Miss. Kai-Hsin Cheng, IBM4811 International Strategy Management Singapore International Airlines Situation Analysis Singapore International Airlines is the largest leading airline service in Singapore. It has a competitive advantage and differentiation over its rivals. The purpose of the SIA is placing a priority on quality service to satisfy customers. In the case, SIA offers the best in-flight service to their customers throughout many regions. Moreover, they use differentiation strategy and strong recruiting and training strategy to improve their airline service in order to compete with their competitors.
More analyze will be discussed in the following five forces analysis and SWOT. Five Forces Analysis of Airline Service Industry Competition from Established Rivals: High There are many existed rivals in the airline service industry, both domestic and international. SIA’s main domestic competitors are Air Asia, Japan Airlines, Malaysia Airlines, QANTAS, Lufthansa and also other American and European Airlines. These are the competitors that are trying to compete in the airline service industry market in South and Southeast Asia.
Competition from New Entrants: Low New entrants have difficulties in entering the airline service industry, because the new firms will need to have heavy investment in investing in lands for airport, buying aircraft and recruiting people. Moreover, it is hard for new entrants to compete with other leading airline service company, because there are already too many competitors in the airline service industry. Competition from Substitutes: High There are many other airline service companies in the airline industry. Therefore, the substitutes are very high.
Customers tend to switch to different airline services due to the price competition between each Airline services. The lower price the company offers the higher customer will switch into their services. Bargaining Power of Suppliers: High Supplier power is very high in airline industry. When the fuel price increase then the airline service industry has no choice. So they have to increase the fuel surcharge for tickets in order to balance the cost too. Bargaining Power of Buyers: High The buying power for customer is high in airline service industry.
There are many hundred of Airline companies in Asia for customers to choose. TABLE 1: SWOT Analysis of Singapore International Airlines |STRENGTHS |WEAKNESS | |Good Reputation |Not be able to success in Air New Zealand. | |Excellent in flight Service |SARS outbreak. | |Encourage employee motivation and employee productivity. Hard to establish common safety, service, and performance standard. | |Good recruitment strategy and training for young aircraft and cabin | | |crew. | | |OPPORTUNITIES |THREATS | |Decrease regulatory barriers will help increase airline’s demand. |Compete with the low cost airlines | |Open-skies agreements. SARS and Iraq War leads to high lay off workers. | |The outbreak of SARS can be a good opportunity to expand airline |Global economic weakness. | |service to other region. |Terrorism. | Problem/Key Issues SIA is an excellent full-service airline that is competing with many low cost airline, but SIA still putting the customer as the first priority. Alternative Actions Firstly, SIA provide the first class treatment for all classes, because they are more concern on customer satisfaction and needs. While other airlines cut back on service to make more profit.
Secondly, there is a strong recruiting and training strategy in SIA. SIA only recruit and train the best young aircraft, cabin crew, and many professional officers working around the world. Unlikely others competitors only provide lesser time of training. Lastly, SIA also offer the best maintenance and design goods for customer, such as better seat space is wider, spacious leg room, video screen and communication device. Moreover, this will state the differences from other competitors. Evaluation of Alternatives TABLE 2: Analysis of SIA Core Competencies Alternatives |Valuable |Rare |Costly |Non-Substitutable | | |Capabilities |Capabilities |to Imitate | | |Recruiting and training employees |YES |NO |NO |NO | |Maintenance & Design Goods |YES |NO |YES |NO | |Full-Service Quality |YES |NO |YES |YES |
After doing the core competencies analysis, it shows that full-service quality of SIA has become its core competency. The reasons are that SIA places the quality service as the first priority. Mostly all the questions and decisions are based on the customer satisfaction and needs; such as the seating spaces, the communication devices, entertainment devices and the comfortable seats for all classes. Moreover, instead of charging the entertainment fee, they provide free drinks and offering the fax services in the air. However, there are still disadvantage for this alternatives. SIA will have a difficult time in facing other competitor which provides the low cost airline.
In addition, SIA need to face on the problem with how to establish the common safety, service, and performance standard when they have alliance with other airlines. Recommendation a) Strategic Intent- To become the largest leading airlines that consider the customers as the first priority. b) Strategic Mission- To achieve the superior airline service providing the best and luxury goods and service to our priority customers for both domestic and international. c) Key Result Areas- a. Recruiting department and reward the right behavior. b. Promotion marketing. d) Strategies- a. SIA can provide extra trainings for their alliance partner, in order to improve the service skills and also this will help increase the performance standard from both airlines partner. b.
Provide more rewards for both alliance partners’ employee, in order to increase and develop the employee’s motivation. c. Offer collecting flight mileages for customers to get a free reward ticket, instead of cutting the price to compete with other airlines. e) Objective- Provide better training to improve the relationship between partners and become the largest leading airlines in worldwide within one year. APPENDIX Tables and figures TABLE1: SWOT Analysis of Singapore International Airlines TABLE 2: Analysis of SIA Core Competencies Bibliography Kannan, R. (2004). Singapore international airlines: Preparing for turbulence ahead. Thunderbird School of Global Management, 1-13.