Singapore Airlines: Strategic Analysis and Management Overview Report

This report provides a comprehensive analysis of Singapore Airlines (SIA), a highly regarded airline known for its superior customer service and strategic management. It begins with an introduction to SIA's history, tracing its evolution from Malayan Airlines. The report then delves into a detailed PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors impacting SIA. Following this, a Five Forces analysis evaluates the competitive landscape, including threats from new entrants, the bargaining power of customers and suppliers, competitive rivalries, and the threat of substitutes. The report concludes with strategic recommendations for SIA, focusing on improving CSR strategies, customer retention through rewards programs, staff training, and potential business diversification. The analysis underscores SIA's strong position in the airline industry, highlighting its commitment to customer service and technological advancements, while also suggesting areas for further improvement to ensure continued growth.

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STUDENT NAME

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INTRODUCTION
One of the most reputed companies situated in Singapore is Singapore Airlines (SIA) who
has gained significance for superior quality customer service and well built strategic
management. By incorporating Malayan Airlines with Imperial Airways, Ocean Steamship
Company in Liverpool and Straits Steamship Company, SIA was formed in the year 1937
(Singapore Airlines, 2017). Since then SIA had been able to consider its available
resources and gained competitive advantage over its competitors. With technical support
of IATA and British Commonwealth Airlines, SIA was able to expand its business.
Douglas DC-3s was introduced in company’s fleet in the year 1957 after which the
company became public and was given the name Malayan Airlines in year 1957.
Singapore, Malaya, Sarawak and Sabah formed a federation in the year 1963 after that the
company was renamed as Malaysian Airlines. Then in the year 1966, the company was
finally given the name of Singapore Airlines after Singapore got detached from the
federation (Sustainability Report FY2015/16, 2016). Then after, SIA made its
headquarters in Singapore.

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PESTLE ANALYSIS
Figure: PESTLE analysis
Source: (Blackburn, 2016)
The PESTLE analysis made of SIA will help in getting detailed information regarding
company’s external factors which are indirectly related to the firm. The threats and
opportunities relating external factors will be analysed while evaluating opportunities
behind it (Frue, 2017).
Political: Politics factor has always been in favour of the company as the carrier of the
company carries nations logo, governmental support is always with SIA. The threat here is
instability in countries government may affect SIA’s business as the flight takeoffs may
have to undergo several legal verifications and suspiciousness of securities. The cost of
operations has chances of increment with reduced number of passengers in politically
affected areas (Pestel and Five Forces analysis of Singapore Airline, 2015).
Economic: Economically Airline industries have to face barriers as their operations are
related to many countries economies. The most important factor that affects the company

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is fuel prices i.e. if the economic conditions of countries leverages fuel prices, company’s
overall pricing strategy will be hampered. Also if economies goes down, it may directly
hit the sales of the company as people then prefer not to make longer journeys for tourism
purposes. Although SIA uses best pricing strategy, any steep change made in countries
GDP are always a threat for the company.
Social: Travel and tourism companies have to face many challenges socially as their
operations are not limited to one country only. While travelling in countries, different
language as well as different cultures has to be faced by company’s employees. SIA here
faces threats as most of the company’s staff is not known to many languages and to face
people from different countries becomes quite challenging. The flight attendants are
required to understand the demands and problems of passengers and if it is not met, they
might face trouble in flight.
Technological: Technological factors are immensely substantial in industries where top
marketers are involved. People who travel in high class section of flights demand for
superior interiors and more comfortable journeys. Thus, in order to provide with high class
journey with comfortable environment, airline industries are bound to spend huge amount
for technological innovations and make their in flight support more securable. While
considering about SIA, it holds youngest form of fleets i.e. latest and newer
technologically enabled aircrafts can be found in its collection. The company is still
working on its improvements by introducing recliners, headsets, entertaining gadgets and
cosy beds which get easily attracted by customers. SIA official websites provides
customers with an insight to what they demand and in different budgets (Jurevicius, 2013).
Legal: Legally, the government regulations and country laws have always affected airline
industries operation. In order to make travelling to other countries, especially while
making travel to newer country, SIA has to undergo many paper works and abide by

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country laws. Different countries follow dissimilar laws and to maintain them becomes
quite challenging. Therefore in order to sustain the market, SIA is highly depended on
legal and governmental support.
Environmental: Climatically airline industries are more prone to disturbances created due
to bad weather. The climatic disruptions in countries it deals in like flood, earthquake,
drought, etc. can make cancellations of flights. Travelling gets reduced in affected areas
which might affect commercial aspects. The increasing contemplation in corporate social
responsibility by today’s industries has impacted SIA. The company here lacks some
reputation as the company has been seen slow in responding and enabling suitable CSR.
More customers’ demands for environmental friendly travelling which has become major
concern for big companies (Together We Grow: Environmental Report, 2011).

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FIVE FORCES ANALYSIS OF SINGAPORE AIRLINES
Figure: Porter’s five force analysis
Source: (Odessa, 2017)
Five force analyses is one of those management tools that helps to identify the external
forces of companies which can be further evaluated to bring enhancement in operations. In
Singapore Airlines, Five force analyses has been made that may assist its management to
evaluate future opportunities and threats that comes in the way of company’s future
growth path (Chan, 2011).

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Threats of new entrants: This force relates to scope of entrances made by new
competitors in present market. Since SIA has got great prominence in airline industry in
Singapore, this force seems weaker. The extensive governmental support and good quality
service providing feature makes other entrants difficult to beat SIA. Public support is also
gained by company as it is nation supported organisation while having a logo with
countries flag itself. One another reason that adds difficulty for new entrant is that the
government does not want to add many flights which can create clogging of airports and
atmosphere as it may increase air congestion level which impacts global warming.
Singapore basically deals in long travelling and thus threat relating long haul is weak. But
new entrants that targets short distances travelling can succeed in entering present market
(Roll, 2017).
Bargaining power of customers: This force in which customers bargaining power is
measured seems stronger for SIA. In Asian regions many airline industries are present that
provides superior services along with few of them who provides cheaper rates. The
increasing awareness of internet and social medias sites have also affected the company’s
sales as people makes comparisons between available companies before making decision
regarding their journey. Lesser to no switching cost also drives customers to change their
service operators within no time.
Bargaining power of suppliers: This is also a strong force for SIA as airline industries are
highly depended on fuel and manufacturing companies. According to Potter, the business
seems to have weak position if suppliers bargaining power is high. SIA has to make oil
purchases from its suppliers under their conditions and if any hike is seen, the company’s
profits are affected. SIA purchases its major aircrafts like Boeing and Airbus from other
manufacturers. They seem to supply aircrafts along with its parts in higher prices since

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there is limited number of suppliers. Also after sale services provided by them are very
expensive that shows that SIA has threat from its suppliers (GALLEZO-ESTAURA,
2016).
Competitive rivalries: Presence of enough competitors, who provides much elevated
service to travellers, has always been threat for SIA. The only strategy that saves company
here is improvement in service standards and introduction of cost cutting in prices. In few
routes like Kangaroo route, SIA has a monopoly which gives tough competition to its
competitors along with providing services in those areas which has got more legal
complexities (Sustainability Report FY2015/16, 2016).
Threat of substitute: Potter has defined this factor as an extent of threat under which any
new product is replaced by other company’s products. For SIA, governmental support has
enabled the company to get easy permissions for connecting with different countries in far
distances. However shorter distance travelling has been a matter of concern. For travellers
other substitutes like railways and luxury busses have been a good option where price
factor is examined.
RECOMENDATIONS
SIA has got all the capabilities to rule airline industry, although there are few areas
that can be improved to enhance its operations. Firstly SIA needs to work on its CSR
strategies that are presently seen negligible in company’s management (Bice). If the
company shows increase in respect towards environmental safety, it may gain
advantage over its customers as well as government. Secondly, the company can
introduce various discount schemes or reward systems to attract its customers so that
switching of industry from customer side is eliminated. Adding on points while

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purchasing tickets and thereafter giving rewards may keep SIA customers attached
with the company. Thirdly, the company needs to work on its staff training and
recruitment. Since the company lacks efficiency in its staffs cultural diversifications,
SIA can introduce training programmes where different languages and education
about cultures may be provided (Sustainability Report FY2015/16, 2016). This may
help them to convey easily with passengers and also be liked by customers while
speaking to them in their languages. The fourth recommendation for SIA will be to
diversify its business into manufacturing units. Since the company has to face threats
from its suppliers, SIA can establish its own manufacturing units as well as service
teams that will also help in reducing companies costs.
CONCLUSION
After making analyses of SIA it can be said that the company holds a strong position
in airline industry (Southerden, 2017). The strategic management of the company
has enabled SIA to give high returns to its stakeholders while enhancing travel and
tourism industry. The company provides additional services to its customers by
making recommendations for hotel and destination booking while arranging
convenience for them (AYOB). SIA has always shown its advancement in procuring
latest technology methods and newer fleet of aircrafts which have always attracted
its customers. The only part where the company can make improvement is to
introduce environmental security as well as in flight support which can ensure
further growth of the company in positive direction. On concluding note it can be
said that SIA’s mission to provide superior service to its customers has been seen in
its operations.

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REFERENCES
AYOB, A. M. (n.d.). SINGAPORE AIRLINES LIMITED: BUILDING A CULTURE OF SERVICE
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