PESTLE and Porter's Five Forces Analysis of Singapore Airlines
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This report provides a detailed analysis of Singapore Airlines using PESTLE and Porter's Five Forces models. It includes strategic recommendations for the company to achieve a large market share.
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Running head: Singapore Airlines Introduction to management
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Singapore Airlines Table of Contents Introduction...............................................................................................................1 Nature of the business...............................................................................................1 PESTLE ANALYSIS................................................................................................1 PORTER FIVE FORCE ANALYSIS.......................................................................3 Strategic recommendations.......................................................................................5 Conclusion.................................................................................................................6 References.................................................................................................................7 Introduction Singapore Airlines is one of the largest airline companies in Singapore. The company is awarded 5-star standard carriers in Singapore and it is the subsidiary of the Singapore government. It can be evaluated that company is based at the change international airport and flight services are 1
Singapore Airlines offered by the company in more than 45 nations and also across 94 destinations worldwide. The company is listed on the SGX and is one of the biggest carriers in the market if the focus is given on the market capitalization. Singapore Airlines conduct more than 102 aircraft which have an average fleet of 7 years. The geographic segments of the Singapore airlines are East Asia, Europe and South West Pacific (Bok, 2015). Nature of the business The company created itself as the flag carrier of Singapore and the connection is with the 20 airports which are situated in 18 different locations. The destinations are Europe, Australia and also many segments of the Middle East. The company focuses on the various strategies related to differentiation itself by focusing on the service innovation and also it has been analyzed that there are seven schools that offer education to the cabin crew and also the services related to information technology and flight services (Taneja, 2016). PESTLE ANALYSIS Political factor Political factor gives influence on the external business environment of the company. This is related to the policies of the government that emphasizes the intervention of the specific economy. It has been analyzed that company has focused on Air India so that the blow of privatization can be managed by the Indian government. This has also become a hindrance in the overall political factor for the operation of the business. Social factor There are various factors that impact the social environment of the organization. The factors are related to the need and preference of the customers. The company focuses on the approach related to customer-centric. There is also enhancement in the overall disposable income of the consumers that have changed the purchasing power of the consumers (Kaufman, 2015). Economic factor The economic factor of the organization is concerned with the entire rate of interest, taxation policies and also with the foreign exchange rates. This factor affects the business environment of 2
Singapore Airlines the company which focuses on the emerging markets of Asia and it also assists in strengthening the entire Singapore dollar of comparison with the currencies of foreign. It can be analyzed that the organization has given focus on the stake in China Eastern Airlines that are against 7.3 Million and also there are many issues which are faced by the stakeholders. It can be seen that the demand is minimizing and it is related to the business environment. The fuel cost is stabilized which has given effect on the business environment of the organization. The rates of the fuel are also influenced by focusing on the economic factor related to the aviation industry and it has influenced the operations of the Singapore airlines (Asif, 2015). Technological factor This factor focuses on the technology in which it has been seen that the efficiency related to fuel is taken into consideration so that operations can be conducted easily. The engineering department of the company has emphasized on the overall repairs so that big market share can be grabbed. Singapore airlines are considered as a first carrier that has given emphasis on the overall products so that the passengers who are availing the services on board without the need of giving power to the laptops can be served. The company has focused on the sun as a microsystem that assists in enhancing the productivity and also focuses on the flights (Joo & L. Fowler, 2014). Environmental factor In this, it has been seen that the focus is given to the general public of Australia. Singapore airlines emphasize on the methods concerned to the society and also take into consideration the steps so that carbon footprints can be minimized. The operations of the organization are impacted by the weather and also by the different seasons. The company emphasizes the use of the cleaners so that the operations can be completed in a sustainable manner (Heracleous & Wirtz, 2014). Legal factor The variations also affect the operations of the organization and also it focuses on the China aviation. It helps to encourage the private airlines which are operating their operations in the overall airline sector. There are various limitations related to investment by considering the 3
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Singapore Airlines government body (Jiang, Baxter & Wild, 2017). It has been seen that Singapore airlines take into consideration the fair trading laws and also the law related to the customers so that in the right direction the activities can take place. The focus is also given on the five freedoms of air which helps in managing the operations of the Singapore airlines. The company focuses on the legal procedures so that customers don't face any hindrance in conducting the operations of the company. PORTER FIVE FORCE ANALYSIS When the focus is given to the five forces it has been evaluated that it is considered as an essential structure which helps the company in evaluating the overall level of competition. It helps in the development of the strategy of the Singapore airlines. This model focuses on evaluating the various aspects which affect the activities of the company and also it offers effective services to the consumers and assists in attaining the overall profits (Holloway, 2017). Industry rivalry It can be evaluated that in this aspect the company suffers from various problems in the aviation sector and it helps to open all the information related to the services given or offered in the market. The activities are operated in the niche markets. It can be evaluated tha1t there are wars related to a price that is created by various different airlines. It has also been evaluated that in the present scenario the industry rivalry is moderate (De Neufville, 2016). Potential of the New Entrants When the focus is given on the market of Singapore it can be stated that the potential entrant is weak this is just due to the huge capital which is invested in establishing the company and also it has been seen that market is saturated. It can be analyzed that there is high congestion in the airports and the focus is given by the government on the various advantages related to the operations of the company. There are difficult carriers to enter the market if the analysis is made of the economic factor. The challenges are increasing in achieving the airport slots Singapore airline is only the company. The overall cost of the operations and also the political factors are increasing the overall barriers to the entry into the new players. Threat of substitutes 4
Singapore Airlines This is known as an essential factor when the emphasis is given to the model. This factor showcases all the information which is linked with the substitution of the services or the products. It has been seen that threat of substitute is moderate if the focus is given on the Singapore airlines. Substitution rate is moderate and also there are many low-cost carriers who are completing the entire operations of the aviation sector. The provision is also high when the emphasis is given on the high railway services. There are many technologies which are related to communication. These technologies are the threat of substitute to the carrier services of the company. Proper services should be taken into consideration by the company so that in the right direction activities can be conducted (Bateson, Wirtz, Burke & Vaughan, 2014). Bargaining power of purchasers Power of purchaser is moderate if Singapore Company is taken into consideration. It can be said as moderate as the switching cost is less of other airlines. The management of the company emphasizes on the loyalty reward programs so that customers can avail more and more services. The internet has also enabled the consumers to analyze the prices of the overall services which are offered by the company. Bargaining power of the suppliers In this aspect, the focus is given to the overall competition level present in the market. the bargaining power of the company is strong and it has a link with the duopoly of many Boeing and the Airbus of many other planes. It can be stated that the overall cost is managed and also the power of the supplier's increases. The overall bargaining power of strong as it can be analyzed that there are various suppliers who are giving various services in the market. this will also help the company to achieve goals. Strategic recommendations By focusing on the entire analyzes it has been seen that the operations of the Singapore airlines help in gathering the data which assist in managing various strategic choice of the organization. The strategic management of the organization can help to consider the various strategies which are concerned to the Ansoff's matrix and in this, the porter generic strategy is related that help in 5
Singapore Airlines implementing many alternatives methods of enhancing the growth in the market. There are four recommendations on which focus should be given Development of the services It has been seen that company should take into consideration proper segmentation of the entire market and also it enhances the services of the organization if the emphasis is given on the entire need of the target segments of the consumers. The market also takes into consideration various types of consumers and also focus is given to the services offered by the company. It is essential for the marketers to focus on the target segments so that the entire opportunities can be given in the market. The customers of the Singapore airlines should be divided into many sections and also there are various methods that emphasis on the overall demographic and also on the factors related to the behavior. Market penetration The management of the organization should emphasize on focusing on the penetration of the new markets. It has been seen that the airline industry mostly operates the operations in Africa and emphasizes on the leisure passengers. It can be analyzed that the company should emphasize on the entering into the partnership with other airline sectors who are focusing on giving the services related to campaigns and also quality food to the customers. Niche market It is essential for the Singapore airlines to consider the services of the airbuses that offer banquet halls. Space is offered by the organization which is for more than 200 customers so that target can be given on the niche market and also it is essential for the customers who are operating the conferences and also the events related to the flights. Diversification This should be considered by the company by offering all-inclusive packages for the travelers so that customers can be satisfied with the entire services. Through this technique, it can be easy to differentiate the services and helps to attain the large market share in the competitive environment. 6
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Singapore Airlines Conclusion By considering all the points discussed in the report it has been concluded that PESTLE analysis which is discussed in the report helps in conducting the overall activities of the company in an effective manner. By focusing on the PORTER FIVE FORCES MODEL it has been seen that level of competition can be understood easily. The five factors also assist in analyzing the level of competition present in the market. In the concluding part, the discussion is made of the recent strategic recommendations by considering different strategies which help to analyze the overall porter five forces and pestle analysis. It is important for the company to focus on all the aspects discussed in the report as it can help to manage the activities and also help to achieve a large market share in an effective manner. In this report the focus is given on strength and weakness also by considering pestle and porter models. Recommendations that are discussed in the report will help to achieve a large market share in an effective manner and also by this the competition level can be reduced which is prevailing in the market. So, it is important for the company to function properly so that goals and objectives can be achieved. References Asif, M. (2015). A critical review of service excellence models: towards developing an integrated framework.Quality & Quantity,49(2), 763-783. Bateson, J. E., Wirtz, J., Burke, E. F., & Vaughan, C. J. (2014). Sifting to efficiently select the right service employees.Organizational Dynamics,43(4), 312-320. Bok, R. (2015). Airports on the move? The policy mobilities of Singapore Changi Airport at home and abroad.Urban Studies,52(14), 2724-2740. 7
Singapore Airlines De Neufville, R. (2016). Airport systems planning and design.Air Transport Management: An International Perspective, 61. Heracleous, L., & Wirtz, J. (2014). Singapore Airlines: Achieving sustainable advantage through mastering paradox.The Journal of Applied Behavioral Science,50(2), 150-170. Holloway, S. (2017).Airlines: Managing to make money. Routledge. Jiang, H., Baxter, G. S., & Wild, G. (2017). A study of China’s major domestic airlines’ service quality at Shanghai’s Hongqiao and Pudong International Airports.Aviation,21(4), 143- 154. Joo, S. J., & L. Fowler, K. (2014). Exploring comparative efficiency and determinants of efficiency for major world airlines.Benchmarking: An International Journal,21(4), 675- 687. Kaufman, R. (2015). Why Your Customer Service Training Won't Lead to Happy Customers (or Inspired Employees).The Journal for Quality and Participation,37(4), 33. Taneja, N. K. (2016). Adaptation Strategies by Airports. InAirline Industry(pp. 149-166). Routledge. 8