Strategic Limitations and Issues of Singapore Airlines

The Singapore Airlines (SIA) has employed various innovative business strategies to support the organization. However, a decline in profits during the first quarter of financial year 2015 indicates growing challenges for SIA. Analysis reveals that operating profits have decreased by approximately 52% due to market changes and intense competition. This study aims to understand the strategic limitations and issues faced by SIA.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
SWOT Analysis of Singapore Airlines............................................................................................2
Identification of critical strategic issues in Singapore Airlines.......................................................7
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
Strategic management can be considered as the pillar behind the development of business
strategies for the organizations. To the business organizations, strategic management is one of
the major tools for the achievement of organizational goals and objectives (Hitt, Ireland &
Hoskisson, 2012). On a more precise note, strategic management refers to a particular process
undertaken by the organizational managers that includes the processes of planning, monitoring,
analysis and assessment of business strategies in order to achieve goals and objectives of the
companies. Strategic management includes the process of formulation and implementation of
major organizational strategies. The organizational managers can identify the major strategies
issues in the organizations with the help of strategic management so that effective strategies can
be developed in order to diminish them (Hill, Jones & Schilling, 2014). Organizational managers
use some specific strategic tools in order to identify strategic issue in the companies. One of
those major tools is SWOT Analysis. Organizational managers are able to identify the major
organizational strategic issues with the help of SWOT analysis. The main objective of this
research is conducting a SWOT analysis on Singapore Airlines and after that, to identify two
major strategic issues of the company. Singapore Airlines is the flag carrier of Singapore and the
airline is its hub at Singapore Changi Airport. Singapore Airlines commenced its operation in the
year of 1947. At present, the employee base of the company is about 25000 (singaporeair.com,
2017). Based on the whole discussion, a conclusion is drawn at last.
SWOT Analysis of Singapore Airlines
As per the above discussion, SWOT analysis is considered as one of the major tools of
strategic management as it helps the organization managers to identify the strengths, weaknesses,
opportunities and threats of the companies (Eden & Ackermann, 2013). The major aim of this

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part is to conduct a SWOT analysis on the business operations of Singapore Airlines. The SWOT
analysis is shown below:
Strengths
 The adoption of Multi Brand Model strategy has been one of the major strengths of
Singapore Airlines. In the year 2012, Singapore Airlines launched Scoot that became one
of the three long-haul low cost carriers (Thedrum.com, 2017). Singapore Airlines has
been able to register profit for consecutive thirteen years and the profit margin has been
high in the last five years.
 Singapore Airlines is well known as the company has been providing their customers
with premium quality of products. These premium products have been a major strength of
the airline as it has differentiated the company from its major competitors.
 Singapore Airline is the largest Asian Airline in whole Europe that helps the airline to
position their premium products (singaporeair.com, 2017). This is a major strength of
Singapore Airlines. In Europe, Singapore Airlines operates in eleven destinations that
have almost 70000 weekly seats. Thus, the company has become able to compete with
the European airline companies.
 Apart from Europe, large presence of Singapore Airlines can be in the Australian and
New Zealand market. Currently, Singapore Airlines operates in seven Australian
destinations with a capacity of 85000 seats. In New Zealand, Singapore Airlines operates
with more than 11000 seats. All these aspects together has made Singapore Airlines the
second largest foreign airlines in Australia and fourth largest in New Zealand.
 It is remarkable that Singapore Airlines has been profitable in every year since it has
started operation 40 years ago. This can be considered as the most dominated strength of

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the airline. Among all the airlines of Southeast Asia, Singapore Airlines has been able to
register the most amount of profit as the airline has been performing significantly over all
these years.
Weaknesses
 It can be seen that maintaining the opportunity of growth has been one of the major
weaknesses of Singapore Airlines. In the recent years, the average growth rate of
Singapore Airlines’ passengers has been less than 2% per year and the growth in
passenger tariff is low. The main reason is the limited growth opportunity of passengers
(reuters.com, 2017).
 It can be seen that Singapore Airlines has not been able to access the market of North
America and it is a major weakness of the company. In the US market, Singapore
Airlines holds the position of ninth. Being not able to make business in the American
market is a limitation of the business operation of Singapore Airlines (straitstimes.com,
2017).
 Chine is one of major markets for Singapore Airlines and slow growth in Chine has
become a weakness for Singapore Airlines. In the last eight years, only 30% growth has
been registered in the business of Singapore Airlines in China. However, it needs to be
mentioned that there is still major business opportunities for Singapore Airlines in China.
Inability to register growth in china is a major weakness for Singapore Airlines.
 Being reluctant in entering into partnerships like joint ventures is a weak area for
Singapore Airlines. Over the years, Singapore Airlines do not have any partnership or
joint ventures with any of the major companies. In addition, small ventures are not
working for the company. Thus, it is a major weakness for Singapore Airlines.

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Opportunities
 There is a huge opportunity for Singapore Airlines to enter into deeper partnerships so
that the company can improve its weak areas. Under the leadership of Mr. Goh, the CEO
of the airline, Singapore Airlines has become able to enter into eight major partnerships
along with several others.
 As per the announcement of Singapore Airlines on May 2014, the airline has been
working on the development of major premium economy products that includes the
introduction of long-haul aircraft 2H2015. For this reason, Singapore Airlines has
identified major market segments for premium economy products. This will create major
business opportunities for Singapore Airlines.
 The joint venture of Singapore Airlines with Indian conglomerate Tata will provide major
business opportunities for Singapore Airlines. The main reason of this partnership is that
India has been providing unique growth opportunities for Singapore Airlines. This
partnership will be helpful to unlock growth opportunities for Singapore Airlines
(airvistara.com, 2017).
 The introduction of Scoot in the year 2012 has opened a new market for the company that
has a huge potential growth opportunity. In the recent years, major partnership can be
seen between Scoot and Nok in order to establish new long-haul low cost carrier and it is
called ScootNok.
Threats
 Large increase in the number of Gulf carriers is creating threat for Singapore Airlines as
these carriers have been affecting the profitability and growth of the company. The
impact of Gulf carriers can be seen in major markets where Singapore Airlines operates

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like the markets of Asia, Europe, Australia, New Zealand and others. Thus, the huge and
aggressive competition from Gulf carriers is a major threat for Singapore Airlines
(asean.travel, 2017).
 It can be seen that the Southeast Asia market has been suffering from overcapacity as
many competitors of Singapore Airlines are operating in this market. Thus, mismatch in
demand and supply can be seen as supply is more than demand in this industry. Hence, it
can be said that the increasing amount intense competition is creating threats for
Singapore Airlines.
 It is a fact that Singapore Airlines has been the market leader in terms of premium space.
However, it can be noticed that the increased competition in this segment is narrowing
the gap with Singapore Airlines. In the near future, this can be a major threat for
Singapore Airlines.
 It can be seen that the rival companies of Singapore Airlines are gaining massive
strengths day by day with the help of effective strategies. This can also be considered as a
threat as it can affects the growth and profitability of Singapore Airlines.
Analysis of the operations of the corporation Singapore Airlines (SIA) reveals the fact
that financial performance of the company has deteriorated with steady decline in its profit over
the past several years. The poor financial performance of the company is said to be driven by
intensified competition and difficult market condition. In the recent years, SIA has encountered
biggest challenges and has carried out numerous strategic adjustments ever since Goh Choon
Phong assumed charge as the chief executive officer (CEO) at the start of the year 2011. The

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present section identifies the critical strategic issues faced by the company based on analysis of
the current situation of the company and SWOT analysis
Identification of critical strategic issues in Singapore Airlines
Strategic Issues faced by Singapore Airlines in attaining growth opportunities
Based on the SWOT analysis of the company Singapore Airlines, it can be hereby mentioned
that a specific strategic issue of SIA is the overcapacity present in the Southeast Asian market.
Increase in the competitors of the company SIA counting the LCCs along with the full service
flags have led to the excess supply in the market (Shaw, 2016). Therefore, it can be hereby
mentioned that the opportunity of growth in the passenger of SIA remain exceedingly limited.
Again, the home market of SIA is comparatively mature and for the last decade has witnessed
swift growth of Low cost carrier (LCC) carrier, however, has slow growth of full-service.
Furthermore, SIA also has conventionally depended on sixth freedom passage; nevertheless,
transit growth witnessed in a wide-body network is restrained by intensifying competition,
specifically from Gulf Carriers.
In the course of growth of the middle as well as middle class, the overall demand is still
getting improved in the Southeast Asian region, however, the overall capacity is adding up a
swift pace during the period of long term, medium term as well as short term markets (Johnston
& Marshall, 2015). Therefore, this is developing pressure on specific load as well as yield facets
of Singapore Airlines. Again, SIA also has reliably been a pioneer in the premium market;
however, competitors have contracted the existing gap impressively as of late. In addition to this,
SIA also has one of the major premium offerings in the business so far, but there are still lot of
carriers at or at least close to the maximum point of the group. Essentially, the business class

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offerings on the larger part of the Singapore Airline’s long term force was necessarily presented
during the year 2006. During this time, it spoke to a specific jump last contending different
offered items. Nowadays, a few airborne transports have presented analogous business class
offerings, bridging the gap with SIA. Indeed there are some air carriers of Europe and North
America that had been quite a few eras behind, have now bridged the gap (Baker, 2014). Thus, it
can be hereby mentioned that the entire airline industry can be considered to be one of the most
competitive sectors and the rival airlines are attempting to acquire advantage of different
opportunities and assess the requirement of the consumers to sustain in this competitive market
(Keller and Kotler, 2015). Management of SIA is also concerned with the consolidated important
competitors such as Emirates Airlines as well as Qantas Airlines operating in the Australian
route. Moreover, the increase in the number of airlines specifically in the Gulf nations are
remaining to be very much aggressive and large number of rivals for both economic as well as
premium passengers in this specific SIA market.
Critical strategic issue due to inappropriate strategy for market development
Singapore Airlines also faces strategic problem in gaining accessibility to the market of
North America and strategy adopted for China. The prospects of acquiring return to specific non-
stops to particularly North America are almost nil. Consequently, SIA needs to depend on the
fifth freedom in order to pursue growth in the non-stop service segment. However, these kinds of
rights are difficult to secure as markets namely China would be perfect transit stops as SIA is not
essentially open (Dickinson, 2014). Again, China also remains a strategic market for the
company SIA. However, the entire group has successfully established new secondary markets
utilizing Scoot, that now runs around 12 weekly flights to around four different Chinese
destinations. Nevertheless, several attempts to carry out investment in different Chinese airlines

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have hugely failed considerably and the present political environment carries out specific deals,
that are crucial for position of SIA for a long-term period in the important Chinese market (Baker
& Saren, 2016). Thus, management of SIA hereby fails to develop a strategy to overcome the
problem of accessibility to the market of North America. Again, management of SIA has also
failed to properly implement an appropriate strategy for functioning in the Chinese market. SIA
Group although operates in the market of China with 60000 complete weekly service seats.
However, growth of the company has been comparatively slow and the capacity is approximately
30% over the past eight years. During the same period of time, the Cathay Pacific Group has
extended operations in several parts of Mainland China by approximately 50% whilst three chief
gulf carriers have enhanced their capacity, thereby eroding the share of the market of SIA in the
concerning markets (Meffert, 2013). Thus, it can be hereby stated that SIA has failed to develop
appropriate strategy of partnering with any Chinese carrier on regional connections (Foxall,
2014). However, its incapability to get codeshare as well as strategic partners together with the
decreasing market share compared to rivals implies that China is not strength for the company
anymore.
Another critical strategic issue that can be witnessed from the operations of Singapore
Airlines include missing the opportunity of establishing Tiger Airways as a wholly owned
subsidiary of SIA. Thus, the Tigerair was not incorporated into the group of SIA. Again, Tiger
air can be considered to be unprofitable in the current years, bringing down the results of the SIA
group. Again, the corporation also encountered disadvantage with essentially the geographic
factor of the company (Sheth & Sisodia, 2015). Thereafter, the management of the company
realized that long time flights are no more profitable for the corporation. The prospects of these
flights are not very impressive. In addition to this, joint venture strategies for development of

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market of the firm have also become the weakness and critical strategic issue of the firm
Singapore Airlines since the corporation fears about the dilution of the reputation of the brand
(Kotler et al., 2016). The company does not engage in any of the metal unbiased anti-trust joint
undertaking that have become widespread in the trans-Atlantic as well as trans-Pacific markets.
These essentially have also begun to break through the Asia-Europe market. Quite a lot of of
SIA’s Japanese as well as European rivals are engaging in these kinds of ventures, thereby
presenting a competitive advantage, specifically on US routes of the operations of SIA. SIA only
has joint collaborative operations with two different small carriers that again do not serve up
Singapore.
Conclusion
In conclusion, it can be said that the management of Singapore Airlines has employed
different innovative business strategies since the beginning that have supported the entire
organization. However, decline in the level of profits recorded during first quarter of the
financial year 2015 helps in indicating growing challenges for the Singapore Airlines. Analysis
of the operations of the firm reveal that the operating profits of the firm have decreased by
approximately 52% caused mainly by the swift changes in the conditions of the market and
intensified conditions of the market. Thus, the current study helps in understanding the factors
that are crucial to comprehend strategic limitations and issues of SIA.

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