Singapore Airlines: PESTLE, Five Forces, and Recommendations

This report provides a comprehensive analysis of Singapore Airlines, examining its external environment through a PESTLE analysis, which considers political, economic, social, technological, legal, and environmental factors. It then delves into the competitive landscape using Porter's Five Forces to assess the threats of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and competitive rivalry. The report evaluates the effectiveness of the airline's responses to these environmental factors and competitive pressures, offering strategic recommendations for future success. The introduction provides the background of Singapore Airlines. The report covers topics such as the political and economic stability, social and cultural aspects, technological advancements, legal and regulatory frameworks, and environmental considerations. The report also analyzes the changing competitive environment and the impact on Singapore Airlines. This report is a valuable resource for understanding the airline's strategic position and future prospects.

RUNNING HEAD: SINGAPORE AIRLINES 1
SINGAPORE AIRLINES
Student Name
Institute Name

SINGAPORE AIRLINES 2
Executive summary
The concept of air travel has transformed the way people have led their lives as well as
experiences in today’s world. The current airline industry is actually plays a basic and important
role in the going global of other sectors as it advertise the concept of tourism, international
investment as well as world trade. This is why, it leads to economic development. At the same
time, all kind of airlines based companies within the industry works in highly dynamic
surroundings where many legal, technological, social and economic forces communicate with
one another and this is why, it impacts their actions and decisions (Whyte et al., 2012). The
important question here is that what can be most right and attractive manner to increase the
access of the market for airlines all across the world. With the help of Singapore Airlines, the
report will understand the external environment of the company and airlines adapting as per the
environment.

SINGAPORE AIRLINES 3
Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
PESTLE Analysis............................................................................................................................4
Task 2...............................................................................................................................................8
Changing competitive environment (Porter’s Five Forces).............................................................8
Importance of changing competitive environment in Singapore Airlines and how it impacts
policies and decision making within the organization or industry sector......................................13
Evaluation of the effectiveness of the organization’s response.....................................................14
Recommendations..........................................................................................................................15
Reference.......................................................................................................................................16

SINGAPORE AIRLINES 4
Introduction
The report will discuss in detail about Singapore Airlines. Singapore airlines was founded in
from Malayan Airway Ltd. where the organization was initiated the business in 1947. Since there
are number of political factors, the company was actually renamed as Malaysian Airways and
Malaysia Singapore Airlines however, in the end it split into Singapore Airlines along with
Malaysia Airlines in the year 1972 (Beria, Niemeier & Frohlich., 2011). When there is no
regional route present right after the separation, the company has been force to depend solely on
global marketplace which is highly subjected competition. The bad or difficult start developed a
spirit which is driving to compete and also dedicate to the branding of the company. The entire
airlines have also initiated the branding strategy as per its number of services in the flight and the
company was also engaged in French Haute couture and a renowned designer namely Pierre
Balmain. He designed a unique and distinct version of the Malay Sarong Kebaya since the
airlines Stewardess uniform. This at the later stage becomes a very popular signature for the
brand (Airport Transport World, 2014).
Task 1
PESTLE Analysis
Following is the detailed discussion: -
1. Political: the political environment of the Singapore has been very stable because of its
dominant political party called as People’s Action Party is the government ever since
independence. The government of the country has permitted freedom in number of ways
like corporate governance and has also set some limitation for the industry. In addition,

SINGAPORE AIRLINES 5
the company is also to make majority of the decisions. The government also impacts the
company by recruiting director over the organization. the government has also permitted
SIA to focus on profit when it is compared with public or social accountabilities, the
government also provide support to the company for retrenchment activities especially
during any kind of economic crisis (Center for Aviation, 2013). The foreign policy of the
country also maintains a good association, it have also settled a diplomatic association
with more than one hundred and seventy five countries and have specifically maintained
cordial relationship with large scale economy and countries like Germany, UK and
France. The country also managed to enter in the trade agreement which is free
specifically between India, Australia, Japan, New Zealand and USA. In the recent time, it
has also associated with China as well. the country has also seen working closely and
diligently to build a strong connection with many Middle East countries with an intensive
and high level of visit that exist between both the countries along with signing the Gulf
Based Cooperation Council and Singapore Free Trade Agreement by the end of 2008. In
addition, the present Asia Pacific region has raised a situation of unrest during the recent
time specifically in many developing countries. Country like Thailand has also faced a lot
of turmoil in the year 2008 since there was a lot of protest because of which tourism
industry is impacted. There were act of terrorism as well which impact some of the
country in the present region (Bloomberg, 2012).
2. Economic: The financial crises in last ten years have severely impacted many countries
all across the world which primarily caused due to recession in many countries. The crisis
remained for the whole year and the current financial institution has been very careful
while loaning the money and organization that have gone through a difficult cost by

SINGAPORE AIRLINES 6
cutting different measures in order to survive in long run. There are signs of recovery that
have shown in 2009 and yet IMF has further predicted in many countries and it will be
out of the recession by 2009. The prices of oil were also hitting at a very high level and
further seen sharp drop by the end of 2008. The prices were rising at stable speed by
hitting the high peak by the end 2009 (Chan, 2000). The prices of oil also came as an
outcome in so many ways where some have projected that the prices of oil will drop to a
specific level because most of country is were still recovering from the burns of recession
and it had further speculated that it will further continue to surge. The board of Singapore
Tourism Board has been putting a lot of pressure as well as efforts in promoting varied
Singapore as destination of Meeting, Convention, Incentives and Exhibitions which is
also called as MICE. There are two integrated projects as well as resort were costing of
SGD eighteen billion and places like Marina Bay Sand along with Resort World at places
like Sentosa has finished by 2010 which is further expected to drawn seventeen million
and high quality tourism. The country is also involved in hosting Formula one night race
and all such will also make a positive kind of impact on business based travel in country
like Singapore and further boosted the tourism based sector (Cook, Tanner & Lawes,
2012).
3. Social: Singapore is basically an immigrant nation and have a diversified culture which is
almost close to thirty five percent of the present population where non citizen living in
the nation with twenty five percent of foreigners and just ten percent of local residents.
However, there was a lot of protest in recent time related to this issue. Instead of high
level of non-citizen of citizen related ratio, this nation is still promoting the international
talent and also believing that the nation will have short of labor many the immigrant

SINGAPORE AIRLINES 7
policy was there to finish. The complete population contains almost more than seventy
five percent of Chinese people which is followed by Indian as well as Malay (Hakiman,
2011). The main religion followed by resident of the country was Islam, Buddhism,
Taoism, Christian and Hindu. The country was specifically known for its rich Asian
culture, this country is also one of the most western inclined countries in Asia. The recent
development in Chinese economy along with many open door policy have landed in this
country with major international labor which arrives from China and this have also
developed some kind of cultural conflict among many people living in Singapore. The
country is also famous for the hard work as well as competitive culture which was
operating of Kaisu which holds traditional values from Chinese tradition and have strong
impact on the working culture. This further converted to a culture of high values along
with power distance and the low level of employees have accepted the subordinate level
which sometime questions the decision of management. The management also stressed
on the current team work and maintenance of group harmony was also encouraged from
time to time (Fu & Oum, 2014).
4. Technology: the basic invention like computer along with internet has resulted in so
many kind of expansion of telecommunication and electronic innovation during the past
ten year. Growth in the recent time where the value of HD is important and provide a
crisper kind of image in addition with high speed of processing system in order to
compress as well as decompress different images and rapid data transfer rate and main
solution in high quality with no gap in time as well as clear image and sound. With
advancement in technology, the basis definition of entertainment has been constantly
evolved and electronic devices are getting portable with rise in performance. Such kind of

SINGAPORE AIRLINES 8
gadgets is constantly getting cheaper and more people are treating as it is becoming a
necessity (Heracleous & Wirtz, 2014). Every house in the country will have a portable
processing system along with hand phone and cameras that are completely loaded with
personalized game, photos, music as well as videos. Such items will normally carried at
time of travelling.
5. Legal: transformation in present regulatory foundation can have major influence on
airlines industry specifically for those that are associated national level carriers. Different
types of governments are brining different set of outlook from political perspective and
there are strategies, there are many steps which are constantly impacting the present
aviation industry. For example, there were some kind of terrorist events in 2001 and there
were some important regulatory transformations that influence the way in which travelers
must be scrutinized for all air travelers (Heracleous & Wirtz, 2014).
6. Environmental: there is rise in issues and concerns about the airlines travelers for many
environment friendly based services and functions. The main preference is likely to
develop in the time to come because of the national level of carbon reductions aims and
rise in prices of energy. Some kinds of airlines have already initiated to deal with green
concerns and integrating it with other CSR based policies and plans of marketing.
However, Singapore Airlines has therefore been very slow in speed in order to respond to
demand from customers (Lim & Lee, 2012).
Task 2
Changing competitive environment (Porter’s Five Forces)
Following is the detailed discussion of the Porter’s Five Forces: -

SINGAPORE AIRLINES 9
1. Threat of new entrants: the present airline sector need a huge capital level investment
with at least millions of money needed right before the business processes and it is based
on estimates that the company need about one dollar in order to generate one dollar
revenue. It will also need a lot of work in logistic department with highly skilled
personals like technicians, pilots as well as specialized managerial personnel that are
often restricted by resources in the present industry. There is also some kind of restricted
access to routes and airport with another difficulty post any new entrant. Since the region
of Asia Pacific is moving towards free deregulation and trade related to airspace and
more options are developed (Heracleous & Wirtz, 2006). From the time of introduction,
by companies like America Southwest Airlines in the year 1973, there is Low Cost
Carrier as well that have gained a lot of popularity and proven to be highly profitable.
Number of different organization have formed to give the services which revolve around
the Asian region as well as around 1990s and presently Asia region have almost over
sixty of varied kind of LCC primarily because of offer with short distance flight within
similar country. Some of the airlines have also initiated to provide long haul budget
airlines for instance; Air Asia has also introduced the services called Air Asia X in the
year 2007. This service offer flight from London to Malaysia and also covers Australia
and India. At the same time, the LCC were never considered as a direct competition to
SIA and as the main market for such airlines where the travelers were most cost
conscious. It is also possible that in near future, these LCC will also venture into the
premium market sector especially when the company is able to reach specific level of
business based expertise. Such trends must not be completely overlooked by SIA in long

SINGAPORE AIRLINES 10
run and it is also safe to base an assumption that the current treatment of number of new
entrants will remain low at the present time (Markides &Sosa, 2013).
2. Rivalry among the present firms: the goods in the current industry have a short shelf in
fair manner and the service is also based on loss when airplane takes off and every kind
of cost incurred cannot be recovered properly. The seats are normally around seventy five
percent with full on capacity and airlines that is also dominating in the same region by
considering the direct competition with SIA are small and they are associated with
Malaysian Airlines Ltd., Cathy Pacific, Japan Airlines and many more. There are some
airlines which are able to compete completely against SIA and the complete airlines are
same in structure as well as market shares (Pearson & Merkert., 2011). At the same time,
there is a lot of potential for development in the airlines sectors in the Asian region with
recent crisis in finances that have forced companies around the world in order to engage
in the process of cost cutting factors and it also consist of hitting the airlines industry in a
hard manner with almost eleven billion of loss in the year 2009. The Asian region has
positive development of almost two percent as compare worldwide. Such kind of carriers
are utilizing differentiation based strategy principles which focus mainly on varied
booking service as well as in-flight offers. There is frequent flyer based programs and
were also provided by airlines to retain consumer and create a positive loyalty for brand.
According to the marketing perspective, most of the airlines are member based on
strategic alliance are associated with Star alliance and Sky-trex and have right code of
share system with other partner’s alliances to increase the flight association and also
extend connection with flight. At the same time, SIA has strived with the offering and

SINGAPORE AIRLINES 11
with reputable excellence in association with in-flight service and innovation based
entertainment systems.
3. Threat of substitute product: Singapore Airlines had also aimed that passengers that
focus on the comfort as well as on time while travelling and are less price sensitive which
have made other mode of transport a bad substitute for the company, specifically on
different medium along with long haul flights (Porter, 1985). At the same time,
advancement in technology have also evolves with new kind of treats. The concept of
video conferencing also means of getting a lot relinquish the need for business travelers
and this is why, there are number of post serious treat which make it as substitute to
complete airline industry. With the help of advancement in technology with HD video
conferencing are able to finish at low capital investment as well as low maintenance fees.
New characteristics has come with introduction like sharing files, recording with video,
computer screen that have made the concept of video conferencing to be near direct
meeting (Richards, 2012).
4. Bargaining power of buyers: the current airlines industry has been active part of
products for so many years with an aim of getting from one destination to another and it
never makes a lot of difference on which the present airlines company they select and this
is also true specifically for long to medium haul travel. By the time, air space completely
deregulates for instance, the recent deregulation of Malaysia-Singapore air travel has also
prompted a kind of an influx of other kind of carrier like Air Asia and Firefly to diverse
market like MAS and SIA. The travelers in the present airline industry contain business
passenger along with discretion based passengers (Olienyk & Carbaugh, 2011).
Discretion based passengers are very flexible by nature on the flight and time connection

SINGAPORE AIRLINES 12
along with cost is main problem for them. Business passengers are not very sensitive by
nature and also about price despite short traveler’s time and also with comfortable travel
with right priority for people. People will also hesitate to move to airlines when timing
and price is matched with certain kind of interest. There are number of traveler principle
travel agents for buying the tickets and there are some business travelers even recruit a
designated travel based agent. The travel agents also form huge amount of sales of tickets
and this further give specific power to other travel agents and airlines will normally
provide some percentage of commission to them for sales of tickets. The concept of zero
commission based policy by Singapore Airlines has also caused protest in the form of
boycott of sales of Singapore Airlines tickets by many travel agents who consist of
almost eighty percent of total sales which further forced the company to decrease flight
and also down sized in places like India. The bargaining power of the buyer is indeed
quite high for the company (Schafer & Victor, 1997).
5. Bargaining power of suppliers: the company have number subsidiary Singapore Airport
services for handling the ground based service like handling baggage and it also consist
of in-flight beverages and food supply. (The Times of India, 2014). The company also
has other subsidiaries like SIA engineering that also engaged in maintaining the aircraft
as well as services. The company has also been very strong and financially stable and this
is why it never relies heavily on many other financial situations for different business
process. This further leaves the main suppliers of the present SIA just on producers of air
craft. The jet fuel also forms up to forty percent of all the expenditure of airlines and is
also used as a commodity that has the power to change or move the crude oil prices. The
airlines sector usually buys the plane from Airbus to Boeing (Riwo et al., 2013). At the