Corporate Competitive Strategy: A Case of Singapore Airlines

Executive Summary

Strategic corporate management requires experts to conduct an environmental scan and establish factors that impact of operations within the industry in question. The report establishes a strategic analysis of Singapore Airlines as one of the largest carrier aircrafts in Singapore. The paper begins by scanning both the external and internal environment of the company and goes further to provide challenges that are facing the Singaporean firm. Equally, it is in the interest of the report to come up with strategic policies and implementations that can solve various issues that are facing the firm within the airline industry. For example, geo-political conflicts such as the outbreak of covid-19 have impacted firms in the airlines industry in a significant manner. Managers in such industries should come up with policies that can help recover from the same. In essence, the paper explores corporate strategy management of the Singaporean Airlines as a way of gaining a deeper insight into aspects of governance in multinational corporations.

1. Introduction

Firms that operate in the airlines industry have faced many challenges during the outbreak of covid-19 in a significant manner. Singapore Airlines is the main flab carrier airline firm in the country that has been a pillar to various operations (Heracleous and Wirtz, 2012). It is vital for the report to conduct an environmental scan on the operations of the company with a view of establishing aspects that have been impacted as a result of the outbreak of coronavirus. Singapore Airlines is a suitable option for the report as it is one of the main flab carrier firms within the industry (Wirtz, Heracleous and Pangarkar, 2008). The paper will begin by coming up with an external and internal environmental analysis with a view of establishing challenges that have been or that are detrimental to the wellbeing of the firm (Goh, 2005). Equally, there is a need to give action based recommendations that can help solve issues that have been identified.

2. Environmental Analysis

2.1 External Analysis

2.1.1 Political Factors

One of the most important political factors that have led to stabilization of the firm in the industry is the steady and stable local political landscape. The government in Singapore has provided strong backing for the SIA with a view of making the company make an impact in the industry. Second, political developments in the region are another challenge or opportunity for SIA to do better and increase its coverage.

2.1.2 Economic Factors

The airplane industry is huge and depends a lot on fuel and the lack of stability in such prices has negatively impacted SIA. The fluctuation of fuel turbine prices and lack of stability is a challenge that has impacted operations of the firm (Heracleous and Wirtz, 2012). Equally, an adverse currency change is a factor that impacts ticket prices and other things within the industry.

2.1.3 Social Factors

Shifting of consumer preferences within the market is a social aspect that has impacted provision of services by SIA. For instance, an increase in disposable incomes of individuals within the country can lead to changes that impact customers flow. Equally, the change of consumer perception over low cost airlines is a problem that the Singapore Airlines is facing.

2.1.4 Technological Factors

The airline industry is highly dependent on technology and new developments to provide the best of services to each customer. Singapore Airlines has done well to ensure that it has improved technological infrastructure in its bid to match what other competitors are providing in the market (Pramitha, Wasito and Ozali, 2018). It is also important to note that SIA has made a huge investment in R & D as a way of coming up with strategies that can promote performance.

2.1.5 Legal Factors

Changes in regulatory rules and frameworks on global front have impact operations of Singapore Airlines in a significant manner. For instance, travel restrictions that have been established as a result of coronavirus outbreak have negatively impacted travel operations in a significant manner. SIA is strategic in the manner that it conducts its activities to avoid getting into loggerheads with compliance authorities.

2.1.6 Environmental Factors

Singapore Airlines has done well in managing its environmental systems and green practices. It is the role of each corporate company to come up with strategic approaches to handling of the environment (Wirtz, Heracleous and Pangarkar, 2008). As such, SIA has invested in various community responsibility programs and ensured reduced emission of waste to the environment. It is important to note that SIA ensures efficient utilization of resources as well as complying with the requirements of IATA’S four pillar strategy.

2.1.7 Threats of New Entrants (Low)

The airlines industry is a capital intensive investment that requires new players to set up operations within the country. The threat from new entrants is highly minimal as new players must assemble enough resources for the same (von Beuningen, 2014). Singapore Airlines is better placed as it enjoys support from the government as well as a strong financial background. With low threat of new entrants, SIA enjoys more profits since no new entrants can affect its operations outright. In essence, Singapore Airlines enjoy a low level of threat from new entrants due to investments made.

2.1.8 Bargaining Power of Suppliers (High)

The bargaining power of suppliers in the airline industry is high as companies do not have much control over aspects such as price fluctuations (Schefczyk, 1993). The fluctuations that are notable in the fuel market and other aspects leave little chance for companies to control some aspects in the market. The airline industry has a high bargaining power of suppliers, which makes it hard to control prices and profitability significantly.

2.1.9 Bargaining Power of Suppliers

The bargaining power of buyers in the airline industry is very high as customers opt to travel and utilize affordable airlines. It is important to note that Singapore Airlines is one of the companies impacted by a high bargaining power of buyers (von Beuningen, 2014). Customers can enjoy the comfort of comparing prices online through applications such as Skyscanner and Expedia. High prices for customers scare them off to utilize of affordable firms as a means of travelling.

2.1.10 Threat of Substitution (medium to high)

The airlines industry is faced by a high level of threat from substitution as other firms might offer appealing prices for the customers (Wirtz, Heracleous and Pangarkar, 2008). When customers have other options that are efficient, Singapore Airlines operations can be jeopardized in one way or the other. Considering factors and other aspects that impact travelling decisions within Singapore, it is fair to conclude that the threat of substitution in the industry ranges from at least medium to high.

2.1.11 Competitive Rivalry (High)

Threat from competition in the industry is a great determinant towards establishing a successful corporate strategy for any organization. For instance, the development of low cost carriers has changed the way organizations should position themselves in the market. Singapore Airlines faces competition for other established firms in the Singaporean market (Chen and Muzi, 2013). In essence, the threat from existing competitor firms is an imminent problem within the airline industry. The airlines industry experiences a high level of competitive rivalry among all players, which necessitates SIA to adopt strategic approaches to handling of the same.

2.2 Internal Environmental Analysis

2.2.1 Valuable

It is important to explore how valuable Singapore Airlines is to its customers and other stakeholders within the industry. The value of a company in the market or industry is determined by the value it creates utilizing existing resources (Pramitha, Wasito and Ozali, 2018). Through various operations and practices, SIA has managed to handle its resources well for a competitive advantage. This includes human resources, marketing expertise and operations management.

2.2.2 Rarity

SIA operates in the airline industry and has managed to provide operations similar to those of established competitors in the market (Pramitha, Wasito and Ozali, 2018). However, the airline industry is capital intensive a factor that has locked many players out. The resources utilized by firms in the industry are rare, which scares off new entrants and firms that have not established well.

2.2.3 Imitable

SIA can gain a competitive advantage ahead of the rest and ensure that its resources are not imitated by other players. However, the airline industry is optimal in a manner that cannot guarantee a firm to come up with differentiated services (Chen and Muzi, 2013). SIA has optimized its operations to ensure that its services are of a higher quality to avoid imitation from other players.

2.2.4 Organizational Competence and Capability

The most valuable, rare and inimitable resources for the company should be protected and utilized to give SIA a competitive advantage (Wirtz, Heracleous and Pangarkar, 2008). For instance, its financial background and support from the government has played a critical role in promoting operations. SIA is strategically organized and all activities are coordinated well within the industry.

2.2.5 Tangible Resources

It is vital to explore tangible resources utilized by the firm to ensure that operations run smoothly within the industry. Tangible resources include physical assets including land, premises and other financial resources (Schefczyk, 1993). For instance, the communication systems or infrastructure utilized to control operations is an illustration of tangible resources. Equally, craft and other management systems imply tangible resources.

2.2.6 Intangible Resources

Intangible resources for SIA include all non-physical assets that contribute towards improved operations in the industry (Chen and Muzi, 2013). For instance, goodwill, intellectual property rights and customer lists form part of the intangible resources that the company should utilize. SIA should ensure the resources are utilized well within the industry to help it gain a competitive advantage.

3. SWOT Analysis and Issues Facing the Company

3.1 SWOT Analysis

3.2 Issues Affecting SIA Operations

It is important for the report to assess Singapore Airlines and come up with a set of issues that impact operations and profitability in the airline industry. The first issue or challenge that imminently faces the company includes a high cost of operation (Goh, 2005). The company is reliant on turbine fuel prices that experience fluctuations that are uncertain. In essence, the cost of operation increases in a significant manner. Second, increased competition from well established players in the market has left the company exposed to fierce price wars in the market. Increased rivalry in the market reduces the potential of SIA to attract higher profits (Pramitha, Wasito and Ozali, 2018). The third issue that affects operations of the company includes geo-political tensions that can lead to government shutdown. The issues raised have been selected on what has impacted the profitability of the airlines in a significant manner.

4. Action Recommendations

4.1 Strategy 1: Implementation of cost-cutting measures

It is important to highlight that players in the airlines industry utilize strategic approaches towards handling of cost-issues in a bid to reduce expenses related to each operation. Notably, the airline industry is expensive to maintain and operate and it is the duty of the management at Singapore Airlines to come up with strategic measures that can help reduce operating costs (Heracleous and Wirtz, 2012). For instance, the outbreak of coronavirus has hit many firms in the airline industry due to travel restrictions that have been in place for over a year now. Singapore Airlines is not an exception and one of the measures taken to cushion the financial status of the company is to lay off some workers. It is crucial to note that laying-off employees has been an option for many companies due to unfavorable business environment. In essence, SIA should strategically apply the right procedures and ensure that /the company is cushioned against economic shocks as a result of future pandemic outbreaks (Goh, 2005). Other cost-cutting measures that can be employed to reduce the expense of operation for SIA include reducing rates that employees are paid, streamlining the supply chain and advocating for sustainable financial practices. Companies that have achieved or implemented the status have proved to be efficient in the airline industry.

Employees within a company are essential in helping organizations achieve their goals in a significant manner. As such, reducing pay for employees might not be a long-term solution towards the same (Baxter and Srisaeng, 2018). However, reducing the number of hired professionals can prove to strategic towards the same. Singapore Airlines should make a move towards adopting the right strategies that can help reduce costs at the same time keep employees happy. Failure to adhere to such measures can make the organization fail to retail experienced professionals who are more productive (Wirtz, Heracleous and Pangarkar, 2008). It is the duty of management at Singapore Airlines to purposively reduce costs of operations by retaining experienced employees. This is because new employees require training and would take time to adapt to the new working environment conditions (Pramitha, Wasito and Ozali, 2018). New employees would make SIA incur financial costs that would otherwise be avoided by retaining experienced ones. The airline industry requires that operations are efficient in a manner that can reduce costs of operation in a significant manner. Equally, reducing consumption of fuel turbines by introducing innovative approaches can help reduce costs for SIA.

4.2 Strategy 2: Reduce Competition in the market

The airlines industry in Singapore has many players who have established and any chance to reduce competition for SIA would prove instrumental towards its operations. For instance, coming up with improved customer care services that are exceptional from competitors can prove useful (Fan and Lingblad, 2016). It is the duty of management at Singapore Airlines to use the right approaches and ensure that competition is avoided by having exceptional customer care services. It is important to highlight that poor customer service in any airline industry would consequently impact operations. SIA should purpose to train and develop skills of all employees working for the organization as a strategy towards ensuring they remain exceptional in the market in terms of delivery (Lim, 2017). Poorly trained customer service employees can cost SIA its reputation in the airlines industry and management must purpose to develop them. For instance, having workshops and being trained on leadership skills can prove strategic to improving services (Schefczyk, 1993). It is also crucial to note that with trained professionals, a company can reduce competition in the market significantly. As such, SIA must reduce competition by ensuring exceptional service provision to all clients in the airlines industry.

Another approach that SIA can use to reduce competition in the airlines industry is installing high quality aircraft interior products. Poorly furnished interior aircrafts might fend of customers, especially those belonging to the higher social class (Fan and Lingblad, 2016). Services should be thrilling and appealing to customers as well as costs involved. For instance, improving cyber security for the airlines would prove instrumental towards improving the safety of each passenger. Failure to administer high level security can lead to loss of client loyalty as safety and privacy should be paramount. Airlines that have improved security systems have proved to retain their clients as customers prefer safety and convenience (Wirtz, Heracleous and Pangarkar, 2008). Equally, employing improved communications systems is another approach to improve efficiency in the airlines industry. Singapore Airlines should be strategic in a manner that guarantees constant and effective communication to all stakeholders within the organization. Employing integrated methods towards marketing and communication is an approach that can prove strategic to Singapore Airlines operations. For instance, use of social media services to communicate and update all stakeholders at any given time can help maintain an effective run of operations (Lim, 2017). Singapore Airlines as a potential of doing better in the market by ensuring the issue of competition is reduced by effective communication services. Ignoring communication operations for the organizations might deny Singapore Airlines the chance to gain a competitive advantage in the market.

4.3 Strategy 3: Getting ready for geo-political tensions

It is vital for each airline industry to be ready for each geo-political tension that may arise. Singapore Airlines is not an exception and it is the duty of its management to come up with contingent strategies that can control such incidences (Fan and Lingblad, 2016). For instance, issues such as Brexit and the outbreak of coronavirus across the world have impacted airline industry operations significantly. The airline industry has been significantly hit by travel restrictions that have affected their potentiality of making more profits. Some countries went into a total lockdown implying that no one can travel (Lim, 2017). Such geo-political tensions are epidemic to the airline industry, which requires firms in the industry to adopt measures that can help face the same. SIA should find ways of approaching the matter as a way of reducing any disruptions as a result of the government or political inequities (Baxter and Srisaeng, 2018). The outbreak of covid-19 has taught many multinational companies of crucial strategies that should be in place to void disruptions. The virus has shown the world that there is a need to have a contingent plan that can help business operations run and avoid disruptions.

Political conflict between two countries is a factor that can limit or disadvantage the airline industry operations in a significant way. As such, it is the duty of Singapore Airlines to maintain good relations with the community and the globe at large (Fan and Lingblad, 2016). Failure to fix such can be detrimental towards administering diversity in business, which can promote operations significantly. For example, companies that have employed people from diverse backgrounds might be attractive to customers than those who show discrimination (Wirtz, Heracleous and Pangarkar, 2008). SIA should ensure its management has the right leadership skills that show liberty and respect for all customers as a way of ensuring that they are comfortable. Having plans in place that can serve as a cushion to operations of a company during geo-political conflicts can prove instrumental. For instance, some nations could not allow entry of crafts into their territory due to the outbreak of the pandemic. Some countries were labeled hotspots and planes could not enter to and from such countries (Lim, 2017). The outbreak should serve as a case study for the airline industry, which has been affected and hit by covid-19 significantly. Much should be implemented by the company management as contingent strategies to boost operations during geo-political outbreaks such as covid-19.

5. Personal Reflection

Completing the report on Singapore Airlines has helped me gain a lot of insight towards corporate governance. For instance, I have noted with concern that conducting an environmental scan for any industry is essential for strategic planning and decision making in any organization (Baxter and Srisaeng, 2018). Singapore Airlines is a suitable example of a company that has been hit by covid-19 and exploring its strategy has helped expand my scope of understanding regarding management of organizations (Fan and Lingblad, 2016). Another important aspect that I have noted during the completion of the assignment is that some tools are essential in determining the position of a company in an industry. For instance, porter’s five forces of competition have helped e understand that competition within an industry should be minimized for maximum profits. Equally, I have learned that making strategic decisions for any business should be based on merit and not projections that have no facts (Heracleous and Wirtz, 2012). I will use the information and knowledge gained from the completion of this assignment to deliver in a professional manner in any capacity I will feature in future.

References

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