Long before one of its Boeing (BA) jumbo jets vanished into the tropical darkness, Malaysia Airlines was struggling to find its financial footing. The carrier has lost money for more than three years, beset by high costs, a proliferation of unprofitable new flying in its network, and two low-cost rivals at its home airport in Kuala Lumpur (Bachman 2014).
The company is said to have lost over $1.2 billion dollars in the past 3 years and that the lost is only increasing every year. It was stated that in 2013 Malaysian Airlines had a negative 4% profit margin while the worlds average airlines profit margins were 5% and up. In the last year the airlines domestic yield performance decreased by seven percent. The company’s losses can be attributed to the expansion which the carrier has been implementing. The carrier’s expansion included adding 21 new aeroplanes as well as boosting their capacity up by 19%. Analysts also criticised the carrier’s decision to buy the Airbus A380. This superjumbo was a waste of money as the company’s current capacity was already struggling to make a profit. The majority of parent company Malaysian Airline Systems (MAS:MK) is owned by the government’s sovereign wealth fund, Khazanah Nasional (Bachman 2014).
Report: Reasons for drop in share price:
Problem recognition is an important factor in the consumers search for a products and service to satisfy their needs and wants. Problem recognition includes many external and internal searches. Problem recognition is when there is a need that needs to be fulfilled, as well as the awareness of this need and strategy to fulfil this need. Problem recognition is the first stage in the five stage decision making process and is seen as one of the most important stages as it is the first thing the consumer thinks of. Malaysian airlines failed to take the first step in the decision making process as it failed to look at the need recognition of its consumers. Without looking at the need recognition of its consumers it could not fulfil the rest of the decision making process with regards to its consumers as if consumers could not identify with the company and that their needs and wants to be fulfilled then they would not choose the airlines services.
There are two important factors to consider when looking at problem recognition such as an ideal state as well as an actual state. The ideal state is where a person wants to be and the way they want things to be. The actual state is where a person is at the time regardless of their ideal state. Problem recognition is defined as the perceived difference between an actual and an ideal state of mind. Internal factors can influence the ideal state. The airline failed to adhere to this as they did not think about the ideal state a consumer would like to be such as that they would like to travel on a comfortable reputable airline with good service at a good and affordable price. While the ideal state is that the consumers do not...