Running head: STRATEGIC MANAGEMENT

Strategic Management and Leadership

Name of the Student
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Authors Note

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Executive Summary
Singapore airline is regarded as a national symbol of Singapore and have its hub at Changi
Airport of Singapore. It is the flag carrier of the country forming a group with several
subsidiaries, like SIA Engineering company which handles the maintenance and repair of
aircraft and has joint ventures with 27 companies including Rolls-Royce and Boeing.
The paper describes the strategic plan of the Singapore airlines by discussing the several
points like mission, vision and objectives of the company, environmental analysis at macro
level, industry analysis, and capability analysis. The papers also state the proposed strategy
and strategy evaluation method of the company.
The paper proposed the strategies as, the company can diversify their market by using their
strength and opportunities. To overcome the threat, the company can adopt the strategy of
merger and acquisition with some airline companies in South East Asian countries and North
American region. To avoid the weakness of low cost competition in short haul sector, it can
apply the cost leadership strategy. Further, internal factors can be developed to overcome the
threat and weakness of the company.

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Introduction................................................................................................................................3
Vision, Mission and Objective Statement..................................................................................4
Macro Environmental Analysis: PESTEL.................................................................................5
Industry Analysis: Porters Five Forces.....................................................................................6
Capabilities Analysis..................................................................................................................8
Threshold capabilities................................................................................................................8
Distinctive Capabilities..............................................................................................................9
Value Chain Analysis.................................................................................................................9
Proposed Strategy.....................................................................................................................10
Strategic Evaluation.................................................................................................................11
Conclusion................................................................................................................................12
References................................................................................................................................14

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Introduction
Singapore airline is regarded as a national symbol of Singapore and have its hub at
Changi Airport of Singapore. It is the flag carrier of the country forming a group with several
subsidiaries, like SIA Engineering Company which handles the maintenance and repair of
aircraft and has joint ventures with 27 companies including Rolls-Royce and Boeing. The
airline has grown over the last decades from a small regional airline to the worlds leading
cargo and passenger carrier. The company has a fleet of modern aircraft and provides best
service to Asia and other part of world.
The Singapore Airlines has its origin in the year 1947 when the demand for airlines
started growing and the market has developed the potentiality with the introduction of twinengined Airspeed Consul between Ipoh, Penang, Kuala Lumpur and Singapore by a Malayan
Airways. Initially there was a joint shareholder of Malaysia Singapore Airlines between the
government of Malaysia and Singapore (Wirtz and Heracleous 2013). However, in 1972, the
joint venture had ended and two new airlines called as Malaysian Airline System and
Singapore Airlines had started. In the beginning, Singapore airlines had a modern fleet of 10
aircraft with 6000 staff members and a route network around 18 countries and 22 cities. Soon
the airline began to create its own brand name and maintaining its standards of service.
Further with continuous product innovation and investment, the airline of a small island
became a large multinational company.
The paper describes the strategic plan of the Singapore airlines by discussing the
several points like mission, vision and objectives of the company, environmental analysis at
macro level, industry analysis, and capability analysis. The paper also states the proposed
strategy and strategy evaluation method of the company.

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Vision, Mission and Objective Statement

The Vision of the Singapore Airline is to place the airline in a globalised world with
continuous growth and maintain loss free record. The vision statement of the airlines
indicates that the company is responsible not only for attaining excellence in the airlines
industry but also to be a good citizen by improving the lives of the people. Keeping this in
mind the company has made commitments towards the health and welfare of the citizens and
education and arts for the societies and all the countries where they operate (Rothaermel
2015). One of the main aims to achieve its vision is to preserve the environment and believe
in sustainable development.
The mission statement of the Singapore airlines states "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." It indicates to satisfy
the shareholder by giving them good returns by providing superior service at competitive
price and generating a yield that helps in expansion and modernization of the airlines (Stauss
2013). These steps will keep the employees happy and motivated and they will be satisfied.
The objective of the company is to ensure the security of the people and deliver the
best of the service to the customers. The company aims to provide service that satisfy the
need of the people and want to operate within their resources and deliver value for money.
The other objectives are to see that the staffs are competent enough to perform their task
effectively and optimize their potentiality (Mellahi and Frynas 2015). Moreover, the company
aims to be a good citizen by taking care of the environment and believing in sustainable
development.

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Macro Environmental Analysis: PESTEL
The Pestle analysis helps to understand the effect of the macro environmental factors
on the companys growth and development. It explains the political, economic, social,
technological, legal and environmental forces that affect the organization (Smit and Dula
2014).
Political: The political factor plays a major role in the operations of the airlines in the
industry. The airline carries the countrys flag as it represents a national carrier of the country
and is headquartered at the capital city of the country to represent the country. Hence given
the fact that airlines represent the nation, any political changes affects its brand (Ward and
Peppard 2016). The government gives full support to the airlines and if withdraws its support
then the airline faces heavy disaster
Economic: As the airlines operate across the national boundaries, any change in
economic conditions of national or international levels will affect the company due to the
intense resources carried by them. One of the most potential threats is the price of crude oil
that increases the fuel cost of the company. Any political disturbances in Arab countries lead
to increase in crude oil price and affect the cost structure of the company. This rise in fuel
cost could be handling by passing it to the customer but for Singapore Airlines, it is difficult
as it already has a premium pricing strategy.
Social: Changing social changes in the society affects the airline business to a large
extent. Initially the travel by flights were availed by the richer section of the society but
gradually with rising disposable income, even the middle income group people has started
opting for air flits (Mellahi and Frynas 2015). Further, the customer now looks for a low cost
carrier rather than a high cost carrier. Singapore airlines that have positioned itself as a

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premium airline has increased its shareholding in Tigeriar, a Southeast Asian low cost carrier
to overcome the social issue.
Technological: Technological innovation always helps the company to develop
competitive position in the industry. Singapore airlines do continuous research and
development by innovating new products and fleets to satisfy the customers. Some of its
innovations are reclining seats, seatback entertainment system and headsets (Thomas2015).
Legal: Airlines do get affected by the changes in the regulatory framework of the
country. For security reasons, different countries have different regulatory requirements that
need to be met by the airlines and thus affects its cost of operations.
Environmental: The airlines need to be environmental friendly due to the national
carbon reduction targets that have to be achieved to control global warming in the world. The
airlines need to integrate the green issues in their strategies and corporate social
responsibilities. Singapore airlines are slow in it and have to fasten up its strategy for
sustainable environment.

Industry Analysis: Porters Five Forces

Michael Porter five forces analysis have identified the five forces of market that
affects the performance of the companies. They are as follows:
The threat of new entrant (weak): The threat of new entrant in airline industry is weak
The air travel industry has reached the saturation point with national carriers that gets the
support from the government, especially in long haul airlines passenger sector. Hence the
traffic growth in airline industry generally comes from growth of national carriers and not by
entry of new entrants due to the congestions in the skies and airport (Sengupta and Sengupta
2014). Further, airline industry demands huge capital investment for the nascent firm which

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does not become possible for the new firms. However, in short haul sector, there are some
threat of new entrant like Air Asia and Jet Star due to low capital investment.
The intensity of rivalry (high): There is intense rivalry in the airline industry but it
varies according to routes. For routes where the airlines provide good service, the rivaly
intensity increases, Like the route of London to Paris. Under the situation Singapore Airlines
has adopted price-cutting strategies with high quality service. Some routes are monopolized
by few carriers like the Kangaroo Route that connect Australia, New Zealand and Southeast
Asia has been monopolized by Singapore airlines due to weak competition among the rivals.
The Threat of Substitute Services (moderate): It refers to the extent by which the
services can be replaced by another similar service. Inc case of short haul, the threat of
substitute service is moderate due to increasing investment in transportation business along
with Singapore Airlines (Ward and Peppard 2016). However, in case of long haul, there is
less threat for substitute services and there has been increasing cons o business.
The bargaining power of the Customer (moderate): The bargaining powers of the
customer are moderate in the airline industry. The switching cost between airlines is very low
as the information about the flights availability is easily available in the websites (Johnson
2014). Few websites also show the comparison between the flights rates, routes and services
that makes the switching cost very less. Under the situations, the airlines need to start loyalty
schemes where with the increase in the number of flights with the company, makes the
customers earns loyalty points and lessen their fares.
The bargaining power of Suppliers (strong): The bargaining powers of the suppliers
are generally strong in case of airline industry due to few suppliers and large buyers (Hit,
Ireland and Hoskisson 2012). It requires the supply of high end technology goods that is not
available with many, like, fleets are supplied by Boeing and Airbus where duopoly exist and

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engines are supplied by few suppliers like, Pratt and Whitney, Rolls Royce and General
Electric.

Capabilities Analysis
Singapore Airlines have been able to succeed and achieve a strong competitive
position in the industry due to its efficient usage of resources. The major resources are
discussed here under threshold capabilities and distinctive capabilities are discussed through
value chain analysis.

Threshold capabilities
Physical resource: The physical resources that are available maintenance centre,
hangar and catering centre. Both Singapore Airlines and Government have together invested
in developing the infrastructure and physical resources in Changi Airport.
Planes: Singapore airlines have 22% 747-400 aircrafts of the total world production.
The planes have better fuel efficiency and greater flying range and quieter cabin than any
other airlines (Hitt, Ireland and Hoskisson 2012). The airlines have strong competitive power
to attract customer with low cost and high quality service.
Finance: The sources of finance are revenue and shareholders funds. The source of
revenue is the sales which is not unique and depends on its marketing strategies. But the
shareholders fund is able to establish a strong financial position for the company as it has
grown at a rate of S$500 million every year (Sexton 2014). Te another strong point is the
company has no debt. Such a financially strong position is unique in the airline industry.
Human Resource: The Singapore Airlines have a comprehensive human resource
management system that training and motivation programs for its employees. The companys

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labour cost is lowest as compared to other airlines (Hill, Jones and Schilling 2014). The
company has got consecutive awards for its employee training programs and has spent
enough in training the employees. It believes that the essential factor for success of any
organization is human resource. To motivate the frontline staff, the company has started
programs like, outstanding service on the ground floor which is unique and valuable in nature
and is difficult for other company to imitate its culture.
Technology: In terms of technology, Singapore Airlines is the first to launch several
innovative products like, in-flight entertainment system for customers and global satellite in
flight fax and telephone service (Hill and Jones 2013). Further, in regard to pre-flying service,
the internet check-in service and centralized baggage tracing unit system was introduced by
Singapore airlines which had made the management of handling baggage effective.
Reputation: The Company has established a unique reputation and goodwill by
winning about sixty awards in various categories at the national and international levels.

Distinctive Capabilities

Value Chain Analysis

Singapore Airlines is known for its differentiated customer service by providing
innovative and premium quality service. The company has been able to create a value in the
minds of customer that in-flight crews of the airline provide the best hospitality as compared
to other airlines. This has been achieved by strategic brand positioning and advertising the
products through the image of a Singapore Girl (Heracleous and Wirtz 2014). The after
sales service by the airline is different and unique to retain the customer. The company
strategy of entering into membership with Star Alliance to share the lounges and terminals
and expand the route network has given frequent benefits to the regular fliers and helped the

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company to spread the service globally. The company is able to provide best of the customer
service by training its employees through rigorous training programs which had made them
efficient and helped them to provide flawless service to the customer The company is able to
maintain a fleet of latest aircraft with low maintenance cost and safety assurance from any
kind of flight accidents.

Proposed Strategy
The SWOT analysis of Singapore Airlines identifies that that the strength of the
airline is its brand image, size and its positioning strategy. The company has always been
benefitted by applying the first mover strategy and always being ahead of its competitors in
terms of quality and price. However, the company faces a weakness in the market in terms of
huge competition for short haul carrier and loses the customers due to large number of low
cost carrier in the South East Asian markets (Abdi et al. 2013). The company is even not able
to attract more passengers in the home land because the homeland customers are already
matured and there is more demand for short haul route than the long haul route, which faces
huge competition. Moreover, the company also faces huge competition in North American
market and unable to develop competitive advantage against the rivals.
Singapore airline has the opportunity to avail the resources of 24 members companies
of the Star Alliance, which is the most successful airline strategic alliance. Hough the
company is struggling in some market, in markets like India its flourishing in a joint venture
with Tata Sons.
The threat to the airlines is the rapid growth of several airlines of Middle East, like,
Etihad and Emirates which are adopting similar positioning strategies as the Singapore
airlines (Heracleous and Wirtz 2012). Initially the airline was the leader in business class
products but now similar products are introduced by airlines like British Airways.

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The TOWS analysis can be drawn from the SWOT analysis which helps to identify
the proposed strategy. The company can diversify their market by using their strength and
opportunities. To overcome the threat, the company can adopt the strategy of merger and
acquisition with some airline companies in South East Asian countries and North American
region (Heracleous and Wirtz 2012). To avoid the weakness of low cost competition in short
haul sector, it can apply the cost leadership strategy. Further, internal factors can be
developed to overcome the threat and weakness of the company.

Strategic Evaluation
The evaluation of the strategies can be done by using SAF (suitability, acceptability,
feasibility) model. The suitability evaluation of the strategies can be done by understanding
the external environment analysis. It examines whether the strategic options are suitable
under the given external environment (Fan and Lingblad 2016). The threat and opportunities
can be most suitably dealt by availing the opportunities and encounter the threat by making
alliances with the local companies. The company merger and acquisition strategy is most
suitable to combat the threat from competitors.

The

company

can

also

avail

the

resources of other member companies of Star alliance which is the most suitable strategy and
can aim at obtaining cost leadership.
Feasibility focuses n whether the company has the requisite resources to continue with
the strategic choices. The feasibility analysis helps to evaluate the internal capacities of the
organization. The strength and weakness of Singapore airlines helps to do the feasibility
analysis. The most feasible strategy will be to adopt the policy of diversification and enter the
market in alliance with domestic companies given the suitable external environment and
internal resource capacity (David and David 2016). The Singapore Airlines has 88
destinations in 38 countries that create a suitable external environment to emphasize on

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diversifying their route to get the competitive advantage. Further the companys strength is its
internal efficient resource and low cost operation which makes it feasible to diversify the
products and expand its market. The company should however strengthen its asset turnover
ratio to make diversification of product effective.
Acceptability focuses on financial and shareholders aspects of the strategy. It
examines the risk and return of the strategies and the reactions of the stakeholders towards
the strategy (Eden and Ackermann 2013). The risk and return can be examined by capital
budgeting techniques and then if it satisfies the conditions of the techniques then it can be
evaluated. The reaction of the stakeholders is reflected through the share prices and if it is
favourable then the strategies should be accepted. The financial tool that can be applied is Net
Present value method, Internal Rate of Return Method, Payback method and others.

Conclusion
The paper describes the strategic plan of the Singapore airlines by discussing the
several points like mission, vision and objectives of the company, environmental analysis at
macro level, industry analysis, and capability analysis. The paper also states the proposed
strategy and strategy evaluation method of the company.
The vision statement of the airlines indicates that the company is responsible not only
for attaining excellence in the airlines industry but also to be a good citizen by improving the
lives of the people The mission statement means to satisfy the shareholder by giving them
good returns by providing superior service at competitive price and generating a yield that
helps in expansion and modernization of the airlines. Further, the objective of the company is
to ensure the security of the people and deliver the best of the service to the customers.

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The environmental analysis is done through Pestle which explains the affect on the
organization due to the changes in the external factors. The industry analysis is done through
Porters Five Forces which identifies that the most strong and the most weak forces of the
market that affects the growth and development of the company. The threshold capabilities
and the distinctive capabilities of the organization s studied in terms of basic resource
analysis and value chain analysis. Based on the SWOT and TOWS analysis, the paper
proposed the strategies that need to be adopted by the company and later the evaluation of the
strategies are done through Suitability, Acceptability and feasibility analysis.

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14

References
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Journal

of

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Wirtz, J. and Heracleous, L., 2013. Singapore Airlines: Managing Human Resources for
Cost-effective Service Excellence.

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