Saturday, March 28, 2020
YouÃ¢â¬â¢re no doubt aware how important security is to your WordPress site. In fact, youÃ¢â¬â¢ve probably heard plenty of advice on the subject Ã¢â¬â including that you should change your WordPress login page URL. However, you may not be sure why or how to do that.Changing your login page URL is a simple but effective security technique that can help keep hackers out. After all, a unique, difficult-to-guess URL is harder to locate. This means people are less likely to gain access to your site unless you want them to.In this post, weÃ¢â¬â¢ll briefly discuss why changing your WordPress login page URL is a smart idea. Then weÃ¢â¬â¢ll show you how to do so using a free plugin. LetÃ¢â¬â¢s take a look! you customize your login page, it looks something like thisBy default, WordPress sites all use identical URL structures for this page. If your websiteÃ¢â¬â¢s domain is www.mysite.com, for example, you can log in by visiting www.mysite.com/wp-login.php or www.mysite.com/wp-adm in.This makes it easy to remember how to access your site. However, the downside is that anyone who knows the first thing about WordPress can find your login page quickly. Once theyve located it, hackers can get busy trying to break in. If you change the URL to something hard to guess, on the other hand, youÃ¢â¬â¢ll slow those same hackers down by making your login page harder to find.Additionally, changing your login page URL has a secondary benefit in that it can eliminate a lot of resource-wasting bot traffic to your site.Why you shouldnt change your login page URL manuallyBelow, well walk you through the process of changing your login page URL using a plugin. However, in some cases you may be tempted to complete this task manually (for instance, if you want to limit the number of plugins you install on your site).While you can use File Transfer Protocol (FTP) or another method of accessing your sites files directly toÃ sort of make this change, this isÃ not a good ideaÃ for a couple main reasons:Every time you update WordPress, it will recreate the login page file. This means youll need to change the URL all over again.Manually changing your login page URL can create errors with your logout screen, and cause other issues with important site functionality.In general, we recommend not altering your sites core files if you dont have to. Doing this can have unintended consequences. Fortunately, theres a better way of hiding your login page.How to change your WordPress login page URL using a pluginWe should emphasize that this technique wonÃ¢â¬â¢t prevent hacking completely. However, it does provide an extra layer of security for your site. Changing your login page URL is best used in combination with other methods of protecting your admin area, such as implementing Two-Factor Authentication (2FA) and limiting the number of login attempts allowed.To change your WordPress login page URL, we recommend WPS Hide Login: WPS Hide Login Author(s): WPServe ur, NicolasKulka, tabrisrpCurrent Version: 220.127.116.11Last Updated: August 22, 2019wps-hide-login.18.104.22.168.zip 98%Ratings 3,615,198Downloads WP 4.1+Requires This is a lightweight solution that gets the job done simply and quickly. WhatÃ¢â¬â¢s more, its popular, has excellent reviews, and receives regular updates from the developer.YouÃ¢â¬â¢ll want to start out by backing up your site, just to be safe.Ã Then, youÃ¢â¬â¢ll need to install and activate the plugin.After those tasks are done, navigate to Settings General in your WordPress dashboard.If you scroll to the very bottom of the page, youÃ¢â¬â¢ll find a new section labeled WPS Hide Login:This option will enable you to create a new URL for your login page by typing it into the field after your websiteÃ¢â¬â¢s domain name. Your best bet is to choose something random, as you would for a password (for example, a string of numbers and letters). Just make sure you record the new URL somewhere secure, so you donÃ¢â¬â¢t los e access to your site.When youÃ¢â¬â¢re happy with the new URL, click on the Save Changes button.From now on, youÃ¢â¬â¢ll be able to use this address to log into your site, and the default URL will be disabled. If for some reason you ever want to reverse this process, just deactivate WPS Hide Login, and the URL will return to normal.ConclusionWordPress is a very secure platform, but there are always steps you can take to further protect your website. Changing your login page URL is a small tweak that Ã¢â¬â when implemented as part of a comprehensive security plan Ã¢â¬â makes it more difficult for hackers and spammers to gain access.Furthermore, using this technique is surprisingly simple. In fact, it will only take you a few minutes if you use the right tool. By installing aÃ plugin likeÃ WPS Hide Login, you can alter your login pages URL through your dashboard settings, and see the change take effect immediately.Do you have any questions about how to change your WordPr ess login page URL? Tell us in the comments section below! How to change your #WordPress login page URL. Plus how it helps keep your site secure! #tutorial
Saturday, March 7, 2020
Malaysia Airlines Business Plan Essay Example Malaysia Airlines Business Plan Essay Malaysia Airlines Business Plan Essay Business Plan Our Way Forward December 2011 Confidential 5 December 2011 Malaysia Airlines is in crisis. Our combined losses in the first three quarters of 2011 have already exceeded RM1. 2 billion, and the final numbers for the year will not improve upon this. The core passenger airline business is chronically challenged. The new Board and Management team, in place for three months, has been hard at work on a plan, referred to as the Business Plan, for Malaysia Airlines. This Business Plan outlines our near-term recovery plan to move us to profitability by 2013, as well as a set of Ã¢â¬Ëgame changersÃ¢â¬â¢ to sustain our performance and create a platform for continued growth for Malaysia AirlinesÃ¢â¬â¢ future. Executing this plan is key to our recovery. It will require complete focus and commitment to make hard and difficult decisions in the next 24 months and the strongest determination to see these initiatives succeed. To the Malaysia Airlines Team, all our stakeholders and customers, I ask for your unwavering support, patience and continued patronage in this time of challenge and opportunity. Ahmad Jauhari Yahya Group Chief Executive Officer Confidential Page 2 Page 2 Executive Summary Current Situation Our Recovery Plan Game Changers: Sustaining Our Performance Foundations Our Commitment 4 13 21 31 38 42 DISCLAIMER This Business Plan document is issued to Malaysia Airlines staff and external stakeholders with the purpose of disclosing a balanced and objective management view of the current situation, as well as the plan for recovery and our future growth. In the spirit of transparent management practice, we share some financial information as part of the discussion. For all intents and purposes, the financial information and figures pertaining to the future should not be construed as forecasts, projections or estimates of future profitability or representations of the companyÃ¢â¬â¢s future performance. These figures are merely a set of aspirational targets which are aligned to the CompanyÃ¢â¬â¢s strategy as outlined in this Business Plan. This document and its contents have been approved by Malaysia AirlinesÃ¢â¬â¢ Board of Directors, but are not to be considered as estimates, forecasts nor projections reviewed by external auditors. Page 3 Executive Summary Page 4 CURRENT SITUATION Malaysia Airlines is in crisis. We have incurred a net loss of RM1. 2 billion in the first three quarters of 2011 alone. More than 40 percent of our routes are loss-making and our unit cost position is 10 Ã¢â¬â 15 percent above corresponding revenues. In fact, we are in a much more tenuous position than we were in 2006 when we were in a similar crisis. The aviation market has become even more competitive with the rapid increase of the low cost carrier (LCC) segment, continued growth of the Middle Eastern full service carriers and revival in the fortunes of Asian full service carriers such as Garuda, Japan Airlines (JAL) and Thai Airways. Meanwhile, Malaysia Airlines has not focused adequately on the premium segment of the market, and our product quality has fallen. Our marketing efforts have been predominantly focused on tactical sales promotions rather than brand-building. With such adverse odds, our intensifying sales efforts could only generate low yields insufficient to cover an increasingly uncompetitive cost structure. Thankfully, we are still flying high in service standards, due to the valiant efforts of our superb Malaysia Airlines team. Yet the demand outlook for Asian aviation is strong. Across Asia, there is huge growth in disposable income, ramped-up access to credit cards and the Internet, and increased cross-border trade. Southeast Asia, in particular, with its combined population of over 500 million, myriad islands and underdeveloped road and rail infrastructure, is well-placed for aviation growth. Indeed, we expect ASEAN passenger demand to double by 2020. This is rightfully an exciting market for all participants in the aviation industry. This strong demand outlook is however clouded by both possible near-term shocks and certain longterm trends. Irrational exuberance in aircraft orders by Asian airlines is engendering a situation of capacity over-supply and excessive price competition. We expect the current Southeast Asian regional fleet to triple in the next decade. Increasing liberalisation also makes it easier for airlines to compete outside of their home markets. In the US and Europe, this combination of overcapacity and liberalisation has invariably yielded market consolidation, with only the strongest airlines surviving in their original form. Page 5 To make an already bad situation worse, there is the near-term possibility of a global recession emanating from Europe, and stubbornly high jet fuel prices conspiring to create the perfect storm of immediate turbulence. Without question, our current trajectory is unsustainable and nothing short of dramatic action will reverse our fortunes. Our weekly cash losses are in the millions of Ringgit. If we maintain our current business model, we will be out of cash by the middle of the second quarter of 2012. We will be bankrupt. Beyond the loss of 20,000 jobs, this would mean an indefinite end to connectivity with the many global hubs to which we are connected today. It is unthinkable and yet it is entirely possible. With new, expensive aircraft entering our fleet next year, our financing costs will increase markedly. While these new aircraft are larger and generally enable us to fly at a lower per-passenger cost, we must fill these aircraft to realise the savings. Indeed, if we do not fundamentally reengineer our commercial function, our losses in 2012 could easily top RM2 billion. To pay for our new aircraft and to cover our certain near-term losses, we must show investors that we are serious about changing our game. We have no other alternative. This is the greatest challenge we have ever faced as a business; a fundamental and radical overhaul is required to put us back on the path to sustained profitability. Here is our flight plan. Our vision is to become the preferred premium carrier, well-positioned for the coming consolidation of the Asian aviation marketplace. While Malaysia may be relatively small in the Asian arena, we will harness the countryÃ¢â¬â¢s geo-economic centricity in ASEAN, emphasise our natural cost-competitiveness as a hub and utilise alliances and partnerships to significantly Ã¢â¬Ëpunch above our weightÃ¢â¬â¢. Using a combination of tie-ups, we will achieve Ã¢â¬Ëvirtual scaleÃ¢â¬â¢, expand our network, coordinate our commercial functions and synchronise operations with similarly-minded airline partners. We will also exploit MalaysiaÃ¢â¬â¢s competitive cost position to lower our costs. This will create the broadest array of network options for our customers and deliver an industry-leading cost position. We will follow a two-step approach in achieving this vision. In the near term, we are relentlessly focused on five initiatives to achieve a recovery to profitability for the 2013 financial year. We will then focus on a set of Ã¢â¬Ëgame changersÃ¢â¬â¢ that will help us build a robust and sustainable business for the future. Page 6 OUR RECOVERY PLAN Enabling our ambition of becoming the preferred premium carrier must begin with a fundamental remodel of our core business. There is nothing revolutionary about this; it is the sheer simplicity of focus, and going back to basics. We will follow the playbook used by other airlines in their successful turnarounds but adapt it effectively to our unique context. The hard truth is, there will be some difficult decisions to be made to achieve a successful recovery. We will make these decisions in the best interests of our employees, shareholders, customers, business partners and Malaysians at large, and we count on the support of all stakeholders in this process. 1. Smaller yet profitable network. Going forward, our network shall include routes where our premium travellers will want to go, and where we can win in terms of competitive position and home advantage. We are shrinking to grow, and as we get back on firm financial footing, we shall expand our network to cover the worldÃ¢â¬â¢s major economic regions and hubs. 2. Win back customers. We will take delivery of 23 aircraft in 2012, each with state-of-the-art passenger amenities. As we introduce these products, we must also reinvigorate our sales and marketing functions. We must win back the hard-earned loyalty of customers, especially those in Malaysia, and convince them of the superior value of our enhanced services. We also need to optimise our revenue management to enhance yields. 3. Relentless cost focus. As we take on new aircraft, we must quickly realise the savings from their improved efficiency. Lower fuel bills and maintenance expense reductions must be locked in early. We must also focus on keeping overhead and discretionary expenditure to a minimum. Finally, we will achieve savings in procurement through the collaboration with AirAsia and AirAsia X, subject to full compliance with global anti-trust legislation. 4. Keep it simple. We have become a very complex business with a number of different operating entities Ã¢â¬â core full service airline, MASholidays, MASkargo, MAS Aerospace Engineering (engineering and maintenance), training, catering, and ground handling. We need to de-clutter to ensure proper focus on our core business: flying our customers. We also need to give the ancillary businesses sufficient freedom to achieve their full potential. We therefore intend to commence the process of spinning-off our ancillary businesses starting with ground handling, training and engineering maintenance. Page 7 . Bridge the funding gap. Given the aircraft deliveries we are receiving in 2012, we acknowledge the funding gap that must be bridged. This bridge has five pillars of support: a. Achieve positive quarterly operating cash flow by the end of 2012. We shall Ã¢â¬Ëshrink to growÃ¢â¬â¢ and consequently make resultant hard decisions to materialise reductions in costs and cash outflow b. Capital expenditure funding for our new planes through debt financing and leasing arrangements c. Working capital boost via the return of pre-delivery deposit payment (PDP) upon delivery of our new aircraft d. Proceeds from the potential spin-offs of our ancillary businesses e. Unwavering support from our major shareholders, whose support keeps our balance sheet robust despite a relatively high gearing Strong shareholder support is understandably conditional on Management undertaking all necessary measures including difficult and unpopular decisions to assure a positive operating cash flow performance. We shall indeed commit to do everything in our power to redeem the faith and support of our major shareholders. Page 8 GAME CHANGERS: SUSTAINING OUR PERFORMANCE Beyond the recovery, we will pursue a series of Ã¢â¬Ëgame changersÃ¢â¬â¢ that will fundamentally overhaul our business model and sustain our performance. These strategic initiatives are sheer necessities to maintain relevance in a dynamic and ever-changing airline landscape. 1. Launch of a new regional premium airline. In the first half of 2012, we will launch our new shorthaul brand, flying an entirely new Boeing 737-800 fleet. Given a clean slate, a new business model can be designed from inception for sustainable commercial success without any inertial drag of legacy airline models. The relatively smaller size of the Boeing 737 means the airline can fly to more places where our customers want to travel, at times convenient to their schedules. We also intend to create a separate management structure to focus on the unique customer needs of regional premium travellers. This new airline shall set new standards for product and service quality, cost efficiency, and operational excellence. It will therefore set the template for airline success. 2. Alliances and partnerships. By the third quarter of 2012, we will be the newest member of the oneworld alliance. We are excited to join this extensive global network and look forward to increasing traffic via our combined networks and infrastructure. To augment our alliance membership, we intend to enter into material partnerships with major airlines to link our respective geographic strengths into a unified international presence. This will bring obvious mutual benefits to the parties involved as jointly, the whole will be in a much stronger competitive position than the sum of the parts. 3. Collaboration with AirAsia. On 9 August, we signed a Collaboration Agreement with AirAsia and AirAsia X. The Agreement provides all three airlines with a step-change improvement in operations through best practice sharing in select areas (such as fuel efficiency) and lower procurement costs (such as in fleet, ground handling and engineering maintenance services). Collaboration will also allow our customers to travel between more destinations than previously with an introduction of connecting services across the respective airlinesÃ¢â¬â¢ networks. Without question, the collaboration is an essential element of Malaysia AirlinesÃ¢â¬â¢ overall recovery and will further enable our sustainability going forward. Page 9 We recognise the vision and sacrifice of our principle shareholder, Khazanah, in making this collaboration possible. Importantly, the collaboration exercise is and will be done in full compliance with global antitrust and other regulatory requirements. 4. Ancillary business spin-off. With the successful spin-off of non-core businesses in our recovery plan, we can better focus on the core airline business and ensure a long-term competitive cost position for supporting services such as engineering maintenance, ground handling and training. In addition, we can ensure the full development of these ancillary businesses by attracting thirdparty specialists as strategic partners. MalaysiaÃ¢â¬â¢s competitive cost position means we can build regionally competitive ancillary businesses with Malaysia as a hub. FOUNDATIONS To execute on our Recovery plan and achieve a sustainable performance, we will need to further develop three foundational elements. 1. Branded customer experience. Our customers are our top priority. In addition to the gradual rollout of our new product, we will improve customer satisfaction at every touch point Ã¢â¬â pre-flight, inflight and post-flight. Malaysia Airlines will deliver on its brand promise consistently, across all touch points, channels, national borders and at all times. In the months ahead, we will be making investments in a number of tools and processes, as well as mobilising the organisation across functions and layers to align and execute on the Malaysia Airlines brand promise. 2. Continuous operational improvement. In line with our vision to be the preferred premium carrier in the region, we will be making substantial changes to our operations to excel on three key dimensions: commercial effectiveness, flight operations and cost management. In terms of commercial effectiveness, we intend to seek continuous improvement in areas such as revenue management, direct sales and in the use of social networks for marketing. As we take delivery of our new fleet, we aim to set the new benchmark for excellence Ã¢â¬â for both aircraft and airport operations. Finally, while Malaysia Airlines has always had the potential to be the lowest cost player in the full service segment, we lag labour productivity benchmarks and are not best-in-class in areas such as procurement. We intend to bridge the gap with our peers in the region through continuous improvement programmes. Page 10 3. Winning organisation. Malaysia AirlinesÃ¢â¬â¢ loyal and dedicated staff are a huge asset. However, we have to make a fundamental shift to a more performance-based culture. We wish to work collaboratively with our union and association partners to create a pay-for-performance compensation approach and culture. We have started to simplify our organisation structure to accelerate decision-making and create more accountability. We shall assemble the right people for the senior leadership of Malaysia Airlines and we shall not shy away from taking key decisions to effect this. And given the necessity Ã¢â¬Ëto shrink to growÃ¢â¬â¢, we will have no choice but to right-size the organisation for the greater good of Malaysia AirlinesÃ¢â¬â¢ survival. A leaner and meaner organisation will quickly become an agile, competitive and winning organisation. These actions will ultimately be the turning point on whether we can achieve and sustain acceptable financial performance. We expect to achieve a significantly reduced loss for 2012. Our Ã¢â¬Ëbase caseÃ¢â¬â¢ target for 2012 performance is a Group loss of approximately RM165 million. With an accelerated recovery, our Ã¢â¬Ëstretch targetÃ¢â¬â¢ is for the Group to achieve a modest profit of up to RM238 million in 2012. We plan to sustain increasing levels of profitability and aspire to generate a profit after tax of over RM900 million by 2016. Page 11 OUR COMMITMENT A commercially sustainable flag carrier airline is vital to the broader eo-political and macroeconomic national objectives of global connectivity and trade linkages for Malaysia. However, our very existence is at stake given the internal and external factors combining to create the perfect storm. We must first take hard and potentially unpopular decisions Ã¢â¬â simply to survive, in order to then have the possibility to thrive. We therefore take a pledge of full commitment to undertake all necessary measures as outlined in this Busine ss Plan to first and foremost secure our survival, and ultimately to achieve our vision of being the preferred premium carrier. This radical flight plan will allow us to fly more satisfied customers to more places, build rewarding careers for our employees, and build a global brand that will make all Malaysians proud. We ask for your unwavering support, patience and continued patronage in this time of challenge and opportunity. The Preferred Premium Carrier 1 2 3 4 5 Smaller yet profitable network Win back customers Relentless cost focus Keep it simple Bridge the funding gap A Launch of new regional premium airline 1 Alliance and partnerships 2 Collaboration with AirAsia 3 Ancillary business spin-off 4 Branded customer experience B Continuous operational improvement C Winning organisation Page 12 Current Situation Page 13 Figure 1: Forecast demand growth Available Seat Kilometres (ASK) billions 1,068 ASEAN to/from mature markets 542 ASEAN to/from rest of Asia 2010 Source: OAG MARKET OUTLOOK The demand outlook for the Asian aviation sector is strong, fuelled by a burgeoning middle class and increased global and intra-regional trade. Long-term trends Based on forecasts of GDP growth, trade flows and other factors, we anticipate a doubling of demand over the coming decade (Figure 1). This presents a 2020 sizeable opportunity to all airlines in the region, and we are not alone in making sizeable aircraft Existing aircraft New narrowbody aircraft New widebody aircraft Figure 2: Planned capacity Aircraft Ã¢â¬Ëlow costÃ¢â¬â¢ 449 422 347 277 orders to fill the demand. By our count (Figure 2), 1,000 new narrow-body jet aircraft have been contracted for delivery over the next decade, an effective tripling of the commercial aviation fleet, likely outpacing the speed of demand growth. Ã¢â¬Ëfull serviceÃ¢â¬â¢ Ã¢â¬Ëlow costÃ¢â¬â¢ 220 176 89 59 189 155 174 At the same time, aviation markets in the region are being liberalised, with most ASEAN countries 71 te Ca Gu s lf th ay A i r Pa ci fic Li o Ai n rA si In a di G Je o ts ta r Ti ge r C eb u M AS Et ih ad Em ira SI A targeting completely Ã¢â¬Ëopen skiesÃ¢â¬â¢ by 2015. This will allow carriers from any country to serve passengers in more overseas markets. Source: Press reports In other regions, this combination of overcapacity and deregulation has led to dramatic consolidation. In the US and Europe, the top three airlines account for 40 Ã¢â¬â 60 percent of the market. In Asia, they account for only 20 percent. Consolidation will inevitably come to Asia as well. Success in such challenging environments depends on the creation of a differentiated approach. This can be earned through building a leading cost position or by creating a unique value proposition to customers. We will do both. To thrive in this increasingly challenging market, we have to relentlessly pursue our vision of becoming the preferred premium carrier, well-positioned for the coming consolidation of the Asian aviation marketplace. We need to fundamentally remodel our core business and to put in place Ã¢â¬Ëgame Page 14 hangersÃ¢â¬â¢ that will keep us ahead. Success of these efforts rests on the foundation of three elements: branded customer experience, a culture of continuous operational improvement and a winning organisation. We will fail if we do not deliver on all components of our flight plan. Perhaps more so than in other markets, we are also witnessing a rapid segmentation of the market, with carriers differentiati ng themselves along two dimensions: Ã¢â¬Ëlow costÃ¢â¬â¢ versus Ã¢â¬Ëfull service,Ã¢â¬â¢ and Ã¢â¬Ëshort haulÃ¢â¬â¢ versus Ã¢â¬Ëlong haul. Ã¢â¬â¢ Increasingly, airline owners are looking to place their chips in multiple segments (Figure 3). More than clarifying product tradeoffs to customers, this segmentation drives dramatic focus and simplification in airlines. The low cost carrier model (LCC) in particular has become immensely successful for those who can secure the absolute lowest unit cost in their relevant market. For those who cannot achieve rock-bottom costs, the challenge is to compete on service levels to customers more inclined to the Ã¢â¬Ëfull serviceÃ¢â¬â¢ experience. Demand for Ã¢â¬Ëin betweenÃ¢â¬â¢ service levels (competing both on price and service) is disappearing, as customers largely target one particular product type. Recognising this, Malaysia Airlines is charting our future strongly in the full service, long-haul segment, with plans for extended participation in the full service, short-haul segment as well. Figure 3: Business model segmentation Short-haul Full-service Long-haul Low cost/value CCF* ASIA AUSTRALIA/INTÃ¢â¬â¢L Note: *CCF: Comprehensive Collaboration Framework between Malaysia Airlines, AirAsia and AirAsia X as announced on 9 August 2011 Page 15 Short-term shocks More so than other industries, airlines are vulnerable to macroeconomic events which create Ã¢â¬Ëdemand shocks. In 2011 alone, there were two such shocks with the devastating earthquake/ tsunami in Japan and the floods in Thailand. Airlines must build business models able to withstand such external shocks. Figure 4: Profit/loss of Firefly business RM Turbopropbased business Jet-based business In 2012 , we must be prepared for the possibility of a global recession, brought on by EuropeÃ¢â¬â¢s sovereign debt crisis, and a continued high cost of jet fuel. 2010 Source: Malaysia Airlines 2011 Figure 5: Skytrax annual ratings Ranking 1 2009 2010 2011 OUR RECENT PAST Over the past decade, Malaysia Airlines has lost its focus on the Ã¢â¬Ëfull serviceÃ¢â¬â¢ portion of the market, which has historically been our bread-and-butter. 2 3 4 5 6 We launched our Firefly Ã¢â¬Ëlow costÃ¢â¬â¢ subsidiary in 2007. While the turboprop aircraft portion of the business has done well, the jet business launched last year has not yielded the returns we anticipated (Figure 4). 7 8 9 10 Source: Skytrax In an effort to fill aircraft, we priced seats well below our breakeven cost target. Though our cost situation would have improved with increased scale, it would have been insufficient for sustained profitability. We have since closed the Firefly jet business whilst focusing on growth of the profitable turboprop business for 2012 and beyond. With resources diverted to the Ã¢â¬Ëlow costÃ¢â¬â¢ segment of the market, we under-invested in the customer experience that is key for success in the Ã¢â¬Ëfull serviceÃ¢â¬â¢ business. We are left with one of the oldest fleets in the region, which contributed to our removal from the Skytrax Ã¢â¬Ëtop tenÃ¢â¬â¢ list of carriers. (Figure 5) Page 16 As product quality has fallen, we have lost the Figure 6: Unit revenues 2011 year-to date, Sen per ASK hard-earned loyalty of many Malaysia-based fliers. Last year, we lost more than 40 percent of KL-based passengers flying a Ã¢â¬Ëfull serviceÃ¢â¬â¢ competitor airline to a city served by Malaysia Airlines. Our network, too, remains focused on the flows of a previous era, with a significant portion of our capacity concentrated on serving the highlySource: Company reports competed Ã¢â¬Ëkangaroo routeÃ¢â¬â¢ connecting Australia to Europe. The declines in relative product quality and customer loyalty, combined with this overFigure 7: Unit costs 2011 year-to date, Sen per ASK 28. 5 25. 6 25. 0 29. 5 30. 5 representation of capacity on highly-competed routes have weakened our yields. Our unit revenue levels are now 15 25 percent below regional peers (Figure 6). 10. 4 11. 8 Our cost position is also not sufficiently lower than our competitors (Figure 7). As a result, our unit revenues have remained stubbornly below our unit costs. Source: Company reports Part of our poor cost position is due to the age of our aircraft. Just as the ageing fleet has driven down our pricing power, so too has it increased our costs. For every flight flown, we pay 15 20 percent more for fuel than does a competitor airline flying a more modern aircraft. Page 17 Unfortunately, the larger issue on the cost side is inadequate labour productivity (Figure 8). In Figure 8: Labour productivity 2010, No. of airline employees per aircraft seat the months ahead, there will be a need to overhaul our organisational structure. 0. 77 OUR STRENGTHS 0. 50 0. 43 Notwithstanding our internal challenges, there remains several assets in our arsenal. This includes strong technical capabilities and our well-trained cabin crew who continue to win awards (Figure 9) and is the hallmark of our Source: Company reports Malaysian hospitality. The crewÃ¢â¬â¢s dedication is to be credited for the strong brand equity we continue to enjoy. Both at home and overseas, the Malaysia Airlines Figure 9: Skytrax cabin crew ratings brand remains associated with our unique heritage and high-quality service. Rank 2008 2009 2010 2011 1 This positive predisposition to the Malaysia Airlines brand will receive a boost from our 2 new fleet additions and upgrades. Twentythree state-of-the-art aircraft will be delivered over the next 12 months, each with the latest 3 Source: Skytrax passenger amenities. Only through the foresight of previous management would we be in so fortunate a position to replenish more than half of our fleet of aircraft in a three-year period. These improvements will help reduce our fuel and repair bills, as well as convince our once loyal customers to return to our fold. Page 18 Signed in August 2011, our Collaboration Agreement with AirAsia and AirAsia X is a critical achievement. We are in discussions to coordinate our ground services, training and engineering maintenance functions, as well as to launch a joint procurement venture that will allow us to realise the combined benefits of scaled purchases. We estimate the cost savings to Malaysia Airlines alone will be more than RM100 million per year. 5,991 5,251 Figure 10: Malaysian competitive cost position 2011, Monthly wages, RM 11,856 In addition, we are close to finalising a connecting service that will enable passengers on either airline to seamlessly connect between carriers on nonoverlapping routes. Source: JETRO, Euromonitor Sydney Hong Kong 1,228 940 Beijing 846 Bangkok 588 Jakarta Singapore Kuala Lumpur Of course, any discussion and implementation of initiatives will be subject to full compliance with global anti-trust and other regulatory requirements. Our full entry into oneworld in the third quarter of 2012 will considerably enhance our network while providing baseload demand from our fellow oneworld members. In the months ahead, we will announce a series of additional partnerships that will drive increased commercial scale. These partnerships will be critical for us in the years ahead. Finally, our home remains Malaysia and that is our most defendable asset of all. Going forward, we must continue to realise all natural cost advantages (Figure 10) available to us to ensure we can profitably offer the best value in the sky. Page 19 STATUS QUO IS NOT AN OPTION A bold revision of our Group is necessary to avoid the failure of Malaysia Airlines as we know it. Weekly cash losses are in the millions of Ringgit. Without radical efforts now, we anticipate bankruptcy in the middle of the second quarter of 2012. Indeed, without action, our losses in 2012 could easily top RM2 billion. Preventing such an outcome requires a variety of efforts, but at the core must be a reversal of this loss-making. Securing funding for future operations requires evidence to new investors Ã¢â¬â be they through debt or equity Ã¢â¬â that a dramatic change in fortunes is possible in the very near term. The challenge is immense but, we believe, recovery is within our grasp. Firm and decisive actions will have to be taken now. Page 20 Our Recovery Plan Page 21 In approaching our recovery, we are focusing first and foremost on our primary, core business: the passenger airline. True sustainability means our passenger aircraft will be able to fly profitably whatever the broader economic and market conditions. To be clear, there are exciting opportunities for our ancillary businesses Ã¢â¬â engineering and maintenance, cargo, and training, to name a few Ã¢â¬â but success of the core business must be the cornerstone of the GroupÃ¢â¬â¢s broader performance. There are five steps to our recovery. The first is to aggressively reduce capacity on routes that have generated losses over many years. As Figure 11 (page 23) shows, over 40 percent of our routes today lose money. Second is the effort to fill aircraft on our remaining network with loyal, satisfied customers. Next, we must relentlessly cut costs in all areas where it does not reduce the customer experience or our commitment to safety. Simplifying the business by spinning-off ancillary units is the fourth step. Fifth is to fund this recovery. This is by no means a small feat. Smaller yet profitable network 2 Win back customers We will suspend services on routes where we are substantially loss making. This will account for approximately 12% of our ASKs. It is our desire to return to the markets that we are exiting in the near future after we have stabilised our business. We will take delivery of 23 aircraft in 2012, each with state-of-the-art passenger amenities. As we introduce these products, we must also reinvigorate our sales and marketing functions. We must win back the hard-earned loyalty of customers, especially those in Malaysia. We also need to optimize yield through better revenue management and tactical sales programmes. 2012 profit impact: ~RM220 302 mil. 3 2012 profit impact: ~RM394 477 mil. 4 Relentless cost focus Keep it simple In a brutally competitive industry, we need to maintain focus on continually managing our costs down and achieving operational excellence. As we take on new aircraft, we must quickly realise the savings from their improved efficiency. Lower fuel bills and maintenance expense reductions must be locked in. Our overall business structure has become too complex with a number of ancillary activities becoming very large and complex. We therefore intend to Ã¢â¬Ëspin-offÃ¢â¬â¢ some ancillary businesses to ensure greater focus on the core airline business and give these ancillary businesses more freedom to grow and achieve their full potential. 2012 profit impact: ~RM309 392 mil. 2012 profit impact: ~RM255 337 mil. 1. Positive operating cash flow 2. New debt and leasing arrangements 3. Working capital boost via the return of pre-delivery payment deposits 4. Proceeds from potential spin-offs 5. Unwavering support of our shareholders 5 Bridge the funding gap Given the aircraft deliveries of 2012, we acknowledge the funding gap that must be bridged. This bridge has five pillars of support: Page 22 Figure 11: Profit before tax by route 2010, RM profitmaking lossmaking More than 40% of routes are loss-making 100 routes in network Source: Malaysia Airlines 1 SMALLER YET PROFITABLE NETWORK Our network is the heart of the Company and, while we want to serve our customers as well as we can, we recognise that we cannot generate profits on all the routes we are currently flying. Hence, we will, based on Malaysia AirlinesÃ¢â¬â¢ own independent internal profitability and yield analysis, suspend services from select loss-making routes and will further focus on the core ASEAN region where we are the strongest. We plan to suspend Cape Town, Johannesburg, Buenos Aires, and other loss-making routes. On the other hand, we will increase our frequencies to key regional cities to benefit from the strong growth in regional demand. Successful turnarounds from other airlines, such as JAL (Figure 12) or Garuda, have been based on aggressive network cuts. We believe that, while we are cutting Available Seat Kilometres (ASK) by close to approximately 12 percent next year, we will be able to grow again profitably in the years ahead. Figure 12: Case example: Japan Airlines Capacity (ASK billions) and Net Income (RM millions) pre/post turnaround Profit impact: RM220 302 million Page 23 2 WIN BACK CUSTOMERS In 2012, we will take delivery of 23 new aircraft and phase out the A330-200 and B747-400 fleets. We will continue that effort over the next few years and, by 2015, we will have the youngest fleet in the region Figure 13: Aircraft age Years AirAsia Cathay Pacific Singapore Airlines Malaysia Airlines 13 12 10 9 10 (Figure 13). Our new aircraft will be equipped with best-in-class hardware and we will make significant investments next year to upgrade our meal services on all sectors (Figure 14). 2008 5 3 7 5 5 7 8 2011 2015 Building on our new fleet, we are revamping our approach to branding, distribution and customer loyalty. We are overhauling our commercial approach and revenue management systems to earn our fair share of corporate travel, drive front-end cabin revenue and fully leverage our oneworld membership to generate traffic (Figure 15). Source: Company reports Figure 14: Incoming fleet Figure 15: Sales marketing key business activities planned for 2012 Regional 1 Centralised New product roll-out Increase Frequent Individual Traveller (FIT) mix Connectivity improvement Direct channel push 11 Enrich (loyalty) Malaysia Airlines Corporate Travel (MCT) Programme enhancement Small Medium Enterprise (SME) push Business leisure campaign oneworld alignment 6 7 8 9 programme enhancement 12 Revenue management 13 Route suspension 2 3 4 10 Seasonality management impact 14 Malaysia Airlines 5 Enhanced Advertising Promotion deployment branding revamp Profit impact: RM394 477 million Page 24 Figure 16: Fuel efficiency savings Percent savings per ASK travelled 3 RELENTLESS COST FOCUS In a brutally competitive industry, we need to maintain focus on continually managing our costs down. In the short term, we will realise significant cost savings from our updated fleet deployment, with our state-of-the-art aircraft consuming less fuel. For example, as Figure 16 shows, flying the B737-800 Source: Aircraft manufacturers instead of the B737-400 will save us close to 23 percent of our fuel bill on a typical flight between Figure 17: Maintenance expense savings 2010, Expense per aircraft block hour, RM (Industry benchmark) Kuala Lumpur and Bangkok. In addition, our maintenance costs will decrease as we operate a newer fleet with lower maintenance requirements (Figure 17). However, benefits from our new aircraft deployment will not be sufficient. We have undertaken a comprehensive cost review that has identified RM200 million in 2012 savings Source: Form 41 opportunities (Figure 18). Improvements will come from increased utilisation of assets, early return of Figure 18: Key cost initiatives planned for 2012 Target run rate savings, RM millions 1 Productivity enhancement 70 80 2 3 ircraft and improved cost control over key functions. Strategic procurement of fuel Fuel efficiency from CCF bestpractice sharing Additional procurement initiatives Maintenance cost cap increase Early return of Boeing 747 15 20 30 35 30 35 10 15 25 30 We will realise further savings from the closure of stations in markets where we are suspending services. 4 5 6 Source: Team analysis Profit impact: RM 309 392 million Page 25 Additional infrastructure savings will be achieved once existing operation bases are consolidated to fewer locations. We will further focus on a review of our procurement contracts to achieve critical rate decreases. Finally, we are expecting cost savings through joint procurement and sharing services such as training and ground handling with AirAsia, subject to compliance with global anti-trust legislation. Looking forward, we will conduct a broader efficiency review that will aim at improving our organisation effectiveness and bring our productivity level closer to that of our regional peers. 4 KEEP IT SIMPLE Our overall business structure has become too complex with a number of ancillary activities becoming very large. We need to de-clutter the business to ensure greater focus on the core airline. We therefore intend to Ã¢â¬Ëspin-offÃ¢â¬â¢ some ancillary businesses to give these units more freedom to grow and to achieve their full potential. We intend to start with joint ventures in training and ground handling with AirAsia that will result in capex avoidance and lower costs through enhanced asset utilisation, scale and sharing of best practices. We believe these businesses have the potential to attract more third-party customers and grow into attractive stand-alone companies. The new companies may also consider tie-ups with strategic partners to enhance capabilities, expand geographic reach and access new customers. We also intend to spin-off MAS Aerospace Engineering (MAE) with an intention to create a strong standalone engineering maintenance services provider. We believe these spin-offs will also enhance MalaysiaÃ¢â¬â¢s competitiveness as a regional aviation hub. Spin-offs will commence in the near-term but the completion of this process will be influenced by the availability of strategic partners and the state of the capital markets. Profit impact: RM 255 337 million Page 26 Short term: Arrest chronic losss include: Drive front-end cabin revenues Ramp-up corporate revenues Implement dynamic and integrated sales marketing programmes Grow direct channels Improvement potential (RM mil. ) 220 302 Win back customers Commercial excellence 394 477 Relentless cost focus Operational excellence Close stations according to own network rationalization Continuous improvement, examples include: Conduct thorough review of procurement costs Implement productivity improvement programme Improvements in on-time performance, aircraft turnaround times and asset utilisation Reduce structural fixed costs; operations consolidation Spin-off training , ground-handling and other ancillary businesses, some with AirAsia, to generate additional third party business Spin off MAE Total 2012 potential profit impact 09 392 Keep it simple 255 337 1,178 1,508 Page 27 SUMMARY Our Ã¢â¬Ëbase caseÃ¢â¬â¢ target is for the core business (passenger airline without cargo, catering and other ancillary businesses) to generate a significantly reduced loss of approximately RM340 million in 2012. As Figure 19 illustrates, we are targeting further improvement still with a Ã¢â¬Ëstretch targetÃ¢â¬â¢ whe re the core business would breakeven in 2012. With estimated core airline losses of approximately RM1. 32 billion in 2011, this represents a one-year recovery of between RM 1,178 Ã¢â¬â 1,508 million. This is ambitious, but we believe it is achievable. Figure 19: Impact of initiatives to core airline profit 2012, RM millions 255-337 309-392 394-477 (200)-(190) (340)-0 (340) 220-302 (1,318) One-year turnaround worth RM 1,178 Ã¢â¬â 1,508 million 1 2011 Core airline losses (analysts estimates)* Smaller yet profitable network 2 Win back customers; commercial excellence 3 Relentless cost focus; operations excellence 4 Keep it simple Finance charges 2012 Target Note: All scenarios presume US$130 jet fuel and do not include any potential restructuring costs. Interpolated to arrive at core airline losses from analystsÃ¢â¬â¢ estimates of Group performance; figure is purely for illustrative purposes and does not represent MASÃ¢â¬â¢ view of FY2011 losses Source: Team analysis, analyst reports We will begin suspending unprofitable routes early in 2012, which will first limit our losses. Our aggressive fleet plan, with the entry in service of the A380 aircraft on our flagship London rou te, coupled with best-in-class product and key innovations in customer service will drive our yield and load improvements. We also expect significant cost savings from the deployment of this new fleet, both from maintenance and fuel consumption. While those improvements have a cost, we have managed to keep constant some of our key procurement costs. We will also leverage our new fleet to improve the utilisation of our superb crew while still delivering top-notch service and safety. Finally, we will decrease our other fixed costs through a comprehensive review of both external and internal drivers. Page 28 Figure 20: Sources of Group profit 2012, RM millions 978 1,318 (165) (165)-238 102-165 (1,245) 011 Group losses (analysts estimates)* Improvement in subsidiaries profits in 2012 Core airline improvement in 2012 2012 Group target Note: All scenarios presume US$130 jet fuel and do not include any potential restructuring costs *Excludes gains/losses from forex exposure and hedging instruments Source: Team analysis, analyst reports For the Group (core airline plus all ancillary businesses), our Ã¢â¬Ëbase caseÃ¢â¬â¢ target for 2012 performance is a loss of approximately RM165 million. With an accelerated recovery, our Ã¢â¬Ëstretch targetÃ¢â¬â¢ is for the group to achieve a modest profit of up to RM238 million. This is shown in Figure 20. Figures 21 and 22 (page 30) depict the reversal of our targeted cash position. As the Ã¢â¬Ëbusiness as usualÃ¢â¬â¢ scenario makes clear, our current trajectory would almost certainly leave us in bankruptcy. With the Recovery plan, however, we plan to end the year having generated RM 313 Ã¢â¬â 744 million in cash. Once this recovery is accomplished, we will make aggressive decisions to change the battleground and become a major player in the upcoming consolidation as the preferred premium carrier. Page 29 Figure 21: Operating cash generation 2012, RM millions Figure 22: Cash balance 2012, RM millions Source: Team analysis Source: Team analysis As noted earlier, 2012 will be a key transition year on our path to becoming the preferred premium carrier. While we are beginning our turnaround process, the investments required to update our fleet and generate additional revenues will be massive. We are confident that we have secured a funding plan that will enable us to achieve this vision. This plan rests on 5 pillars: 1. Achieving positive operating cash flow on a quarterly basis by the end of 2012 2. Successful debt financing and leasing arrangements for our new aircraft 3. Working capital boosts from the return of pre-delivery payment deposits upon delivery of our new aircraft 4. Proceeds from the potential spin-offs of our ancillary businesses 5. Unwavering support from our major shareholders, whose support keeps our balance sheet robust despite a relatively high gearing Page 30 Game Changers: Sustaining Our Performance Page 31 OUR VISION While much about the years ahead remains uncertain, the forces of overcapacity, market liberalisation and industry consolidation are certainties. In markets where the consolidation has played out, only the strongest airlines survive in their original form (Figure 23) and maintain profitability. In the US, for example, where liberation began over 20 years ago, a series of mergers has produced a market where the top three players control 60 percent of the market, and only the largest two (Delta and United) appear to have developed a sustainable business. Similar events have played out more recently in Europe and Latin America, with small airlines losing market share and generating significantly lower financial returns Ã¢â¬â if they are profitable at all. This same scenario will play out in Asia in the coming years. Figure 23: Capacity share of leading airlines in deregulated markets 2009, share of market based on RPKs Other Other Other Gol American Airlines/TWA United/ Continental British Airways/Iberia Lufthansa Group Delta/ Northwest TAM Air France/ KLM LAN AirAsia Other Malaysia Airlines Singapore Airlines Cathay Pacific China Southern Top 3 Top 3 Top 3 Top 3 N. America (liberalised in 1980s) Source: OAG Aviation Europe (liberalised in 1990s) L. America (liberalised in 2000s) Asia (liberalisation beginning) Our vision is to shape the future of the industry and be a leader in the consolidation in Asia by becoming the preferred premium carrier. We must achieve capacity leadership amongst Ã¢â¬Ëfull serviceÃ¢â¬â¢ carriers where we can and partner elsewhere to realise the true commercial scale of our business. Page 32 Figure 24: Capacity share of ASEAN-connected markets 2010, Capacity share based on ASKs MAS-Wings Other Other Other Other MAS Other Other Turkish Airlines Singapore Airlines Garuda Indonesia Other Jetstar AirAsia MAS Emirates Thai Airways Qantas MAS Tiger China Southern Garuda Philippine Airlines Vietnam Airlines British Airways Lufthansa KLM-Royal Dutch Airlines Cebu Jetstar Silk Air MAS Thai Airways AirAsia Singapore Airlines Eva Airways Air China China Eastern Vietnam Airlines Air India Jet Airways MAS AirAsia Thai Airways Singapore Airlines ASEAN to/from S. Asia MAS Thai Airways China Airlines Singapore Airlines Asiana Thai Airways Japan Airlines Gulf Air Saudi Arabian Airlines Qantas Airways Etihad Airways Qatar Airways MAS AirAsia Singapore Airlines Thai Airways International AirAsia Emirates Cathay Pacific ASEAN to/from Greater China Korean Air ASEAN to/from N. Asia Singapore Airlines ASEANto/from ANZ Singapore Airlines ASEAN to/from Europe Domestic Malaysia Source: OAG Aviation Intra-ASEAN ASEANto/from Mid East Going forward, we will prioritise our growth in regions where we can offer truly leading connectivity and defendable leadership positions. As Figure 24 highlights, the markets in which Malaysia Airlines competes today are highly fragmented: many airlines operate similarly-sized businesses. Beyond domestic Malaysia, Malaysia Airlines does not have a top two position in any market. The result is a relatively small and fragmented network compared to our competitors, and insufficient frequencies to meet the demands of our sought-after customers. This must change. Leveraging on our game changers, we will use strategic partnerships and alliances to extend connectivity especially to regions where there is a smaller commercial opportunity for operating our own aircraft. This will ensure superior connectivity for our customers while managing financial risks for our shareholders. By ourselves where we can, and with our partners where we must, we will build an increasing number of leadership positions. Our customers and our shareholders alike will benefit. Page 33 1 LAUNCH OF NEW REGIONAL PREMIUM AIRLINE The separation of businesses by aircraft type and distance travelled is increasingly common globally. Airlines including United, Qantas, Lufthansa and Singapore Airlines segment their businesses by aircraft type to some degree. The segmentation allows the airline with the smaller aircraft to focus on commuting and Ã¢â¬ËfeedÃ¢â¬â¢ services to the parent, while the airline with the larger aircraft can focus exclusively on serving long-haul passengers. Starting in the first half of 2012, we will launch our new regional premium airline, a short-haul airline connecting Malaysia to the rest of ASEAN and key cities in South Asia and Greater China. The new carrier will exclusively fly our incoming fleet of Boeing 737-800 aircraft with the latest in passenger amenities. While the early focus will be on key business routes less than four hours from Kuala Lumpur, the airline will eventually fly all domestic and regional routes flown by Malaysia Airlines today (Figure 25). Figure 25: Improved connectivity through regional premium airline To Tokyo To North Asia To Amsterdam To London To Paris New regional premium airline Malaysia Airlines mainline Page 34 Figure 26: oneworld benefits Enhance load factors through additional partner traffic and improved brand awareness Drive hub connectivity to facilitate international expansion and further destinations Leverage relationships to pursue joint purchasing Share equipment and resources for maintenance to reduce variable costs REVENUE EXPERTISE Leverage industry experience, management skills and expertise In the long run, potential advisors may come to Malaysia Airlines to share their international experience COST CAPITAL Alliance will offer us potential additional sources for capital Strengthens capital structure Supports / stabilises clientÃ¢â¬â¢s valuation Long-term interest / investment in client Partner airlines (full members) 2 ALLIANCES PARTNERSHIPS In the second half of 2012, Malaysia Airli nes will become a full member of oneworld. The move toward an alliance will provide a broader network of international destinations, plus provide a basis for customers to increase their loyalty to our services (Figure 26). Beyond alliance membership, we are exploring the possibility of JVs with select partners in order to serve multiple markets together, while reducing the financial risks of participating individually. We look forward to sharing details of these initiatives in the months ahead. Page 35 3 COLLABORATION WITH AIRASIA The signing of the Collaboration Agreement with AirAsia and AirAsia X in August 2011 was a turning point for aviation in Malaysia. Working together will benefit all of our customers, improve our individual cost structures and grow Malaysia as a hub for tourism and aviation. For customers, collaboration offers opportunities to connect to more destinations seamlessly. In the coming months, the airlines will introduce a connecting service, allowing passengers on one airline to connect on select, non-overlapping routes served by the other carrier. At the same time, this move provides Malaysia Airlines with far broader reach, as passengers in more than two dozen cities around the region can be connected to Kuala Lumpur for their onward long-haul travel. Over the past few months, the three airlines have begun discussions about where joint procurement and consolidation of key activities could lead to greater efficiencies. Importantly, this is not about imposing one business model on the other. Rather, it is about looking for prudent opportunities where consolidated operations will deliver better service at lower costs for all. Fuel purchasing is one such area, where the combined scale of our global requirements can be used to negotiate better terms. For engineering , training and ground services, we can save capital costs by sharing common equipment and increasingly selling reserve capacity to other airlines. Already we have identified approximately RM100 million in annual savings for Malaysia Airlines alone. Ultimately, the collaboration must be about promoting the centrality of Malaysia as a hub for tourism and aviation in the region. With major hubs in Bangkok, Singapore and Hong Kong, we all have a role in ensuring the attractiveness of Malaysia to other airlines and potential travellers. Through collaboration, we have the opportunity to bring more scaled support services to Kuala Lumpur, and work with all government parties to create an environment hospitable to the growth of aviation. All collaboration negotiations and activities will, however, be carried out in full compliance with any regulatory or antitrust requirement. Page 36 4 ANCILLARY BUSINESS SPIN-OFF As documented earlier, we have significant opportunities to improve our productivity and simplify our core business. One element of addressing this will be to empower some of our scale support operations to spin-off and become separate companies in their own right. These new companies will be able to offer services to other airlines transiting in Malaysian cities. Their heightened scale will also benefit Malaysia Airlines, as cost efficiencies are passed back to the core airline. At the same time, separating management will drive more focused attention and will bring all businesses to globally best-in-class operational and profitability levels. Notably, this model has been used successfully by Lufthansa, Singapore Airlines and Cathay Pacific. Consistent with this plan, we will move to a new structure, where a holding company will become our primary listed vehicle. The core airline business and the scaled ancillary businesses will be held under this holding company structure. This will drive improved focus for each of the separate businesses and deliver truly leading cost positions to the airlines, as the spin-offs compete increasingly with their competitors for third party business. Proceeds from bringing on board strategic partners can be used to fund our recovery and broader strategic objectives. Figure 27: Corporate structure Holding Company 100% 100% In future lt; 100% 100% wide-body narrow-body including Firefly Turboprop 100% pilot training/ academy 100% round services Near-term priorities Identify strategic partners for divestment, and assure best-in-class airline support operations Page 37 Foundations Page 38 A BRANDED CUSTOMER EXPERIENCE The Malaysia Airlines of the future will strive to deliver superior customer experience at every touch point: when customers book flights, before, during or after the flights. In the months ahead, we will be making significant investments in tools and processes, from call centres and our website through to the layout of our aircraft to ensure that we are paying attention to all details that matter (Figure 28). Figure 28: Components of Branded Customer Experience Page 39 B CONTINUOUS OPERATIONAL IMPROVEMENT After reaching breakeven in 2012, we will further increase our profitability by making bold moves to align operational efficiency with the highest standards in the world (Figure 29). Our goal is to achieve the highest customer satisfaction while improving our revenues and operating as efficiently as possible. This improvement will come in several steps and will be anchored around three pillars: commercial excellence, best-in-class flight operations and cost optimisation. We know it will take time but we have the core assets to build on. On the people side, our employees have a proven track record of providing industry leading service. On the Ã¢â¬ËhardwareÃ¢â¬â¢ side, we are getting brand new aircraft and ground equipment that will provide us a strong base for improved flight operations. Figure 29: Continuous operational improvement Our revenues per ASK have been lagging those of our competitors. While a major effort will be done in 2012, we need to keep improving our capabilities. We will first revamp our sales and marketing strategies and combine them with best-in-class revenue management systems. We will also target more direct sales through our website. Lastly, we aim at building strong social media capabilities to improve marketing effectiveness. Commercial excellence Best-in-class flight operations Our customers want to get to their destination safely and on time. As we take delivery of our new fleet, we will target an increase in utilisation for all aircraft types. We will also reduce turnaround times and have more efficient engineering services from our MRO JV. We will conduct a thorough review of our fuel cost and investigate innovative ways to improve fuel efficiency. Cost optimisation We will be acting on two key levers to reduce costs. First, we will re-negotiate our procurement costs in catering, ground handling and maintenance. Our second lever is labour productivity. We will undertake a systematic comparison of productivity levels by function and department versus our competitors and strive to close the productivity gap. Where necessary, we will Ã¢â¬Ëright sizeÃ¢â¬â¢ the organisation to achieve costs in line with our peers. Page 40 C WINNING ORGANISATION A critical requirement to the recovery of Malaysia Airlines and achievement of sustained and consistent performance is to transform ourselves into a high performance organisation. There are a number of areas we need to address to achieve this important goal. Our labour productivity is well below our relevant competitors and our compensation philosophy is not sufficiently performance-based. In addition, our decision-making approach is cumbersome with a lack of clear accountability on key decisions. Because of the reduction in the network, there is a need to review the manpower level. We would like our organisation to be leaner, more nimble, customer-oriented and meritocratic with a compensation approach that Ã¢â¬Ëpays for performance. As part of this, we will realistically need to make targeted resource reductions. We recognise that this organisational transformation will be quite profound. We therefore commit to undertake this exercise by responsibly engaging with our employees and the Government so as to minimise the adverse impact of these necessary changes. We believe that these changes will make Malaysia Airlines a better place to work thereby enabling u s to attract the best talent and provide greater career advancement opportunities for our employees. Page 41 Our Commitment Page 42 Malaysia Airlines well-being and strength is a major component to the countrys economy. We carry the aspirations and pride of the Nation. Both at home and abroad, the Malaysia Airlines brand remains associated with our unique heritage of giving customers that personal touch. The airline also carries the expectations of all our employees, without whom the airline would not still be flying today, given all the challenges the Company has faced over the years. We are in a crisis and the current situation of the Company is a serious concern for our people, stakeholders, customers and business partners. We recognize that hard and unpopular decisions will need to be made along the way for MASÃ¢â¬â¢ survival and future success. We will treat these decisions with the gravity that they merit, and forge solutions in the best interest of our employees, shareholders, customers and strategic partners. As this journey of recovery has begun, we ask for your support, patience and understanding as we rebuild Malaysia Airlines as the preferred premium carrier. The Preferred Premium Carrier 1 2 3 4 5 Smaller yet profitable network Win back customers Relentless cost focus Keep it simple Bridge the funding gap A Launch of new regional premium airline 1 Alliance and partnerships 2 Collaboration with AirAsia 3 Ancillary business spin-off 4 Branded customer experience B Continuous operational improvement C Winning organisation Page 43 Five-year initiatives Produced by GCEOÃ¢â¬â¢s Office at Malaysian Airline System Berhad MAS Complex A, Sultan Abdul Aziz Shah Airport 47200 Subang, Selangor Darul Ehsan Malaysia www. malaysiaairlines. com
Wednesday, February 19, 2020
Entrepreneurship Initiation - Essay Example To begin with, it is vital to make some reasonable refinements and settle on decisions going to which particular piece of the new administration advancement hypothesis this study wishes to make a commitment. The typology contrived by Goldstein et al. (2002) closed to have an extensive level of functional significance and is accordingly the most evident one to utilize. This administration typology recognizes four administration sorts by utilizing two qualities. These traits, (1) Contact power, and (2) Variety were uncovered to be the basic typology traits by variable examination (Goldstein et al., 2002). While contact power is seen as the measure of interrelationships between workers furthermore clients, mixture is seen as the aggregate sum of decided appearances of the services. Rosen, (2002), claim that the contrast between these service sorts is that service sorts with a generally low mixed bag have a tendency to utilize conventional new product improvement apparatuses to create services. Because of constrained introduction to client changes, the attributes of these services look like, all things considered, the qualities of physical merchandise. By force is altogether different (Mathis, 2002). Considering the distinction in service advancement and instruments effectively accessible to service firms with low contact power, a more noteworthy commitment can be made to service advancement for firms with a high contact force and mixture, particularly when considering the little collection of writing covering this subject in this specific portion (Minkoff and Cline, 2003).
Tuesday, February 4, 2020
Business modelling - Essay Example This method of data analysis has been in operation for an extended period especially in the economic statistics. Regression has also become popular among lawyers in the recent past, being used as evidence of liability under Title VII of the civil Rights Act 1964. Regression analysis while handling a single explanatory variable is characterized as a Ã¢â¬Å"simple regression.Ã¢â¬ (Fox, 1997) Regression analysis will be used when it is determined that two or more variables have a connection in a linear relationship, Hinkle, (1996). When we focus on simple regression, it means that we have only two variables in question. The variables will be denoted by X and Y. and the relationship can be determined as; y = ÃÅ¸0 + ÃÅ¸1 x + Ã , this is a linear equation because it will result in a straight line when presented in a graph, (Fox, 1997). Data analysis is an activity we cannot escape from in our day to day activities. Data may be realized from the business activities such as their mode of supply or transport. Businesses will, therefore seek to obtain the most favorable model through analyzing the data. The kind of analysis is called Ã¢â¬Å"The linear regression analysis,Ã¢â¬ (Fox, 1997). Regression analysis has a number of strengths, first according to Fox (1997), regression method of data analysis is beneficial in circumstances where forecasts are promising, such as the number of intended admissions in a college. This methodology assists administrators to predict and get ready for additional demands that are likely to arise in the future Regression analysis is also a quite cheaper method as data are easily collected and usually can be gathered from other earlier source. Furthermore, independent variable data are not expensive to update as compared to acuity-quality data, (Fox, 1997). Vonon (1998) advocates for the technique by says that method, of data
Monday, January 27, 2020
Social Disorganization Theory The social disorganisation theory was one of the most important criminological theories developed from the Chicago School of thought, namely research conducted by Shaw and Mckay (1942). Shaw and McKay (1942) used spatial maps to study the residential locations of juveniles referred to Chicago courts, they discovered that rates of crime were not equally dispersed. Instead, crime was concentrated in certain areas and interestingly remained stable in such areas despite the changes of the individuals who lived there. Unlike other theories of delinquency, The Social Disorganisation Theory suggested that where an individual lived was more instrumental in determining the likelihood that an individual will become involved in criminal activities than individual characteristics such as age and gender. The theory was not intended to be applicable to all types of crimes but mainly to street crimes at neighbourhood level. The Social disorganization theory directly linked high crime rates to neigh bourhood ecological characteristics such as poverty, residential mobility, family disruption and racial heterogeneity (Gaines and Miller, 2011). All of which will be discussed in more detail throughout this essay. The first core element of the social disorganization theory to be discussed is Poverty, which can be defined as the state of being extremely poor. Such a lack of wealth is often seen to be due to the lack of employment opportunities. Such incentives like the Princes Trust and Catch 22 focus on poorer areas of society and seek to increase the employment opportunities for young people there. Jenson (2003) found that when employment opportunities increase pressures on residents to flee decrease ensuring more stable and improved communities. However it is when employment opportunities remain low that economic deprivation grows which could lead to social disorganization, which in turn leads to crime (Shaw and McKay, 1942). Other theories such as The Strain Theory (Merton, 1957) support the impact that poverty can have on a communities crime rates as due to lack of employment opportunities people turn to other methods of fulfilling their financial and material needs in an anti social way i f this cannot be done pro-socially such as through employment. Racial Heterogeneity is the second element of the social disorganisation theory to be reveiwed; this notion is related to the diverseness of races within a society. The social disorganization theory proposes that crime occurs when the methods of social control are weakened (Sun, Triplett and Gainey, 2004). Interestingly it is racial heterogeneity and urbanization that are predicted to weaken the control of individuals to most, due to lack of communication and interaction among residents (Sun, Triplett and Gainey, 2004). It is the lack of knowledge that allows for the racial separation along with the media often using particular races as scapegoats for certain crimes almost creating a moral panic within the communities singling out a certain race which would then increase the likelihood of their engagement in criminal activity (Bowling, 2002). This is supported by the findings that even among poorer neighborhoods, some racially diverse and others racially homogeneous, local friendship s lower certain crime rates such as assault (Sun, Triplett and Gainey, 2004). The third element of the social disorganisation theory to be considered is residential mobility this refers to the frequency of which individuals change their residence. Residential mobility has proven to help to explain the social disorganization theory, it has successfully explained automobile theft (Rice and Smith, 2002), gang crime (Lane and Meeker, 2000) and sexual re-offending (Mustaine, Tewksbury and Stengel ,2006). Shaw and McKay (1942) also noted that socially disorganized communities tended to produce criminal traditions that could be passed to successive generations of youths, due to the lack of residential mobility; criminal subcultures developed and overrun communities. It was hard for people to re-locate for reasons such as financial and fears of leaving that community. Residential mobility and poverty were often seen as interrelating factors in research on the social disorganisation theory as they were both significant predictors of delinquency but were stronger predic tors when looked at together (Blau and Blau, 1982). The final element to be discussed is family disruption; family has proven to be leading process within the social disorganisation theory (Sun, Triplett and Gainey, 2004). Sampson (1986) suggested that social disorganization may affect youth crime in particular its effects on family structures and stability. Consistent with the previous research social disorganization may influence the level of crime through its effect on family, however other researchers found that family may be used to alleviate the damaging effects of social disorganization. Tolan, Gorman-Smith and Henry (2003) found that parenting practices somewhat mediated the correlation between disorganised community and delinquency. However this study looked at families who were not seen to be disrupted. Burfeind (1984) found that that family disruption influenced delinquency in different ways, such as: the level of attachment to the father and paternal discipline. However the majority of studies that looked at the interactio n of family disruption and social disorganisation theory focused on male offenders and did not consider female crime; something which has been steadily on the increase in todays society. Despite its early origins, social disorganization theory continues to be prominent in the study of delinquency. In fact, Kubrin and Weizer (2003) suggested that the theory may be stronger now than when it was first proposed. As suggested in this essay, social disorganization theory continues to dominate in explaining delinquency in regards to the neighbourhood characteristics such as; poverty, racial heterogeneity, family disruption and residential mobility. It could be suggested that to prevent delinquency it is important to organise communities who are disorganized for example providing youth centres, employment opportunities and empowering individuals to maintain their homes in disorganized communities. By improving neighbourhoods and making them more appealing, social controls and relationships will be strengthened. All the elements discussed within the essay have a clear impact on the social disorganisation theory and the more of which are present in a community increases the li kelihood of social disorganisation and delinquency (Shaw and McKay, 1942). However it must be noted that poverty was often found to be the strongest and most consistent predictor of crime compared to the other three core elements: racial heterogeneity, racial mobility and family disruption (Warner and Pierce, 1993).
Sunday, January 19, 2020
Amazon. Coma's E-Business Model Monte Sutton strayed university Assignment #2 Submitted In Partial Fulfillment of the Requirements for the Course BUSSES: contemporary Business Dry. Miller Fall 201 1 Discussion 1. Discuss the pros and cons of Amazons growth and diversification of business and specialization, and make recommendations about what Amazon could have done differently. The internet has become a part of most everyone daily life for many years now. In addition E-Business has appeared for several years now.E-dustless refers to conducting business over the internet. E-Business accounts for more than one- quarter of the value of all manufacturing shipments, sales and revenues, totaling $1. 3 trillion (Boone ; Kurt, 2011). In 1996 a famous retail company In E-Business was launched called Amazon. Com_ Amazon. Com sells various products like electronics, books, music, DVD's, housemates, PC's and cars. Amazon. Com is the biggest retailer in E-Business, It has expanded Its business In more than 220 countries. Amazon had first started out as a company had first started out as an online bookstore.While selling books Amazon was making a decent profit, but Amazon leadership did not feel hat they were not making as much money as they had hoped to make tort the first year _ Also a lawsuit from Barnes and Noble prompted Amazon to come up with a way to better Its corporation. In 1999 when the E-useless boom began Amazon Went Amazon began to emerge into the world of E-Business this was the best thing they could have done. By doing this they begin to make huge profits and turned into one of the world's leaders in E-commerce. Amazon was able to take over the E- Business because they began to offer to their customer's better deals than the otherE-Business corporations could offer. They were truly focused on customer satisfaction. The firm uses sophisticated inventory tools that help keep its costs down and allow it to wait for favorable supplier prices before placing orders . Amazon was able to restock when nobody else was restocking. As demands was falling off a cliff [because other retailers had placed holiday orders much earlier], they could get better rates (Boone ; Kurt, 2011 up. 223). The owner Jeff Bozo understood that in order to remain competitive in this business they had to first focus on the needs of the customers.Understanding what customers want and need is was very beneficial for the success of the company. Also expanded its merchandise at a lower cost would also attract more customers to order from Amazon. Another benefit of Amazon was that they had partnership with numerous transportation companies and could provide fast and accurate service to their consumers. Amazon has experienced many negatives ratings from some of their customers because of some of the defective merchandise they have received. Because Amazon has partnership with many consumers to sell their merchandiseAmazon does not really know what a person may be receiving. Con sumers only know that they ordered this merchandise from Amazon and if something is wrong Amazon should be responsible for the product. I fully understand their complaint. Understand the consumer's complaint. I recently ordered a Colby MPH player from Amazon and when I got the MPH player it did not work. I looked all over the internet to try and find a contact number for Amazon but could not. I called Colby and went through some trouble shooting techniques before it was determined that the part was defective.The Colby told me to return the merchandise back to Amazon and they would replace it. Although once I went on Amazon website to find out how to return the item it was fairly easy. I felt as though instead of me returning the item back to Amazon I should have returned the item to Colby and they could have sent me a replacement item. Now I have to wait until Amazon gets the old MPH player and the they order me another one from Colby. I would recommend that Amazon find out a way to cut out the middle man so that consumers can get their replacement items in an expeditious manner. Discussion 2.Determine the impact if Amazon. Com had split up and became a family of brands (for example Ã¢â¬Å"AmazonÃ¢â¬ for books, Ã¢â¬Å"Super toysÃ¢â¬ for toys, etc. ), each with a public face but all run by the same parent company. Amazon may have lost some consumers had they would have branded themselves into a family of brands. What makes Amazon so unique is that a person can go to their one website and find everything they are looking for. The website has made so many changes to make it easier for the consumer to go directly to their website categorize what they are looking for and will e able to see Just that product.Had Amazon would have Just distinguished itself into a certain brand it would have seemed like they may have been trying to promote a certain item and this would have created competition amongst Amazon with its who truly likes ordering from Amazon. They wo uld think that this is another E- Business that they are not familiar with doing business with. The ease of going to one website and understanding that everything at this website is all Amazon and the way that you use to order your merchandise you can still do it the same way.To any companies tend to think they are doing things to make it better for the consumer but in all actuality they are confusing the consumers. Discussion 3. Determine if it would be possible for Barnes and Noble or Borders to extend their markets in the same way that Amazon. Com has. Explain your rationale. Yes I think it is very possible for Barnes and Noble or Borders to extend their markets in the same was Amazon. Com has. The reason I feel this way is because the average American consumer we are always looking for the next best marketable company on the internet.Variety is the spice of life. At first consumers would be hesitant to order something other than books from Barnes and Nobles or Borders. But once the word get out that both these companies have become and establish E-Business like Amazon they should have no problem with becoming marketable in the E-commerce business. Not all consumers are happy with ordering merchandise from Amazon, so therefore it will take another company to get into the E-commerce business and have an established reputation and more will follow.In order for Barnes and Noble and Borders to become successful they need not to try and duplicate what Amazon is already doing in the E-Business. They need to come up with other creative ways to market their products, and also try and offer better pricing and better shipping rates than Amazon has to offer. Like anything, at first business may be slow for both companies because this is a new venture for them. But once the companies understand how the E-Business works and what customers want and need I don't for see any problems with them marketing other items other than books over the internet. Discussion 4 Determine what Amazon. Mom would need to do to expand their distribution chain to include some brick and mortar outlets, and whether or not this would be a good idea. In order for Amazon to get into the Brick and Mortar outlet Amazon now would have to go out and find more building throughout the world and then higher more employees to run the outlet facilities around the world. Now Amazon instead of competing in the E-commerce industry now they would also be competing in the store industry. By doing this would cost Amazon more money and could possible reduce the decline in sales over the internet. This would not be a good idea for Amazon for many reasons.Operation cost to maintain a building and a full time staff make up a large part of the overhead cost. Most retail stores commission are a big part of a sales person salary so therefore they may not have the best interest in the internet provides more information than the sales representative could. Most consumers now days go to a retail sto re and price and item then go home on the internet and get a better deal. Amazon is doing Just fine by remaining the top E- Business on the internet, References Boone, L. , Kurt, L. , (2011). Contemporary Business. Sons Inc. Hoboken, NJ: John Wiley and
Saturday, January 11, 2020
Marketing: In business, firm marketing generates the revenues that the financial people manage and the production people use in creating goods and services. The challenge that faces marketing is to generate those revenues by satisfying customersÃ¢â¬â¢ wants at a profit and in a socially responsible manner. However, marketing is not limited to business organizations.Whenever we try to persuade somebody to do something: donate to RED CROSS, not to litter the highways, save energy, vote for candidate, we are engaging in marketing; thus marketing has a broad societal meaning and it is applicable not only for profit making but also for not profit organizations. Many scholars define marketing as follows: 1. According to American Marketing Association, marketing is defined as the performance of business activities that direct the flow of goods and services from producers to consumers or users. . According to William J. Stanton, Marketing is a system of business activities designed to plan , price, promote and distribute want satisfying goods and services to present and potential customers. 3. According to Evans and Berman, Marketing is the anticipation, stimulation, facilitation, regulation and satisfaction of consumer and publicÃ¢â¬â¢s demand for products, services, organizations, people, places, and ideas through the exchange process. 4.According to Philip Kotler, Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Generally, the definition of marketing can be grouped in to two: classical (narrow) definition and modern (broad) definition. Classical Definition: In classical terms marketing can be defined as the performance of business activities that direct the flow of goods and services from producers to consumers. This definition is too narrow to describe marketing.It emphasizes the distribution aspect of marketing. Modern Definition: In broade r terms marketing is defined as a system of business activities designed to plan, price, distribute and promote want satisfying products (goods and services) to present and potential customers. In marketing, there are combinations of activities, which start before the creation of a product and donÃ¢â¬â¢t end until customers are satisfied. Therefore, product planning, pricing, distribution and promotion are the main activities performed in marketing.Marketing includes anticipating demand, which requires a firm to do customer research on a regular bases so that it develops and introduces products that are desired by consumers, Management of demand which consists of stimulation, facilitation, and regulation of tasks; and satisfaction of demand which involves actual performance, safety, availability of options, after sale service and other factors. From the above discussions, we can conclude the following about marketing: a. Marketing is the business activity concerned with the flow o f goods and services from producers to consumers. . Marketing generates and facilitates exchange c. The concept of marketing lies on needs, wants, and demands of customers. d. Marketing is greater than selling. e. Marketing is an integrated activity. f. Marketing is concerned with customer satisfaction. MARKETING FUNCTIONS The following are the basic marketing functions: 1. Environmental Analysis and Marketing Research: Involves monitoring and adapting to external factors that affect success or failures, such as the economy and competition; and collecting data to resolve specific marketing issues. 2. Consumer Analysis:Involves examining and evaluating customer characteristics, needs, and purchase processes and selecting the group of consumers at which to aim marketing efforts. 3. Product Planning: ( including goods, services and ideas) Involves developing and maintaining products, product assortments, product images, brands, and packaging, and optional features; and deleting falteri ng products. 4. Distribution Planning: Involves establishing relations with distribution-channel intermediaries, physical distribution, inventory management, warehousing, transportation, the allocation of goods and services, wholesaling and retailing 5.Promotion Planning: Involves communicating with customers, the general public and others through some form of advertising, publicity, personal selling, and/or sales promotion. 6. Price Planning: Involves determining price levels and ranges, price techniques, terms of purchase, price adjustments, and the use of price as an active or passive factor. 7. Broadening the organizations' /individuals' scope: Involves deciding on the emphasis to place, as well as the approach to take, on international marketing, service/ -non-profit marketing and societal issues. 8. Marketing Management:Involves planning, implementation, and controlling the marketing program (strategy) and individual marketing functions; and appraising the risks and benefits i n decision making. According to W. J. Stanton and McKarthy, there are eight economic activities in marketing that are broadly classified into three: 1. Exchange: -Buying -Selling 2. Physical Distribution Ã¢â¬â Transportation Ã¢â¬â Storage 3. Facilitating /Auxiliary/ Ã¢â¬â Financing Ã¢â¬â Marketing research and information Ã¢â¬â Risk bearing Ã¢â¬â Product standardization 1) Exchange: It is the process by which parties provide something of value to one another to satisfy the needs of each.The seller provides a needed product Goods Services Seller Buyer Money Credit The buyer offers something in return a) Buying: It is acquisition and procurement of goods for eventual resale or for production of other goods or rendering of services. b) Selling: It is not only just to make sales but also to find buyers, stimulate them, and provide advice and service to buyers. It involves advertisement, personal selling, customer service, publicity, etc. 2) Physical Distribution: Refer s to handling and movement of goods from production area to market center.It consists of a) Storage: It provides proper handling and storage of goods until they are demanded and sold. b) Transportation: It is the shipment and movement of goods from their manufacturing place to the market center /place of sale/. It enables to make goods reachable to the consumers. 3) Facilitating Function /Auxiliary Function: these are functions that facilitate and assist the proper performance of other functions of marketing. It encompasses a) Financing: To carry out business operations smoothly, it requires finance or money. Marketing as a major business activity, leads us to the need for money or finance.Without it, organizations are unable to schedule their operations. The activity of financing involves the proper handling and management of the inflow and outflow of money. Accordingly, finance is defined as the management function, which involves effectively obtaining and using money. Sources of finance include revenue from sale of company products and services, rental of business properties, from sale of stock, or from loan and credit agencies. b) Market Research and information: Managers of businesses do not make decisions on the basis of common sense or intuition. They require information.Therefore, to make marketing decisions and to design effective marketing policies, managers should get information regarding tests, preferences, attitudes and needs of customers; position of competitors, capacity of suppliers and creditors. For the success of business, market research is an important activity that involves gathering, analyzing, and interpretation of data collected regarding the needs of consumers. c) Risk Bearing: Business organizations when they are established, it is with the objective of getting profit, expansion, growth, etc. Nevertheless, they fail to achieve their objectives because of uncertainty of the future.Hence, the chance or the possibility of loss that bus iness face is known as RISK. d) Product standardization and Grading: These are facilitating functions that are used to identify the quantity and quality of production. When goods are standardized and graded neither the buyer nor the seller is required to check each and every part of the product. It saves the time of both buyers & sellers. Standardization enables customers to know that there is always definite or standard quality in a particular package; and grading indicates that a package labeled with grades A, B, or C are always uniform and the same everywhere and ever time.The field of marketing is a crucial one for several reasons: it stimulates demand; a large number of people are employed on marketing positions; it supports entire industries such as advertising and marketing research; all people are consumers in some situations; it is necessary to use scarce resources efficiently; it impacts on people's beliefs and life styles; and it influences the quality of our lives. The s cope of marketing is quite broad and diversified. To perform the marketing functions, marketing Performers are required and they are organizations or individuals that undertake one or more marketing functions.They include manufacturers, service providers, wholesalers, retailers, marketing specialists, and organizational and final consumers. Each performer has a different role. One party usually does not perform all the functions. This is due to costs, assortment requirements, specialized abilities, company size, established methods of distribution, and consumer interests. TASKS OF MARKETING MANAGEMENT Marketing managers in different organizations might face any of the following states of demand. The marketing task is to manage demand effectively. The various states of demand and the corresponding marketing management task according to P.Kotler are the following: 1. Negative demand: This is a state in which all or the major parts of the society, dislikes the product and may even pay a price to avoid it. Examples are vaccination, alcoholic employees, dental work, and seat belts. The corresponding marketing task is to analyze why the market dislikes the product and whether product redesign, lower price, or more positive promotion can change the consumer attitudes. This marketing task or activity is known as CONVERSIONAL marketing which tries to change peopleÃ¢â¬â¢s want rather than serve their wants. . No demand: This is a case where target customers may be uninterested in or indifferent to a particular product. For example, farmers may not know about a new farming method; college students may not be interested in taking foreign language courses. Marketing managers are concerned with finding ways to connect the productÃ¢â¬â¢s benefits with the userÃ¢â¬â¢s needs and interests. This marketing task is known as STIMULATIONAL marketing; it tries to stimulate a want for an object in people who initially have no knowledge or interest in the product 3.Latent demand : Consumers have a want that is not satisfied by any existing product or service. This state of demand where many customers share a strong need for something that does not exist in the form of actual product is called LATENT demand. Examples include the need for harmless cigarettes, more fuel-efficient cars, etc. In this case, marketing managers respond by trying and developing effective goods and services that will satisfy the demand through analysis and measurement of the potential market.The marketing task is called DEVELOPMENTAL marketing and its task is to measure the size of the potential market and trying to develop a new product or service that would satisfy the demand. 4. Falling demand: Sooner or later, every organization faces falling demand for one or more of its products. For example, churches have seen their membership decline, and private colleges have seen fewer applications. The marketer must find the causes of market decline and re-stimulate demand by finding new m arkets, changing product features, or creating more effective communication and the marketing task is REMARKETING. . Irregular demand: It is a state in which the timing pattern of demand is marked by seasonal and volatile fluctuations causing problems of idle capacity and overworked. For example museums are under-visited during weekdays and overworked during weekends. The corresponding marketing task is SYNCHROMARKETING, i. e. , to find ways to alter the time pattern of demand through flexible pricing, promotion and other incentives so that it will better match the time pattern of supply. 6. Full demand: The organization has just the amount of demand it wants and can handle.It is a state where the current level and timing of demand is equal to the desired level and timing of demand. The marketing task is MAINTENANCE marketing and is designed to maintain the current level of demand against changing consumer preferences. The organization maintains quality, and continually measures sat isfaction to make sure it is doing a good job. 7. Overfull demand: It is a state in which demand is higher than the company can or wants to handle. The marketing task is called DEMARKETING and its task is finding ways to reduce the demand temporarily, or permanently.De-marketing involves such actions as raising prices and reducing promotion and service. It does not aim to destroy demand, but only to reduce it. It calls for using normal marketing tools in reverse. 8. Unwhole-Some demand: Unwholesome products such as cigarettes, alcohol, and hard drugs will attract organized effort to destroy the demand or interest in particular product or service. The corresponding marketing task is known as COUNTERMARKETING it is a difficult task in that the aim is to get people who like something to give it up. Marketing manager cope with these tasks by arrying out marketing research, planning, implementation and control. The demand levels and corresponding marketing tasks are summarized as follows : State of demand| Marketing task| Formal Name| 1. | Negative demand| Disabuse demand| Conversional marketing| 2. | No demand| Create demand| Stimulation Marketing| 3. | Latent demand| Develop demand| Developmental marketing| 4. | Falling demand| Revitalized demand| Remarketing marketing| 5. | Irregular demand| Synchronize demand| Synchro-marketing| 6. | Full demand| Maintain| Maintenance marketing| 7. Overfull demand| Reduce demand| Demarketing marketing| 8. | Unwholesome demand| Destroy demand| Counter marketing| 2. 3. MARKETING MANAGEMENT CONCEPTS We have described marketing management, as the conscious effort to achieve desired exchange outcomes with target markets. Now we ask what philosophy should guide these marketing efforts? What weights should be given to the interests of the organization, the customers and society? Very often these interests conflict. Clearly, marketing activities should be carried out under a clear philosophy of efficient, effective, and responsible mark eting.There are five competing concepts under which organizations conduct their marketing activity. 1. The production concept: This concept holds that consumers will favor those products that are widely available and low in cost. Management of production oriented organization concentrates on achieving high production efficiently and wide distribution coverage. Organizations that appreciate this concept assume that consumers like products that are widely available and accessible at low cost. The production concept is one of the oldest concepts guiding sellers.The assumption that consumers are primarily interested in product availability and low price holds in at least two types of situations. The first is where the demand for a product exceeds supply as in many Third World countries. Here consumers are more interested in obtaining the product than in its fine points. The suppliers will concentrate on finding ways to increase production. The second situation is where the productÃ¢â¬â ¢s cost is high and has to be brought down through increased productivity to expand the market.Texas instruments provides a contemporary example of the production concept: Texas Instruments is the leading American exponent of the Ã¢â¬Å"get-out production, cut the priceÃ¢â¬ philosophy. Ford put all of his talent into perfecting the mass production of automobile to be down their instruments all of its efforts in building production volume and improving technology in order to bring down costs. It uses its lower costs to cut process and expand the market size. It strives to achieve the dominant position in its markets.To Texas Instruments, marketing primarily means one thing bringing down the price to buyers; this orientation has also been a key strategy of many Japanese companies. 2. The product concept: Under this concept, marketing managers assume that consumers will prefer those products that offer (provide) the most quality, performance, with good features. Managers in this pr oduct-oriented organizations focus their energy on making quality products and improving them over time. These managers assume that buyers admire well-made products and can select, purchase and appreciate product quality.Products oriented companies often design their product with little or no customer input. These managers are caught up in a love affair with their product and fail to appreciate that the market may be less Ã¢â¬Å"turned on. Ã¢â¬ They trust that their engineers will know how to design or improve the product. Too often they will not even examine competitors products because Ã¢â¬Å"they were not invented here. Ã¢â¬ A General Motors executive said years agoÃ¢â¬ Ã¢â¬Å"How can the public know what kind of car they want until they see what is available? Ã¢â¬ GMÃ¢â¬â¢s designers would develop plant for a new car. Then manufacturing would make it.Then the finance department would price it. Finally, marketing and sales would try to sell it. GM failed to ask cust omers what they wanted and never brought in the marketing people at the beginning to help figure out what kind of car would sell. The product concept leads to Ã¢â¬Å"marketing myopiaÃ¢â¬ a focus on the product greater than on the customerÃ¢â¬â¢s need. Railroad management thought that users wanted trains rather than transportation and overlooked the growing challenge of the airlines, buses, trucks, and automobiles. Churches and the post office all assume that they are offering the public the right product and wonder why their sales falter.These organizations too often are looking into a mirror when they should be looking out the window. 3. The Selling concept: Under this philosophy/concept/, marketing managers assume that consumers purchase products if the organization undertakes an aggressive selling and promotion effort. Therefore, firms emphasize and direct their effort on promotion and selling of their products. Most firms practice the selling concept when they introduce new products and when they have over capacity. The selling concept holds that consumers, if left alone, will ordinarily not buy enough of the organizationÃ¢â¬â¢s products.The organization must therefore undertake an aggressive selling effort. The concept assumes that consumers typically show buying inertia or resistance and have to be coaxed into buying, and that the company has available a whole battery of effective selling and promotion tools to stimulate more buying. The selling concept is practiced most aggressively with Ã¢â¬Å"unsought goods,Ã¢â¬ those goods that buyers normally do not think of buying such as insurance, encyclopedias, and funeral plots. These industries have perfected various sales techniques to locate prospects and hard sell them on product benefits.Most firms practice the selling concept when they have over capacity. Their aim is to sell what they make rather than make what the market wants. In modern industrial economies, productive capacity has been built up to a point where most markets are buyer markets (i. e. , the buyers are dominant), and sellers have to scramble hard for customers. Prospects are bombarded with television commercials, newspaper ads, direct mail, and sales calls. At every turn, someone is trying to sell something. As a result, the public identifies marketing with hard selling and advertising. 4.The Marketing Concept: The marketing concept is different from the above three concepts. Managers under this concept assumes that the key to achieving organizational goals is based on the determination of the needs and wants of consumers and delivering or providing the desired satisfaction more efficiently, and effectively, than competitors. When we compare the marketing concept with the selling concept, the selling concept focuses on the needs of the seller; the marketing concept focuses on the needs of the buyer. Selling concept focuses on the needs of the seller; marketing on the needs of the buyer.Selling is preoccupi ed with the sellerÃ¢â¬â¢s need to convert his product into cash. Marketing is preoccupied with the idea of satisfying the customersÃ¢â¬â¢ needs of the product and the whole cluster of things associated by creating and delivering the product. The marketing concept rests on four main pillars, namely target market, customer needs, coordinated marketing, and profitability. These are shown in figure below Ã¢â¬â The selling concept Starting pointFocusMeans Ends FactoryProductsSelling ; Profits throughpromotion sales volume The marketing concept Starting point focus meansEndsTarget market Customer CoordinatedProfits through Needs marketingCustomer Satisfaction Here we examine how each pillar of the marketing concept contributes to more marketing that is effective. i. TARGET MARKET: No company can operate in every market and satisfy every need. Nor can it even do a good job within one broad market. Companies do best when define their target market (s) carefully and prepare a tailored marketing program. An auto manufacture can think of designing passenger cars, station wagons, sports carts, and luxury. But this thinking is less precise than defining a customer target group.One Japanese carmaker is designing a car for the career woman, and it will have many features that male-dominated cars donÃ¢â¬â¢t have. Another Japanese carmaker is designing a car for the Ã¢â¬Å" town man,Ã¢â¬ the young person who needs to get about town and park easily. In each, the company has clarified a target market, and this will greatly influence the car design. Societal Marketing Concept: It holds that the organization should determine the needs, wants, and interests of the target markets and deliver the desired satisfaction more effectively and efficiently than competitors in a way that maintains or improves the customerÃ¢â¬â¢s and the ocietyÃ¢â¬â¢s well-being. The societal marketing concept calls upon marketers to balance three considerations in setting their marketing poli cies. Originally, companies based their marketing decisions largely on short-run company profit. Overtime, companies began to recognize the long-run importance of satisfying consumer wants, and introduced the marketing concept. Now they are beginning to think of societyÃ¢â¬â¢s interests when making decisions. The societal marketing concept calls for balancing all three considerations-company profits, consumer wants, and societyÃ¢â¬â¢s interests.