Describe briefly the background information of the organization selected. You may include ownership, history, size, types of products or services, and business scope and markets (locally & globally).
Strategic management refers to the management of the strategies of the organisations in order to achieve their targets, goals and objectives. It can also be referred as to the process of implementing and evaluating the decisions which ultimately helps business in achieving its aims (Hill, Jones and Schilling, 2014). This assignment will include the concepts and models which will be linked to the business of Singapore airlines and therefore appropriate business strategies are selected for the organisation. It covers the background analysis of the company, macro environment analysis by using PESTLE analysis, competitive analysis by sing Porter’s five forces model and new ideas are developed for the growth and development of the business by using SWOT analysis. At last, the conclusion is given and recommendations are given for improvements in the business.
A strategic discussion about the company helps in setting the priorities and using the resources to work towards common goals. It also assist business in shaping its future as the guidance is provided with the help of strategic planning and ultimately it contributes in the success of the organisation.
Background information of Singapore Airlines
Singapore Airlines Limited was formed with the incorporation of Malaysian Airlines in the year 1947 but afterwards they got split in 1972 and a separate brand was formed named Singapore Airlines. Since then the company is growing in the domestic and international markets. The company ranks tenth in terms of the volume of international passenger it carries. The company carries the sarong Kebaya uniform for its stewardesses and this gives them special identity as they are called Singapore Girls (Singapore airlines, 2017).
The company is one of the dominant airlines of the world and the major stake is held by government and Temasek Holdings which holds 54.5% of the stake. The company wholly owns Silk Air, Singapore airlines cargo and Budget aviation holdings. The company partially owns Vistara (49%) and Tigerair Taiwan (10%). The other subsidiaries of the company include SIA Engineering Company (CAPA, 2017).
The group provides the services which enrich the experience of the customers. It has one of the most comfortable and spacious aircrafts. The company owns around 106 aircrafts and the average year of those is 7 years and 8 months. It has the modern aircrafts which are designed to take care of the needs and requirements of the customers. It owns Airbus A330-300, Airbus A380-800, Airbus A350-900, Boeing 777-200, Boeing 777-200 ER, and Boeing 777-300 & Boeing 777-300 ER. With this, there are various inflight services provided to the customers for enhancing their experiences like first class cabins, suits, First class features, Business class, Premium economy class and economy class. The airlines focus on its other services like Catering, entertainment, safety and security of the passengers (Singapore Airlines, 2017).
The airlines move to more than 50 destinations in different countries. It covers five continents and has strongest presence in the South East region. T covers countries like Australia, India, Thailand, UAE, Bangkok, Dubai and many more. It is one of the most awarded airlines of the world and has won the prestigious awards in this industry like Airline with best service by Airhelp (Hong Kong), Top foreign Airline by Next Media Top Service Awards, Best airline in Asia by Skytrax World Airline Awards (UK), Best Major Airline by Trip Advisor Travellers Choice 2017 Awards (US) and many more.
Macro Environment Analysis
Macro Environment Analysis can also be referred as external analysis which helps the companies in scanning the external environment of the company which includes Political, economic, social, technological, legal and environmental factors (Freeman, 2010). This analysis helps in taking the strategic decisions of the company and in implementing those strategies. Below given Macro environmental analysis of Singapore Airlines will help the company to identify possible opportunities and threats which impact the whole airline industry and outside the con troll of Singapore airlines.
Political factors include the government actions and political activities which affect the success of the business. These factors also affect the operations of Singapore Airlines. The political risk of Singapore airlines is relatively lower than some of the other countries. The country is democratic and has low political conflicts. But the National Political Frameworks affect the airlines a lot. There is political stability and it provides opportunities to the business of Singapore Airlines (Heracleous & Wirtz, 2012). Airline industry rests heavily on the political changes and factors which affect the operations of the industry. The government policies may impact the growth and development of the industry and also the profitability of the company ultimately. Like, the changes in the prices of oil, the airline industry have faced the pressure from the government to unwind the surcharges on fuel. It also depends on the relationship between different countries that how well the flights may move from one country to another. There are different organisations which regulate that how much freedom will be given to the flights of different countries which ultimately affect the airline companies and also increase the competition (Peppard and Ward, 2016).
Singapore airlines are affected to a great extent by the economic factors because it flies through the national and international boundaries. The economic factors like the Gross Domestic product (GDP), interest rates or economic cycles of different nations affect the business of the company. For e.g. if the GDP of a country increases, it will increase the per capita income and this will bring an increase in the demands of airline travel. There may be some uncertain economic elements which affects the business of the company. Singapore has increased in terms of growth and this has attracted more number of tourists in the nation (Sengupta & Sengupta, 2014).
Socio- cultural analysis
The socio cultural environment includes traditions, backgrounds, thoughts, culture, society and other factors which differs in every country and affects the business of the organisations. The social environment of the country Singapore also plays an important part in the industry of airlines. The population of the country is ageing which reduces the demand of airlines because aged population prefers less travelling. Also, the young generation prefers to take their studies aboard which are helping airlines to grow. Also, the development and growth of tourism is helping airlines to increase their revenues. The company has to categorize their potential customers into different generations, sociological attributes and income status which will help it in providing the services as per the needs and requirements of the customers (Chen, HE & Wong, 2013).
Technology plays a main role in improving the efficiency of the airline company. It lowers down the costs and helps in enhancing the overall experience of the customers which further helps in alluring the customers. In Singapore, the number of internet users have been increased which also benefitted the company to provide online services of booking tickets and checking the status of flights online. The company has one of the youngest fleets in the industry which shows that it believes in innovations and invests a huge amount on Research and Development (David, 2011).
These refer to the legal laws and regulations which impacts the business of airlines. The aviation industry has to follow different regulations in the country. Singapore airlines have to follow the legislations and policy given by the Civil Aviation Authority of Singapore. It includes Air navigation Act, carriage by Air Act and many more which helps the company to operate without any hindrances and with safety. The changes in regulatory framework affect the operations of the business (Wheelen and Hunger, 2011).
This is related to the environment. Singapore airlines have to take care of the environment because the passengers demand the environment friendly services nowadays. The company is making environmental efforts by reducing the emissions in the environment. For this, the company has joined the International Air Transport Association (IATA) to bring efficiency in fuel and to reduce carbon emissions. The company like this get an opportunity to make a place in the society and builds up its image in front of consumers of services (Singapore airlines, 2017)
The competitive analysis can be done for Singapore Airlines with the tool Porter’s five forces model. It contains the analysis of the company on the basis of five factors which shows how they are connected to the macro environment of the company and how it impacts the company overall.
The five forces of the tool are discussed below:
Bargaining Power of the customers: the bargaining power of the customers is moderate. It is because the customers have choices for the airlines but Singapore airlines provide high quality services. The switching costs are low which is why the customers find easy to choose one company over other. The company could develop unique features which help in holding the customers with the company (Rahman, Azad & Mostari, 2015).
Bargaining Power of the suppliers: the bargaining power of the suppliers is high because there are few suppliers of airline products and services and the consumers are many which provide the power to the suppliers. The fleets are mainly supplied by Boeing and Airbus which holds the power to bargain (Hesterly and Barney, 2010).
Threat of Substitute products: the threat of substitute products is high. With the advent of globalisation, more forms of transportation and links have been made between different countries which affect the demand of the services of Singapore Airlines. These substitutes include Mass Rapid Transit, buses and Taxis which are used by the users (Crook, et al., 2008).
Threat of New entrants: The threat of new entrants is low because of high capital investments and high need of the legal and regulatory requirements. It is a saturated industry and one or two companies rule the markets. Rest of them just back of the economy (Warren, 2008).
Industry and competitive rivalry: The rivalry in airline industry is intense which is why the businesses need to make changes in their products and services to meet the requirements of the customers. The rivalry also depends on routes to routes. The rivalry will be intense when there will be more companies providing services and vice versa. The competitors of the company in Singapore includes Air Asia, Jet Star, Malaysia Airlines, Emirates and more on International and domestic levels.
The key opportunities with the company are identified that it can customise its services in a well-defined manner in order to take advantage of its dominant position in the country. The company also have good international connections which help in it establishing its services well in the foreign countries and to be in competition with the international airline brands like Emirates and Air New Zealand. The threats which are identified by the analysis done through different models are such that the legal requirements are many and the political relationships of the country may fluctuate which hampers the operations of the company. Also, the threats identified are the fluctuating oil prices and economic conditions of the nations (Rothaermel, 2015).
To evaluate different internal and external forces of the company which affects its operations and performance, SWOT model can be used. The strengths, weaknesses, Threats and opportunities of the company are evaluated below:
The biggest strength of the company is its brand name and its history. The company has rich history and is operating since 1972 after the split with Malaysia Airlines. Since then, the company has positioned itself well and has been able to increase its passengers year after year. It is one of the best airline companies in the world and has won several awards which prove its capabilities. The company has good reputation in the international markets as well. The company provides premium services at a budgeted cost. The company also have diversified itself into various subsidiaries. There is skilled workforce in the company which increases the quality of its services. Also, the company has strong support from the government of Singapore (Riwo-Abudho, Njanja & Ochieng, 2013).
The company has some weaknesses as well. The company lacks in the presence of social media which is one of the most important platform for promoting the brand nowadays. There is a low cost carrier of the company, TigerAir, which is reducing its overall profitability. The company is failing in adding the passengers on a continuous basis at a good rate. The company is also shrinking its markets because of its low performance in some North American countries. The company also have restricted access on some of the routes (Kew and Stredwick, 2017).
The biggest opportunity of the company is that because of globalisation, the people travels from one place to another for the purpose of trade, education, tourism ,etc. which increases the demand of the airlines. The company can collaborate with the Tourism department to enhance the number of customers. The increase of online business has also created an opportunity for the airline company. The company has made alliance with many other companies which increased its operations excellence (Aaker and McLoughlin, 2009).
The company can be exposed to many types of threats which might affect the operations of the business. The emergence of other companies and innovative services by them increases the competition. The price fluctuations of fuel might affect the overall cost of the flights. Fluctuating government regulations can pose a threat or the economic conditions could also hamper the business of the company (Hitt, Ireland and Hoskisson, 2012)
It can be concluded that the company is a star performer in the sector and it has many opportunities to grow and expand in the domestic as well as international markets. The strategic analysis of Singapore airlines has been done with the help of models and tools like SWOT analysis, PESTLE analysis and Porter’s Five Forces Model. The analysis concludes that the company is performing excellent by using the available resources but the merging competitors and the fluctuating situations in the economy and in the political and legal requirements may affect the business of the same. The company can grab the opportunities available to increase its value in the industry and to enhance its performance by using its strengths.
After the strategic analysis of the company, it is recommended to Singapore Airlines that it should differentiate its services from the competitors so that it can allure customers for using its services. This can be done after analysing the weaknesses and strengths of the company. The company lacks in the coverage of flights in some of the areas. The company should focus on its relationships with the government of these areas and start its services to maximise its coverage. Also, the company should focus on its digital presence as most of the customers nowadays are available on the digital platform. This would help the company in positioning itself and making its strong presence in the market. The company can also work on its loss making units so that the overall performance of the company does not get affected. The company could also focus on customising the services for its customers in different countries to meet their requirements and needs in a better way than the competitors. Service industries are all about caring for the customers so they should make the customers feel that the company acre for them. This could be done by training the staff and employees to deal with the customers well and assist them in every way possible. These suggestions can assist Singapore Airlines in gaining competitive advantage.
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