Managing Across Borders: SIA, Globalisation, Outsourcing Report

This report provides a comprehensive analysis of managing across borders, focusing on the impact of globalization and outsourcing within the airline industry, specifically using Singapore Airlines (SIA) as a case study. The report begins with an executive summary and introduction to globalization, emphasizing its influence on business operations, market competition, and technological advancements. It delves into the background of SIA and its joint ventures, highlighting the benefits of such collaborations, including access to new markets and shared resources. The analysis includes a PESTLE, SWOT, and VRIO analysis, identifying political, social, and technological risks, as well as competitive pressures. The report examines the significance of outsourcing to SIA, its reasons for outsourcing, and the success of joint ventures. It also considers the role of IT advancements in globalization and concludes with recommendations for business expansion, such as introducing new aircraft, targeting untapped markets, and capitalizing on air cargo opportunities. The report provides a detailed overview of the airline industry's challenges and opportunities in a globalized market.

Managing across borders1
MANAGING ACROSS BORDERS
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1.0 Executive summary
As the beginning of the subsequent industrial era, few concerns have been as viciously explained
as the globalisation occurrence. At a period where the industrial development is making a quick
advancement in nation such as India, firms in the industrialised spheres are undergoing
escalating pressure to offshore service and manufacturing to moderately cheap-labour nations to
accomplish a cost benefit in the corresponding domestics and overseas marketplace. The fiscal
impacts of such does on national productivity are under excessive quarrel, whereby the
supporters claim that offshoring has an affirmative effect on the yield due to the access to low-
cost services and merchandises.
Based on the PESTLE, SWOT and VRIO analysis and background research, the following
recommendation is given for the company to increase the customer base, demand and capacity
utilisation. The company can introduce aircrafts in various destinations so as to cover untapped
markets. The company can introduce aircraft with varying capacity which can fly low capacity
when the demand is low. The firm can also increase the numbers of aircrafts so that they can be
at position to improve connectivity and frequency. It is of essence the company introduces
weekend destination path that can attract leisure travellers, for instance; from Mumbai to Leh or
Chennai to Port Blair. Likewise they can introduce international destination such as between Bali
and Cochin. Air cargo is an untapped market in India and with the experiences of Singapore
airlines; Vistara can quickly capture the Air cargo. According to the rough estimates, more than
99% of the India populations have not seen the interior of the aircraft (Beri 2011). Therefore,
they can initiate budget airlines like the scoot of Singapore airlines.

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Table of contents
1.0 Executive summary...............................................................................................................................2
2.0 Introduction...........................................................................................................................................5
3.0Background............................................................................................................................................6
4.0 Globalisation of Singapore Airlines.......................................................................................................7
5.0 Risks......................................................................................................................................................7
5.1Political...............................................................................................................................................7
5.2 Social.................................................................................................................................................8
5.3Technology.........................................................................................................................................8
5.4 Terrorism...........................................................................................................................................8
5.5 Global competition............................................................................................................................9
6.1 Outsourcing.........................................................................................................................................10
6.1.1 SWOT analysis.........................................................................................................................10
6.1.2 Resource-based view................................................................................................................12
6.2 significance of outsourcing to SIA......................................................................................................16
6.2.1 Reason for outsourcing Tata sons.................................................................................................16
6.2.2 success of SIA due to joint venture..............................................................................................16
6.3 IT advancement in globalisation..........................................................................................................17
7.0 Conclusion...........................................................................................................................................17
8.0 References...........................................................................................................................................19

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9.0 Appendices..........................................................................................................................................21

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2.0 Introduction
Globalisation is an important model which has become the chief aspect in business life
during the past few eras. The occurrence impacts the business existence, economy, social and
setting in various means, and nearly all business have been influenced by these variations. These
variations are habitually connected to escalating rivalry and the fast modifications of technology
and data transmission (Lovelock 2011, pp. 56). To challenges these deviations, business need to
keep in mind numerous features of the focal influences of the globalisation. Globalisation leads
to improved opposition. This rivalry can be connected to products and services’ price,
technology adaptation, target marketplace, quick response, and swift invention by firms (Oum &
Yu 2012, pp. 13). Clients have a huge mass of selections in the market and this influence their
conducts. All these expectations need a reaction from the firm, otherwise sales of business will
reduce and they incur loss in terms of profits and market share. One of the most outstanding
indicators of globalisation is the routine of novel technologies by internationally and
entrepreneurial focused on business to exploit different business prospects. E-commerce and
internet processes hold specific prospective for SMEs seeking to widen their collaboration into
novel global markets (Lovelock 2011, pp. 57). Data is costly, most valuable and expensive
production element in the contemporary world if a firm have a chance to use information and
awareness then it denotes that it can adjust to this universal change. Most leaders are
shortsighted. Though current’s competitive scenery regularly expanses to a global horizon, they
see that their knowledge is unsurpassed. No responsible managers devise an astigmatic
approach. Effective global functions needs a genuine equidistance of viewpoint
Though it has developed a bad reputation over the decades, outsourcing is on the
progression. In the contemporary global marketplace, the capability of outsourcing can mean

Managing across borders 6
differences between staying up in the game and closing permanently. Currently, firms are
looking to be more quality and cost-efficient in seeking to outsource to companies in the
destination like India. Outsourcing accelerates product advancement and advance efficiency, cut
cost as they allow firms to improve its output, productivity and bandwidth (Oum & Yu 2012, pp.
14). It also permits firms to scale projects by tailoring their tactics for various requirement and
needs while offering services that are outside of their core expertise or offering. While the
phenomenon is becoming well known as a popular practice, it is still fairly new to some
corporations, comprehending outsourcing and its importance can play a large part in business
growth and success.
3.0Background
Being one of the oldest companies in India, it was established in 1868 by Tata Jamseji
with its headquarters at Mumbai. Operating firms under Tata sons are Tata Steel, TCS, Tata
global beverages, Tata Power, Tata Chemicals, Tal Hotels Resort and Palaces, Tata
communications and Titan. Air India as operating as Tara Airlines from 1938 and in 1946 it was
transformed to the public limited company as Air India.
SIA is the flag carriers of Singapore with flying record of 45 years by starting its flying
way back in October 1972 (Heracleous & Wirtz 2012, pp. 482). SIA is one of the major players
in the airline industry with business over nine states and with an assortment of 27 joint ventures
counting Boeing and Rolls Royce.

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4.0 Globalisation of Singapore Airlines
A joint venture is a way of joining expertise and resources of two otherwise unrelated
firms. The benefits of the joint venture are access to new market and distribution web, sharing of
risks and costs, improved productivity and access to the greater resources such as specialised
employees, technology and finance (Lovelock 2011, pp. 57). The principal contribution and
activity of SIA was to offer necessary technical expertise, global network and access to the gears
exercise and best performs of SIA in the aviation trade. The company also provides personnel for
evolving new expertise and making reasonable for the joint venture in connection with the
procurement of the spares and infrastructure, aircraft, engineering services. Tata’s contribution
to the firm comprise offering knowledge of the Indian market, working towards the synergies
between the Tata SIA airlines and other associates of the Tata on making reasonable efforts to
benefits from the economies of scale.
5.0 Risks
5.1Political
The government has initiated a novel liberal reform in the aviation sector such as liberalising the
foreign direct investment in the Indian Airline sector (Ibef.org 2014). As part of the progression,
Indian government is supporting and taking great initiatives by dispersing funds for new airports.
The government announced 45 new airports and over 70 regional routes under the Udan scheme
(Ministry of Civil Aviation, Government of India 2014). The cost of fuel is escalating because
the subsidies offered by the government are taken off. Also, the launch of Make in India policy,
Indian owned airlines are getting the preferential attention (Ministry of Civil Aviation,
Government of India 2014).

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5.2 Social
The aviation industry offered a lot of employment chances due to the industry growing so fast
that a lot of individuals can be hired (Ibef.org 2014). Similarly, increase in the working
professionals and students who are moving home to metro cities and abroad is directly advancing
the airlines sectors. Additionally, the Indian customers are highly informed and choosy, put a lot
of attention on value for money and price sensitive. The government safety regulations in airline
sector are advanced and extremely strict (Rodrigues & Cusick 2012, pp. 7). A status of pride is
connected to the airline's passengers and therefore leading to an advancing in first-time flyers.
The most important factors are that entrepreneur and businessman are upsurging in India and
they have less time to spend in travelling thus preferring to use airline services more often.
5.3Technology
Aircraft manufacturing sectors are making novel and advanced aircraft, which are more
comfortable and fuel efficient. The rate of technology advancement is assisting the rise in the
capacity, minimise the travel period and reduce the failure rate. The rise of e-ticketing and e-
commerce is assisting airline firms to offer ease booking to the users. The most progressed
technology aspect is the satellite-based navigation. Privatisation and modernisation of airport
offered users a lot of more comfortable methods of boarding and checking-in to aircraft.
5.4 Terrorism
Political unrest and terrorist attack internationally have disturbed tourism, but not halted it. The
most impacted areas are where that turbulence has happened and has been the concentrate of
widespread media focus. An international terrorism index created by the vision of humanity
organisation illustrates fivefold upsurge in terrorist victims since 9/11. The Taliban, Islamic
states, Boko Haram and al-Qaeda are assemblies accountable for numerous of the 18,000

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terrorism-connected deaths in 2013, which illustrated a rise of 60% over the earlier year. While
the security and safety may not be inspiring motives for tourists choosing a specific last stop,
shortage of security often eradicates all places from the tourists. Travellers’ well-being and
security are becoming a priority as nations move to guard their people (Rodrigues & Cusick
2012, pp. 9). Government supports around the globe create warning and advisories for their
people to stay away from the location hit my unrest. The attention to security and safety has had
numerous impacts on the travellers. Most remarkably, society’s at the most airports has been
improved in an effort to prevent peoples and aeroplanes. Some items are no longer permitted on
board and screening procedures have taken the effects. While all the deeds of terrorist cannot be
averted, the tourism sector is trying to offer as much as safety and security as possible
(Rodrigues & Cusick 2012, pp. 11).
5.5 Global competition
By 2024, user spending in the area will also top US$4,000 per capita in 2013 (Fan & Lingblad
2016, pp. 115). The portion of the world has with best performer such as the Philippines had the
prevalent number of overseas citizens. Asia Pacific’s large populace, joined with a huge
topographical zone, makes air transport the most effectual method of travelling around this
portion of the globe (Oum & Yu 2012, pp. 15). India and Myanmar are the two key markets
projected to forefront the air travel leaderboard in the area, compelled by regulatory alterations,
the opening of these nations to foreign investment and robust domestic marketplaces and
improved international competition. Lost cost carrier is enduring to take part from the schedule
operators internationally, and they are specifically favoured by the cost-cognizant tourists. The
LCC class is projected to dictate value development within the air group in Asia Pacific over

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2012-217, recording a 14% increase in significance sales over this age (Oum & Yu 2012, pp.
16).
Players such as Indigo, Jet star and Tiger Airways are some of the transporters backing to the
rising fame of the lower cost class in the area, though the region is currently geographically
skewed. Players such as Tiger, Jet star and Air Asia are becoming a huge contender and gaining
power in the region that they hold almost same strengths to that of their colleagues such as
Wizzair, Easy Jet and Ryanair (Singaporeair.com 2016).
6.1 Outsourcing
SIA offers access to the tools of training in the aviation industry. The company also as a global
network and provide the crucial technical expertise and know-how. Finally, the company offer
reasonable efforts towards a joint venture which benefits the company from the economies of
scale perspective. Based on the strategic model, the key for a company to triumph in a specific
marketplace is to successfully set up its strategic resources and briskly use its core competencies
to build competitive edge over its opponents. Thus, the core strengths of the SIA are quality
services, strong branding and human resource (Singaporeair.com 2016).
6.1.1 SWOT analysis
Strengths: Vistara is a joint of two iconic brands; Singapore Airlines and Tata. Tata has over 140
years of experiences in the Indian market and encounters of 8 years in airlines sector experiences
with the Tata airline which was flying as Air India (Financial Express Bureau 2015). Joint
venture with Singapore airlines who has over 40 years of experiences in the industry is a big
addition. Vistara is a full-service airline with five meals patterns (Giriprakash 2014). They are
offering work and traditional cuisine and to uphold the quality of the caterers they have chosen

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the caterers from the Tata (Taj caterers). Vistara offers great in-flight encounters even in the
Economy class with food as a part of the regular ticket (Financial Express Bureau 2015). The
company has an excellent branding and advertising exercise that has improved its existences in
the Indian airline. The company is following value-based frequent flier programs. Instead of
getting points centred on the distance covered, the framework revolves around earning points on
what one pays. The company has connectivity to less covered places such as Jammu, Leh,
Ranchi, Port Blair and Amritsar. The firm also has user-friendly services such as carry-one plus
or auto check-in which permits users with check-in luggage to carry 12kg of the handbag
(Giriprakash 2014).
Weaknesses
Even after functioning from 2016, Vistara brand recognition is relatively low. The competition is
very high and the price is high compared to the rivals (Financial Express Bureau 2015). The
airline's operational cost is high which comprises the leasing charges, aviation turbine fuels cost
parking and landing costs. The seat allocated for the business class is relatively higher which
can lead to low occupancy rate. Finally, the destination and aircrafts connectivity are low.
Opportunities
The company can introduce more aircraft to improve the frequency, mainly between the major
destination such as Mumbai, Delhi and Bangalore. Liberalisation of 5/20 to 0/20 can assist
Vistara to tap into the international market and it can quickly do with the assistance of
experienced Singapore airlines (Giriprakash 2014). Introducing varying capacity aircraft can
assist the switch to lower capability when the demand is low. Additionally, they can use the low
capacity aircraft in the route with fewer passengers. The company can introduce WI-FI for

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economy class which can increase the market share. Similarly, they can offer point to point
service to cover untapped international markets. The Indian airline market is growing at great
pace. The passengers have increased during the last four years. It has increased to 5.2% in 2014
from 3.2% in 2011.
Threats
Tata is holding shares in Air Asia India, which can result in a conflict of interests. Also, the
threats from arising in competitors are escalating each day (Singaporeair.com 2016). Increased
terrorist operations are creating apprehension in passenger’s thoughts. Improved transportation
options like hyperloop and unpredictable weather atmosphere and natural disasters are huge
threats. Advanced technologies are making the corporate training and transition easier with the
assistance of computer and internet. That means the business travels are minimising since
physical presence is not required. Also, a poor financial performance of the Indian civil aviation
sector is one of the threats of an airline. While combining the accumulated losses from 2008 to
2015, it has accomplished above $10.6 billion. In 2015, it was above $1.5billion as per the report
of a centre for Asia Pacific Aviation (Fan & Lingblad 2016, pp. 117).
6.1.2 Resource-based view
There is no uncertainty that airline sector is in deep rivalry with numerous airlines fighting to
survive. To prosper in the ever-varying market, SIA must have planned ability to aid the firm to
outdo its competitors. RBV proposes that strategic competence comes from a competitive edge,
which comes from the assets of an organisation and the use of those resources (capabilities and
competencies).