Singapore airline

CTH SM # 72001 / Dilani Jeewanthi – HOSPITALITY & TOURISM STRATEGIC Page 2

H

STRATEGIY PLANING FOR SINGAPORE AIRLINES

Hospitality and Tourism Strategic Planning Assignments

Dilani Jeewanthi

CHT SM #721001

THAMES COLLEGE /SRILANKA

MAY 2014


Contents

1. Introduction …………………………………………………………………………………………………………………………3 1.1Stages of Strategy……………………………………………………………………………. 4

2.1 What is business strategy ...............................................................................................................5

2.1.2 USEFULNESS OF BUSINESS STRATEGIES.....................................................................5

2.2 STRATEGIC ANALYSIS .............................................................................................................6

2.2.1 INTERNAL ANALYSIS.....................................................................................................6

2.2.2 EXTERNAL ANALYSIS MODELS.................................................................................. 11

2.3 STATEGIC OPTION .................................................................................................................. 12

2.3.1 DEFINITION ................................................................................................................... 12

2.3.2 MODELS AVAILABLE FOR EVALUATION .................................................................. 13

2.4 ETHICS ..................................................................................................................................... 16

2.4.1 DEFINITION ................................................................................................................... 16

5. Conclusion ................................................................................................................................... 16

REFERENCE................................................................................................................................... 17


Task 1 – Report

1. Introduction

Today there is rapid development in the business world and the reason is competitive market.

Therefore every organization needs a direction to achieve the mission, vision and objectives and

goals. The strategic management is very important part to an organization because it helps to

identify where the organization is now and how it could achieve the goals in the future.

The success of an organization depend on the decision making of the strategic manager,

therefore the manager must have good planning system. This could be long term or short term.

Firstly it is important to do the internal and external analysis in order to identify the current

stands of the organization and also to understand the strategic options available and risks

attached to each option. Then it would be easy to choose the best option for the organization

Now most of companies do strategic planning for every year.

Figure 1 traditional strategic pyramid.

Figure 2 new stretch strategies.

Source - http://www.1000ventures.com/

http://www.1000ventures.com/


1.1 Stages of Strategy

Figure 3 Stages of strategies.

Source - http://www.1000ventures.com/

2: DISCUSSION

2.1 What is business strategy

According to Knowles (2012) business strategy is: p. 3

‘Strategic management is defined as the set of decision and action that result the formulation

and implementation of plans designed to achieve a company’s objectives”

The Business strategy show the direction how achieving goals and objective set of an

organization .These strategies are used for long term plan, it help organization to conduct the

business.

2.1.2 USEFULNESS OF BUSINESS STRATEGIES

The Strategy is a road map for the organization; it helps to identified all the directions to

achieving mission, vision and objectives of the company. Mostly, Strategy plan is long term plan

around 3to 5 years. So a company can focus how to achieve the goals systematically. The best

way to do this is a SWOT analysis of company. Which allow the organization to recognize their

strength, weakness, opportunities and threats and this analysis play major role in decision

making.

http://www.1000ventures.com/


2.2 STRATEGIC ANALYSIS

The process of developing strategy for a business by researching the business and

the environment in which it operates.

Source - http://www.businessdictionary.com

Figure 4 strategies Analysis.

Source - https://www.google.lk/

2.2.1 INTERNAL ANALYSIS

According to Knowles (2012) internal analysis is: p . 13

“The company analyzes the quantity and quality of the company’s financial, human, and

physical resources, It assesses the strength and weakness of the company’s management and

organizational structure.”

Resource Audit:

According to Knowles (1996) Resource audit is: p. 132

“This stage of analysis strategic capabilities looks at the resource base under a number of areas

as physical resources, human resources, financial resources and intangibles.”

http://www.businessdictionary.com/definition/process.html

http://www.businessdictionary.com/definition/developer.html

http://www.businessdictionary.com/definition/strategy.html

http://www.businessdictionary.com/definition/business.html

http://www.businessdictionary.com/definition/environment.html

http://www.businessdictionary.com/definition/operate.html

https://www.google.lk/


The knowledge of the recourses available in the company is very important because it is useful to

identify which resources are critical to the firms capabilities.

Figure 4 Resource Audit

Source - https://www.google.lk

Value Chain Analysis

According to Knowles (2012) Value Chain Analysis is: p. 167

‘The term value chain describes a way of looking at a business as a chain of activities that

transform inputs into outputs that customers value “

Figure 5 Value chain analyses


To identify activities the organization performs which links them to the organizations adding

values



Core Competence Analysis: The analysis use to identify the capabilities and the skills compare

to other organization the knowledge core competence of the business and use the tool at the

market make competitive advantage for the company.

Figure 6 Core competencies

Source - http://www.iccdcanada.org/

SWOT Analysis.

SWOT: Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses come

under internal analysis. This is very useful for the managers to get quick idea of the company

overview strategic situation.

Strengths Weaknesses

Brand name Limited financial capabilities

http://www.iccdcanada.org/


Source - http://canvanizer.com/new

Figure 7 SWOT Analysis

Performance Analysis:

After value chain analysis, resource audit, core competence analysis it helps to understand the

capabilities of the company. On the other hand it evaluate organizational past performance and

benchmarking comparison with competitors.

Figure 8 performance analysis

Source - http://www.cs.kent.ac.uk/

Innovation Audit.

Many companies do not Patrice this; the reason is that the company must have high innovation

capabilities to perform this. In these step improvements such as creation of a new product, new

development or new event would introduce by the company.

http://canvanizer.com/new

http://www.cs.kent.ac.uk/


Source - http://www.innovationlabs.com

Figure 9 innovation audit

Portfolio Analysis:

The Portfolio technique helps management to balance their flow of the cash recourses among all

the businesses.


Figure 10 Portfolio Analysis

Product Life Cycle:

According to Knowles (2012) product life cycle is:P 187

“Product life cycle is one way to identify success factors against which executive can executive

can evaluate their firm’s competencies relative to its key product or products.”

http://www.innovationlabs.com/



Source - http://www.soopertutorials.com/

Figure 11 Product Life Cycles

2.2.2 EXTERNAL ANALYSIS MODELS

PESTEL:

This model use to identify external factors affect for the organization when the company achieve

their goals. PESTEL is Political, Economic, Social, Technological, Environmental and Legal

factors so the strategic manager keeps an eye on this changers happening externally and make

changers at the company to face these Issues and effects.

Source - http://www.dineshbakshi.com/

Figure 12PESTEL

SWOT:

OPPORTUNITIES THREATS

Emergence of new markets Global Economic Crisis

http://www.soopertutorials.com/

http://www.dineshbakshi.com/


After analyzing the external factors it could identify what are the new opportunities and threats

available to the organization and how to use those opportunities and how to avoid threats.

Therefore this SWOT analysis must do regularly to find out current situation, only then the

company would benefit from this analysis.

Porter’s Five Forces Analysis:

This model developed by Michael Porter

Bargaining Power of Customers

Bargaining Power of Suppliers

Threat of New Entrants

Threat of Substitutes

Competitive Rivalry

Source - http://www.sydneyweb.com.au/

Figure 13Porter’s Five Forces Analysis

2.3 STATEGIC OPTION

2.3.1 DEFINITION

Strategic options are many methods that are meant to achieve a certain objective that is

materialized in the performance of some specific activities. Examples of strategic options

include; cooperation in production, the diversification, and the in formalization of activities.

Source -http://www.ask.com/question/strategic-options-definition

http://www.sydneyweb.com.au/

http://www.ask.com/question/strategic-options-definition


2.3.2 MODELS AVAILABLE FOR EVALUATION

To identify different strategic options the company could use models such as Ansoff’s Matrix,

Porter’s generic strategies, alternative methods of growth strategies and other alternative

strategies use this system and can decide what is the best options available for the organization.

Ansoff’s Matrix - develop by professor Ansoff’s in 1957 it was publish in article called

‘Strategies for Diversification in Harvard Business Review.

Market Penetration - Existing products to exisiting market.(improving product quilitry and

service) .

Market Development - Existing products to new market, targeting new segment, new uses or

geographical areas and promote the existing products.

Product Development – promoting new product to the existing customers.

Diversification – Marketing new product to new customers.

Figure 14 Ansoff’s Matrix

Source - http://www.askwillonline.com/

http://www.askwillonline.com/


Porter’s Generic Strategies

Cost Leadership:

According to Knowles (1996) Cost leadership is: p. 61

“A low –cost producer producing a comparable product at the lowest cost and therefore being

able to sell at the lowest price.”

Differentiation:

According to Knowles (1996) Differentiation is p .61

‘Strategies dependent on differentiation are designed to appeal to customers with a special

sensitivity for a particular product attribute.’

Cost Focus: a focus strategy concentrating only needs of the particular market segment.

Focused Differentiation: Targeting a narrow segment of market by differentiation Figure 14 Ansoff’s

Matrix

source - http://freelancerconsulting.com/

http://freelancerconsulting.com/


Organic Growth –This strategy use by small business at the beginning of the developing

company by their own capabilities

Mergers and Acquisition

This happened in some companies at some situation two companies join and do their operation

together.

Purchase on one company or business entity by another company.

Strategic Alliance

According to Knowles (2012) Strategic Alliance p.237

‘Strategic Alliance is distinguishable from joint ventures because the company’s involved do not

take an equity position in one another. In many instances Strategic Alliance are partnerships

that exist for a defined period during which partner contribute their skills and expertise to a

cooperative project “

Other Alternative Strategies

Market Niche:

A small and profitable segment which facilitates a marketer is

referred as market niche.

Market segmentation:

According to Knowles (2011) market segmentation p44

The market consists of many types of customers, product, and need. The marketer has to

determine which segments offer the best opportunities. Consumers can be grouped and served

in various way based on geographic, demographic, psychographic, and behavioral factors.


.

2.4 ETHICS

2.4.1 DEFINITION

According to Knowles (2012) Business ethics p.82

‘The term ethics refers to the moral principle that reflect society’s beliefs about the actions of an

individual or a group that are right and wrong.`’

2.4.2 The role of ethics in developing strategy for business success.

According to Knowles (2012) - CEO Skinner Acts to Meet Mc Donald’s CSR.

In the year 2005 in America there were a lot of criticism against fast food industry and to face

this issue the CEO of Mc Donald’s introduced nutritional food for the fast food industry and

revolutionized the system and that leadership culture and

those who were involved in the industry followed the same

and .up to today it is a very successful in the industry.

Source - http://www.nytimes.com/

3. Conclusion

Today business in tourism and hospitality is very competitive therefore the manager must have

good strategic plan to face any kind challengers in the industry, however to keep long term

strategic plan is very important for every company, then only they can achieve their goals. Next

to achieve goals the organization can apply different models of strategies.

http://www.nytimes.com/


REFERENCE

Knowles, Tim (1996) Corporate Strategy for Hospitality, Essex: Longman Group Limited

Longman house, Burnt Mill, Harlow

Strategic Management (Formulation, Implementation, and control) 12th edition

John A Pearce 11, Richard B Robinson, Amita Mital

Special Indian Edition 2012

publish by the Tata McGraw Hill Education private limited .

Principles of marketing Philip Kotler, Gary Armstrong

Year 2011, publish by dorling Kindersley pvt limited India

A Definition of Business Strategy available

http://www.rapid-business- intelligence-success.com/definition-of-business-strategy.html

Use fullness of business strategy Available in

http://businesscasestudies.co.uk/business-theory/strategy/business-strategy.html#axzz32zgEVL

Strategic analysis available in

http://www.businessdictionary.com/definition/strategic-analysis.html

Strategic Option Available in


Ansoff Matrix Available From:

http://www.askwillonline.com/2012/01/understanding-ansoff-matrix.html

Porter’s Generic Strategies available

http://www.rapid-business-intelligence-success.com/definition-of-business-strategy.html

http://businesscasestudies.co.uk/business-theory/strategy/business-strategy.html#axzz32zgEVL

http://www.businessdictionary.com/definition/strategic-analysis.html


http://www.askwillonline.com/2012/01/understanding-ansoff-matrix.html


http://www.marketingteacher.com/generic-strategies/

http://books.google.lk/books?id=7cCjAgAAQBAJ&pg=PA536&lpg=PA536&dq=CEO+Skinner+Acts+to+Me

et+Mcdonald% E2% 80% 99s+CSR.

http://www.marketingteacher.com/generic-strategies/

http://books.google.lk/books?id=7cCjAgAAQBAJ&pg=PA536&lpg=PA536&dq=CEO+Skinner+Acts+to+Meet+Mcdonald%E2%80%99s+CSR

http://books.google.lk/books?id=7cCjAgAAQBAJ&pg=PA536&lpg=PA536&dq=CEO+Skinner+Acts+to+Meet+Mcdonald%E2%80%99s+CSR


CONTENTS

1: INTRODUCTION………………………………………………………………………………………………………………………..

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1.1 INTRODUCTION TO THE CHOSEN ORGANIZATION…………………………………21

2: DISCUSSION……………………………………………………………………………………………………………………………………….24

2.2 STRATEGIC ANALYSIS FOR SINGAPORE AIRLINE…………………………………24

2.2.1 RESORCE AUDIT………………………………………………………………………...24

2.2.2 VALUE CHAIN ANALYSIS……………………………………………………………..26

2.2.3 CORE COMPETENCY……………………………………………………………………28

2.2.4 PERFORMANCE ANALYSIS……………………………………………………………28

2.2.5 INNOVATION AUDIT……………………………………………………………………29

2.2.6 PORTFOLIO ANALYSIS…………………………………………………………………29

2.2.7 PRODUCT LIFE CYCLE…………………………………………………………………30

2.2.9 PORTER’S FIVE FORCES ANALYSIS………………………………………………….31

2.2.8 PESTEL …………………………………………………………………………………………………………………………………….32

2.2.10 SWOT ANALYSIS……………………………………………………………………...34.

2.3 DISCUSSION ON STRATEGIC ANALYSIS FOR………………………………………...36

2.3.1 CURRENT BUSINESS SCENARIO……………………………………………………...36

2.3.2 PAST AND CURRENT STRATEGIES…………………………………………………..37

2.3.3 SINGAPORE AIRLINE FUTURE PLANS………………………………………………37

2.3.4STRATEGIC OPTIONS AND ANALYSIS……………………………………………….............................37

2.4 RISK………………………………………………………………………………………………………………………………………………40

2.4.1 DEFINITION…………………………………………………………………………………………………………………………...40

2.4.2 RISK ASSOCIATED WITH EACH OPTION…………………………………………....41

0.3 RECOMMENDATION……………………………………………………………………………………………………………..42


Task 11 – Report

INTRODUCTION

1.1 INTRODUCTION TO THE AVIATION INDUSTRY

The aviation industry is the largest, fastest-growing and most competitive industry in the world.

Its’ duty is to provide the best air transport services and goods for its’ passengers. As an industry

they manufacture aircrafts, handling airlines and training centres. The Airline industry is

connected to all global market business (e.g. medicine tourism, transport, sport events) and is

directly connected to the Tourism industry. This is because, every year, half the world’s tourists

travel by air to their destinations as it is the fastest, safest and most comfortable way to travel

long, and short, distances. In 2012, the International Air Traffic Association (IATA) annual

published report stated that 3 billion passengers and 47 million cargo was transported safely.

Principally this industry creates jobs and their job market is spread over many areas, such as

airport and aircraft, catering and cargo. Currently 57 million people work in this industry.

Figure 1:Moden aircraft.

Source - http://web.mit.edu/airlinedata

From ancient times, people dreamt of flying by air, they created kites and balloons to fly, and

then in 1903 the Wright brothers built the first engine-powered aircraft. This was the first

successful aircraft. On the 20th of May 1952, a young pilot called Charles Lindbergh set out to

make history by flying across the Atlantic Ocean from New York to Paris. This was the first non-

stop flight. DC 1, DC2 and DC3 planes changed the world, DC3 being the first aircraft to carry

passengers and cargo

http://web.mit.edu/airlinedata


1.2 Introduction to chosen organization - Singapore Airlines

A Singapore airline is a national airline in Singapore and a subsidiary of the Singapore

government. It’s based at Changi International Airport and is a member of IATA (IATA

designation SQ 3-digit code 618) and ICAO (ICAO designation SIA). The airline operates flights

to over 45 countries and 93 destinations worldwide. On the 1st of May 1947, this amazing airline

started as Malaysian Airways Ltd, when it was a regional airline, however their business and

marketing strategies helped the organisation develop rapidly and it became the second largest

five-star airline in the world. The airline has built up a strong reputation for excellence in

customer service, namely from their iconic “Singapore Girls” - their passengers now expect the

highest of standards at all times. SIA are very innovative and at the beginning they flew to Kuala

Lumpur once a week. They then purchased a DC3 aircraft and expanded their services to other

countries surrounding Singapore. The best example of their innovation relates to their first DC3

flight when they introduced serving food and beverages such as sandwiches, biscuits, chilled

bottles of water, hot and cold chocolate drinks and alcoholic beverages. They also maintained

their safety records and were accredited by the airline industry.

The SIA expanded their services to special fast-air cargo transportation, cabin crew (pilots) and

an Engineers’ training school. The Engineering department maintains the standard of the aircraft

and terminal services operate the tours and promote tourism, etc.

The SIA’s target market is business and leisure travelers. Their aircrafts consist of different types

of cabin - their luxurious suites have a private room with bed space, these are expensive cabins.

They also have first-class cabins in which the passengers have a special private set and in-flight

entertainment system, a private view and they can request meals as and when they wish to do so.

Their third cabin type is for business class clients where they can use their laptop and work

without power and on a flat-bed. Finally there is economy class where passengers have on-board

movies, television programmers, music, games and entertainment devices.

Figure 2 suite cabin

Source - http://www.singaporeair.com/

http://www.singaporeair.com/


There are 290,000 employees working at Singapore Airlines, in Singapore and overseas.

Currently they particularly try to push sales on long-haul destinations in Europe and America;

however they also develop more business on the kangaroo

route and the Indian market. In order to keep a balanced

portfolio, SIA have quickly developed their budget airline

(Tigre) as there is more competition from budget airlines. The

main objective of SIA is to give benefits to their passengers.

Their next objective is for their Human Resources Manager to

train their employees to deliver high service standards to

customers and to satisfy them so that SIA’s reputation is

strong. They also have a business objective (mission business strategies) and to achieve their

short and long-term goals.

Figure 3 first class cabins

Source -http://www.singaporeair.com/

Destinations: Europe, Middle East, South Asia, South Asia Far East, Australia, North America,

South America , Canada and Africa ,new eland

Figure 4 destination Singapore airline do their operation.

Source -http://en.wikipedia.org/wiki/Singapore_Airlines

http://www.singaporeair.com/en_UK/flying-with-us/cuisinelanding/

http://en.wikipedia.org/wiki/Singapore_Airlines

http://en.wikipedia.org/wiki/File:SIA_Destinations.png


1.4 Singapore Airlines Mission:

“Singapore Airlines is a global company dedicated to providing air transportation services of the

highest quality and to maximizing returns for the benefit of its shareholders and employees.”

Source - http://erikoway.wordpress.com/2012/05/

Slogan - ‘A Great Way to Fly'

Source -http://en.wikipedia.org/wiki/Singapore_Airlines

1.5 Social Responsibility:

Singapore Airlines adopt many CSR initiatives to increase the social cultural standard of the

community, such as sponsoring art exhibitions and maintaining art galleries and theatres. They

are particularly keen on financially supporting sport events, community welfare services and

education programs, free air tickets and donating to charitable organisations.

Figure 5 SIA give donation for children organization.

Source - http://www.singaporeair.com

Singapore Airlines conduct a charity service around the world every year and at Christmas time

they visit a children’s organisation in Narita, Japan.

They sponsor soccer talent for young children in Moscow city.

They have a project to help senior citizens in the United Kingdom.

They help children in Zurich who have a difficult family background.

http://erikoway.wordpress.com/2012/05/


http://www.singaporeair.com/en_UK/about-us/sia-history/sia-csr


The Arts

The airline support maintenance for theatres and art galleries. They sponsor art exhibitions,

dancing shows and film festivals. They give donations to protect masterpieces in Spanish.

Education

SIA support children who are talented at art and sports when they participate in international

competitions by paying for their air tickets and other expenses.

They have sponsored the International Cup (horse race) since its inception in 2000.

2: DISCUSSION

2.2 STRATEGIC ANALYSIS OF SINGAPORE AIR LINES

2.2.1 RESORCE AUDIT

Physical Resources

The Changi Airport has three terminals, shopping centers,

dining facilities, a maintenance department, four lounges,

kids clubs and a media centre.

Singapore Airlines maintain 102 modern aircrafts

Sources - http://www.singaporeair.com

Figure 6: Changi airport

Plans - Plans - There are modern aircraft fly fleet 102, on the

other hand SIA own 22% of all aircraft in the world.

SAL is the first airline to introduce micro system passages that

allow passengers to use their laptops in-flight.

Figure 7: business Class

Financial Resources

SAL – Finance and shareholders Finance.

http://www.singaporeair.com/en_UK/flying-with-us/business-listing/


2013 profit increased by SGD 229.2 million dollars.

Human Resources

Every year they invest 100 million dollars for employees’ training.

Good team spirit.

Well trained front line staff that gives the very best customer service.

The airlines won a National Training award each of the last three years.

The air hostesses nicknamed “Singapore Girls” follow a 15-week training programmer including

food and beverage service and safety in flight.

The SAL has a well-educated engineering department who maintains the quality of the aircrafts

and produce a good product and service for the passengers.

Knowledge-based – The former CEO Mr. Goh is highly educated and worked for 20

years in SAL.

Intangible resources

The SIA brand is a well recognized brand in Asia and has a good reputation. Their main icon is

the ‘Singapore Girls’ - they heavily promote this brand and icon - such strategies and this icon

are a very successful and powerful idea.

Figure 7: SIA brand image.

Technology Resources

Online reservation system, online check-in , self-service.

The Web page maintains the databases.

SIA were the first airline to introduce headphones, flight entertainment systems,

and telephone and fax facilities within the aircraft.


2.2.2 VALUE CHAIN ANALYSIS

Carefully considering all primary and support activates, Singapore Airlines in all successful in all

departments. The airline always has the highest passenger load year on year, increasing with

each year.

Primary activities

Inbound logistics

These activities principally help the airline to take materials from other suppliers such as the

freedom of air, fuel and landing rights. Singapore Airlines share their operation with other

countries as an International airline and they pay more attention when selecting routes, yield

management, passenger service and flight scheduling.

The airline keeps long-term agreements with fuel suppliers to avoid price changes occurring.

Operation.

They provide the best service they can to passengers in flight and at the airports, such as picking up passengers, help at ticket counters, gate handling operation (checking in) and with their

(four) luxury lounges.

The airline was the first to introduce hot meals, hot and cold beverages, free alcoholic beverages,

wireless internet, hot towels and a cabin entertainment system. All of these activities have given

the company a good reputation, a good brand image and loyal customers.

Outbound Logistics:- The airlines make hotel reservations, car rental bookings and baggage

tagging, as well as other flight bookings upon passenger’s requests.

Source - http://www.singaporeair.com/

Marketing & sales:

Seasonal promotions - reduced prices.

Free tours of Singapore.

Promoting Membership cards (Membership card and free air miles).

http://www.singaporeair.com/en_UK/special-offers/hotel-deals/


Tour operators advertising tours

“Singapore girls campaign“

Source - http://www.singaporeair.com/en_UK/special-offers/free-singapore-tour/

Service. - In flight self-service and lost baggage service.

Figure 8: marketing advertisement.

SIA infrastructure.

The firm infrastructure is about general management, finance, and assets. Providing excellent

services is the Mission of SIA and they are committed to that by maintaining most up to date fleet in the industry. In terms of management and finance, SIA has financial stability and have

the freedom to make decisions without interruption from the government. .

Human resource management.

Most essential part of corporate strategy is HRM, in the service industry a significant part of the marketing strategies also include HRM.). In terms of recruitment, training and development, HRM can contribute to the effectively towards the company.

Recruitment.

Academic as well as physical attributes are considered to be the main qualification for cabin

crew applicants in SIA. The recruitment process is extensive, involving many interviews, psychometric tests and other

tests. The company hires around 500-600 new cabin crew, to cover attribution rates of around 10%.

http://www.singaporeair.com/en_UK/special-offers/free-singapore-tour/


Training and development

SIA has introduced extensive training and development programs and spends almost 14 times

more per employee on a Singapore average scale. The training includes functional skills, soft skills of personal interaction, personal poise, grooming and deportment, and emotional skills of dealing with the consequences. Performance service index is used to manage to performances of

the staff.

Technology development

In their airport lounges around the world SIA provides luxury service with high speed internet access, broadband…etc.). SIA has continuously introduced the most advanced plane such as A380. Rapid improvement of online ticketing, online checking and self-service checking in

airports are worth mentioning as technology developments.

Procurement

With advanced online system and encouragement of frequent flyer program SIA manage their

website and data base in high standard. Also its contractors have the advantage of apply bidding through this website.

2.2.3 CORE COMPETENCY

The SAL has strong capabilities and core competency compared to other competitive airlines.

This is due to the skills of the top management at the airline. They have great operational

planning, their marketing strategies are very strong and the interpersonal skills of the flight

attendants are excellent. The airline follows business strategies and management strategies to

build strong communication with their employees and to motivate them to work as a team. SAL

has a strong reputation for their overall mission and excellent customer service, plus a fast

working system. The airline has a good relationship with partners and suppliers which is

advantageous for them development wise. Their main slogan is ‘ first in fly’ which is a good

example of how they make advances in comfort for their passengers.

Source - http://www.singaporeair.com/en

2.2.4 PERFORMANCE ANALYSIS.

The SIA annual report of 2013 showed their total revenue as SGD 15098.2 million and operating

a profit of SGD 229.2 million, for that year.

http://www.singaporeair.com/en_UK/careers/careers-at-sia/


2.2.5 INNOVATION AUDIT

Singapore Airlines is more innovative than any other airline in the world - they use this business

strategy very successfully. They have introduced many things in airports as well as in-flight,

such as meals, hot and cold beverages, alcoholic beverages, changing their menus, at times,

every week. They have special menus for kids and teenagers, different types of cabin suites with

a bed as well as other facilities, first class has extra space, business and economy class both have

wireless internet facilities, and they have different types of lounges and kids play areas. As an

airline they develop the features of their aircraft and introduce new services to their passengers.

Source -http://www.singaporeair.com/en_UK/about-us/sia-history/

2.2.6 PORTFOLIO ANALYSIS

With the BCG matrix the airline can do business in a smart way and it is identified by their

market share via investments. SAL doesn’t have a balanced portfolio so they give extra attention

to the area of question mark

Figure 9: BCG matrix

Sources - http://maktubat.wordpress.com

TG

SAL SAE

SAC TG SA

http://www.singaporeair.com/en_UK/about-us/sia-history/

http://maktubat.wordpress.com/2012/11/17/application-of-bcg-matrix-in-airline-business-ana

http://maktubat.files.wordpress.com/2012/11/bcg.png


Star -The Singapore airlines and their budget airline has high marketing share and high

marketing growth.

Product MARKET SHARE MARKET GROWTH

Singapore airline (SAL) high high

Tiger airline (TG) high high

Silk airline (SA) high high

Singapore airline cargo

service (SAC)

low

high

Singapore airline

engineering department.(SAE)

low high

Sources - http://dlibrary.acu.edu.au/

Question mark– the SAL Cargo and terminal services in both of these services after making as

different unit they make low market share but there is high demand.

Sources - http://dlibrary.acu.edu.au/research/

2.2.7 PRODUCT LIFE CYCLE

Overall SAL sales in product such as fight operation in Maturity level in the market and their

other budget airline is in growth state. The terminal service and cargo must increase their

marketing share because it is in the introduction stage.

http://dlibrary.acu.edu.au/research/carpediem/pages/volume4/vol4no1_businessanalysis.htm



Introduction Growth Maturity Decline

Singapore airline

Tiger airline

Silk airline

SAL terminal services

SAL Cargo

2.2.8 PORTER’S FIVE FORCES ANALYSIS

This model helps to identify what effect there is to the company and how to serve customers and

make a profit.

Industry rivalry

In the airline industry, there is strong competition within the market. This is caused by the

presence of budget airlines. This is a primary concern for Singapore Airlines.

Product

Sales

SAL TG SKL SAE

SAC


Potential of new entrants

It has proved to be difficult for new entrants to the market due to the economic barrier. In

Singapore there are more difficulties in obtaining airport slots due to the fact that there is only

one airport. The high operational costs and political factors are the biggest barriers to new

players.

Threat of Substitutes

Airlines have a competitive advantage in long distance travel, however roads, rail and

boats/ferries could create a high level of competition for short distance travel. As a small country

Singapore Airlines has no chance to compete with Mass Rapid Transit or buses within the

country.

Singapore is small country so it does not have a strong effect on them, but for people travelling

from Singapore to Malaysia or Indonesia there is the alternative option for them to travel by bus.

Bargaining Power of Customers.

Singapore Airlines has a lot of competition from large airlines and low cost air lines so the

customer has the power to choose which airline they would like to give their business to. SIA

does have big customer demand and a reputable brand name, they always add features and offer

a high standard of customer service. They were the first airline to adopt a customer loyalty

program giving free air miles (Kris Flyer).

Bargaining power of suppliers.

Safety standards, Improve services, Advance technologies and fuel costs all help to create a

strong level of supplier power in the Airline Industry.


2.2.8 PESTEL

· Political

Singapore has a politically stable environment.

The Government allows the airline to take 90% of their decisions freely.

They allow the airline to do CSR work from their own profit.

During the economic crisis the Government helped the airline to be stable within the market.

More importantly, the government has a good relationship with Europe and all other countries

which are advantageous for the airline.

The government only taxes the airline 20% of their total profit, which is more favorable than the

rates set for other airlines. Other countries take more than 30%.

· Economic

From 2007 to 2008 they faced a Global Financial Crisis just as all countries did so the

Government financially supported SIA in their operation.

An increase in oil prices in 2009 greatly affected airlines and thus resulted in increased air ticket

prices.

· Social

They cover all segments of the market.

SIA understand the cultural diversification of their passengers and they have a lot of respect for it

so they cater for that by offering their traditional food, upon their request.

· Technological

In 2007, SIA were the first airline in the industry to introduce a large airbus (A380).

SIA were the first airline to introduce working in-flight using passenger laptops without power.


Singapore Airlines introduced in–flight entertainment systems.

Fast e-ticketing system.

Environmental

SIA use cleaner, greener aircrafts.

· Legal

Fair trading law

Consumer law

Natural environmental law

Five freedoms of air (Licenses to fly to other destinations)

Source - http://dlibrary.acu.edu.au

2.2.10 SWOT ANALYSIS

· Strengths

Reputable brand name.

One of the largest airlines in the world.

Largest market share.

The technological development of in-flight facilities.

Large and green aircrafts.

Financial stability.

Loyal customers.

http://dlibrary.acu.edu.au/


· Weaknesses

Cargo, airport terminal services and the engineering department have been operating as separate

businesses, without success.

The high price of their air tickets.

SIA doesn’t have a strong domestic market; they rely on the international market.

Source - http://dlibrary.acu.edu.au/

· Opportunities

Expand the service to more countries and cities.

Introduce more technological advances and in-flight facilities.

Do more promotional work to Middle Eastern and Chinese markets in order to increase the

market there.

Develop their low cost airlines.

· Threats

Fuel cost increases.

Competitors in low cost airlines.

International political view.

Travelers affected by the European financial crisis.

http://dlibrary.acu.edu.au/research/carpediem/pages/volume4/vol4no1


DISCUSSION ON STRATEGIC ANALYSIS FOR SIA AIRLINE

2.3.1 CURRENT BUSINESS SCENARIO

After analyzing Singapore Airlines it is known that SIA has acquired a lot of strengths. Their

major strengths are that they are one of the best and largest airlines in the world; they have a

good brand reputation, diversification, financial stability and profits in every year, as well as a

very high human resource capability. Also, the second largest marketing capitalization belongs to

SIA.

However, the market share of all their products such as Singapore Airlines and Silk Air are

experiencing high growth and have a high market share. Their cargo service and engineering

department also have a high growth rate but a low market share, whereas Tiger Airline is

somewhere in the middle. The airline’s strength is their level of innovation and their excellent

level of service.

The airline targets all segments of passengers needs and caters for all their requirements.

Singapore Airlines target high class passengers. Their regional airline Silk Air, aim for the

middle class and Tiger Air is designed for budget passengers. SIA’s website has made advances

and is the most user- friendly web page in the airline industry; it contains all the information

passengers require.

The rapid development of the tourism sector in Singapore is good for the airline, the project of

promoting Singapore for MICE tourism destination. This can be taken as an opportunity to

expand the business further; the government expects five million people to visit the country

every year and to use SIA as their main transport option. The airline also sponsors numerous

sporting events and artistic projects.

2.3.2 PAST AND CURRENT STRATEGIES

Singapore Airlines have used many strategies in the past and also currently to be successful. To

reach the level they have they concentrated on corporate level strategies such as market

penetration. They were also the first airline to serve food and beverages and to offer in-flight

movies, internet facilities - this strategy has helped them to sustain a reputable brand name and to

have loyal customers. From their DC4 aircrafts to their green aircrafts, they have purchased all

the modern aircraft into their fleet. At the beginning they only operated short-haul flights, but

now they have developed their market and consequently they fly to 64 destinations worldwide


and they fly directly to destinations as far away as Los Angeles and New York. Their other two

airlines Silk Air and Tiger Air cater for all types of passengers. They have developed products

for business class passengers such as introducing wireless internet facilities so that passengers

can work on their laptop during their flight. SIA is a luxury five-star airline service therefore the

price is high, hence why they introduced Tiger Airlines as a budget airline using cost leadership

strategies. The differentiation strategies in airline seats for aircrafts A380 include suites - the

passengers who use these have their private place including a bed as well as other facilities.

Using focus strategies Singapore Airlines offer four different classes for travelers; suites, first

class, business class and economic class. SIA follow a strategy alliance with the largest airlines

Delta and Swiss airways between 1989 and 1995, then a new strategy alliance with American

and Australian airlines in 1996, for air routes.

2.3.3 Singapore Airline future plans.

SIA will sponsor the Formula 1 World Championship.

The air bus A380 is the largest aircraft and will fly to Mumbai and New Delhi.

The Airbus Company and Singapore Airlines will open a new flight training centre.

An alliance with Air New Zealand, operating in Auckland using airbus A380.

2.3.4 STRATEGIC OPTIONS AVAILABLE AND ANALYSIS

Considering all the information, there are many strategic options available to Singapore Airlines

in order to develop the market and their product, they can apply Ansoff’s matrix, Porter’s generic

strategies, alternative methods of growth strategies and other strategies.

Ansoff’s Matrix

Market Penetration

· The airline operates in Africa; mostly with this route they use leisure travelers. They have

introduced a family package under ‘all- inclusive’. They made a partnership with a travel

company to offer safaris, camping, and accommodation and to provide food and

beverages.


Other Alternative Strategies

Market Niche

· Next, they can use the air bus as a banquet hall;

the capacity is around 150 to 200 passengers,

targeting a niche market, doing events,

especially conferences. In- flight conferences are

a memorable experience. This saves those

travellers time and money. Travel for Mice

tourism, this can be a revelation within the industry, new treats for Mice tourism.

· Figure 10: Mice tourism in Singapore

Source - http://www.upsingapore.com/mice-colab-2014/ ·

Diversification

· Opening an SIA brand transit hotel handled by the airline. This hotel has more business

clubs to cater for business travelers. This is a good opportunity for the airline to promote

all- inclusive packages, which is the best option for the passenger. SIA has a good

reputation and offers a good level of customer care so they can easily promote this to

passengers.

2.4 RISK

2.4.1 DEFINITION (Risk of Strategic Management)

According to Knowles (2012) the definition of ‘risk is:n P. 11

“First of all, the time that a manager spends on the Strategic Management process may have a

negative impact on their operational responsibilities; the manager must be trained to minimize

that impact by scheduling their duties allowing enough time for strategic activities.

http://www.upsingapore.com/mice-colab-2014/


2.4.2 RISK ASSOCIATED WITH EACH OPTION

Market Penetration - the cost of the service and product is

increasing.

Environmental risks - When promoting this kind of

package the airline must consider the security

procedures involved with this package, it includes

safari tours involving wildlife so that is an environmental risk.

Figure 11: safari tours in Africa;

Source - http://airmalawi.net/south-african-safaris-

In Africa, the water, food and medicine can sometimes have an impact so this is another

environmental risk.

Financial Risks - This kind of package is at a very high cost due to it being long-haul

travel and all- inclusive. The airline must encourage passengers to take out travel

insurance. Considering all of these factors, promoting and operating an airline is costly

financially for them and it can lead to them potentially losing control.

Plan, using Airbus as a banquet hall

Financial Risks - Using the airbus as a banquet hall is risky, first of all because of

customer demand, there are lots of hotel offering promotions, and also there are other

locations for such events so it is a competitive market. They will have to design a special

plane for this enterprise so the airline will need to invest heavily in this. It will not be

used every month therefore maintenance costs are also high. Finally, for promotion the

airline must have a new marketing campaign, which again is costly.

Legal Risks - this is the first time anyone has introduced this type of aircraft so the airline

must get a licenses.

Technological Risks – Introducing new technology is also a risk.

http://airmalawi.net/south-african-safaris-a-holiday-to-remember/


Safety Risks - Safety is very important in case of a hijacking or if an accident happens. It

would damage the image and reputation of the airline.

Diversification, building a new hotel.

Financial Risks - Investing for a new market is a very long-term procedure. When

opening a new hotel they will need a location near to the airport, they also have to

purchase a hotel and develop it - this is a financial risk for the company.

Psychological Risks - training staff under a new environment.

Market Risks - they must keep their rates similar to those of their competitors.

Reputation Risk – The quality of the hotel and the service offered must be to a very high

standard; otherwise it would have a negative impact on the brand image.

Competitive Risk – there are a lot of famous brand hotels available in Singapore so this

creates a big competitive risk for the organisation and potentially they could lose

financial control.

0.3 RECOMMENDATION

Principally, considering all the options available in the market, the best options available current

business developing environment. They can target a marketing niche and diversification.

2.6.2 JUSTIFICATION FOR THE CHOSEN OPTIONS

Marketing niche

The reason for choosing this option is that it is less risky and is financially stable to Singapore

Airlines. On the other hand, the long term customer reputation and the brand image is the most

valuable thing so the airline must consider to practice more innovation. The government deliver

various programs to promote Mice tourism in Singapore, it offers advantages for choosing this

option.

Using an airbus as a banquet hall is a very new experience for passengers. Singapore is

promoting Mice tourism and their main objective is for five billion travelers to visit Singapore

each year. In Mice tourism they have a lot of events especially sporting events so these travelers

can have their meeting whilst flying. This helps them save time by holding their conference in


the air - there is no need for a different cabin. This can be very profitable for SIA especially ass

people like to spend more money on a conference. This option offers them more privacy.

Singapore Airlines are very innovative so they can introduce new ideas to the airline industry

and go into partnership with other top class businesses, conducting their events in the air. SIA is

financially stable so they have the capability to do this.

Figure 12 : meeting room at the ship

Source - https://www.google.lk/s

4 : CONCLUDING REMARKS

Singapore Airlines use lots of business strategies to reach this level within the marketing

industry. They have done a great service to the aviation industry and helped to develop it. On the

other hand, they have given a quality service to customers and added features and services for

their entertainment during their journey. They use a brand strategy to keep their standard; the

SIA is a very successful business within Asia so Asians can be proud of it. The business strategy

used by Singapore Airlines has been successful; therefore they give more consideration to

external factors and keep their core competencies up to an adequate standard, in line with their

competitors. Lastly, find out the strategic options available within the market and follow them,

then SIA can make a development in the industry and keep their brand highly respected.

https://www.google.lk/s


REFERENCE

History of the organization Available From

https://www.singaporeair.com/en_UK/about-us/sia-history/

[Accessed 10 th May 2014 )

http://www.singaporeair.com/[Accessed july01,2011

The Mission of the airline Available Fromhttp://erikoway.wordpress.com/2012/05/

Slogan Available From- http://en.wikipedia.org/wiki/

Social ResponsibilityAvailable From


/Accessed 10 th May 2014 )

Physical ResourcesAvailable From -http://www.changiairport.com/[Accessed 10 th May 2014 )

Knowledge BasedAvailable Fromhttp://www.singaporeair.com/jsp

Intangible recoursesAvailable From - http://myassignmenthelp.info/assignments

Value chins analysis available http://www.ukessays.com/essays/marketing/value-chain-analysis-of-

cathay-pacific-marketing-essay.php

Five Forces available in http://www.ukessays.com/essays/marketing/pestel-and-five-forces-

analysis-of-singapore-airline-marketing-essay.php

Innovation AuditAvailable Fromhttp://www.singaporeair.com/en_UK/about-us/sia-history/

Porteplio AnalysisAvailable Fromhttp://dlibrary.acu.edu.au/ Existing Nov 3 2008

http://maktubat.wordpress.com

Star Available From-


https://www.singaporeair.com/en_UK/about-us/sia-history/

http://www.singaporeair.com/%5bAccessed%20july

http://erikoway.wordpress.com/2012/05/



http://www.changiairport.com/shopping-and-dining

http://www.singaporeair.com/jsp

http://myassignmenthelp.info/assignments

http://www.ukessays.com/essays/marketing/value-chain-analysis-of-cathay-pacific-marketing-essay.php

http://www.ukessays.com/essays/marketing/value-chain-analysis-of-cathay-pacific-marketing-essay.php

http://www.ukessays.com/essays/marketing/pestel-and-five-forces-analysis-of-singapore-airline-marketing-essay.php

http://www.ukessays.com/essays/marketing/pestel-and-five-forces-analysis-of-singapore-airline-marketing-essay.php

http://www.singaporeair.com/en_UK/about-us/sia-history/


http://maktubat.wordpress.com/2012/11/17/application-of-bcg-matrix-in-airline-business-ana



Question markAvailable From -


Legal Available From - http://dlibrary.acu.edu.au Existing Dec 3year 2013

WeaknessesAvailable Fromhttp://dlibrary.acu.edu.au/research/carpediem/pages/volume4/

Singapore Airline future plans

http://www.singaporeair.com/en_UK/media-centre/

http://dlibrary.acu.edu.au/

http://dlibrary.acu.edu.au/research/carpediem/pages/volume4/

http://www.singaporeair.com/en_UK/media-centre/

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