Write an essay on Singapore Airlines.
Singapore Airlines is the national airlines of the country Singapore. It also has international presence. Their main markets outside Singapore is Asia and Australia. This company was started in the year 1972, and since then the company has grown by leaps and bounds and have been successful in making a strong presence in the airline industry. It has proved to one of the world’s largest and one of the most successful airlines in the world. It is one of the first choice of the customers while choosing their airlines for any travel purposes. It has achieved so much because they follow a very clear mission statement: “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.” (Singapore airlines, 2014). On the other in this paper, we will evaluate how effective are its human resource management and how do they manage their processes and their employees (Clarke, 2014). Are the processes followed by the company are robust and effective enough to sustain in the long run? For this analysis different model will be used such as PESTEL analysis, Porter’s five force model, strategic recommendation to the company, etc.
PESTEL analysis is basically used with the motive of understanding the political, economic, social, technological, environmental and legal effects in the company and the market as a whole. It is also used to understand how the company should react to such situations (LIU, 2015).
We know that the Singapore Airlines operates in multiple countries and hence it is very important that the political system of different countries should support the company. It is known that every country has their own national airlines and those airlines as they are the national airlines and also carry the national flag along with them get the maximum support from the government. So in such situation, it is difficult for the company to mark its presence in different countries. Also, in the home country, it is very important for the airlines to get full support from the government otherwise it can have disastrous results (Dombrowski, 2014).
Also, as we know that the Singapore Airlines operate in different countries and they have their resource team with people from different countries they are affected by the variation in the national and international economy. Another important economic aspect which the airlines has to take care about is the increase in the fuel prices. For example, the political instability in the Middle East, in 2011 also called as Arab Spring has resulted into unprecedented levels of fuel pricing. This has a direct impact on the airline’s fuel cost (Prajapati, 2014).
Social customs and beliefs also has an impact on the airlines company. Earlier travelling to the exotic locations of tropical destinations were considered to be meant for only the rich and filthy people. But as the disposable income for people started increasing since 1980, people who earlier did not consider such trips also started engaging in planning such trips and make use of the airlines (Nguyen, 2014). These airlines trips became more affordable to the common people. Also, in some way it has also observed that the preferences of the people have changed. Earlier who only used to choose the premium packages and flights are not shifting towards the low cost airlines as and when the services for them are increasing and getting better (Whyte, 2012).
In a market like airlines where the market is almost saturated, it has become very important for the companies to be on their forefront in terms of the advanced technology they use as this becomes the differentiating factor for them. The company spends a bomb over research and development to make sure that what they offer to the customer is of best quality and customer enjoy the new technology used by the airlines company (Shah, 2015). The Singapore airlines had used the technology to the best possible manner, they have the youngest crew in their company, they are the company who has proudly participated in new innovations, such as headsets, reclining sets, best entertainment systems.
This is one of the most important factors considered by the customers before making their travel plans. They always expect to have a very environment friendly behavior from the crew members and a comfortable experience with any airlines they choose. This expectation is also expected to increase in the coming future due to increase in energy prices and carbon reduction targets set by different countries (Schmidt, 2013). So it is very important that the company has a strong initiative to support the green initiatives and try to keep the environment as clean as possible (Kankaew, 2015).
Any Company is most affected by the changes in the legal framework or with introduction to new legal laws. As the company operates in different countries so different countries will have different laws and the company has to follow all of them. For example, the terror attack on the WTC in US was a major setback and after that lot of regulatory changes were done which hampered the aviation industry as a whole (Chen, 2015).
Porters five force model was basically introduced by Michal Porter in 1985 to understand the impact of 5 different external factors which have a huge impact on any company. These factors as listed below:
If these factor has an impact in the company then it is very obvious that any company has to consider all these factors before formulating their strategies and future planning (Roy, 2015). Same goes for the Singapore Airlines as they also have to react to these factors and take decisions accordingly.
Here, it is needed to be understood that how new entrants in the airline industry will affect the revenue of the Singapore Airlines and how should they react to such situations. For Singapore airlines, threat of new entrants is really weak as it is very comfortably leading the choice of the long-haul passengers which is leading the Singapore Airline’s market activity (Delbari, 2016). This is because the long-haul airline industry is pretty much saturated and there are only one or two dominant players in such market which includes the national carrier. There is ample amount of support from the government for such airlines.
There is of course serious competition available in the airline industry as well but it are dependent on the route by route basis. There are different route which there are different airlines operating very well and hence on such routes, the competition is fierce (Thomas, 2013). For example the route from London to New York or from Frankfurt to Paris. The only way to win such routes is to cut down the prices for the customers with better services. Also, there are several routes which are dominated by one or two airlines. For example the route between Southeast Asia, New Zealand and Australia have very few carriers and hence have low competition.
This means what is the probability that any product of service in the market can be replace by any of its substitutes. Again, this analysis can be done by distinguishing between the long- haul and short-haul arms of the Singapore airline’s operations. Singapore Airlines do face some moderate threat in the short- haul section as there are several substitutes present which may provide better services than Singapore Airlines and lower cost. As Globalization has been introduced in several sectors, there has been a lot of investment in the in the routes which have been served by Singapore Airlines (Clarke, 2014).
The bargaining power of the airline customers is average. The cost that the customer has to bear to switch from one airline to another airline is very low. These cost comprise of the emotions, cost, time, opportunity and cost to be borne by the customers. The passenger flights has to face this fear of switching cost as this has become very less over the last one or two decades. This is because of the increase in the internet presence and decrease of the travel agents and street airline offices where customers blindly trusted few airlines.
For the airline industry, the bargaining power of the suppliers are too high which is quite unusual as compared to other industries. The planes are being supplied to the airline companies by 2 major suppliers: Boeing and Airbus. So it is in the hands of the suppliers to set negotiation terms.
There are several recommendations which can be proposed to the Singapore Airlines for their betterment. Some of them are as follows:
Conclusion
The paper has very well analyzed the business environment of Singapore Airlines and how different factors affect the business of Singapore Airlines. Also, we have seen how the company plans to tackle these external factors. This analysis also shows that the company is in a very good situation in the marker and is expected to perform very well in the coming time as well. There are several threats available in the market which the company has to take care of but otherwise the company’s performance is commendable. It is in a way leader in its segment and has proved to be constantly chosen as the best airlines by their customers. Also, at the same time, the company need to develop new market as well like they are doing right now in the markets of India and North America. It also has plans to develop low cost airlines so that they can meet the changing demands of the customers and to be on the forefront to fight the tough competition available in the market.
References
Clarke, A. P. (2014). Strategic analysis, valuation and market mechanisms: the 2012 Initial Public O ering and subsequent trading of Japan Airlines.
LIU, Q. (2015). Analysis of high end tourism market in China-Targeting bespoke tour-New high end tourism (Doctoral dissertation).
Dombrowski, J. (2014). Business Model Changes of an Incumbent Player in the European Airline Industry: A Case of the Lufthansa Group.
Prajapati, K. B., Jadeja, S., & Goswami, M. (2014). PEST Analysis for Indian Luxurious Hotel Market. Asian Journal of Research in Business Economics and Management, 4(3), 205.
Nguyen, G. (2014). Air Freight Service Development Plan: Case: CMA CGM Logistics Vietnam.
Whyte, R., Prideaux, B., & Sakata, H. (2012). The evolution of Virgin Australia from a low-cost carrier to a full-service airline–implications for the tourism industry. Advances in hospitality and leisure, 8, 215-231.
Shah, S. T. H., Jamil, R. A., Shah, T. A., & Kazmi, A. (2015). Critical Exploration of Prescriptive and Emergent approaches to Strategic management: A review paper. International Journal of Information, Business and Management, 7(3), 91.
Schmidt, F. (2013). Supply Chain Trends impacting the Air Cargo Industry: Assessing Trends and their Impacts in three Industry Sectors (Doctoral dissertation, TU Delft, Delft University of Technology).
Kankaew, K., & Nok, U. T. (2015). Thai Airways International: the World economy Crisis Resolutions. ACTUAL ECONOMY: LOCAL SOLUTIONS, 3.
Chen, L., & Pawlikowski, H. (2015). The expansion of low cost carriers into the long-haul market: a strategic analysis of Norwegian Air Shuttle ASA.
Roy, A. (2015). What determines airline profitability: industry conditions or firm level capabilities?. Academy of Taiwan business management review,11(2), 17-23.
Delbari, S. A., Ng, S. I., Aziz, Y. A., & Ho, J. A. (2016). An investigation of key competitiveness indicators and drivers of full-service airlines using Delphi and AHP techniques. Journal of Air Transport Management, 52, 23-34.
Thomas, H., Smith, R. R., & Diez, F. (2013). Human capital and global business strategy. Cambridge University Press.
Clarke, A. P. (2014). Strategic analysis, valuation and market mechanisms: the 2012 Initial Public O ering and subsequent trading of Japan Airlines.
Dombrowski, J. (2014). Business Model Changes of an Incumbent Player in the European Airline Industry: A Case of the Lufthansa Group.
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