ANGLIA RUSKIN UNIVERSITY
DECISION MAKING AND
PROBLEM SOLVING
Decision Making in Malaysian Airlines
Prepared BY
MD MONIRUL ISLAM
SID:1230634
MOD: MOD000978
Module Leader: MR. HASAN KHAN
1/6/2014
DECISION MAKING PROBLEM IN MALAYSIAN AIRLINES SDH BHD
Introduction:
The exceptional blast of corporations and financial services industry has carried about vast
opportunities to utilize newer principles, methodologies, tools and practices not only in the
field of Investment analysis but also in the field of Decision making process. Decision
making and problem solving one of the most challenging and imperative criteria for not
only small medium organization but also it is play vital role for every large multinational
organizations. Decision making is a process that choses a desired option from among a
set of alternates on basis of given criteria or strategies (Wang, Wang, Patel, & Patel, 2004;
Wilson and Keil, 2001). Alternatively, decision making is a cognitive process of human
behavior. There have several ways to make decision by the management of the every
organization through decision making process. Problem-solving frequently involves with
decision-making and also decision-making is mainly important for management and
leadership. There are several progressions and performances to improve decision-making
and the superiority of decisions. Decision-making is more ordinary to certain characters,
so these people should focus more on improving the quality of their pronouncements.
Peoples that are less natural decision-makers are often able to make quality assessments,
but then need to be more decisive in acting upon the assessments made. Problem-solving
and decision-making are closely linked, and each requires creativity in identifying and
developing options, for which the brainstorming technique is particularly useful. Thus far,
at additional level, it might be observed as a problem solving activity which is concluded
when an individual or groups activities reached in satisfactory solution. Therefore, decision
making is a cognitive or expressive progression which can be coherent or unreasonable,
can be based on explicit conventions or tacit conventions. Decisions are likely to be
instinctive and following the decision, we spend time analyzing the cost and benefits of
that decision. This is known as "Rational Choice Theory," which encompasses the notion
that we maximize benefits and minimize the costs. According to Jim Nightingale, Author of
Think Smart-Act Smart, states that "we simply decide without thinking much about the
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decision process." In a controlled environment, such as a classroom, instructors might try
to encourage students to weigh pros and cons before making a decision.
Logical decision making is an important element of all kinds of professions, where
specialists apply their knowledge in a given area to make informed decisions. However,
decision analysis, recognized and included suspicions with a structured and reasonably
justifiable method of decision making process since its conception in 1964.
Company Overview and Problems Occurred in Malaysian Airlines SDN BHD:
Malaysian airlines have several problems issued arise not only in operating and financial
problems but also they have several issued in management. However, Malaysia Airlines had
its modest start in the golden age of travel. A cooperative plan of the Ocean Steamship
Company of Liverpool, the Straits Steamship of Singapore and Imperial Airways led to a
proposal to the government of the Colonial Straits agreement to run an air service. The
outcome was the integration of Malayan Airways Limited (MAL) on 12 October 1937. On 2
April 1947, MAL took to the skies with its first marketable flight as the national airline. The
existence of BOAC also facilitated MAL's entry as a member of IATA. After the
Independence of Malaya in 1957 and with the contribution of BOAC, QANTAS, the
government of the Federation of Malaya, Singapore and the Territory of North Borneo, MAL
was launched as an unrestricted limited company. Fuelled by a young along with dynamic
team of visionaries, the domestic carrier turned into a global airline in less than a decade.
With the creation of Malaysia in 1963, the airline changed its name to Malaysian Airlines
Limited. In 1965, with the severance of Singapore from Malaysia, MAL became a bi-national
airline and was renamed Malaysia-Singapore Airlines (MSA). In 1966, the Governments of
Malaysia and Singapore became the majority shareholders in the national carrier and
Malaysia-Singapore Airlines (MSA). In 1971, the partnership involving Malaysia and
Singapore was dissolved, and Malaysia Airlines Berhad was incorporated. With an
authorized capital of RM100 million, the company made a final revision to its name in
November 1971, and Malaysian Airline System Berhad (MAS) was launch in new name.
However, the year 2005 Malaysia Airlines faced one of its most challenging times. Operating
against a challenging global economic climate, increasing competition and rising operational
costs, Malaysia Airlines was forced to broadly restructure operations (Malaysiaairlines.com
2011). On 27 February 2006, newly appointed Managing Director or CEO Dato Sri Idris
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Jala, along with a new management team announced a Business Turnaround Plan (BTP).
Since then a number of actions and changes were done to restructure the business. The
company had achieved a significant cost reduction of RM 665 million in financial year of
2006 and more than 700 million in 2007. However, basically MASs difficulties can be
considered into three key issues which are Financial problems, Operational problems and
Management problems.
In 1995, MASs management had launched a strategic initiative to aggressively scale up its
operations and international network. As such, MAS has placed an order of 25 new Boeings
aircraft which are to be delivered in five years time. The purchases of the aircraft were
made in US Dollar and no hedging method was used at that time because of the stable
currency between Ringgit Malaysia against U.S Dollar. Unfortunately in 1997, Asian
countries including Malaysia incurred economic down turned which, has resulted the
devaluation of Ringgit Malaysia and an increased of interest rate. Consequently, MAS cost
of purchase increased tremendously. Due to the above scenario, MAS was reported to incur
5 consecutive losses for the past 5 years. In 2001, MAS after tax loss was reported to be
RM1.3 billion. There have another problem occurred in poor customer service and
management system which put this airlines in great losses. Many of customers complain
about their e-ticketing service which is not handling by the management very strictly. The
reason is, customer database is not monitoring effectively by the management though there
have a massive investment in Information System. Organization in decision making delays
the solution which they need to be delivered as soon as possible to the customer. However,
this problems are not stop here, in further management are not concerning regarding about
customers complain and neither given any prompt ticket refund nor resolving e-ticketing
problems. Nevertheless, Malaysian airline struggling with several problems and getting bad
feedback from the customers not only for poor management but also external interaction of
government and political issues and so on.
Proposed decision making approach and solution:
After reviewing several problems from various angles it is clearly seen that MAS
managements are delaying to delivers their decision which have taken or somehow
management taking wrong approaches to take appropriate decision for the organization.
However, in decision making process there have two ways to make decision which is may
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the management of MAS can take Logical approach or Magical Approach. However, for a
big organization like Malaysian airlines should be implement logical approaches rather than
magical approaches. The problems which arise in MAS management organizations need to
be analyze their internal as well as external factors very carefully. Through logical approach
identify the problems in systemic ways and take necessary action step-by-step. Once
accomplish one problem than would be taking another step for next. Moreover,
management must be acknowledging that, each stage fully covered through intelligence and
care. ASK SIR L model, which is one of the most effective component in logical approach
decision making model.
ASK SIR L Decision Making Model
A
Appreciate
Specify
Cause
Solution
Implement
Review
Learn
Through this model organization will be identify the most important problems which is exist
in. For example, from the scenario of MAS customer service problem which state,
customers trying to change their flight through online service and getting trouble to fixed it.
After that, they called to administrator and did not get any feedback, later on send an email
but no response at all. However, again they called to the service department and explain
overall scenario to the management over the phone and get replied back I am not the one
responsible for this and I not in charge to resolve this issue and there is no one else to talk
to this issue. However, this issue gave a negative indication of MAS customer service.
What decision can take MAS organization through ASK SIR L model? Firstly, they need to
find out what are the causes existing thus the problem arise. Once specify next step will be
find out a possible solution to overcome from this. However, before implement the possible
solution which decision taken by the groups than forward it to the top management to review
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the decision. Once, top management appreciates overall decision then will start to work for
implementation.
Decision making through STEP analysis:
As earlier mention, problem-solving frequently contains of decision-making, and decisionmaking is specifically vital role for management and leadership. There are procedures and
methods to recover decision-making and the quality of pronouncements. After reviewing the
overall problems of Malaysia airline management can be take further decision through STEP
analysis to overcome from their existing problems.
Sociocultural
Malaysia is self-possessed of three main races where Islam is the official religion. Its
fruitfulness in cultural variety and could be used as the attracting factor for the tourists to
travel to Malaysia, and indirectly helped MAS to progress its operation to contain more
foreign destinations.
Economic
The Asian economic crisis in the late 90s which has affected the South East Asian region
was also a causative factor that caused MAS to suffer 5 consecutive losses. These
circumstances got degenerates as the Malaysian Ringgit currency was undervalued, which
in turn led to high interest on foreign trade. Investments made by MAS to expand its
business by purchasing more aircraft were highly affected by this. The devaluation of RM
had also led to low spending power, which caused lesser people to travel by air. The
tragedy of September 11 has also contributed to the reported losses by MAS. Since then,
the world economy was on its downturn and the world masses were getting phobia to travel
by air. MAS have to bear the losses as its main operation is based on the international
network.
Politics and Legal
Due to the actual bad economic recession, Malaysian Government through Bank Negara
had to reread the foreign and monetary policies. As such, Ringgit Malaysia (RM) was
attached to RM 3.80 to 1 US dollar. The Government had to impose stricter and tighter
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policies for Malaysian to travel abroad to avoid currency outflow, which indirectly caused low
rates of travelers for MAS. The situation worsens, when the regional economic recession
was coupled with the instability in the political arena in Malaysia in 1998. As a result, the
investors lost their confidence, being more cautious and prefer the attitude of look and see
and some of them have ceased their operations in Malaysia, resulting in more layoffs.
Technology
MAS has also invested in IT and telecommunications advancement to increase the
efficiency of its operation. More people can have access to the MAS services just through
the Internet where people can book and buy their ticket online. Besides that, more
promotions and advertisements can be done through the Internet, which can attract more
and more people to travel with MAS. The growing demand in cargo services has resulted in
more airlines opting to convert their passenger aircraft into cargo aircraft. This new trend
provides an alternative for MAS to reduce some money on purchasing new cargo aircraft
and perhaps enter into other possible profitable operations.
Conclusion:
Malaysian airline still holding their reputation in aviation industry. Hence, there have several
factors which they need to be overcome to reduce their further loss in nearest future.
However, management should take decision to improve their internal factors through
implement logical decision approach rather than magical approach. The companies like
aviation industry, by made a decision management require thinking analytically to resolve
their problem. However, management need to reflect some decisions and challenges which
are difficult because probably they dont have the necessary knowledge or experience, in
which case they need first to decide if the decision which made by them or challenge is
actually suitable and necessary for at this stage. There have few decisions which have to be
made whether managements are ready or not, others might not be as pressing as they
imagine. Moreover, it also wouldnt be considerable to change-based decision if having
considered the implications carefully to decide that it is not the best thing to do.
Management should take decision in right way as in right time so they can be avoiding their
nearest problem.
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