BUS300: Strategic Analysis of Singapore Airlines - Report

This report provides a strategic analysis of Singapore Airlines, a leading airline company. It begins with an introduction to the airline and its operations, followed by an external analysis using PESTLE and Porter's Five Forces frameworks to assess the political, economic, social, technological, legal, and environmental factors, along with industry competition. An internal analysis, employing a SWOT analysis, examines the company's strengths, weaknesses, opportunities, and threats. The report then presents strategic options, including investment in Scoot and partnerships, followed by recommendations for the company's future. The conclusion summarizes the key findings and suggests strategies for Singapore Airlines to maintain its competitive advantage and address challenges from low-cost carriers. The report is contributed by a student to be published on the website Desklib.

Running head: SARTEGIC ANALYSIS
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STRATEGIC ANALYSIS
SINGAPORE AIRLINES

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Table of Contents
Introduction:...............................................................................................................................................1
External analysis of Singapore airlines.........................................................................................................1
Pestle analysis:........................................................................................................................................1
Porter’s five forces:.................................................................................................................................2
Internal analysis:..........................................................................................................................................3
SWOT analysis:........................................................................................................................................3
Strategic options:........................................................................................................................................5
Recommendations:.....................................................................................................................................5
Conclusion:..................................................................................................................................................6
References:..................................................................................................................................................6

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Introduction:
Air travelling is the facility that is providing the convenience travel to the customers these days.
It has grown to that extent that no big city has remain untouched. It is also the facility that has
supported the activities of globalization and tourism all over the world. It is the report that
provides the description about the strategic analysis of Singapore airlines. Singapore airlines are
the company that has started its operation in 1947 as Malayan airlines (Heracleous and Wirtz,
2010). It was the joint venture between the Singapore and the Malaysian government. In the year
1965, Malaysia and Singapore separated and both decide to separate the operation of the airlines
as well. Singapore airlines have come into the industry in the year 1972. The company struggled
and today is one of the leading firms in the industry and is considered as the premium airline
facilities in Singapore. The report discusses about the internal and the external analysis of the
company along with some of the strategic options that can be implemented to have more
business.
External analysis of Singapore airlines
Pestle analysis:
It is the technique that has been used to conduct the external analysis of the company to provide
the information about the impact of various external factors on the company’s functioning.
Political factors: political factors include the impact of the government legislation and the change
in the policies by the government. It has been analysed tat Singapore airlines is backed up the
Singapore government as it is promoted by the government entity Temasak Holdings thus
government always take decision in favour of the company (Heracleous and Wirtz, 2012).
Economic factors:
Economic factors include the factors related to fluctuation in the interest rate and tax rate. It has
been analysed that Singapore is the place with stable economic and the Singapore dollar is also
strengthen in recent years (Heracleous and Wirtz, 2014). As the economy is stable thus it also
helps the people to increase their purchasing power and thus customers prefer to travel by sir
rather than other means.

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Social factors: changes in the demands and the trend sin the society affect the choice and
purchase decision of the customers. In the year of 2002, one of the flights has crashed which
resulted in bad image of the company but airline has managed to balance the situation by
offering compensation to the relatives and family of the people injured or dead in the case
(Eiseman, 2011).
Technological factors: technology is the factors that affect each and every industry now a day.
Thus, airline industry also gets affected by the change and advancement in the technology.
Singapore airline is very much updated with the technological tools (Freeman,2010). The
company was the first to install productivity suite for the passenger’s benefits. The company is
making efforts in providing great and hi tech atmosphere to the passengers in and outside the
flight (David, 2011).
Legal factors: any changes in the regulatory framework of the industry affect the functioning of
the company in that industry. As discussed that Singapore airlines is backed up by the
government thus many a times the legal restriction does not affect the company negatively (Hitt,
Ireland and Hoskisson, 2012).
Environmental factors:
Singapore airlines are considered as the company that is very much sustainable in nature. It is the
company that is certified with ISO for environmental management system of the company. The
company also believes in maintaining the balance between the use of resources and the
availability (Wheelen and Hunger, 2011).
Porter’s five forces:
It is the technique that helps in analysing the factors that are related to the industry.
Threat of substitute: MODERATE
It has been analysed that the threat of Singapore airlines is not very low and not very high. This s
because it is the company that operates in the airline industry and the people who needs to travel
to long distances has to travel by air (Hesterly and Barney, 2010). As far as other travelling
mediums are considered, they can provide facilities for travelling in cheap prices and substitute
can be done.

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Threat of rival: HIGH
Although Singapore airlines is one of the leading airlines in the country but there are many other
airlines that provides air flying traveling to the customers with low process such as European
airline, Asian airlines etc. the company provide its services at very high price and this may
sometimes against the company but the profit margin of the company is always high as
compared to other competitors (Doyle, 1990).
Threat of new entrant: LOW
Threat of new entrant is very low because of the government interferences in the airline industry.
This industry also requires great amount of seed capital to set up the business which is not that
easy to spend (Merkert and Hensher, 2011). This is the industry that can only earn profit at large
scale because economies of scale support the many to reduce its operating cost per unit.
Bargaining power of buyers: HIGH
In this case the bargaining power of the customers or the need users are high because they have
many alternatives and substitutes available for them,, if the company set their one prices then
customers do not thing again to switch the brad. The customers in the airline industry are not that
much loyal, it is their convenience that supports their decision to choose the airline and not their
loyalty for the brand (Wirtz, Heracleous and Pangarkar, 2008).
Bargaining power of suppliers: HIGH
Even the supplier power in this industry is very high. This is because the dependency of the
companies on suppliers is high. If the fuel prices are increased by the suppliers then it affect the
price of the air tickets as well and the companies do not have choice other than this.
Internal analysis:
SWOT analysis:
It is the technology that helps in analysing the company’s internal functions it provides the
detailed description about the strength and weakness of the company along with the
opportunities and that available for the company.

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Strengths:
Trendsetter: It is the company that has set many trends in the airline functions such as provision
of drinks and meals ta the flights, audio and video services etc.
Revenue: it has been analysed that the company has consistent sales profits and revenue since
years. The company is earning high profits and is one of the leading firms in the industry.
Weakness:
Shares in Tiger airways: it has been identified that Singapore airlines had 40% stake in the tiger
airlines which is experiencing loss from 5 years. This acts as the weakness for the company and
for its profits as well (Nair, Palacios Fernández and Ruiz Lopez, 2011).
Restricted to limited areas: The Company is trying hard to get access all over the world though
their airports with other companies but still have restrictions in covering some of the areas.
Opportunities:
Low cost operations: It has been analysed that the customers wants everything at very low cost
ad Singapore airlines is serving at very premium prices. Thus investing more in the Scoot ltd.
will help the company to operate as low fare carrier in the industry.
Expanding the partnership: it is a very big opportunity for the company to enter the market by
the practice of joint venture with other companies (Tugores-García, 2012). This helps the
company to enter easily into the new market without focusing on developing the brand image or
entering with the new name.
Threats:
Rising fuel prices: It has been analysed that the fuel prices are raising day by day and this affect
the functions of the airline industry directly. This is because of the fuel price faces kind of
fluctuation then the airline companies also have to make changes in their flight tickets and other
services which may affect their image in the market.
Competition from low fare carriers: It has been analysed that the company like Singapore airlines
is serving the customers with premium prices and with premium services. However, the

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customers look for the travel facilities that provide the services in low price. Thus, the company
has to face competition from the low carrier’s service in the industry (Alamdari, 2002).
Strategic options:
 Investment in Scoot: Scoot is the project of the company that is into low price services.
This helps the company to fight with the low price fare carriers in the industry. Invest
more in scoot project results in acquiring direct market segments by the company. The
company can easily provide services to the customers who want premium services and
also serves the customers who want low cost services. Although the company is using the
project for facing the competition in the market but still not focusing on the services and
the dual strategy of achieving cost leadership along with differentiation helps the
company to have more profits along with large customers base all over.
 Partnership: It is the vest and the very easy way to enter the new market. this is because
when the new company in the airline industry enters the new market they have to
accompany barriers such as legal barriers, government pressure, market customization,
change in strategies etc. this is because they have to make alterations in their processes
according to the local market which is really hectic. Partnership can helps the company
enter the new market easily (O’Connell and Williams, 2005). The company need not to
worry about making changes in their system and prices as well as there will be no issues
of developing the brand name in the new market as the associated company is already
serving the local customers of the new market.
Recommendations:
As per the discussion of the strategic framework of the company and the options available in
front of the company, the need of hour for the company is to compete with the low cost airline
companies; this is because they are taking the market share of the Singapore airlines by serving
the customers at very low cost. As discussed that airline industry customers are not brand loyal
and the switching cost for them is also not very high thus they can easily switch other brand as
per their convenience, thus, it is required by Singapore airlines to be the convenient option for
the customers rather than the high priced luxury option. Customers generally want to avail the
services at low prices. They can compromise the services bit not on the price thus it is required

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by Singapore airlines to focus on its project of Scoot that is related to the low price services of
the company.
Conclusion:
It has been concluded from the report that Singapore airline is one of the leading airline
companies in the country. It is serving the customers with high legal factors affect the company
in price premium services. As per the analysis of the industry and the external factors, it has been
analysed that several factors such as political, economic, social, environmental, technological
factors affect the company’s functioning. The industry analysis suggests that the company has
threats with rivals and substitutes but the new entrant is not a threat for the firm. The bargaining
power of suppliers as well as the buyers is high in this case. The company is the leading firms
and thus have effective image in the industry but the company is facing competition from the
low-cost operators. Thus, it has been recommended to the company that it has to implement
some strategies such as investing the in the project scoot that is already running by the company
which allow the customers avail the services at low prices. It has also been recommended to the
company to make partnership with other firm to enter the new market.

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References:
Alamdari, F., 2002. Regional development in airlines and travel agents relationship. Journal of
Air Transport Management, 8(5), pp.339-348.
David, F.R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Doyle, P., 1990. Building successful brands: the strategic options. Journal of consumer
Marketing, 7(2), pp.5-20.
Eiseman, F.B., 2011. Bali: Sekala & Niskala: Sekala & Niskala. Tuttle Publishing.
Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge university
press.
Heracleous, L. and Wirtz, J., 2010. Singapore Airlines’ balancing act. Harvard Business
Review, 88(7/8), pp.145-149.
Heracleous, L. and Wirtz, J., 2012. Strategy and organisation at Singapore Airlines: achieving
sustainable advantage through dual strategy. In Energy, Transport, & the Environment (pp. 479-
493). Springer London.
Heracleous, L. and Wirtz, J., 2014. Singapore Airlines: Achieving sustainable advantage through
mastering paradox. The Journal of Applied Behavioral Science, 50(2), pp.150-170.
Hesterly, W. and Barney, J., 2010. Strategic management and competitive advantage. Pearson,
ed., Pearson Prentice-Hall.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.

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Merkert, R. and Hensher, D.A., 2011. The impact of strategic management and fleet planning on
airline efficiency–A random effects Tobit model based on DEA efficiency
scores. Transportation Research Part A: Policy and Practice, 45(7), pp.686-695.
Nair, S.K.S., Palacios Fernández, M. and Ruiz Lopez, F., 2011. The analysis of airline business
models in the development of possible future business options. World Journal of
Management, 3(1), pp.48-59.
O’Connell, J.F. and Williams, G., 2005. Passengers’ perceptions of low cost airlines and full
service carriers: A case study involving Ryanair, Aer Lingus, Air Asia and Malaysia
Airlines. Journal of Air Transport Management, 11(4), pp.259-272.
Tugores-García, A., 2012. Analysis of global airline alliances as a strategy for international
network development (Doctoral dissertation, Massachusetts Institute of Technology).
Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
Wirtz, J., Heracleous, L. and Pangarkar, N., 2008. Managing human resources for service
excellence and cost effectiveness at Singapore Airlines. Managing Service Quality: An
International Journal, 18(1), pp.4-19.

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