Study On Singapore Airlines: PESTEL And Porter’s Five Forces Analysis

PESTEL Analysis of Singapore Airlines

Discuss about the Study on Singapore Airlines.

Singapore Airlines Limited, established in the year of 1947 is regarded as one of the successful pioneers of the aviation industry. The airline serves as one of the prominent representation of Singapore with its regional hub in Singapore Changi Airport. Owned under the collaboration of the firm of Temasek Holdings, and the Singaporean Government, the Singapore Airlines Limited has been one of the most significant airlines.  Operating in more than 32 nations and across 5 continents, Singapore Airline is one of the integral airlines in international airline industry (Limited S., 2017).

According to International Air Transport Association Singapore Airlines has aced many competitors and in market capture and capitalization. The airlines and their objective of “A Great Way to fly” was the first launcher of Airbus A380, making it one of the most innovative features of the organization. The airline boasts of covering a market share of about 6.5% in the international and most of South East Asia.

The global acknowledgment and recognition makes it as one of the most commendable and luxury specific airlines. In the Asia-Air Pacific region, Singapore Airlines is deemed as one of the most remarkable and consistent airline performer. According to their public profile, the achievement is stated “Today, our fleet of 108 aircraft is some of the youngest in the industry, with the average age standing at seven years and eight months.”

The history of Pestel Analysis goes back to the research led by Henry Mintzberg, Michael Porter and many other significant economists who developed a path breaking technique in business analysis. This analysis includes the Political, Economic, Social, Technological, Environmental and Legal factors of Singapore Airlines. It is an acronym which entails all the external factors that are inevitable in deciding and reviewing the current market scenario in regards too many aspects. It is one of the scanning tools used in the strategic management for different organization. The analysis for Singapore Airlines is:

PESTEL Analysis (Created by the author)

• Political: The political factor in this analysis entails the key legislations and regularity frameworks that are set by the federal system of the operating country. Issues like overseas markets, government policy, foreign trade policy, political stability or instability, tax policy, trade restrictions and environmental restriction which the airlines have to face is included within this.  This agenda also includes the intervention from the government in many cases. Singapore Airlines Limited mostly enjoys the benefit from the government as the People’s Action Party does not interfere unnecessarily in their operations. In fact the organization shares a viable relation with the government which facilitates the internal and trade relations with other countries like USA, Japan, Australia, India etc (Limited S., 2017).
• Economical: Determinants like disposable income percentage of the citizens, economic development, exchange rates and inflation really affect the business operations of an organization. In regards to Singapore Airlines there were many economic challenges which it faced due to the major financial crisis in the year 2009. Therefore it was supported with monetary aids from the Government. Even the initiatives introduced by the Singapore Government for enhancing the global accreditation for the country, the airlines played a major role as significant representation for the tourism department of Singapore, which eventually affected its revenue and its global appeal.
• Social: Any market research includes a socio-cultural criterion that identifies the diversity in our demographics. The social factor involves the age, interest, population, preference. Therefore this factor is very effective in deciding the actually production and image of the organization in the public view. Owing to the advantages of an immigrant country, Singapore has to serve a number of different individuals from different countries and nationality. In effect to this they have to maintain the diversity in food, in the addressable culture and any relevant issues that influence their customers and clienteles. ‘Kiasu’ or the workaholic culture prevalent in Singapore, has a positive impact on the activities of Singapore Airlines.
• Technological: Technology plays a very importunate part in all types of development. This factor includes all the innovative methods of services, new styles or better production improved and mechanized methods that are implemented in the said organization in regards to its operation. The involvement of technology in strategic management is very essential in comprehending the nature and success story of the organization. Singapore Airlines has been one of the pioneers of introducing technology within a flight environment without any power charging systems. In addition to this the online services offered by Singapore Airlines is deemed as one of the best in the market, which eventually affects their revenue and impression. The in flight technological facilities provided by Singapore Airlines make travelling very comfortable (Smit & Dula, 2014).
• Environmental: There are some key regulations which any organization must abide by, according to the contemporary business norms. The world, as one resides is drastically been effected due the harmful release of gases and dust particles by the different types of manmade activities. Therefore the Singapore Airline should take into view the pertaining environmental degradation, reduce the emission the fuel that operate the airline and promise for the development of sustainable resources in regards to its business activities. Consequently the carbon emissions have been minimized due to the use of more cleaner and natural equipments for Singapore Airline. The integration of environment friendly merges with the concept of Corporate Social Responsibility which makes it more permissible. The Airlines makes use of greener aircrafts system that helps to make it environment friendly in nature (Rothaermel, 2016).
• Legal: It is an unavoidable factor for any organization as it helps in maintaining and regulating the frameworks accordingly. The legal systems and authorities must keep a check in the activities of the organization as it functions within a social setup. In fact visa issues and most importantly laws that help in protecting the clients when they fly on board are includes with the legal factor. One such instance which impacted to change and preserve the strict regulations of baggage checking and boarding passes was during the terrorist attack of 2009. Singapore Airlines majorly are granted the license to travel and use different airways to reach different destinations, which makes it more accessible to more clients (Rachet, 2014).

According to Michael Porter discussed in his analysis of the strategies involved in profitable operation of a business opined in:  Competitive Strategy: Techniques for Analyzing Industries and Competitors”, the five point plan must be incorporated in every organizationThe five force model is a marketing strategy that involves four factors including within the rivalry aspect of the business. In case of Singapore Airline this analysis will focus on the airline industry. The innovator termed the factors as micro environmental in nature which involves the following:

• Competition in the Airline Industry
• Potential and Opportunities of New Entrants
• Threat of Prevalent Competition
• Powers and Authority of Suppliers.
• Powers and Authority of Buyers.

Porter’s Five Point Plan. (Created by the author)

The five forces of Analysis reacting to the strategic management of Singapore Airlines are:

• A successive number of organizations have been introduced into the airline sector. Therefore over the last century quite a numbers of private as well as Government owned organization have ventured into this market. According to the facts by the International Air Trade Association, there has been a significant rise in the number of low cost and small haul airlines in the last decade which has inevitably helped in the remarkable impact on profit maximization. The intense rivalry is essentially great for the development of the business therefore even successful organizations like Singapore Airlines must scan the market and make several predictions. In order to arrest market share on such routes, airlines must adopt price-cutting policy or ensure that the worth of their service is more improved than its competitors. According to Cook and many market analysts they have observed that on well-serviced routes, lack of punctuality can have harmful effects on airlines or carriers (Liu, 2016).
• Threat of prevalent competitors: The direct cause and effect of the Porter analysis is the threat, which is also called the threat of the substitutes or the prevalent competitors. The potential threat of Singapore Airlines is the low cost airlines that fly across Asia Pacific and many regions. In fact AirAisaX can be regarded as one of the biggest and relevant competitors. It captures on the experience of flying which they provide to even middle class people, so they can easily afford it but Singapore Airlines Limited face this challenge as they a reputation of serving the prominent and crème-de-le-crème with their extravagant service (Limited. S, 2017).
• One of the major influences of industrial or business operations is the opportunity for any new entrants in the relative field. Therefore new startups and entrant which venture the market and capture it for a period of time must be taken seriously because they eventually affect the sales and revenue. In spite of the fact that though Singapore Airlines have successfully been in the business for a long time, but since it has such a strong hold over the market there is hardly any risk factor that is detrimental to the business operations. Moreover the space crunch in providing airports and landing sites also minimizes the chance of new entrants (Limited, S. 2017).
• The bargaining authority of buyers: The customer and the clients are the ultimate decision makers about the sustainability of any product or service based organization. This is in fact important to notice because it will help in formulating strategies in the future that focuses on identity the customer base, respecting their preference, providing multiple number of options and making it easily accessible to the customers. Therefore today if the customers reduce online booking for Singapore Airlines it will definitely include many such lucrative offers that will aid in influencing the decisions. The authority of the buyers has been proven while reviewing the airline sector (Lacar, 2013).
• The bargaining authority of the suppliers: Any industry or organization runs on a multi disciplinary basis with mutual cooperation and collaboration for different kinds of services and products. Therefore the bargaining authority of suppliers in case of Singapore Airlines is very important as for example the supply of the Boeing  aircrafts or the supply  of fuel and several other aspects those regulate the logistics of  the airline. The services that are employed and pursed by Singapore Airline are dependent on many factors that determine the best operations for the airline which aids in further predictions and investments (Grant, 2016).

 According to Airline Pilot Association (APA), Singapore Airlines is comparatively one of the most successful airline carriers. Therefore they already utilize all the resources and make travelling in their airline as one among the best traveling experiences. There are some recommendations which will help in enhancing its productivity by the following ways:

• Singapore Airlines should involve a numbers of innovative employments in human and technical resource which will have a positive effect on the present resources and enhance its productivity.
• Singapore Airlines has attempted different kinds of strategies and due to its immense quality service provided to the following countries in which it operates most often or a daily basis can be further used for proving its global significance. It is one of the well sighted for the travel purpose but they can incorporate services which will help in increasing their customer base which commute on daily basis. It can capture the international officials and business and corporate travels and attempt to make it as successful as the other counterpart.
• It must facilitate the services and since it is a comparatively booming industry it can make resourceful use of the population of Singapore. A number of training or counseling sessions for the involvement of the youth to the airline can be introduced in their marketing plans and proposals.
• One more recommendation which can be implemented in the initiative to maintain the reputation of the organization which has become one of the key representatives of Singapore on the global map. The context to business operations, customer satisfaction and other relative factors should be given more focus in order to retain the quality of their services.

Porter’s Five Point Analysis

Conclusion    

Singapore Airlines Limited is one of the key airline carriers in the global market. It employs strategies that allow the best of operations for their resources and over the significant years it has achieved many success stories. A conclusion has been drawn on the report that includes Pestel and five porter analysis for Singapore Airlines Limited. A precise review has been drawn on the business infrastructure, the resources that belong to the organization, and the threats and challenges faced by Singapore Airlines. The stakes that are involved with the investment in the airline sector is approximately more than billion dollars therefore the entire substitutes limit and challenge their game plan in retaining as the best on the market.

It aids in determining the influences and contemporary competitions of the organization. It helps in analyzing the power and capability of the organization and to decide their marketing strategies accordingly.  The study draws an analysis on the external factors of the airline organization. The airline has comparatively maintained its predominance and status, but it should also venture other offshore markets and capture the increasing percentage of airline travel. The new entrants pose as rivals by targeting any innovative strategies for any specific set of customers, but Singapore Airlines Limited have a strong client base along with the best service which makes it one of the best airline travelers.

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