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CONTENTS
Contents........................................................................................................................1
1.

Introduction of Singapore Airlines.........................................................................2

2.

Measurement of Singapore Airlines success........................................................3

3.

4.

2.1.

Definition of success................................................................................................3

2.2.

Singapore Airlines Balance Scorecard.....................................................................3

2.3.

Profitability of Singapore Airlines..............................................................................5

2.4.

Customer Satisfaction Index of Singapore Airlines..................................................7

2.5.

Singapore Airline Employees Satisfaction Index.....................................................8

Reasons of Singapore Airlines Success.............................................................10


3.1.

Effective Marketing Campaign...............................................................................10

3.2.

Organisational Culture............................................................................................10

3.3.

Strong Distribution Network and Partnership.........................................................10

3.4.

Effective cost and price control..............................................................................10

3.5.

Safety and Reliability..............................................................................................10

3.6.

Excellent Customer service....................................................................................11

Analysis of Singapore Airlines Strategic Capabilities..........................................12


4.1.

Value Chain Primary and Secondary Activities......................................................12

4.2.

VRIN Framework....................................................................................................12

5.

Leadership contribution to Singapore Airlines Success......................................13

6.

Singapore Airlines strategy consistent with strategic capabilities.......................14

7.

Factors that might affect the sustainability of Singapore Airlines success and

suggestions to overcome the difficulties.....................................................................15


8.

References..........................................................................................................16

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1 INTRODUCTION OF SINGAPORE AIRLINES

Singapore has built its name on being one of the world top transportation hubs base on the
advantageous of her geographical location and to mention that Singapore Airlines (SIA) is a
critical contributor to that success cannot be further from the truth. Singapore Airlines origin
could be traced to October 1937 as Malayan Airways and later rename to Malaysia Singapore Airlines (MSA) in 1966 after the separation from Malaysia Federation. Due to the
differences in the corporate direction of MSA by Singapore and Malaysia government, in
April 1971 it was decided that assets of MSA will be divided and resulted in Singapore
flagship carrier Singapore Airlines.
Since then Singapore Airlines have expanded its global route network to 60 destinations
and established three subsidiaries airlines to cater for the ever-changing airline industry.
With an annual operating profit at SGD$410 million and an increase of 2.5% group net profit
y-o-y (Singapore Airlines, 2015), this report will use theoretical framework examine the
success factors of Singapore Airlines.

Figure 1 - Singapore Airlines Portfolio (Singapore Airlines, 2015)

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1. MEASUREMENT OF SINGAPORE AIRLINES SUCCESS


2.1.

DEFINITION OF SUCCESS

Actually, the term success is defined as accomplishment of a purpose. However, for a


profession, organization or industry, a successful business strategy is derived from key
success factors which determines the necessary conditions for success. The dynamic
nature of the airline industry calls for building a competitive advantage over competitors
through strategic competitiveness in order to be designated as successful. Wirtz et al
(2008) insists that for SIA, the success is attributed to the effective association of functional
strategies like Financial, HR, and Operations with business level strategies like
differentiation and cost leadership.
Singapore Airlines is positioned as a premium airline with a dual focus on excellent levels of
customer service and high levels of cost-effectiveness. The company which always
recorded a profit since inception, which has won numerous accolades and regularly
awarded as one of the best airlines in the world can be described as successful. Therefore,
SIA has been successful in winning hearts of both investors by profitability and customers
by exceptional services.

2.2.

SINGAPORE AIRLINES BALANCE SCORECARD

Kaplan and Norton (1992) suggested that balance scorecard provides management with a
comprehensive framework that evaluates an organisation stratergic framework against a
set of performance metrics. SIA can make use of the Balanced Scorecard as a holistic
model used to evaluate comprehensive performance parameters. The mission statement of
Singapore Airlines is to provide air transportation services of the highest quality and to
maximize returns for the benefit of its shareholders and employees. There are various
objectives that can be determined from the balance score card of SIA of which profitability
and customer satisfaction are two main focus areas as are also emphasized in the mission
statement.

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The method takes four perspectives into account to measure the successfulness of SIA in
fulfilling its mission and achieving strategic objectives. The financial perspective takes into
consideration shareholders lookout of return on investments; the customer perspective
discusses the companys vision while taking into consideration the customers; the internal
business process perspective talks about operational processes to satisfy various
stakeholders interests and the learning and growth perspective entails capacity of
employees to learn and grow.
The below mention strategy map shows a logical and step-by-step association between
strategic objectives for improving performance of SIA based on the four balance score card
perspectives.

Figure 2 - Singapore Airlines Strategy Map

The subsequent balance score card of SIA is also demonstrated by identifying and setting
targets for those performance measures along with describing SIAs initiatives.

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Figure 3 - Singapore Airlines Balance Score Card

2.3.

PROFITABILITY OF SINGAPORE AIRLINES

Though SIA is not much concerned about market share and revenue, their prime focus is
on recording continuous profitability and delivering superior ROI. SIA has a distinct record
of delivering net profit since its establishment in the 1972. The last 8 years net profit
analysis has been demonstrated below which clearly depicts its strong earnings in spite of
recent tough economic conditions in the worlds aviation market.

Figure 4: Singapore Airlines annual net profit (in SGD millions)

(Source: CAPA - Centre for Aviation and Company Reports, 2015)

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If operational effectiveness is analysed, the SIA has delivered excellent results in operating
profit margins. Below mention diagrams portrays the 3-year highlights till FY 2014/15 and
quarterly performance up to the recent 3rd quarter of FY 2015/16.

Figure 5: Singapore Airlines Operating Profit Analysis

(Source: Singapore Airlines, 2015)

The increase in profits is attributed to substantial financial improvements of its subsidiaries


performances like Scoot, Tiger Airways and SilkAir. The contribution of Scoot and SilkAir
have been tremendously increased from previous year in the same quarter. Also, Tiger
Airways has doubled the operating profits from the previous year. The pain area is in Cargo
business as revealed from the following analysis.

Figure 6: Contribution of Singapore Airlines subsidiaries

(Source: Singapore Airlines, 2015)

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2.4.

CUSTOMER SATISFACTION INDEX OF SINGAPORE AIRLINES

As quoted by Mr. Thomas of Singapore Airlines The airline has always listened to its
customers and it shows again and again Customer loves the Singapore Airlines
experience, and it is also marked in the rare and interesting customer satisfaction metrics
that Singapore Airlines uses internally the ratio of compliments to complaints. It has been
recently recorded that 34 compliments were received against only 1 complaint per 10,000
passengers in 2010 (Singapore Airlines, 2010). Moreover, in a latest customer satisfaction
survey coordinated by Australian Business Traveller SIA stands first with a 90%
satisfaction rating for the year 2015.

Figure 7: Customer Satisfaction Index of major airlines

(Source: Chamberlin, 2015)

The in-flight entertainment system of SIA along with enticing and exclusive special meals
designed by several internationally renowned chefs and the world's most discerning wine
consultants. SIA has been successful in creating its own standard for premier airlines
market. Singapore Airlines has received abundant praise and has won numerous awards
for its customer service. Some of them are worth mentioning such as Worlds Best Airline,
Cleanest Aircraft Cabins, Best Airport Services, Best Airlines in Business Class, Best
Airlines in First Class, Best Airlines in Economy Class, Best In-flight Entertainment
(Skytrax World Airline Awards, 2015). SIA stands second for the customer satisfaction in the
world in a recent ranking published by Skytrax World Airline Awards of 2015.
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Figure 8: Customer Satisfaction Rankings

(Source: Skytrax World Airline Awards, 2015)

2.5.

SINGAPORE AIRLINE EMPLOYEES SATISFACTION INDEX

With about 24,000 employees, Singapore Airlines is one of the largest employer in Airline
industry. Employee empowerment is very significant to deliver quality customer satisfaction
especially in a service industry such as airlines. Empowerment leads to employees job
satisfaction which improves trusts, attitude and behaviour for the organization and helps to
increase productivity and reduce turnover. Singapore Airline understands the importance of
giving sovereignty to employees, moreover, the organizational structure of SIA also ensures
job satisfaction and to obtain maximum output from employees. SIA is committed to create
job satisfaction by using job enrichment, engagement initiatives and enlargement in order to
understand their duties and to create harmony at the workplace. Weiss, H., M. (2002)
Deconstructing job satisfaction: separating evaluations, beliefs and affective experiences. Human
Resource Management Review.
SIA has won numerous accolades like the 2015 Worlds Best Cabin Staff award (Skytrax
World Airline Awards, 2015) and the Best International Airlines for Business Travel (Fortune,
2015). Besides, independent online recruitment reviewer Glassdoor and Indeed provided
4-star ratings in their employee survey for Singapore Airways. These honours were
conferred because of greater employee productivity as can be evident from the following
figures on productivity.
Staff Productivity Ratios
Seat capacity per employee (seat-km)
Passenger load carried per employee
(tonne-km)
Revenue per employee ($)
Value added per employee ($)
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2014/15 2013/14 2012/13


8,547,066 8,462,275 8,354,366
625,516
884,501
242,970

625,995
876,383
242,184

619,969
875,035
159,593

Table 1: Singapore Airlines Staff Productivity Ratios

(Source: Singapore Airlines, 2015)

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2. REASONS OF SINGAPORE AIRLINES SUCCESS


3.1.

EFFECTIVE MARKETING CAMPAIGN

The concept of relationship marketing theory embraces on the brand as an important tool
for a rm's consumer relationship management. It refers to direct all marketing activities
towards establishing, developing, and maintaining a successful brand. The theory further
suggests that consumers behaviour especially the intent to purchase is strongly influenced
by the marketing campaign focused on increasing brand positioning and brand awareness.
Shih-Ping Jeng, 2016, The inuences of airline brand credibility on consumer purchase
intentions Singapore Airlines remained competitive with strong profitability despite of
numerous challenges, and it has been due to its excellent branding and marketing
campaign. The campaign of Singapore Girls holds utmost importance in branding effort of
Singapore Airlines. The marketing campaign is effective in personifying the commitment of
the airline to deliver a superior flying experience. The iconic and unique Singapore Girls
(flight stewardess) wears sarong kebaya uniform which was designed by French couturier.
The Singapore Girl was an effective idea which portrays the four fundamental pillars of a
great customer service care, sensitivity, empathy and efficiency.
Singapore Airlines has been consistent in utilizing communication vehicles for the branding
strategy. The primary message A Great Way to Fly has been consistently communicated
in selective print media and TV-commercials to highlight the quality ambitions of the brand.
Moreover, the message is effectively presented by the iconic Singapore Girl in different
themes and settings. In this way, it can be said that the Singapore Girl has significantly
contributed to the success of Singapore Airlines marketing and branding strategy for
positioning the brand around customer service excellence.

3.2.

ORGANISATIONAL CULTURE

The organizational culture is built when a group of people engaged over a period of time to
develop certain knowledge in order to survive and to deal with external issues.
Organizational culture can be define as values, beliefs, languages and ideas that differ and
complex, those also create diversity in the organization (Barney, 1986). Barney, J., B.
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(1986) Organizational culture: can it be source of sustained competitive advantage?


Academy of Management Review.
Organizational culture holds its importance in determining the success or failure of the
organization. For Singapore Airlines, organizational culture play as an important role as
people from diverse nationalities bring various cultural attributes in the company. SIA needs
to integrate the diversity into one single culture for sharing a common goal and to make
them work harmoniously. The key to success here is to impart training for employees that
they can understand their jobs and organizational culture. The Singapore Airlines culture
fosters harmony and respect for all stakeholders. The SIAs organizational objectives and
culture revolves around providing the highest level of service quality and every employee
needs to understand and perform accordingly. New employees are trained to follow the
goals and corporate culture, this process helps to create success.

3.3.

STRONG DISTRIBUTION NETWORK AND PARTNERSHIP

As part of its international strategy, SIA joined the Star Alliance in the year 2000 and
expanded their network by investments in China and India through strategic alliances with
local organizations. They have forged new deals in 2014 with Air New Zealand, Asiana,
EVA Air and Turkish Airlines as part of the ongoing initiative to expand partnership for
providing a more comprehensive network. SIA has codeshares for over 1,500 weekly flight
routes operated by several European carriers, most of which covers the Western and
Central Europe. These alliances allow the airline to get the benefits of a larger networks
such as the economies of scale as well as network benefits of a larger route network while
remaining an independent company. Besides, the expansion of route network, code sharing
also helps in improving frequent flyer program of SIA by earning miles across the alliance
and redeems the benefits across the network.

3.4.

EFFECTIVE COST AND PRICE CONTROL

In order to achieve cost-effective service excellence, SIA has two main assets - planes and
people. SIA always ensures that the plane is young because the mechanical failures are
rare, fewer take-offs are delayed, more arrivals are on time and fewer flights are cancelled

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for better efficiency of planes. New planes are more fuel efficient and less repair and
maintenance. However, SIA understood that service is mostly about people, so service
employees are the key motivation delivery excellent service and increasing productivity. SIA
invested many training programs. The employees learn how to take care customers and
learn how to communicate by eye levels to them rather than just talking down. The
emphasis in service is not only desired customers but also reduced the cost by minimizing
customer turnover.

3.5.

SAFETY AND RELIABILITY

Describe the importance that SIA emphasize on the fleet safety and reliability

3.6.

EXCELLENT CUSTOMER SERVICE

Customer centric culture of SIA

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3. AN ALYSIS OF SINGAPORE AIRLINES STRATEGIC CAPABILITIES

4.1.

VALUE CHAIN PRIMARY AND SECONDARY ACTIVITIES

A detailed analysis of the companys strategic capabilities starting with the Value Chain and
followed by a VRIN evaluation. Your interpretation of the analysis must clearly show how
the company has been able to build competitive advantage.
PRIMARY ACTIVITIES
Write on the primary activities of SIA, please refer to sample

SECONDARY ACTIVITIES
Write on the secondary activities of SIA, please refer to sample

4.2.

VRIN FRAMEWORK

Describe and analysis how VRIN enable the success of SIA

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4. LEADERSHIP CONTRIBUTION TO SINGAPORE AIRLINES SUCCESS

An evaluation of the contribution of leadership to the companys success, basing this on


appropriate theory. Topics to be included:
o

Leadership (e.g. styles, attributes)

Management theories

Organisational culture

Decision-making

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5. SINGAPORE AIRLINES STRATEGY CONSISTENT WITH STRATEGIC


CAPABILITIES

A detailed analysis and interpretation based on either one further topic area from the
following list:
o

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Business (competitive) strategy consistent with strategic capabilities

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6. FACTORS THAT MIGHT AFFECT THE SUSTAINABILITY OF SINGAPORE


AIRLINES SUCCESS AND SUGGESTIONS TO OVERCOME THE
DIFFICULTIES

An explanation of any external and/or internal factors that might make it difficult for the
company to be successful in the future (cite sources) and suggestions as to how the
company can best deal with these.

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7. REFERENCES

1. Chong, H. G. (2008). Measuring performance of small-and-medium sized


enterprises: the grounded theory. Business and Public Affairs, 2(1), 1-10.
2. Heracleous, L., & Wirtz, J. (2009). Strategy and organization at Singapore Airlines:
Achieving sustainable. Journal of Air Transport Management, 15(1), 274279.
3. Heracleous, L., Wirtz, J., & Johnston, R. (2005). Kung-fu service development at
Singapore Airlines. Business Strategy Review, 16(4), 2631.
4. Kaplan, R. S., & Norton, D. P. (January, 1992). The Balance Scorecard - Measures
that Drive Performance. Harvard Business Review, pp. 72-79.
5. Karmjit, S. (1984). Successful Strategies - The Story of Singapore Airline (SIA). Long
Range Planning, 15(5), 17-22.
6. Lim, L. Y. (1983). Singapore's Success: The Myth of the Free Market Economy.
Asian Survey, 23(6), 752-764.
7. Porter, M. E. (2008). Competitive strategy: Techniques for analyzing industries and
competitors. Simon and Schuster.
8. Porter, M. E. (2011). Competitive advantage of nations: creating and sustaining
superior performance. Simon and Schuster.
9. Rashid, Z. A., Sambasivan, M., & Johari, J. (2003). The influence of corporate
culture and organisational commitment on performance. Journal of management
development, 22(8), 708-728.
10. Singapore Airlines. (2015). Annual Report FY2014/15.
11. Singapore Airlines. (2015). Sustainability Report FY 2014/15.
12. Wirtz, J., & Johnston, R. (2003). Singapore Airlines: what it takes to sustain service
excellence a senior management perspective. Managing Service Quality: An
International Journal, 13(1), 10-19.
13. Wirtz, J., Heracleous, L., & Pangarkar, N. (2008). Managing human resources for
service excellence and cost effectiveness at Singapore. Managing Service Quality:
An International Journal, 18(1), 4-19.

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