Strategic Management of Singapore Airlines
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Table of Contents
Introduction ..................................................................................................................................... 1
Task 1 .............................................................................................................................................. 1
1.1 Major Features of Current Strategy .......................................................................................... 1
1.2 Environmental Analysis ............................................................................................................ 2
1.2.1 Bargaining Power of Customer .......................................................................................... 2
1.2.2 Threat of Substitute Products ............................................................................................. 2
1.2.3 Bargaining Power of Suppliers .......................................................................................... 3
1.2.4 Threat of New Entry ........................................................................................................... 3
1.2.5 Rivalry amongst Existing Competitors .............................................................................. 3
1.3 Aligning Current Strategy with Strategic Capability ................................................................ 3
1.4 Major Stakeholder ..................................................................................................................... 5
1.4.1 Airline Pilot Association - Singapore (Alpa-S) ................................................................. 5
1.4.2 Singapore Airline Staff Union (SIASU) ............................................................................ 5
1.4.3 Singapore Government ....................................................................................................... 5
Task 2 .............................................................................................................................................. 5
2.1 Future Strategies ....................................................................................................................... 5
2.1.1 Culture ................................................................................................................................ 5
2.1.2 Forecast and Estimation ..................................................................................................... 6
2.1.3 Strategic Alliances.............................................................................................................. 6
2.1.4 Outsourcing of Departments .............................................................................................. 6
2.1.5 Innovation........................................................................................................................... 6
2.1.6 Structure ............................................................................................................................. 6
2.2 Aligning Future Strategies ........................................................................................................ 6
2.2.1 Aligning Future Strategies with the Environment.............................................................. 7
2.2.2 Aligning Future Strategies with the Strategic Capability................................................... 7
2.2.3 Aligning Future Strategies with the Objectives of Stakeholders ....................................... 7
Task 3 .............................................................................................................................................. 7
3.1 Identifying the Balance of Intended and Emergent Approaches .............................................. 7
3.2 Balancing Intended and Emergent Approaches ........................................................................ 8
References ..................................................................................................................................... 10
Appendices ............................................................................ Ошибка! Закладка не определена.
Introduction
Singapore Airline is in this industry since 1947. Singapore Airline was established by Malayan
Airway Limited and due to various political reasons, the name of the company was changed to
Malaysian Airways and Malaysia-Singapore Airlines. After some time, they finally decided to
split to Singapore Airlines and Malaysia Airlines System in the year 1972. The owner of
Singapore Airlines is Temasek Holding, it is an investment house owned by their state (Tensi
Aviation, 2009). Currently, Singapore Airlines is one of the biggest airline operators in the world
the total number of its employees is 24,350 and the fleet size of Singapore Airlines is 107.
Currently, it is covering 64 destinations. Revenue of this super jumbo carrier is about $15.23bn
SGD (Singapore Airlines, 2016b).
In this report, we are evaluating the appropriateness of the current strategy of Singapore Airlines.
We will be identifying and evaluating the strategy formation process and the balancing of
intended and emergent process which Singapore airlines utilises.
Task 1
1.1 Major Features of Current Strategy
After the separation from Malaysia Airlines System, Singapore Airlines subcontracted their
operations which worked very well in crunch economy situations. The company’s main strategy
is the dual strategy of low cost and quality service and inside the organisation, it follows the
related diversification (Oum and Yu, 2012).
The main thing they do is that they provide essential training to their people while maintaining
the efficiency of the organisation and providing them with the new ways for technical solutions
for the sake of their customer's comfort. Singapore Airlines keeps changing their strategies to
keep growing in Asia and the standing of regions in global carriers. Singapore Airlines have a
good number of airlines members which is 28, these 28 members are based on every continent
except Australia. The main feature or the strategy which makes the airline achieve more success
than its competitors is that it sells out it aeroplanes when they believe that they are going to cost
high on maintenance. Hence, consumers prefer travelling new places more than opposed to the
older ones. This procedure helps them in pulling in new customers and clients. Singapore
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Airlines has developed a strategy to the corporate level for the sake of diversification of the
business. They are tough to keep their focus on the same strategy (Heracleous and Wirtz, 2009).
1.2 Environmental Analysis
The Threat of New Entrants, Threat of Substitute Products, Bargaining Power of Customers,
Rivalry amongst Existing Competitors, and Bargaining Power of Suppliers are the five forces of
Michael E. Porter (Grant, 2015). These forces are essential and can help out an organisation
assessing their capabilities as well as their strengths. By using these, we can figure out the weak
points of an organisation which can be used to enhance the areas where an organisation is
lacking and it will definitely help in minimising the risk factors.
1.2.1 Bargaining Power of Customer
Talking about the aviation industry, the bargaining power of customer is moderate. Customers
compare the changes of prices between two airlines, as the reduction of cost is being noticed
consistently in the last few years. This eventually led to switching of costs which increased the
burden perceived in choosing the best supplier as compared to another by customers and clients
as well as they are comprised of emotions, financial costs, time, and opportunity. When it comes
to the deadline, Singapore Airlines gives its best to achieve the target before its deadline as it is
one of the most important things in the aviation industry. (Gillen and Gados, 2008) It is
recommended to every passenger to choose one airline as their carrier and travel companion and
stay loyal to one alliance as the consistency of buying these people's earn free air miles from
Singapore Airlines which can be redeemed later while booking a flight which provides a
discount on their next flights (Nugroho & Sihite, 2017).
1.2.2 Threat of Substitute Products
As per mentioned by Michael E. Porter, it is the point where the probability of being replaced is
raised as the other provider is offering the same product or service to the customer and clients of
Singapore Airlines. The number of investors is increasing rapidly along with the globalisation in
transportation and in major geographical hubs, these includes those as well who were served by
Singapore Airlines. The business operations of Singapore Airlines should me made according to
the long term and short term arms of the company. The short-term elements of the business are
relatively moderate so that it is one of the threats of substitute service or product (Porter, 2011).
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1.2.3 Bargaining Power of Suppliers
The business is relatively weak due to the relevant position, as the suppliers are having a strong
power of bargaining. Suppliers always had a very strong bargaining power position in this
aviation industry, unfortunately for a cargo industry. While having fewer manufacturers along
with only a few suppliers in operation, they got the ability to adjust the optimum delivery time
and establish costs by themselves. Fleets to the aviation supplied by what is supposed to be a
duopoly, for example, Airbus and Boeing (Nucciarelli and Gastaldi, 2008). These are the
oligopoly which still exists for the engines supply.
1.2.4 Threat of New Entry
Long-term air travel is a saturated industry with one or two national carriers, signifying their
economies each most of them are seeking the assistance from the government of their nations.
When it comes to the tenure of that relation, the relation between the passenger and the
Singapore Airline and its activity of market, one can clearly see that the threat of new entrants is
weak (Homsombat, Lei, and Fu, 2014).
1.2.5 Rivalry amongst Existing Competitors
Singapore Airlines has some rivalry in this industry which occurs on the basis of routes, for
example, those routes which are especially being served by multiple organisations, the most
known route for where rivalry can be very intense are London to New York and Paris to
Frankfurt. (Hemmatfar et al, 2010) Competition among these aviation industries relays on the
scale from low to high. The rivalry is supposed to be intense and the organisation must keep an
eye on the regular changes of needs and demands of the clients going on into the market while
responding to them at the same time.
1.3 Aligning Current Strategy with Strategic Capability
Singapore Airlines is the well-known company in the East Asian region while analysing the
strategic capability of Singapore Airlines, SWOT analysis is used. SWOT stands for strengths,
weakness, opportunities, and threats of the firm. Strengths and weakness are the internal origins
of the model while opportunities and threats are the external origins of the model (Wirtz,
Heracleous, and Pangarkar, 2008). In other words, strengths and opportunities are helpful while
weakness and threats are harmful.
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Strengths

Singapore Airline has a solid support
Weakness

from the Singapore government.
It cost a considerable measure of cash
to go from Singapore Airline.

Durable hub in Singapore.

Relying truly on worldwide activity.

Satisfied customer base and desired

Market share is less on account of
airline of passengers.
expanding rivalry.

The geographical spread is diversified.


Singapore Airlines has the youngest
reduced since Singapore Airline has
fleet of aircraft.
been keeping up a decent money related
The turnover proportion has been
execution these couple of years.

Opportunity


Can impact the exceptional centre point
Threats

Competitors of Singapore Airlines are
which it has made in Singapore.
Qantas, Thai Airline, Cathay Pacific
Brand-new armada to enhance client
and Air China and Southern Airline.
certainty.

Unbalanced portfolio.

airlines.
More worldwide goals to influence on
its high charge mark picture.
Increasing competition from low-cost

The price of ticket expanded as the cost

The increase in transpacific cargo.

Offer the most comprehensive and

Rising aviation fuel prices.
trustworthy preparing system to staffs

Instability in the Middle East
of oil is increased.
to guarantee mark involvement and
reasonableness.
One can clearly identify that the current strategy of the company is very similar to the capability
of the company as discussed in the above analysis. Singapore Airline is paying attention to the
cost efficiency and quality of their service and this is what they have promised with the
stakeholders of Singapore Airlines and they get a hefty return when they trusting the company
with its money. So it can be stated that company has really aligned its strategy and the way it
operates towards it (Heracleous and Wirtz, 2012).
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1.4 Major Stakeholder
They are the people who directly affects the decision of taken by the firm as well as they affect
indirectly also. Airline Pilot Association - Singapore (Alpa-S), Singapore Airline Staff Union
(SIASU), Singapore Government are supposed to be the major stakeholders of the organisation
(Heracleous and Johnston, 2009).
1.4.1 Airline Pilot Association - Singapore (Alpa-S)
Alpa-S is SIA's pilot union, as we know that pilots of Singapore Airlines are highly qualified and
trained so that they are very difficult to replace, pilots have enough power over Singapore
Airlines and if they go on strike this may directly affect the company.
1.4.2 Singapore Airline Staff Union (SIASU)
SIASU is very diversified in its job scope and members background. SIASU has less bargaining
power as compared to Alpha-S, as it has the crew and the staff who have less experience and
expertise as compared to Alpha-S.
1.4.3 Singapore Government
The government of Singapore plays a very significant role over here. It directly impacts on the
route of Singapore Airlines on which they are able to offer and competition it will face. It helps
in regulating the Singapore in handling landing rights to foreign flight and it helps in regulating
airspace also and establishing new landing rights with numerous countries.
Task 2
2.1 Future Strategies
Rodrigues and Cusick (2012) mentioned that Singapore Airlines strategies are the backbones of
the company which leads the company towards high success. Following are the future strategies:
2.1.1 Culture
The airline is paying attention to enhancing their trust and loyalty with their customer's
guarantees that the people who are attached to the firm and working for it will be known for it.
The key success is the history of the firm which is growing back towards the success in term of
culture and it might affect negatively as well.
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2.1.2 Forecast and Estimation
According to Financial Times (2016), the demand and supply should be forecasted and
researched properly in order to save the company from losses and reducing the amount of risk
associated with it.
2.1.3 Strategic Alliances
The strategic alliance is a technique which has a common goal in respect of their objectives of
the company as well as competitive advantage. In the base of sharing their information, resources
and catering and maintenance of the equipment they are known to be the alliance of two
organisations.
2.1.4 Outsourcing of Departments
The departments which are not part of the core business should be outsourced to those
companies who have the skill, talent and creative ideas to ensure the smooth running of it.
However, it should realise that in the near future number of competitors would enter the industry
and profitability would be scarce. The Singapore Airlines need to focus on their current strategy
and align that strategy with the future in order to better compete with its competitors.
2.1.5 Innovation
Online ticket booking and reservations system has made it easy for the customers so that they
can book it online rather than going to the airline outlet or the travel agency for their tickets. This
method helps in saving much time of both, the clients and customers as well as for the company.
When moving to the site of advancement, they demand application for their mobile devices and
gadgets which make this process more convenient and reliable for the consumers (Johnson,
2015).
2.1.6 Structure
The structure should be designed in a functional way by which the marketing, human resources,
finances and other departments align themselves in order to eliminate communication barriers
and to increase the amount of good and clean conversation which flows.
2.2 Aligning Future Strategies
As discussed above, the future strategy is supposed to be challenging for the world-renowned
airline.
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2.2.1 Aligning Future Strategies with the Environment
The external environment is the very complicated thing which is not under the control of the
organisation. The strategy has been developed while considering that how it will affect the
customers and clients of the company Singapore Airlines is paying attention that how they will
manage to maintain their external environment as well as their future strategy (Vespermann,
Wald, and Gleich, 2008).
2.2.2 Aligning Future Strategies with the Strategic Capability
It can be seen clearly that Singapore Airlines must have to compete with its rival in the market
whether they have to compete directly or indirectly, the organisation is connected with all other
departments externally and internally. The success of the organisation is totally based on the
resources of the firm as well as alliances of that organisation (Fu, Oum, and Zhang, 2010).
2.2.3 Aligning Future Strategies with the Objectives of Stakeholders
The base of this foundation is on completion, team management, and financial projections.
Stakeholders are the people who are responsible for taking a decision based on the objectives of
the company and trust of the consumer and stakeholders (Johnson, 2015).
Task 3
3.1 Identifying the Balance of Intended and Emergent Approaches
According to a survey conducted by researchers, it is found that there are four essential practices
which help Singapore Airlines gaining success as seen in the last five to nine years. The very
first way which provides luxury services at a very affordable price, changes in the structure of
the organisation on daily basis in external environment can even centralised or decentralised and
keeping an eye on the innovation adopted by the world while ensuring the level of quality which
the company follows (Barbot, Costa, and Sochirca, 2008).
The main cause of the success of Singapore Airlines as seen in the last few years is the dual
strategy approach. Assets like aeroplanes and customers are the main focus of this company and
their core philosophy of business. Like other airline service providers the average life span of an
aeroplane is 160 months and then they are sold out, this is not the case with Singapore Airlines
they sell out their aeroplanes when they turned 74 months old, by doing this it helps in lowering
costs but also helps in keeping these planes fit and usable. Recruitment process of this airline
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company is very less as compare to the training as the training period is only four months on
which they focus on their quality rather their performance.
They also pay attention in diminishing the waste without conflicting the service quality of their
customers. Surveys and research show that strategies employed by the hierarchy of the firm
generate a way for the people who have no experience and fresh graduates to be a part of the
board which makes the organisation more productive. (Fu, Homsombat, and Oum, 2011).
Figure 1 Singapore Airlines Progress (Murray and Coates, 2014)
In the above chart, we can find the progress of Singapore Airlines from the year 2006 till 2013. It
was at 120 in the year 2006 and in the year 2011 and 2012 it was very close to 140 and in 2013 it
is at 120 again, the overall position of the firm is very stable.
3.2 Balancing Intended and Emergent Approaches
Planned approaches of the organisation also called Intended and those which are being faced
externally also called Emergent, which is one of the major concerns of this aviation industry.
Many happenings like economy and change in the behaviour or disaster cannot be controlled by
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the firm (Josiassen and Harzing, 2008). Singapore Airlines is doing its best in order to enhance
their strategies according to the customer attraction and demands, which makes them happy, no
matter what we have to do. As the environment is becoming more challenging, the company is
approaching intended and emergent strategies. The intended approach of the organisation is on
the right path as it is adjusted according to the needs of consumers. The company has its own
way of doing business, by which it achieves its goals not only in customer’s perspective but also
according to the company’s believes (Iatrou and Oretti, 2016).
Intended and Emergent are the two factors that are being balanced and effects by the
substantially and performance, in the crises-hit economy which is facing positive image leading
to the clients and customers (Chang and Hung, 2013). Another thing about this is the
achievement of the organisation which is prosperity in term of low-cost effectiveness as more
passengers are using this kind of transportation nowadays. The operating view of the business
according to the research it shows that the company has a fewer range of pricing and a high
number of sales which makes it able to cater a lower, upper-class and middle-class population
into the market segment (Osman-Gani and Chan, 2009).
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