Consultancy Report Final

[Dra
Bankruptcy of the Japan Airline
Consultancy Management
Peter Meehan
Live consulting Firm Japan Airlines
2009 Consultant
Report
Specialized in Consulting And
External audit

Date: 02/06/2016
Student No: 2159403
Name: Bilal Ahmed
MBA-Full Time

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Contents
1.0 Introduction: ....................................................................................................6
2.0 Project Aims....................................................................................................7
3.0 Japan Airline Ltd Background .......................................................................10
3.1 External Factors: ..................................................................................................... 11
3.2 Figure 3.4: Total Airlines net profit 2003-2009.................................................. 12
4.0 Problem Definition.........................................................................................13
4.1 Figure 4.1: The Five Whys and Fishbone Diagram ............................................... 15
4.3. Figure 4.2 5 Whys root cause analysis of the Problem Definition .................... 15
5 WHYs Worksheet – Japan Airline............................................................................. 16
4.4 Explanation:........................................................................................................ 16
5.0 Relevant Literature Review:..........................................................................17
5.1 Impact of Leverage: ................................................................................................ 17
5.2 Phases of Organizational Distress:.......................................................................... 17
5.3 Turnaround Management:....................................................................................... 19
5.4 Organizational Restructuring.................................................................................. 20
5.6 Structural Implication on other elements of organization....................................... 22
5.7 Human Resource Management:.............................................................................. 23
5.8 Leadership Styles.................................................................................................... 24
5.9 Behavioral Leadership:........................................................................................... 24
5.10 Portfolio Restructuring.......................................................................................... 25
5.11 Financial Restructuring......................................................................................... 25
5.12 Change Management ............................................................................................ 25
5.13 Transformational Change: .................................................................................... 26
5.13.1 Managing Change:............................................................................................. 26
6.Potential shortlisted models .............................................................................27
7.Research Methodologies: ................................................................................28
7.2 Secondary research ................................................................................................. 28
7.3 Primary Research:................................................................................................... 29
8.Findings/Results: .............................................................................................30
Questionnaire................................................................................................................ 30
9. Recommendation:...........................................................................................34
10. Conclusion ....................................................................................................38
References .........................................................................................................40
Appendix A:.............................................................................................................. 43
Appendix C:.............................................................................................................. 45
Appendix D............................................................................................................... 46
Appendix E ............................................................................................................... 47
Appendix .F............................................................................................................... 48
Appendix G............................................................................................................... 49

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Report Abbreviation:
CM Consultancy Management
JAL Japan Airline
PID Project initiation document
PD project definition
HBR Harvard Business Review
CSR Critical success factors
KPI Key performance indicators
D/E Debt/Equity Ratio
RBV Resource Based View
IATA International Air Transport Association

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Japan Airlines
Analysis of JAL current Health & Evaluation of Options to Avoid Bankruptcy
Consultant Report
22 September 2009
1.0 Introduction:
Over the past decade the term crisis and crisis management has become
increasingly popular topic for interest for business professionals and
management academics alike.According to the institue of crisis
mangement(2013)business crisis have been on a steady upward trend since
2009.The central idea behind this particular Consultancy report is that it is being
framed at the request of JAL.This report is backed by PID which briefly
incorporates the terms and conditions and disclaimer of this project.Japan state-
backed institution such as development bank and Enterprise turnaround Initiative
Corporation (ETIC) sponsoring the research and compilation of this documents.
Project comprise financial and non-financial benefits in terms of employees
morale, improved credit rating along with sustainable competitive edge, however
these benefits are difficult to quantify but underpinning the master objective to
turn the fortune of persistent loss making organization. This report include

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findings, reasoned judgments, recommendation and conclusion with the
exploitation of academic research,journals,business magazines,articles,peer
reviews, working papers. Extensive primary and secondary research has also
been undertaken which is exclusively focus to diagnose the root cause of
problem and to eliminate them. In addition to this other research platform such as
print, electronic and social media, internet, government and economic publication
also has been exploited. Although the costing involving the consultancy not
always detailed within a report body, the client has specifically requested this
information.
The report is part of organizational strategy to create value and enhance the
potential of revenue in overall organization framework. This framework is to
develop business reconstruction strategies intended to strengthen the position of
creditors, employees and other stakeholders as a result of reorganization.
Rachael Thompson contend that stakeholder management is critical to the
success of every project in every organization I have ever worked with.by
engaging the right people in the right way in your project, you can make the big
difference to its success. And to your career. One way to satisfy stake holder
concerns and promote transparency is to involve project affected stakeholders in
monitoring of project.participational monitoring tend to strengthen relationship
between the project and its stakeholders.
2.0 Project Aims
The aims of this project is to add value in to the client business in order to revive

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and sustain its profitability. As the organization undergoing transformation in fast
pace environment, it is necessary to examine the word add value” it is clear that
what end up being valuable for client and its system is not always obvious or
what is expected by client.However,by applying the concept of interpreting
communities, we show that client and consultant may have problem in
understanding each other language (carter et al,2004) the variety of way
consultant can add value is useful in meeting the wide range of needs emerging
in the client world, “for consultant when defining value added it is necessary to
determine which dimension to include and whose perspectives to use”. David w
Jamison.as the reorganization being supervised by government institution and
has involved renowned financial institututions,objectives was predefine and is
obvious to cut cost without affecting the earning capacity of airline in three year
time as a condition of financial aid. Investment in consulting project yield positive
financial and organizational return to companies(prakash&samwick,2003) .Well
defined Objectives help to determine the aims given below;
1. Ascertain the root cause of problem by carrying out profound research
using formalized tools such as 5 why, cause and effect Analysis and in-
depth research. Which help to breakdown the problem in smaller pieces.
Stratification paves the way for further primary and secondary research
and help to design the recommendations.
2. Provide recommendations to JAL plc. Based on identified problems. Put

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forward measures required to eliminate the causes and overcome
problems,ie; increase revenue/cut cost and to remain competitive in airline
industry, recommendation would be reinforce by propose methods, new
business processes/procedures, Provide Assistance in implementation of
potential frameworks essentially the operational and communication
elements of crisis, models and processes. Recommendation rigorously
considers corporate strategy; undertake research on competitive position,
industry specific analysis, operational management, Resource allocation
and human resource aspects of organization.
3. Facilitate JAL management in gaining knowledge of methods and to
understand relevant models to prepare effectively manager crisis explore
strategies and tactics by using different theoretical lenses and practising
decision making techniques outside of an actual crisis.the deployment of
models in distress situation to overcome such problems in future. Any
process can be built on and format copied for future implementation.
To achieve desired aim we need to eliminate the problem of knowledge
transfer, creation and translation, translation of different interpretation is
simultaneously also as a mechanism of power(foucaut,1972:clegg1989,2001)
we will providing assistance to both manager and employees to their attempt
to improve operations.it is also necessary to conduct research in order to
collect and analyze meaningful data. Research consist of external and
internal research, internal research encompasses both primary and
secondary research. Internal research mainly takes the form of interviews

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with key stakeholders.Questionnares and hand written notes will also be
utilized as part of primary research. This will synthesize with brain storming
session and meetings. A literature review will be conducted to analyze the
research papers, journals and academic books to identify best fit framework
and the contemporary models for particular issue and their deployment. The
review will examine models, academic writings and strategies identified within
the narrow problem definition field. The best fit solution could be based on
research based view(RBD).
3.0 Japan Airline Ltd Background
Japanese aviation comprise the world third largest domestic market about 5.5%
of global traffic and 11% of global industry revenue. An oxford economics study
revealed that aviation has a significant footprint in Japanese economy.
Supporting 07% of GDP and 0.7% of Japanese workforce. JAL is second largest
airline of Japan.Its headquarter is based in Tokyo. Establish with initial capital
outlay of 2bn in year1951.initially its operation was limited to domestic routes,
later on JAL expanded it boundaries in foreign routes granted a license as a sole
international scheduler in Japan and operating successfully in 35 countries
worldwide. During its life cycle it was listed in Japan stock exchange under first
and second section of stock exchange listing.it was fully privatize in 1987. In
2009 JAL suffer operating Losses, which raise concern about its future prospect,
JAL profitability has decline by 147% since 2005. (See Appendix C highlighting
drop in sales in percentage terms.)See Figure below for JAL Comparative
income statement. (See figure 3 for comparative income statement for 2005 to

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2009)
Source (jal.com/30.march 2009)
FIGURE 3: The JAL company comparative Income statement for 2005 to 2009.
Source (JAL.com)
3.1 External Factors:
A first possible distinction is by the origin of distress.it could be external and
internal. Major external influence such as cyclical change in demand, state
regulations, economic environment, war or one off catastrophic event could have
serious implication on business,
The impact global financial crisis which was borne due to the failure of the major
financial institutions caused the drastic impacts on the world economy and slow
down worldwide transportation demand(IATA.2010)Aviation is the pertinent
industry it also got affected by the crisis. Due to which this aviation sector which
is one the fastest growing industry has to face negative growth rate and suffer

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huge losses. Some aviation companies was able to bear such huge losses but
there is a big number of those aviation companies who do not have capacity to
bear such huge losses so they go bankrupt as a consequences of global financial
crisis(ukessays.com 2009)
Japan Airline as announce by its CEO will work on Premium strategy medium
term revival plan by implementing a variety of measure such as cost cutting
measures, no–holds barred to routes restructuring, use fuel efficient aircrafts, the
current distress in mainly caused by ongoing economic crisis and aggravated by
volatility in fuel prices and sharp decline in demand for air service. Japanese
airline industry is inconsistent in terms of growth producing both high and low
demand.IATA latest forecast expect industry revenue to fall by $35b between
2008 and 2009.However in the long term demand in air travel is forecast to grow
considerably (50%)until 2050.(Euromonitor,2008b) (See figure 3.4 international
aviation industry growth for 2003-2009)
3.2 Figure 3.4: Total Airlines net profit 2003-2009
Source (Euro monitor 2008)
-10
-5
0
5
10
15
20
2003 2005 2007 2009
Total Airline net profit

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4.0 Problem Definition
Albert Einstein said” If I were given the one hour to save the planet, I would
spend 59 minutes defining the problem and one minute resolving it” Problem
definition in the area of strategic decision in more often governed by internal
decision. Through discursive moves consultant challenge client definition of the
problem and translate it by appealing on their knowledge and experience of a
similar situation.(James.p.neelankavil,2005) define that most common mistakes
in PD by the client is that they define problem too broadly or too narrowly. Bjorn
Anderson asserts “that client often familiar with the symptom of problem rather
than cause, and these symptoms help the Firm to detect the recurrence of
problem. These symptomatic uses as a yardstick to monitor whether problem has
eliminated or still recurs. beneath every problem lie a cause, thus when trying to
solve the problem consider this approach. Identify the cause or causes of the
problem, find way to eliminate that causes and prevent them from
recurring.”(Bjorn Anderson and tom Fagerhaug :2006)
There is also a growing concern that consultant are pushing standardized
solution rather than listening to the issue and being guided accordingly
(Ashford;1998.xvi)”mistakes can be overcome by systematic approach by
approaching PD in two stages. In the first stage problem is define in broadest
term, and the various components of the problem are identified. In the second
phase the components of the problem are prioritized from the most critical to the
least critical.” (James.p.neelankavil,2005)

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To counter the potential issue consultant put emphasis on interpretative and multi
layered character of consulting work according to (Finchman and Clark 2002)
interpretation is about whether knowledge is required (whether the client has a
problem), what kind of problem the client has, how to apply and create
knowledge with this particular client and how to make sure that changes
occurred” the consultant has utilized a formalized structure approach within an
informal interview process. This would allow identifying the diverse and complex
components of problem and help to drill down the problem further. There is a
model to assist a consultant to identify both clients’ needs and project aims. The
hierarchy of consultant underline specific consultant goals (See Appendix E) This
approach will utilize number of structured tools To determine the root cause with
JAL consultant will utilize cause and effect diagrammed known as the ishikawa
fishbone diagrammed (clary and wandersee,2010) and Five why develop by
sakichi toyoda(shoe maker et al 2013).(see figure 4.1 for the graphic illustration
of the five why’s and fishbone diagramme).

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4.1 Figure 4.1: The Five Whys and Fishbone Diagram
Source (Skool, 2013) (Clary and Wandersee, 2010)
The five whys is very useful tool to identify the actual root cause beneath the
problem, as the root cause is the evil at the bottom that sets in motion the entire
cause and effect chain causing the problem(Anderson Bjorn:2006).(see figure
4.1 for five why root cause analysis).however root cause analysis has some
inherent limitation, most obvious one is the assumption underlying in the model in
that each presenting symptom has only one sufficient cause. Which is not always
the case, another downside the model does not distinguish between casual
factors and root cause. open minded approach with no preconceived ideas to the
end result is ideal for mutual benefit.(Stewart Anderson)
4.3. Figure 4.2 5 Whys root cause analysis of the Problem Definition.

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5 WHYs Worksheet – Japan Airline
Define the Problem: (Declining Revenue and Negative Net current
assets) in 2008-09
Why is it happening? (Identify each as a concern, influence or control.)
2. Inefficient management of resources by Financial,
operational and human resource dept. lack of strategic
depth and consensus in decision making process.
Why is
That?
3.No visionary and vibrant leadership, organizational
structure is rigid and mechanistic.
Why is
That?
4.4 Explanation:
By Applying Root cause analysis together with other research methods such as
interviews and questionnaires, it is possible to find out the problem. This CM tool
is very effective and simple non-statistical tool which widely used to determine
the major cause and the origin of problem. Encompasses the findings with
research it can quickly build on potential recommendation.
1. Incurring too much fixed cost in relation too revenue
Why is
That?
4.Influence of senior government officials in organization
decision making.
5.Common practice in japan,known as”Amakudari”
Why is
That?

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5.0 Relevant Literature Review:
A business failure can be cause by both internal and external factors, According
to(dominic elliot et al;2006) that the crisis incidents or business interruptions are
systematic in nature, comprising of both social and technical elements.”
companies generally tend to focus on profitability due to its reflection on financial
statement as a performance indicator, however JAL liquidity is very essential
element to pay day to day expenses and other obligation, since bankruptcy mean
that a firm fail to honor all its promised payment to other firms.(Bailey
:2003)”Define traits of smart entrepreneur is one who balance the desire to grow
against the desire not to go bankrupt “
5.1 Impact of Leverage:
Borrowing to finance investment is frequently cited as a contributor to financial
crisis. when a financial institution invest its own money at the worst it can lose its
own money but it borrow in order to invest more, it can potentially earn more but
can also lose more than all it has. Therefore leverage magnifies the potential
return from investment, but also creates a risk of bankruptcy. it may spread
financial troubles from one firm to another (suresh goel,2009).Airline industry use
leasing as a main source of finance to buy aircraft hence cost structure highly
consist of fixed cost in terms of leasing interest etc which make it more
vulnerable to fluctuations in seasonal demand.
5.2 Phases of Organizational Distress:
James shein describe phases of organizational distress; if the organizational

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cannot fix it problem in one phase it eventually go in to another phase with less
time to repair the damage.
 Blind Phase: company typically begin in blinded phase, revenue may have
stagnated or even fallen off slightly. Management perceives fall in revenue
is seasonal or cyclical variation. Organization and the related parties
denied realities for long time allowing firm to collapse.
 Inaction phase: Organization is likely to remain profitable, but its problem
has grown to the point which they cannot be denied.thier inertial
resistance to change inspiring irrational hope that thing will turnaround on
their own.
 Faulty Action: at this point management is spurred to action but due to
inaccurate information or incompetent leaders, these proposed remedies
only make the situation worse.
 Crisis: Sustain faulty action drive the Firm in to crisis phase, at this point
company has probably tripped covenants with its lenders and its bleeding
cash. supplier insist on cash in demand and auditor raise genuine concern
about the ability of the firm to continue as a going concern, companies
often retain an investment bank to consider strategic option or even direct
their outside council to draft document for the bankruptcy filing.
These phases present a value framework, because study has shown that earlier
Organization recognize itself in one of these phase and launches a turnaround
efforts, the greater the likelihood of its succes,as companies slide down the

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organization distress curve, they find themselves in a rapidly tightening noose.
There are three approaches to help client;
 Expert model
 The doctor patient model
 Process consultation model.
Edgar shein develop third process consultation model define that the consultant
immediately involve with the client as a partner. The consultant and client
collaboratively diagnose the problem, design and implement intervention and
evaluate the success of intervention.” (Shien 1999).but one major drawback
could be As Legge mention “if client is familiar and clearly define problem for
which they require a solution it will be more difficult for consultant to enforce their
own interpretation and solution”(legge,2002)
5.3 Turnaround Management:
(David Vance) suggested that corporate restructuring should be conducted in two
phases.
 To get company to profitability.
 To get company to superior performance"
Leadership is an important management skills .it can be define as inter-personal
influence directed toward the achievement of goals.(peter senge:1990)Define
that leader in a learning organization are strategic visionaries these leaders are

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able to get other peoples to understand complexity clarify vision and improved
shared mental models”. Timely action by management, leader define that what
the firms is and what it will become, it give direction to every part of the firm form
corporate finance to the loading dock.( john brown) in an interview to HBR in
1997 define “ A business has to have a clear purpose, if the purpose is not
crystal clear people will not understand what kind of knowledge is critical and
what they have to learn in order to improve performance” in absence of such
purpose and clear goal organizational efficiency significantly decline.Henry
mintzberz;define managers “as a craftsman and strategy is their clay, like the
potter they sit between a past of corporate capabilities and future of market
opprotunities”leadership and the management the development of human
resource affect all aspect of business strategy.
5.4 Organizational Restructuring
Contingency theory is the management study of (burn and stalker:2015).they
identified that an organic structure is better suited to an entity that need to be
responsive to change in its products, environment and markets, on the other
hand a mechanistic structure is suited to entity in stable environment Where
change is steady or gradual. Structure highly depend on internal and external
circumstances and network of relation ships (johnson,scholes and Whittington)
argue that “poor performance might be the result of inappropriate configuration
for the situation or inconsistency between structure, process and relationship “It
is more difficult with mechanistic structure to adapt in the fast changing
environment. it is characterized by bureaucratic type of structure formalize roles

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and responsibilities,standardisation of work and centralize decision making,
emphasize on managers authority rather then the expertise of employees. On the
other hand matrix structure is capable to adapt to environmental disruption.
According to Davis and Lawrence,1977 define a matrix structure that any
organization that employ a multiple command system that include not only a
multiple command structure but also related support mechanism and an
organizational culture”
Companies which are surrounded by billions of task mostly rely on matrix
structure. A mechanistic structure is fixed and unbending.(See figure below
presenting the organizational chart of JAL structure)
Figure 5 organizational chart of JAL plc.2009

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SOURCE (Jal.com 2009)
5.6 Interconnected Elements of organization
(Mckinsey 7’s) was first published in 1981,This model facilitate the successful
implementation of change. According to the framework there are seven factors
which contribute to the effectiveness of organization called 7’S.These factors
composed of hard & soft factors. A change in one element has a knock on effect
on other factors. Model is used to asses the changes in other elements as a
result in amendment in one or more factors.
Soft Factors: Hard Factors:

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Strategy
Structure
Systems
Staff
skills
style
Shared Values
5.7 Human Resource Management:
According to nakia maledo”in mechanistic structure employees are dissatisfied
with their work due to the pressure of formalization. Lack of participation and
involvement by employees in decision making reduce the level of engagement.
According to (Robinson et al .2004) “an engage employee can be differentiated
from unengaged employee by the following traits. He Willing to go extra miles,
believe in and identifies with an organization, want to work to make things better,
understand the business context and bigger piture,respect and help colleagues”.
most of the emergent strategies originated from employees ,the resource based
view of strategy has become highly influential,entitis should make full use of
employees (johnson,scholes and whittington)suggest that” if employer can only
see strategies in deliberate plnannig,they not only risk that such strategies can
go unrealised,but they also waste the learning that can emerge from
employees”empoylee voice can be enhance through various mechanism such as
representative consultation, upward problem solving. Suggestion schemes and
project teams.

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5.8 Leadership Styles
In mechanistic structure communication flow vertical up and down in the from of
instructions and orders employees have no power to participate in matters
(Kondalkar;2009)Baurucracy is highly rigid and has a tendency to promote
politics and power blocks. it decrease the efficiency of firm in highly changing and
volatile environment.(Macleod and clarke:2009) emphasized that leader which
ensure a strong transparent and explicit organizational culture which gives
employees a line of sight between their jobs and the vision and aims of the
organization.
5.9 Behavioral Leadership:
(Huczynski and buchanan:2007) define that organizational behavior use the
study of structure ,functioning and performance of organization, and the behavior
of groups and individual within them. This theory of leadership is based on style
rather than traits or quality of leader, in most situations it is the style of leader that
matters. mechanistic structure emphasize to autocratic leadership which retain
most of the power in its hand, on the other hand participative leader try to
encourage participation by subordinates in major decisions. As a result employee
will be more motivated and will perform better in their work. Motivated individuals
are much more likely to work harder to achieve clear work objectives.
(Burns:1977) made a distinction between transactional and transformational
leader” transactional leader approach their follower with an eye to trading and
transformational leader seek to appeal the better nature of their followers,
change them for the better.

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5.10 Portfolio Restructuring
Portfolio restructuring is the acquisition or disposal of assets in form of
divestment, demergers, spin off or management buyout. This include the sale of
underperforming assets. portfolio restructuring can be seen as a part of strategy
to increase the performance of the organization.(Bowman and Singh 1993)define
that it encompasses the broad range of transactions such as selling business
lines, changing the capital structure through the rearranging of debt and equity
capital or altering the internal organization of the firm.
5.11 Financial Restructuring
Financial reconstruction scheme is the scheme whereby Firm organise its capital
structure, including leverage buyouts, leverage capitalisation and equity for debt
swaps. A reconstruction scheme might be agree when organization is in danger
of being put in to liquidation, owing debts that it cannot repay or organization may
be willing to undergo some financial restructuring to better position itself for future
success. The empirical evidence shows that market response positively to
financial restructuring.
5.12 Change Management
Change happens continually in organization, strategic development inevitability
result in some change, planned change is also known as a deliberate and
intended change, As JAL incorporation struggling to move out from current
situation to a new situation.JAL change is one off event but rather it is continually
developing process which has wider effect on every aspect of organization from

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human resource, to organizational structure,.
5.13 Transformational Change:
A major reorganization or restructuring required a through and deep seated
change of the firm system and its procedures. This kind of change has big impact
on entity and on people working on it.Japan Airline company change is
necessary because the current organization and system is no longer appropriate
and change is needed. This encompass reorganization of structure (structural
change), downsize in work force and rationalisation of operation to increase
effectiveness(Elizabeth Ross kanter:2004) suggested that there are cultural
reasons why the organization might be more change adept than others.
According to (kanter) ,change adept organization have three key attributes; the
imagination to innovate, professionalism to perform, openness to collaborate.
5.13.1 Managing Change:
(Moss Kanter:2000) suggested that manager in change adept entity should have
the following skills they are environmentally awrare,are prepared to challenge the
prevailing organizational wisdom, have ability to communicate the
vision,builduing coalition, learning to preserve, making everyone a hero. The
successful strategy will not realise unless it is embed in business.
As part of meeting with senior managers it was determined that strategy would
be more successful if integrated in to business process and facilitated by
consultant. A contemporary dogman define Consulting is more than giving advice
as suggested by hierarchy of purposes of consultant (Arthur n turner SEP 1982

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HBR)
 providing information to client
 solving a client problem
 making a diagnosis which may necessitate redefinition of problem
 making recommendation based on diagnosis
 assisting with implementation of recommended solutions
 Facilitating client learning teaching client how to resolve similar problem in
future, permanently improving organizational performance.
Having determined the problem definition JAL utilise some core models,
Figure;
6.Potential shortlisted models
item Priority Consultant Client
1 High Kurt lewin Leadership model

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2 Low Deming total quality management
3 High Force Field Analysis strategy implementation
4 High The Gemini 4S strategy implementation
5 High The 7S Approach Transformational change
6 Medium Balogun and hope Hailey change management
7 High The cultural Web change management
8 High Psychological contract Employees model
7.Research Methodologies:
The research area has been broken down in to two part, primary and secondary
reseach.it was argued by (Leech,2004) that mix research method paradigm can
also help to bridge the schism between qualitative and quantitative research.
(Onwuebuzie and leech:2004)
7.2 Secondary research
Substantial Focus toward to gather crude date and collect information about
industry as a whole, competitors and their performance through financial
statement, clientele and government regulation in industry, service standards,
employee’s laws. This will entail the trend analysis in particular industry, financial
health of similar size competitors, general economic indicators/trends such as
inflation,interest,money supply etc. and perhaps more importantly to analyze the
fluctuation in oil prices. Exploiting academic literature with the aim designed
financial strategy encompassing the areas of Finance,marketing,governance and
human resource. Academic research will be used to recommend business

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models such as lewin force field model and the Gemini 4s model to apply change
successfully in JAL.
7.3 Primary Research:
incorporate the qualitative and quantitative reseach,JAL middle management
and senior management will be interviewed to get in depth information probably
commercially sensitive ,the scope of qualitative research will extend to
encompass government officials who were involved in decision making in JAL
board, informal conservational interviews will be exploit to identify potential data.
the drill down and 5why model become the formal part of primary research.
Primary research uses quantitative method to gauge the level of employees
motivation for example: how far are you satisfied with management incentive
provided by organization an.at an external level to the organization Detail
customer satisfaction survey would be conducted.complementors,lenders
dependence on JAL airline will be measure throu7gh formalized yardstick.
Primary research will be organization wide, include employees through
probability method and key government officials.
7.4 Research Limitations:
Both the primary and secondary data have their own advantages and limitations,
for primary data time factor play a vital role, the entire process of data collection
has to go through the different stages such questionnaire design, pilot study,
data collection, coding/editing and checking. This is time consuming and due to
the size of this project focus will be carried out where it will perceived most likely

30
to be able to carry out qualitative and quantitative research. There is a possibility
of bias in the information collected through primary studies. Internal primary
research is limited by the stakeholders engage. The organization is expanding
and as it does the amount of individual knowledge may get diluted or skewed.
For example one person’s interpretation of being busy may vary significantly from
another’s.(Isaac and micheal,1971)
8.Findings/Results:
Questionnaire
To measure the motivation level of employees and to asses the likelihood
resistance level as a result of change.There were total 100 participants in this
project which conducted throughout the organization in almost every department
to gauge the level of engagement with work and to identify the likely resistance
due to the change being imposed. Answer given by participants by completing
the questionnare.The pie chart below represent the answer given by participants.
Result of questionnaires used within focused group;

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Employees in many
organization willing accept to
change
Agree
Neutral
Disagree
Employees here are
willing to take new task
as needed
Agree
Neutral
Disagree

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Employees in
organization take
initiatives to Help
colleagues when
needed?
Agree
Neutral
Disagree
Employee Proactively
identify future challenges
and opportunities
Agree
Neutral
Disagree

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These responses show a low level of engagement with work, and strict
resistance to change. Following set of recommendation being proposed to
In my organization
Employees adapt quickly
to different situation
Agree
Neutral
Disagree
I am inspired to meet my goals
at work?
Agree
Neutral
Disagree

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successfully implement turn around strategies.
9. Recommendation:
By having determined the problem definition with in JAL, Following
recommendation has been proposed to the management of JAL group which
closely meet the aims of report.
 It is highly recommended that JAL change its organizational structure
towards organic structure which is more flexible and embedded with quick
decision making, Must be led by transformational leader will increase the
flow of information in both directions, increase the level of employees
participation and discretion help them to focus on task rather than
underlying formalize standard operating procedures of doing task .it will
help to increase employees productivity and creativity , decentralization
and proper delegation of authority will enhance the potential of middle
mangers they will feel more motivated and responsible by enhancing the
number of subordinates in their command(Flat structure) and through
delegation of authority. in nut shell business have the ability to cope with
unpredictable and dynamic environment.JAL can utilize matrix structure at
this stage Increase employees participation in decision making, implement
learning and development programmes,increase employees motivation
through formal techniques such as job enrichment, and incentive planning.
 In the research phase it was found that there is unrest in employees which
is borne by the grapevine rumors of significant redundancy in

35
organization, as part of restructuring plan we have to cut 13000 jobs,
possible reaction can turn in to protest and negative publicity and we also
going to cut pension of retired employees as a part plan. The effect on
employees must be recognized, this aspect of change is very important
and may make change unsuccesfull.effective communication with
everyone affected with change will reinforce the change process, there
should be two way communication. Management should listen as well
explain why change is necessary for everyone. Employees should given
training and education of critical skills which underpinning change
process.Moreover,fromalized Implementation of structured rewards and
performance appraisal system for all employees is highly recommended.
Also there is a need to revise JAL(KPI) and (CSR) which must be
reflective of new management philosophy and vision. .
 It is found during meeting with the operational executive that JAL is
operating many unprofitable routes which engage lot of resources in terms
of employees ,Assets, misallocation cost and management time.
Management immediately need to divest unprofitable routes and should
suspend operation in low growth unfeasible markets. Careful
consideration for portfolio restructuring is required in order to release
funds for other strategic areas this will help Firm to fulfill lenders
obligation, a shut down in facilities lead to downsize in work force which
need to be manage prudently contingency redundancy programmed and
cost should planned in advance, it will help to focus on major profitable

36
routes and efficient control over activities, increase operational
effectiveness and will realize value for business. as a part of portfolio
restructuring acquisition of new fuel efficient aircraft should be acquire
rather than Boeing 737,boieng B777x and 767-300ER more efficient in
terms of cost and size.(see Figure 6 for innovative Low cost Boeing
Aircrafts)Fuel cost become a major concern for aviation industries,
volatility in fuel price and steady rise put significant impact on companies
to forecast and budget planning, also rising cost usurp substantial
revenue.Innovaive Boeings will help to tackle to control major cost. See
Appendix .E highlights of fuel contribution to operating cost.
Figure .6 Depicts benefits of innovative technology in aviation industry.
 It has been found that adherence to best practice is being neglected which
ensure a transparent and smooth operation in modern organizations. It
can be evident by transport ministry recent injunction for JAL management
to review airline safety procedures, as it was found neglected safety rules

37
and took off aircraft in Tokyo,japan without permission of air traffic
controlers.adherence to formalized rules and voluntary code of conduct
help to avoid most of the mishaps. Implement of corporate governance
practices will help to overcome many problems in the area of control and
supervision. strict adherence to the requirement of governance codes will
lead to establish independent non-executive committees consist of
external CEO’S which primarily responsible to oversee executives
directors and their ability to running the company, There also be a
remuneration committee which supervise the remuneration of employees
and take key decisions in this area, audit committee to ensure objective
and independent audit has been carried out possibly through liaison with
internal/external audit teams and nomination committees who rigorously
oversee the mechanism of hiring and selection of key employees.
 During the interview session with Government officials it was reveal that,
they plan to substantially support JAL restructuring through bailout
package. Two state-owned institution are working on behalf of Japan
government .JAL total Liabilities amount to 25$ billion,(ETIC) agreed to
inject 17.7$ billion and state owned development bank contribute to this
package by 2.2$ billions. Remaining 5.5$ b can be settle through utilizing
debt/equity swap model, in which all creditors and lender would have
share in restructure firm. if they agree to give-up their debt. As debt is
increasing at alarming rate, D/E ratio is 4.6% which consider high in airline
industry. Debt for equity swap would counter this risky level and offer a

38
better position to lenders after financial reconstruction without harming
alliances and strategic relationship.
 Achieving strategic objectives required successful implementation.JAL
rigid and complex nature of culture need to be change by transformational
approach, existing rituals and way of doing thing would be highly affected
and existing employees probably resist the cahnge,which required careful
monitoring at all stage.
It is believed that Japan Airline will implement above mentioned
recommendation, they can make their operation successful.
10. Conclusion:
The report has dealt with number of outlined issues. Examine the external
influences and impact of these influences in conjunction with detailed internal
examination of organization. Evaluation of strategic options, pros and cons
and feasibility of each option determined. The literature review determine a
number of models and frameworks on Leadership ,teambuilduing,human
resource and other connected issues. The recommendation is set out in five
basic areas with the overriding recommendation is the implementation of
flexible organizational structure and visionary leadership.it is the basic cause
of all symptoms emerge in terms of insolvency and low employees morale. It
is concluded that JAL group bankruptcy was highly contributed by internal
issues, despite being privatized in 1987, it seems wholly state controlled
entity involvement of government officials and conflict of interest which highly

39
contribute to its failure. as it is clear that current business environment is very
volatile which demand flamboyant leader who can translating vision in to
realistic business strategies consider peoples skills leading employees and
help them to achieve objective which in turn enhance the potential and
effectiveness of otrganization.mechanistic structure inherent with limited
communication and limited range of perspectives in decision making affect
the operational efficiency most, inefficient use of assets, less motivated work
force together with leadership gap,absense or proper formulation of policy
statements, procedural guide and governance code of conduct ,all have
contributed to deterioration in performance of JAL.

41
References
ANSOFF, I. 2007. Corporate Strategy. Bloomsbury Business Library - Management Library, 22-22.
BARNEY, J. 1991. Firm resources and sustained competitive advantage. Journal of management,
17, 99-120.
BASS, B. M. 2008. with Ruth Bass. 2008. The Bass Handbook of Leadership: Theory, Research, &
Managerial Applications.
Financial management. 2013. 6th ed. UK. Emilewolf publishing
Business Analysis .2010. 2nd ed. Crowthorne,Berkshire. Emilewolf publishing Hooley
https://leaderswedeserve.wordpress.com
GJ.piercy.N.and nicolaund.2011 .Marketing strategy and competitive
positioning. 5th ed .Newyork .FT prentice Hall Ehud Menipaz and Amit Menipaz .2011.
International business. 1st ed. .London Sydney
Finkelstien. 2003 .why smart executives fail and what you can learn fromtheir mistakes [Online].
Available: https://books.google.ie/books?id=iv1_WsFlGGcC&pg Accessed[25 may 2016]
James B Shein. 2009. Strategic guide to corporate turnaround and
renewal[Online].Availablehttps://books.google.ie/books?id=gtFcropCebsC&printsec
Accessed[30 May 216]
Bjorn Anderson et al.2006. 2nd
ed.Root cause
analysis[Online].Avaialalbehttps://books.google.ie/books?id=N7bCQty-yH0C&printsec.
VG .kondalkar.2009 .organization Effectiveness and change management[Online].Available:
https://books.google.ie/books?id=xOmwrhQSN1oC&pg=PT82&dq. Accessed[30 May 2016]
Louise Wicham.2012.Delivering an effective project.4th
Ed.[online]Available
https://books.google.ie/books?id=vbObpwAACAAJ&dq=how+to+effectively+done+consultan
http://www.japantimes.co.jp
https://hbr.org
http://centreforaviation.com

43
Appendix A:
Glossary of terms:
CM:Consultancy Mangement
JAL:Japan Airline
PID:Project initiation document
PD:project defination
HBR:Harvard Business Review
CSR:Critical succes factors
KPI:Key performance indicators
D/Debt/Equity Ratio
RBV:Resource Based View
IATA:Internarional Air Transport Association

44
Live Consulting Firm The JAL Consultancy Costing
A JAL carried out consultancy work Ref No 02/09/2016
Item Description Days Value
1 £10,000Initial Meeting with the client to setout requirements in detail, after meeting PID
would be presented to underline the Aims And objectives and to analye and
address the concern for All stakeholders.
1
2
Carryout research both primary and secondary.This will include
Financialstatements,industry averages,government regulations,stock market
statistics,and would also utilise financial news and forecast.
30 £75,000
3
Meeting with client to ensure project is on track as plan on outset, measure
result, analyse variance and investigate KPI, Present report progression to
stakeholders.
1 £75,000
4
Formal Meeting with supply side stakeholders, Such as finance providers,
banks and government officials to discuss the result and communicate future
requirments.
1 £60,000
5
Monitor and assist in formation of committes which recommended by corpote
governance code of best practies.Assit with technical and personal
availability.monitor audit and nomination process of next quarter.
20 £60,000
6
Stringent finacial control and following review monitor the movement in key
variables and KPI'S.
7 £50,000

45
Appendix C:
The JAL Enterprise sales for 2008 and 2009 and consultant forecast for 2010:
Consolidated Financial Highlights
Year Ended Mar 31 Projected
For the year 2009 2008 2007 2006 2010
Operating Revenues 1951198 2230416 2301915 2199385 5000000
Operating Expense 2002043 2140403 2278997 2226220 3000000
operating income -50884 90013 22917 -26834 2000000
Ebitda 67159 206593 140478 98292 854000
Net Income -63194 16921 -16267 -47243 700000
Depreciation and amortization 118043 116580 117561 125126 200000
At Year End
Total Assets 1750679 2122784 2091233 2161240 1500000
Total Net Assets 196771 471070 331873 194746 150000
All figures are presented in equivalent YEN currency
¶
Total Values plus days
All Prices are exclusive of VAT 60 330000£

46
Appendix D.
SWOT analysis used as a part of project.
This evaluation generally surrounded by swot analysis of JAL plc. Model which
sufficiently covered all aspect of macro environment which shape the overall
market help to evaluate internal strength and surrounding environments
identification of best fit and configuration of resources according to external
stimuli.
Strengths:
JAL operational network is vast cover 220 destinations worldwide and hence
has a strong global presence.
Carried over 50 millions customers annually.
Major Japanese institution facilitating JAL revival and providing enormous
financial and management support for revival.
High calibre employees world wide.
Weakness:
Too rigid structure hampering its ability to respond to changes
After bankruptcy 1/3 of workforce would be redundant hence reduce
competitiveness of JAL.
Brand image/goodwill shall impaired as a result of reconstruction.
Opportunities:
Growing airline traffic in Asia pacific and globally.
Increase service to more international destination via code sharing agreement.
Threats:
Rising fuel and labour cost.
Recent tsunami in japan reduce the number of air travellers going in japan
drastically.
Volcanic eruption also reduce air traffic in Europe.

47
Appendix E
A hierarchy of consultancy purpose
Improve Organisational
Effectiveness
Facilitate Client
Learning
Build Consensus and
Commitment
Assist
Implementation
Provide
Recommendations
Conduct Diagnosis that May
Redefined Problem
Provide Solution to
Given Problem
Provide Requested
Information
A Hierarchy of Consultancy Purpose
1
2
3
4
5
6
7
8

48
Appendix .F
Fuel Impact on operating cost Historical & Forecast Figures
% of operating cost Total Fuel Cost
2003 14% $44 billion
2004 17% $65 billion
2005 22% $91 billion
2006 26% $116 billion
2007 27% $133 billion
2008 33% $187 billion
2009 26% $123 billion
F2010 25% $139 billion
F2011 28% $176 billion
F2012 32% $210 billion
F2013 31% $211 billion

49
Appendix G
Crude Oil and Jet Fuel Price Trends

Consultancy Report Final

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