed with them as they are one of the important parties involved in the fruitful execution of the change initiative. The employees also expect that the change will incorporate some new aspects related to the operation of the organization and in that case the appropriate training will be much needed from their point of view as the development in their performance will be instrumental in generating increased amount of revenue (Hashim, 2013). This will also be significant contribution from the part of the employees in achieving the desired growth or the much expected turnaround.

The model is significantly important for the evaluation of the change management approach as it covers the specific parts of the change like the time, scope, preservation of the resources, diversity, capability, capacity, readiness for the change along with power (Langley et al., 2013). The evaluation of the scope of the change by the model specifies the mentioned case to be compulsory

The organization was facing a series of unprofitable periods and along with that it was subjected to significant amount losses. As mentioned earlier, the organization was observed to face an amount of RM 2.52 billion loss in the year 2011. In the year 2012, the organization reported a loss of RM 433 million and in the following year it was again subjected to a loss of RM 1.17 billion. Apart from that in the year 2014, it again faced a loss of 443.4 million in the first quarter and in the following quarter it faced a loss of RM 307.04 million. This was creating a serious financial crisis for the organization as it was not able to generate any sort of profit from the year 2010. Along with that the financial crisis was able to convert the situation of the organization into an emergency state (Booth, 2015). Hence the change was rapidly required by the organization in order to get back to profitability as soon as possible.

The change affects the organization as a whole including the external and internal parts of it. The training policy regarding the performance development of the employees of the organization is a much needed internal aspect that falls under the change initiative. Apart from that the renationalisation of the organization where it will prefer the business conduction in the popular regional routes rather than the unprofitable long overhaul routes is one of the highly important aspect for the organization under the change initiative. The restructuring of the organization in the Malaysian Stock Exchange is also a significant step in making sure that the leading of the change is not subjected to considerable number of challenges.

Though the change initiative observes a significant number of job cuts, even then the organization must make sure that the morale of the employees is not affected in a notable manner as that will make the management of the change significantly difficult. Apart from that, the organization must not break any rules regarding the employee compensation as a step to reduce the operating cost. If the organization fails conduct the above mentioned step, a serious employee unrest can take place in the organization which will have the capability to drag the organization away from the achievement of the desired growth (Cummings & Worley, 2014).

The diversification of the staffs were not a major concern for the organization as that had very negligible impact on the change.

The authoritative, administrative and the individual capacity to execute the change is available among the workforce and the management of the organization. The only thing that lacks for the employees is the proper understanding of the objectives of the change (Daft, 2015). As motives of the change are significantly important to understand in order to be able to conduct in the desired manner under the change initiative, the management of the organization must take care of the situation where they will concentrate on briefing the goals of the organization in approaching the change.

The cost of the change is a major issue for any organization and as the concerned organization is in deep financial crisis, the impact of the considerable amount of expenditure in managing the change will be tough to digest for them. Hence the organization needs to make sure that the cost of change be viable for the organization. The parent organization Khazanah is in agreement to spend 1.38 billion ringgit for compensating the minority shareholders of the mentioned organization. Along with this, the organization is in need to organize training program for the employees of it so that the performance of the employees of that organization gets improved. Apart from that the organization is considering a time period of 3-5 years in order to get a positive result of the change initiative. The change will be imposed on all the available employees and the management of the organization.

The annual financial report of the organization is pretty significant in portraying that the organization was facing repetitive losses and along with that the disappearance of the flight 370 and shot down of the flight MH 17 were able to create a negative impression on the organization among the customers. As the general employees of the organization are the first line representatives of the organization, they were able to observe the dissatisfaction among the customers and the decreasing preferences of the customers (Daft, 2015). Apart from that the financial report was significant for the senior level management in understanding the need of the change. Hence the urgency of the change was there among the employees of the organization and they were prepared for it.

Power:

The main source of the power is the shareholders and specifically Khazansah Nasional Berhead. The plan of the change is expected to restructure the areas of the business operation of the mentioned organization with maximum focus on the regional routes. Apart from that the quality of the performances of the employees is expected to increase with the change which was much needed for the organization. Along with this, the organization is focused in improving the brand image of them which was also a matter of concern for them after the disappearance of the flight 370 and MH 17 (Hayes, 2018). As the organization is able to evaluate all the necessary steps that need to be taken to return to profitability, the organization’s carefulness regarding the change is visible along with the significant investment.

 As the organization considered a plan of 6000 job cuts, the first source of resistance will be the community or the people of Malaysia. The decision of job cut will have a significant impact on the people of Malaysia as the scope of employment will get significantly reduced. Apart from that the government will not be very pleased with the decision as well as they are the responsible party for the taking care of their people. Along with that the job cut will have a notable negative impact on the existing employees of the organization as they will not sure about their future in the organization. That will be significant in the creation of the job dissatisfaction among the employees of the organization and that will be a significant barrier in the smooth conduction of the change (Van der Voet, 2014). Along with that the plan of the new CEO Christoph Mueller to focus more on the Asia and the regional routes will be subjected to significant amount of controversy in the industry. The new CEO also planned for purchases of three new airbuses which was significantly risky knowing that financial condition of the organization. Hence the other members in the senior level management was having significant doubts on the plan. Apart from that the cultural differences was also a major issue for the organization as the organization was having a CEO who is non-Malaysian for the first time ever and the hesitation of the employees and the customers were visible.

The most crucial strategy came from the most powerful shareholder group of the organization, Khazansah Nasional Berhead as they took away the company from the Malaysian Stock Exchange to make the organization completely private so that the change initiative gets applied without any sort of concern. Along with this the organization offered 1.38 billion ringgit to the minority shareholders with the same motive and even before that they requested the board to undertake relevant capital reduction exercises like the buybacks or the cancellation of the stocks of other shareholders (khazanah.com, 2018).

The needs of the change was primarily the financial crisis that the organization was facing. The periods of unprofitability was a major reason behind change initiative. Apart from that the decreasing reputation of the organization was also a major triggering factor for the change initiative. The organization was facing a notable decrement in the performance of the employees of it which also was an important reason behind the sharp decrease in the preferences of the customers towards the organization. The parent organization, Khazansah Nasional Berhead, was significantly ready to invest in purchasing the shares of the organization to make sure that the change initiative gets applied without notable interruption from the other shareholders (Cummings, Bridgman & Brown, 2016). Along with that the transfer of the MAS to MAB was significant from the part of the organization to rebrand MAS and this was a notable step from the part of the organization to improve the negative brand image of the organization among the customers. The introduction of the new airbuses was also a crucial strategy from the management’s point of view in trying to increase the frequency of the flights and earn more revenues from the more profitable Asian and regional routes.

The organization cancelled its operation in the non-profitable routes and focused on the Asia and the regional routes in a significant manner. Along with that the organization was observed to communicate the needs of the change to the employees and the entire workforce. The senior management was observed to create a leader at every department to monitor the change and that was significant from the part of the organisation to effectively manage the change initiative as the process will be notably smooth by following this strategy (Sarayreh, Khudair & Barakat, 2013). The parent organization of MAS took it out of the Malaysian stock exchange to make it private so that the organization does not face any obstacles from the other shareholders in managing the change. The organization was observed to involve their workforce in the change process in a significant manner with the creation of the leaders and small groups of employees. This was a strategy which was significantly fruitful for the organisation in triggering the change process and in monitoring the performances of their employees under the change initiative through the leaders of those groups.

The organization took the decision of conducting a training for their employees so that the incapability of their employees in performing at the desired level gets achievable for them. The parent organization was observed to provide the required funding for the change initiative and apart from that it gave the power to the new CEO to buy the new airbuses (Hossan, 2015). The organization was observed to generate the amount of revenue by focusing at the regional and Asian routes which were more profitable. The organization under the leadership of their new CEO had the aim to return to profitability by following the mentioned change initiative in the next 3-5 years and had the plan to get relisted in the Malaysian Stock Exchange in 2018 or 2019.

The measure of success which was described from the part of the organization in the form of their plan to return to profitability to late 2017. Apart from that the organization restructured the brand image of the existing organization and conducted training for the employees. For rating the success of these actions, the organization implemented an individual review analysis where the customers are able rate the quality of the services of the employees of the concerned organization.

Conclusion:

The case has great significance in teaching the detrimental effects of a negative brand image on the business conduction of the chosen organization and it also helps to show the impact of a change initiative in dealing with such circumstances portrayed in this case.

• The organization is advised to identify the profitable routes in which it will be able to conduct the business with the perfect utilization of the capacity of their flights.
• Being an organization which is largely connected to the service industry, the organization is advised to put strong emphasis on the development of the performances of their employees.
• Apart from that the organization is recommended to recognize the quality performances of the employees under the change initiative with the introduction of appropriate and sufficient rewarding policy.       

References:

Booth, S. A. (2015). Crisis management strategy: Competition and change in modern enterprises. Routledge.

Burke, W. W. (2017). Organization change: Theory and practice. Sage Publications.

bursamalaysia.com (2018). Retrieved from https://www.bursamalaysia.com/market/

Cameron, E., & Green, M. (2015). Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.

Cameron, K. S., & Whetten, D. A. (Eds.). (2013). Organizational effectiveness: A comparison of multiple models. Academic Press.

Carnall, C. (2018). Managing change. Routledge.

chartnexus.com (2018). Retrieved from https://ir.chartnexus.com/mas/website_HTML/attachments/attachment_32862_1366604341.pdf

chartnexus.com (2018). Retrieved from https://www.ir.chartnexus.com/mas/website_HTML/attachments/attachment_24697_1338187461.pdf

Clardy, A. (2013). Strengths vs. Strong Position: Rethinking the Nature of SWOT Analysis. Modern Management Science & Engineering, 1(1), 100.

Cummings, S., Bridgman, T., & Brown, K. G. (2016). Unfreezing change as three steps: Rethinking Kurt Lewin’s legacy for change management. human relations, 69(1), 33-60.

Cummings, T. G., & Worley, C. G. (2014). Organization development and change. Cengage learning.

Daft, R. L. (2015). Organization theory and design. Cengage learning.

Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Hashim, M. (2013). Change management. International Journal of Academic Research in Business and Social Sciences, 3(7), 685.

Hatch, M. J. (2018). Organization theory: Modern, symbolic, and postmodern perspectives. Oxford university press.

Hayes, J. (2018). The theory and practice of change management.

Hossan, C. (2015). Applicability of Lewin’s change management theory in Australian local government. International Journal of business and Management, 10(6), 53.

khazanah.com (2018). Khazanah Nasional Berhad – Home. (2018). Retrieved from https://www.khazanah.com.my/Home

Kuipers, B. S., Higgs, M., Kickert, W., Tummers, L., Grandia, J., & Van der Voet, J. (2014). The management of change in public organizations: A literature review. Public administration, 92(1), 1-20.

Langley, A. N. N., Smallman, C., Tsoukas, H., & Van de Ven, A. H. (2013). Process studies of change in organization and management: Unveiling temporality, activity, and flow. Academy of management journal, 56(1), 1-13.

malaysiaairlines.com (2018). Malaysia Airlines. (2018). Retrieved from https://www.malaysiaairlines.com/in/en.html

oneworld.com (2018). oneworld – Around the World Tickets – Trip Around the World. (2018). Retrieved from https://www.oneworld.com/

Sarayreh, B. H., Khudair, H., & Barakat, E. A. (2013). Comparative study: the Kurt Lewin of change management. International Journal of Computer and Information Technology, 2(4), 626-629.

Van der Voet, J. (2014). The effectiveness and specificity of change management in a public organization: Transformational leadership and a bureaucratic organizational structure. European Management Journal, 32(3), 373-382.

Verhulst, E., & Lambrechts, W. (2015). Fostering the incorporation of sustainable development in higher education. Lessons learned from a change management perspective. Journal of Cleaner Production, 106, 189-204.

Reasons for Change

The modern day organizations are observed to be subjected to significant amount of competition with the other market competitors and the organization usually tries their level best to manage their business operations in such a way that it provides them the much needed space in the intensely competitive business market. The organizations formulate the relevant strategies for managing their business operation in an effective manner which will be helpful for them in achieving their financial goals. Along with the positives, the formulation of the strategy also incorporates bad results for some of the organizations as well, where the business strategy formulated by the organization did not align effectively with the resources of the organization. Hence the strategy making is significant part for any organization. As defective strategy is observed to be significantly affecting the financial structure of the organizations, the change becomes much needed for the organization (Carnall, 2018). The business organizations are observed to shift their focus with the introduction of the change initiative to overcome the severe impact of the defective strategies of the organization. The change initiative is a process by which the organizations try to settle their issues with appropriate and efficient modification in the strategy of their business operations (Cameron & Green, 2015). The paper is focused in specifying one such case where the chosen organization, Malaysian Airlines, restructured their strategy of business conduction in order to overcome the financial struggles and the aircraft losses that it faced in the year 2014. The air craft crashes were significant for the organization as the brand of the organization was getting significantly affected with these incidents. Along with the brand value, the organization was subjected to a notable financial crisis as an effect of the disappearances of its flights. The main triggering reason behind the change initiative was the need of rebranding the organization so that it could be able to overcome the financial crisis (Hayes, 2018).

The Malaysian Airlines is a notable aviation group of Malaysia which was founded in the year 1947 in the form of Malayan Airways. The organization faced several changes throughout the 71 year of its life span where it got converted as Malaysian Airline System and then in the year 2015 it got converted as Malaysian Airlines Berhead (malaysiaairlines.com, 2018). The organization having Khazansah Nasional Berhead and the Malaysia Aviation Group as the parent organization and was observed to be a part of the Oneworld Airline Alliance (oneworld.com, 2018). The organization was having its headquartering Kuala Lumpur.

Challenges Faced during the Process

The organization was conducting in a profitable manner at the start but in the year 1997, the organization was staring to experience significant losses. The organization suffered repeated periods of unprofitability where the organization suffered significantly huge amounts as losses. In the year 1997 the organization suffered a loss of RM 260 million. In the financial year 2000-2001, the organization again faced a loss of RM 417 million which in the following financial year increased to RM 836 million (malaysiaairlines.com, 2018). Apart from that the organization was observed to report a loss of RM 1.3 billion.

In the year 2011, the organization again faced a series of the non-profitable periods, where the organization was observed to report a loss of RM 2.52 billion and this was the highest sum as loss in the history of the organization (chartnexus.com, 2018). The organization was able to specify the reasons as the rise in the fuel cost and the mismanagement of the organization. The organization was significantly trying to reduce the operational cost in order to compete with the low cost carriers in the region. One of the major setback in that try came with the loss of RM 443.4 million in the first quarter of the financial year 2014 and along with that disappearance of the flight 370 was instrumental in making the situation even worse. The disappearance of the flight 370 added a loss of RM 307.04 million which recorded a 75% increment in the loss from the second quarter statistics of the previous year (malaysiaairlines.com, 2018). Along with that the organization suffered a decrement in the stock by 20% as an immediate impact of the disappearance. The shot down of the flight 17 also a major reason the poor financial performance of the organization as it was observed to result in a 33% decline in the average weekly bookings at that time. This resulted in the decrement of the share prices of the organization and the authority was left with no option other than requesting the CEO Ahmad Jauhari Yahya to resign. Under the circumstances, the parent organization Khazansah Nasional Berhead forced some necessary changes in the management of the organization and introduced Christoph Mueller as the new CEO of the organization with immediate focus on the renationalisation and rebranding of the organization.

The major factor that was responsible for the introduction of the change initiative was the repetitive period of losses that the organization was facing at that time. The organization was able to understand that the business conduction in the non-profitable business routes is also a major reason behind the huge amount of losses (Burke, 2017). Along with that the organization tried significantly to reduce the operating cost of their operation in order to make sure that they be able to compete with the low cost carriers.

Impact of the Change on the Organization

The management of the organization was able to understand that the financial crisis was a result of the decreasing trust of their customers on their services which were pretty evident with the disappearance of the flight 370 and the shot down of the MH17. Hence the organization was significantly concerned with the restructuring of the organization’s brand and that was evident with the 60% down in the ticket booking for the mentioned airlines in China in the month of March just after the disappearance of flight 370 (Hatch, 2018). A media report also came out after the shot down of the flight MH17 stating that the flights of the mentioned airlines were observed to be largely empty and that was significant for the organization to understand that the increment in the coverage is not something that will be able to guarantee the desired increment in the profit for them.

The organization was observed to take a change initiative which was focused in making sure that the business operation of the organization avoids the unprofitable long overhaul routes and concentrates on the regional destinations in order to make sure that the flights get maximum number of passengers. Apart from that the organization was observed to cut down 6000 jobs which was 30 % of the total workforce of the organization in order to reduce the operating cost.

• The repetitive losses and periods of unprofitability for the organization.
• The significant detrimental effects in the brand image of the organization (Cameron & Whetten, 2013).
• The urge from the shareholders for the generation of the profit.
• The reduction in the operational cost.
• The perfect utilization of the total capacity of the flights by the mentioned organization.

• The significant impact on the organization with the decision of the 6000 job cuts.
• The loss of the customers in the routes in which the organization will stop their operation.
• The organizational and work culture of the mentioned organization.

• The rich infrastructure of the organization.
• The shareholder’s backing for the change.

• The organizational culture and the power of the government on the organization.
• The continuous financial losses that the organization was facing (Clardy, 2013).

• The chance to concentrate more on the profitable regional routes.
• The chance to create a better brand image which will be able to gain the trust of the customers.

• The loss of the customers that the organization was getting in the routes which it will planning to close under the change initiative.
• The tremendous competition among the regional aviation organizations.

The parent organization Khazansah Nasional Berhead understood the necessity of the change very well and along with that they were able to understand that management of the change will not be an easy task until the mentioned airlines is in the Malaysian Stock Exchange (bursamalaysia.com, 2018). The parent organization was planning to de-list the mentioned organization from the stock exchange in order to manage the change in a better manner. Along with that the parent organization had the vision to return to the profitability at the end of the 2017 and they had the plans to relist the organization in the Malaysian Stock Exchange by the year 2018 or 2019. Apart from that the parent organization’s strategy in the restructuring of the image of the brand was significant with the transfer of the Malaysian Airlines System to the newly constructed Malaysia Airlines Berhad (MAB). Hence, it can be said that the change was revolutionary in nature (Kuipers et al., 2014).

The general challenges that are faced by the organization in managing the change is the intense competition among the regional aviation organizations, the apathy of the workforce in acknowledging the change (Goetsch & Davis, 2014). With the significant amount of the job cuts, the workforce was observed to get demotivated in significant manner. The significant pressure on the parent organization regarding the 6000 job cuts as the general people of the nation were significantly upset with the decision (Van der Voet, 2014). Apart from that the new CEO, Christoph Mueller was a German businessman. Hence the airlines was experiencing the leadership of a non-Malaysian for the first time which was difficult to consume for a segment of the nation. The employees were uncertain about the change and the process was creating significant pressure on the management as they were pressurized to force a turnaround within 3-5 years.

One of the major reason behind the financial crisis and the job cuts was the incapability of the employees in performing in the desired manner. Hence the organization needs to make sure that the employees are trained and developed in the desired manner so that the performance of the employees improved. Apart from that the creation of a sense of an urgency is much needed from the part of the organization in order to make sure that the workforce be able achieve the desired growth that is set by the shareholders.

The selection of the stakeholder will be the employees.

The employees are a major stakeholder in the organization. As the organization operates in the aviation industry, the quality of the services of the employees is a major factor in the creation of a better image of the organization in the industry. The employees of the organization are generally the people of Malaysia. Under the change management process, considerable number of job cuts took place and that was a genuine concern for the employees. Hence the primary expectation of the employees will be the job security and the assurance from the part of the organization regarding their continuation in the organization (Verhulst & Lambrechts, 2015). Apart from that the employees do expect that the objectives of change will be discussed with them as they are one of the important parties involved in the fruitful execution of the change initiative. The employees also expect that the change will incorporate some new aspects related to the operation of the organization and in that case the appropriate training will be much needed from their point of view as the development in their performance will be instrumental in generating increased amount of revenue (Hashim, 2013). This will also be significant contribution from the part of the employees in achieving the desired growth or the much expected turnaround.

The model is significantly important for the evaluation of the change management approach as it covers the specific parts of the change like the time, scope, preservation of the resources, diversity, capability, capacity, readiness for the change along with power (Langley et al., 2013). The evaluation of the scope of the change by the model specifies the mentioned case to be compulsory

The organization was facing a series of unprofitable periods and along with that it was subjected to significant amount losses. As mentioned earlier, the organization was observed to face an amount of RM 2.52 billion loss in the year 2011. In the year 2012, the organization reported a loss of RM 433 million and in the following year it was again subjected to a loss of RM 1.17 billion. Apart from that in the year 2014, it again faced a loss of 443.4 million in the first quarter and in the following quarter it faced a loss of RM 307.04 million. This was creating a serious financial crisis for the organization as it was not able to generate any sort of profit from the year 2010. Along with that the financial crisis was able to convert the situation of the organization into an emergency state (Booth, 2015). Hence the change was rapidly required by the organization in order to get back to profitability as soon as possible.

The change affects the organization as a whole including the external and internal parts of it. The training policy regarding the performance development of the employees of the organization is a much needed internal aspect that falls under the change initiative. Apart from that the renationalisation of the organization where it will prefer the business conduction in the popular regional routes rather than the unprofitable long overhaul routes is one of the highly important aspect for the organization under the change initiative. The restructuring of the organization in the Malaysian Stock Exchange is also a significant step in making sure that the leading of the change is not subjected to considerable number of challenges.

Though the change initiative observes a significant number of job cuts, even then the organization must make sure that the morale of the employees is not affected in a notable manner as that will make the management of the change significantly difficult. Apart from that, the organization must not break any rules regarding the employee compensation as a step to reduce the operating cost. If the organization fails conduct the above mentioned step, a serious employee unrest can take place in the organization which will have the capability to drag the organization away from the achievement of the desired growth (Cummings & Worley, 2014).

The diversification of the staffs were not a major concern for the organization as that had very negligible impact on the change.

The authoritative, administrative and the individual capacity to execute the change is available among the workforce and the management of the organization. The only thing that lacks for the employees is the proper understanding of the objectives of the change (Daft, 2015). As motives of the change are significantly important to understand in order to be able to conduct in the desired manner under the change initiative, the management of the organization must take care of the situation where they will concentrate on briefing the goals of the organization in approaching the change.

The cost of the change is a major issue for any organization and as the concerned organization is in deep financial crisis, the impact of the considerable amount of expenditure in managing the change will be tough to digest for them. Hence the organization needs to make sure that the cost of change be viable for the organization. The parent organization Khazanah is in agreement to spend 1.38 billion ringgit for compensating the minority shareholders of the mentioned organization. Along with this, the organization is in need to organize training program for the employees of it so that the performance of the employees of that organization gets improved. Apart from that the organization is considering a time period of 3-5 years in order to get a positive result of the change initiative. The change will be imposed on all the available employees and the management of the organization.

The annual financial report of the organization is pretty significant in portraying that the organization was facing repetitive losses and along with that the disappearance of the flight 370 and shot down of the flight MH 17 were able to create a negative impression on the organization among the customers. As the general employees of the organization are the first line representatives of the organization, they were able to observe the dissatisfaction among the customers and the decreasing preferences of the customers (Daft, 2015). Apart from that the financial report was significant for the senior level management in understanding the need of the change. Hence the urgency of the change was there among the employees of the organization and they were prepared for it.

Power:

The main source of the power is the shareholders and specifically Khazansah Nasional Berhead. The plan of the change is expected to restructure the areas of the business operation of the mentioned organization with maximum focus on the regional routes. Apart from that the quality of the performances of the employees is expected to increase with the change which was much needed for the organization. Along with this, the organization is focused in improving the brand image of them which was also a matter of concern for them after the disappearance of the flight 370 and MH 17 (Hayes, 2018). As the organization is able to evaluate all the necessary steps that need to be taken to return to profitability, the organization’s carefulness regarding the change is visible along with the significant investment.

 As the organization considered a plan of 6000 job cuts, the first source of resistance will be the community or the people of Malaysia. The decision of job cut will have a significant impact on the people of Malaysia as the scope of employment will get significantly reduced. Apart from that the government will not be very pleased with the decision as well as they are the responsible party for the taking care of their people. Along with that the job cut will have a notable negative impact on the existing employees of the organization as they will not sure about their future in the organization. That will be significant in the creation of the job dissatisfaction among the employees of the organization and that will be a significant barrier in the smooth conduction of the change (Van der Voet, 2014). Along with that the plan of the new CEO Christoph Mueller to focus more on the Asia and the regional routes will be subjected to significant amount of controversy in the industry. The new CEO also planned for purchases of three new airbuses which was significantly risky knowing that financial condition of the organization. Hence the other members in the senior level management was having significant doubts on the plan. Apart from that the cultural differences was also a major issue for the organization as the organization was having a CEO who is non-Malaysian for the first time ever and the hesitation of the employees and the customers were visible.

The most crucial strategy came from the most powerful shareholder group of the organization, Khazansah Nasional Berhead as they took away the company from the Malaysian Stock Exchange to make the organization completely private so that the change initiative gets applied without any sort of concern. Along with this the organization offered 1.38 billion ringgit to the minority shareholders with the same motive and even before that they requested the board to undertake relevant capital reduction exercises like the buybacks or the cancellation of the stocks of other shareholders (khazanah.com, 2018).

The needs of the change was primarily the financial crisis that the organization was facing. The periods of unprofitability was a major reason behind change initiative. Apart from that the decreasing reputation of the organization was also a major triggering factor for the change initiative. The organization was facing a notable decrement in the performance of the employees of it which also was an important reason behind the sharp decrease in the preferences of the customers towards the organization. The parent organization, Khazansah Nasional Berhead, was significantly ready to invest in purchasing the shares of the organization to make sure that the change initiative gets applied without notable interruption from the other shareholders (Cummings, Bridgman & Brown, 2016). Along with that the transfer of the MAS to MAB was significant from the part of the organization to rebrand MAS and this was a notable step from the part of the organization to improve the negative brand image of the organization among the customers. The introduction of the new airbuses was also a crucial strategy from the management’s point of view in trying to increase the frequency of the flights and earn more revenues from the more profitable Asian and regional routes.

The organization cancelled its operation in the non-profitable routes and focused on the Asia and the regional routes in a significant manner. Along with that the organization was observed to communicate the needs of the change to the employees and the entire workforce. The senior management was observed to create a leader at every department to monitor the change and that was significant from the part of the organisation to effectively manage the change initiative as the process will be notably smooth by following this strategy (Sarayreh, Khudair & Barakat, 2013). The parent organization of MAS took it out of the Malaysian stock exchange to make it private so that the organization does not face any obstacles from the other shareholders in managing the change. The organization was observed to involve their workforce in the change process in a significant manner with the creation of the leaders and small groups of employees. This was a strategy which was significantly fruitful for the organisation in triggering the change process and in monitoring the performances of their employees under the change initiative through the leaders of those groups.

The organization took the decision of conducting a training for their employees so that the incapability of their employees in performing at the desired level gets achievable for them. The parent organization was observed to provide the required funding for the change initiative and apart from that it gave the power to the new CEO to buy the new airbuses (Hossan, 2015). The organization was observed to generate the amount of revenue by focusing at the regional and Asian routes which were more profitable. The organization under the leadership of their new CEO had the aim to return to profitability by following the mentioned change initiative in the next 3-5 years and had the plan to get relisted in the Malaysian Stock Exchange in 2018 or 2019.

The measure of success which was described from the part of the organization in the form of their plan to return to profitability to late 2017. Apart from that the organization restructured the brand image of the existing organization and conducted training for the employees. For rating the success of these actions, the organization implemented an individual review analysis where the customers are able rate the quality of the services of the employees of the concerned organization.

Conclusion:

The case has great significance in teaching the detrimental effects of a negative brand image on the business conduction of the chosen organization and it also helps to show the impact of a change initiative in dealing with such circumstances portrayed in this case.

• The organization is advised to identify the profitable routes in which it will be able to conduct the business with the perfect utilization of the capacity of their flights.
• Being an organization which is largely connected to the service industry, the organization is advised to put strong emphasis on the development of the performances of their employees.
• Apart from that the organization is recommended to recognize the quality performances of the employees under the change initiative with the introduction of appropriate and sufficient rewarding policy.       

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