Discuss about the SWOT Analysis of Singapore Airlines.
Strategic management can be considered as the pillar behind the development of business strategies for the organizations. To the business organizations, strategic management is one of the major tools for the achievement of organizational goals and objectives (Hitt, Ireland & Hoskisson, 2012). On a more precise note, strategic management refers to a particular process undertaken by the organizational managers that includes the processes of planning, monitoring, analysis and assessment of business strategies in order to achieve goals and objectives of the companies. Strategic management includes the process of formulation and implementation of major organizational strategies. The organizational managers can identify the major strategies issues in the organizations with the help of strategic management so that effective strategies can be developed in order to diminish them (Hill, Jones & Schilling, 2014). Organizational managers use some specific strategic tools in order to identify strategic issue in the companies. One of those major tools is SWOT Analysis. Organizational managers are able to identify the major organizational strategic issues with the help of SWOT analysis. The main objective of this research is conducting a SWOT analysis on Singapore Airlines and after that, to identify two major strategic issues of the company. Singapore Airlines is the flag carrier of Singapore and the airline is its hub at Singapore Changi Airport. Singapore Airlines commenced its operation in the year of 1947. At present, the employee base of the company is about 25000 (singaporeair.com, 2017). Based on the whole discussion, a conclusion is drawn at last.
As per the above discussion, SWOT analysis is considered as one of the major tools of strategic management as it helps the organization managers to identify the strengths, weaknesses, opportunities and threats of the companies (Eden & Ackermann, 2013). The major aim of this part is to conduct a SWOT analysis on the business operations of Singapore Airlines. The SWOT analysis is shown below:
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Strengths |
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· The adoption of Multi Brand Model strategy has been one of the major strengths of Singapore Airlines. In the year 2012, Singapore Airlines launched Scoot that became one of the three long-haul low cost carriers (Thedrum.com, 2017). Singapore Airlines has been able to register profit for consecutive thirteen years and the profit margin has been high in the last five years. · Singapore Airlines is well known as the company has been providing their customers with premium quality of products. These premium products have been a major strength of the airline as it has differentiated the company from its major competitors. · Singapore Airline is the largest Asian Airline in whole Europe that helps the airline to position their premium products (singaporeair.com, 2017). This is a major strength of Singapore Airlines. In Europe, Singapore Airlines operates in eleven destinations that have almost 70000 weekly seats. Thus, the company has become able to compete with the European airline companies. · Apart from Europe, large presence of Singapore Airlines can be in the Australian and New Zealand market. Currently, Singapore Airlines operates in seven Australian destinations with a capacity of 85000 seats. In New Zealand, Singapore Airlines operates with more than 11000 seats. All these aspects together has made Singapore Airlines the second largest foreign airlines in Australia and fourth largest in New Zealand. · It is remarkable that Singapore Airlines has been profitable in every year since it has started operation 40 years ago. This can be considered as the most dominated strength of the airline. Among all the airlines of Southeast Asia, Singapore Airlines has been able to register the most amount of profit as the airline has been performing significantly over all these years. |
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Weaknesses |
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· It can be seen that maintaining the opportunity of growth has been one of the major weaknesses of Singapore Airlines. In the recent years, the average growth rate of Singapore Airlines’ passengers has been less than 2% per year and the growth in passenger tariff is low. The main reason is the limited growth opportunity of passengers (reuters.com, 2017). · It can be seen that Singapore Airlines has not been able to access the market of North America and it is a major weakness of the company. In the US market, Singapore Airlines holds the position of ninth. Being not able to make business in the American market is a limitation of the business operation of Singapore Airlines (straitstimes.com, 2017). · Chine is one of major markets for Singapore Airlines and slow growth in Chine has become a weakness for Singapore Airlines. In the last eight years, only 30% growth has been registered in the business of Singapore Airlines in China. However, it needs to be mentioned that there is still major business opportunities for Singapore Airlines in China. Inability to register growth in china is a major weakness for Singapore Airlines. · Being reluctant in entering into partnerships like joint ventures is a weak area for Singapore Airlines. Over the years, Singapore Airlines do not have any partnership or joint ventures with any of the major companies. In addition, small ventures are not working for the company. Thus, it is a major weakness for Singapore Airlines. |
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Opportunities |
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· There is a huge opportunity for Singapore Airlines to enter into deeper partnerships so that the company can improve its weak areas. Under the leadership of Mr. Goh, the CEO of the airline, Singapore Airlines has become able to enter into eight major partnerships along with several others. · As per the announcement of Singapore Airlines on May 2014, the airline has been working on the development of major premium economy products that includes the introduction of long-haul aircraft 2H2015. For this reason, Singapore Airlines has identified major market segments for premium economy products. This will create major business opportunities for Singapore Airlines. · The joint venture of Singapore Airlines with Indian conglomerate Tata will provide major business opportunities for Singapore Airlines. The main reason of this partnership is that India has been providing unique growth opportunities for Singapore Airlines. This partnership will be helpful to unlock growth opportunities for Singapore Airlines (airvistara.com, 2017). · The introduction of Scoot in the year 2012 has opened a new market for the company that has a huge potential growth opportunity. In the recent years, major partnership can be seen between Scoot and Nok in order to establish new long-haul low cost carrier and it is called ScootNok. |
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Threats |
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· Large increase in the number of Gulf carriers is creating threat for Singapore Airlines as these carriers have been affecting the profitability and growth of the company. The impact of Gulf carriers can be seen in major markets where Singapore Airlines operates like the markets of Asia, Europe, Australia, New Zealand and others. Thus, the huge and aggressive competition from Gulf carriers is a major threat for Singapore Airlines (asean.travel, 2017). · It can be seen that the Southeast Asia market has been suffering from overcapacity as many competitors of Singapore Airlines are operating in this market. Thus, mismatch in demand and supply can be seen as supply is more than demand in this industry. Hence, it can be said that the increasing amount intense competition is creating threats for Singapore Airlines. · It is a fact that Singapore Airlines has been the market leader in terms of premium space. However, it can be noticed that the increased competition in this segment is narrowing the gap with Singapore Airlines. In the near future, this can be a major threat for Singapore Airlines. · It can be seen that the rival companies of Singapore Airlines are gaining massive strengths day by day with the help of effective strategies. This can also be considered as a threat as it can affects the growth and profitability of Singapore Airlines. |
Analysis of the operations of the corporation Singapore Airlines (SIA) reveals the fact that financial performance of the company has deteriorated with steady decline in its profit over the past several years. The poor financial performance of the company is said to be driven by intensified competition and difficult market condition. In the recent years, SIA has encountered biggest challenges and has carried out numerous strategic adjustments ever since Goh Choon Phong assumed charge as the chief executive officer (CEO) at the start of the year 2011. The present section identifies the critical strategic issues faced by the company based on analysis of the current situation of the company and SWOT analysis
Strategic Issues faced by Singapore Airlines in attaining growth opportunities
Based on the SWOT analysis of the company Singapore Airlines, it can be hereby mentioned that a specific strategic issue of SIA is the overcapacity present in the Southeast Asian market. Increase in the competitors of the company SIA counting the LCCs along with the full service flags have led to the excess supply in the market (Shaw, 2016). Therefore, it can be hereby mentioned that the opportunity of growth in the passenger of SIA remain exceedingly limited. Again, the home market of SIA is comparatively mature and for the last decade has witnessed swift growth of Low cost carrier (LCC) carrier, however, has slow growth of full-service. Furthermore, SIA also has conventionally depended on sixth freedom passage; nevertheless, transit growth witnessed in a wide-body network is restrained by intensifying competition, specifically from Gulf Carriers.
In the course of growth of the middle as well as middle class, the overall demand is still getting improved in the Southeast Asian region, however, the overall capacity is adding up a swift pace during the period of long term, medium term as well as short term markets (Johnston & Marshall, 2015). Therefore, this is developing pressure on specific load as well as yield facets of Singapore Airlines. Again, SIA also has reliably been a pioneer in the premium market; however, competitors have contracted the existing gap impressively as of late. In addition to this, SIA also has one of the major premium offerings in the business so far, but there are still lot of carriers at or at least close to the maximum point of the group. Essentially, the business class offerings on the larger part of the Singapore Airline’s long term force was necessarily presented during the year 2006. During this time, it spoke to a specific jump last contending different offered items. Nowadays, a few airborne transports have presented analogous business class offerings, bridging the gap with SIA. Indeed there are some air carriers of Europe and North America that had been quite a few eras behind, have now bridged the gap (Baker, 2014). Thus, it can be hereby mentioned that the entire airline industry can be considered to be one of the most competitive sectors and the rival airlines are attempting to acquire advantage of different opportunities and assess the requirement of the consumers to sustain in this competitive market (Keller and Kotler, 2015). Management of SIA is also concerned with the consolidated important competitors such as Emirates Airlines as well as Qantas Airlines operating in the Australian route. Moreover, the increase in the number of airlines specifically in the Gulf nations are remaining to be very much aggressive and large number of rivals for both economic as well as premium passengers in this specific SIA market.
Singapore Airlines also faces strategic problem in gaining accessibility to the market of North America and strategy adopted for China. The prospects of acquiring return to specific non-stops to particularly North America are almost nil. Consequently, SIA needs to depend on the fifth freedom in order to pursue growth in the non-stop service segment. However, these kinds of rights are difficult to secure as markets namely China would be perfect transit stops as SIA is not essentially open (Dickinson, 2014). Again, China also remains a strategic market for the company SIA. However, the entire group has successfully established new secondary markets utilizing Scoot, that now runs around 12 weekly flights to around four different Chinese destinations. Nevertheless, several attempts to carry out investment in different Chinese airlines have hugely failed considerably and the present political environment carries out specific deals, that are crucial for position of SIA for a long-term period in the important Chinese market (Baker & Saren, 2016). Thus, management of SIA hereby fails to develop a strategy to overcome the problem of accessibility to the market of North America. Again, management of SIA has also failed to properly implement an appropriate strategy for functioning in the Chinese market. SIA Group although operates in the market of China with 60000 complete weekly service seats. However, growth of the company has been comparatively slow and the capacity is approximately 30% over the past eight years. During the same period of time, the Cathay Pacific Group has extended operations in several parts of Mainland China by approximately 50% whilst three chief gulf carriers have enhanced their capacity, thereby eroding the share of the market of SIA in the concerning markets (Meffert, 2013). Thus, it can be hereby stated that SIA has failed to develop appropriate strategy of partnering with any Chinese carrier on regional connections (Foxall, 2014). However, its incapability to get codeshare as well as strategic partners together with the decreasing market share compared to rivals implies that China is not strength for the company anymore.
Another critical strategic issue that can be witnessed from the operations of Singapore Airlines include missing the opportunity of establishing Tiger Airways as a wholly owned subsidiary of SIA. Thus, the Tigerair was not incorporated into the group of SIA. Again, Tiger air can be considered to be unprofitable in the current years, bringing down the results of the SIA group. Again, the corporation also encountered disadvantage with essentially the geographic factor of the company (Sheth & Sisodia, 2015). Thereafter, the management of the company realized that long time flights are no more profitable for the corporation. The prospects of these flights are not very impressive. In addition to this, joint venture strategies for development of market of the firm have also become the weakness and critical strategic issue of the firm Singapore Airlines since the corporation fears about the dilution of the reputation of the brand (Kotler et al., 2016). The company does not engage in any of the metal unbiased anti-trust joint undertaking that have become widespread in the trans-Atlantic as well as trans-Pacific markets. These essentially have also begun to break through the Asia-Europe market. Quite a lot of of SIA’s Japanese as well as European rivals are engaging in these kinds of ventures, thereby presenting a competitive advantage, specifically on US routes of the operations of SIA. SIA only has joint collaborative operations with two different small carriers that again do not serve up Singapore.
Conclusion
In conclusion, it can be said that the management of Singapore Airlines has employed different innovative business strategies since the beginning that have supported the entire organization. However, decline in the level of profits recorded during first quarter of the financial year 2015 helps in indicating growing challenges for the Singapore Airlines. Analysis of the operations of the firm reveal that the operating profits of the firm have decreased by approximately 52% caused mainly by the swift changes in the conditions of the market and intensified conditions of the market. Thus, the current study helps in understanding the factors that are crucial to comprehend strategic limitations and issues of SIA.
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