Introduction
Overview of the Company
Singapore Airline (SIA) is a widely recognized and celebrated brand name in the air transport industry for over 50 years. This is attributable to its route network that covers over 90 cities in more than forty countries and up to date air transport system.
In addition, SIA is a member of the Star Alliance which has increased its global presence to roughly 140 countries. All in all, the company’s strong brand name is mainly attributed to its excellent customer service (Singaporeair.com, 2013).
For nearly four decades since SIA was detached from Malaysian Airway Limited it has continued to grow rapidly to become a world class airline. Experts attribute this to the company’s values and culture. Singapore Airline has impressed many people due to its creativity, diversity and constant growth.
In addition, the company has been able to meet customers demand as well as gaining competitive advantage in both local and international market (Singaporeair.com, 2013; Ayob, 2004, P. 2).
However, the journey has never been smooth throughout. The company has experienced numerous challenges both internal and external. The most notable predicament was the Asian economic crisis created by the outbreak of the SARS virus in 2003.
The crisis forced the company to cut down wages and lay-off nearly 500 workers. As a matter of fact, this was considered as the largest number of employees to be ever laid-off in the company’s history. As a result, the relationship between the top management and the labor union started to worsen (UK Essays.com, 2012).
So as to attain a world class status SIA went through the following chronology: SIA was established in 1947 under the name Malayan Airways; in 1963, SIA was rebranded to Malaysian Airways owing to the formation of the Malaysian Federation.
The name was later changed to Malaysian-Singapore Airline when Singapore became independent; in 1972, the company acquired the current name when it splits up from Malaysian Airways. In 1986, the girl wearing sarong kebaya (the company’s famous logo) was born.
The young elegant, friendly and kindhearted girl on the SIA’s famous logo represents the culture that the company forever wants to devote to its customers (Singaporeair.com, 2013).
From 1990 to 2001, the company purchased 178 aircrafts and expanded its route networks extensively. In 2004, Singapore Airline broke a world record by launching the longest ever commercial flight from Singapore to Los Angeles and New York. In 2007, SIA broke another world record by purchasing the largest passenger plane-A380.
At the moment, SIA’s route networks spans more than 90 destinations and nearly forty countries. In addition, the company has the most modern fleet in the industry and dominates the South East Asian market (UK Essays.com, 2012).
SWOT Analysis of the SIA
SWOT analysis is an instrument that is often used to assess an organization and the environment. SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis is commonly used in business studies to explore the existing conditions in order to come up with possible solutions or strategies of addressing both internal and external challenges (OCBC Investment Research, 2011, p. 11).
In this case, SWOT analysis will focus on Singapore Airline. The main objective of the analysis is to have firsthand experience of the problems facing the company and gain knowledge concerning probable developments and potentials.
Strength and Weakness
The main foundation of any company is their staff (Kotler, 2001, p. 6). SAI boasts of highly trained and disciplined personnel whose main focus is passengers comfort and satisfaction. Service quality and customer satisfaction have always been the core of SAI as enshrined in its vision and mission statement. The company has managed to achieve all these because of its highly competent staff, which includes the pilots and mechanics.
This has benefited both the company and the customers. For instance, SIA’s service quality has attracted other users like institutions, tourism sector, VIPs among others. In addition, the company also has state of the art training facility for its human resource (OCBC Investment Research, 2011, p. 11).
SIA is a well established airline with a very sound background. The company has always remained profitable despite of numerous challenges both internally and externally. Most of the company’s profits have always been invested back to expand the business. In addition to the strong financial base, SIA also has numerous other resources that have given it an edge over its rivals.
For example, SIA has one of the leading freight handling facilities in the region. The company also has over 95 aircrafts and communication systems which are replaced after every five years.
In addition, SIA’s flight kitchen based in Changi is one of the largest in the world. Last but not least, the company’s brand quality is in all probability the most potent resource. The brand has been nurtured for over three decades to be the most acknowledged and distinguished in the aviation industry (Ayob, 2004, p. 3).
Singapore airline is devoted to the idea of open skies where consumer demand determines the flight destination. However, the company has been unable to access certain countries and airports due to their protectionist policies.
For instance, it took the company a lot of years to access Heathrow and Manchester airports. At the moment, it is still struggling to access transatlantic routes from the United Kingdom. Other weaknesses include lack of growth opportunities for the Flagship Singapore Airline and agility to deal with global crisis (OCBC Investment Research, 2011, p. 11).
Threats and opportunities
The main opportunity for Singapore Airline is the growth of passenger and cargo transport in South-East Asia and the world at large. At the moment, much smaller and remote places are becoming open to the globe. This provides an opportunity for SIA to expand its services. The introduction of lost-cost carrier (LCC) is aimed at capturing this new market segment (UK Essays.com, 2012).
The major threat facing SIA is the increased competition from the Middle East airlines, for example, Tiger Airways and Jestar Airlines. The airline also faces restrictive regulations in certain countries, for instance, the United Kingdom. Another threat is the probable economic depression and pressure on fuel prices (OCBC Investment Research, 2011, p. 11).
Porter’s five forces analysis of the SIA
This model is based on the comprehensive outlook on the company’s strategies that meets the opportunities and threats within and without the industry.
The five forces as identified by porters include: threats of new entrants, bargaining power of suppliers and customers, threat of substitutes, and the rivalry within the industry. Porter’s five forces analysis not only offers a significant foundation for strategic analysis but also examines the viability of the industry to come up possible course of actions (Porter 1980, p. 3).
Singapore Airline is regarded as a distinct industry in Singapore market. As a result, the Porter’s five forces and other externalities have considerable impact on the airline. Regionally, the airline is regarded as the market leader because of its outstanding service delivery and distinguished brand.
However, over the recent past, Singapore Airline has been faced with stiff competition from the Middle East airlines and other news entrants. For that reason, industry analysis is very crucial for the company in order to cope with the current and prospective challenges (Singaporeair.com, 2013).
The ease of entry into a market dictates the level of competition. The threat of entry significantly depends on the barriers put in place to ward off the new entrants (Kotler, 2001, p. 33). SIA controls the largest share of the South East Asian market to a near monopoly.
Despite of the fact that Singapore has not restricted access to its route networks, smaller airlines have always found it very difficult to access this market. Nevertheless, the rapid development of the region’s economy and the tourism sector has attracted global airlines into the market (UK Essays.com, 2012).
Customer’s bargaining power in the airline industry are very high. This is due to the fact that buyers have numerous options to choose from. Therefore, Singapore Airline needs to focus most of its attention on consumer satisfaction and provision of exceptional services.
The power of the supplier in the airline industry is also important and has significant impact on the company’s competitive capacity. For this reason, Singapore Airline has established strong ties with its suppliers and other airline companies (UK Essays.com, 2012).
The airline industry has highest threat of substitutes, particularly Singapore where the sole means of international movement is air transport. The threat increased with the introduction of the low-cost carriers. Therefore, SIA must take notice of the threats in different market segments (UK Essays.com, 2012).
Lately the company has been experiencing stiff competition not only from the Middle East airlines but also from major global players, for instance, Cathay Pacific Airways, British Airways and Fly Emirates among others.
However, Singapore Airline has been able to maintain a competitive edge over its rivals by improving its apparatus, increasing fleet network, offering exceptional services and promoting its brand (Singaporeair.com, 2013).
Conclusion
Industrial analysis of the Singapore Aviation industry provides an empirical overview of how external factor impacts the operations of the Singapore Airline. The main purpose of this analysis is to explain the external business environment, its dynamics and forces that propel the changes.
The fundamental idea behind the two tools of analysis is that businesses have to adjust to the externalities. This reflects the idea that business strategies and goals have to fit in between the capabilities and externalities and therefore it is necessary for an industry/ entity to adjust to the changes.
References
Aaker, D.A. (2005). Strategic Market Management. Hobeken, New Jersey: John Wiley and Sons.
Ayob, A.M. (2004). Singapore Airlines Limited: Building a Culture of Service Excellence. Web.
Kotler, P. (2001). Kotler on Marketing: How to Create, Win and Dominate Markets. New York: Free Press.
OCBC Investment Research. (2011). Singapore Airlines Limited. Company Report (MITA No. 022). Singapore: OCBC.
Porter, M.E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.
Singaporeair. (2013). Singapore Airline: Our History. Web.
UK Essays. (2012). Pestel and Five-Force Analysis of Singapore Airline. Web.