Strategic Management and Leadership in Singapore Airlines

 

Guidance:
We want you to tell us how you think the company has been able to compete successfully and justify your answer with analysis based on the topic area taught as part of the module. "Success" could be evaluated in term of MEASURES such as growth, profitability, market share and so on. But HOW has SINGAPORE AIRLINE achieved this position which may have taken several years?
 
**DO NOT USE SWOT and PORTER’S FIVE FORCES as strategy.**
 
Assignment must contain following (5cm spacing between each) numbered exactly as follow:
 
Part 1 – (Introduction and Definition of Success)
1. A Brief (maximum 100 words) introduction to the company
2. Definition of success which is the measurement of success. Company Data which can be used to evaluate it’s success concluding with your thoughts about whether or not the company can be described as “successful”. May use balance score card, market share, sales figure staff turn-over rate, etc to define the company’s success.
 
Part 2 – (Reasons for Success for Singapore Airline (SIA))
3. An outline of 6 to 10 business reasons behind the success stated in a simple, straightforward way with a brief (4/5 sentences) explanation of each reason. What made Singapore Airline (SIA) successful in the first place? The KEY success factors of SIA (NOT STRENGTH). Please do research on what are the critical success factors that made SIA so successful now. Avoid Strategy “jargon”; no analysis is required – this is to test of your board business knowledge and understanding.
 
Part 3 (Internal Analysis)
4. A detailed analysis of the company’s straight capabilities starting with the VALUE CHAIIN and followed by a VRIN evaluation (sample show in previous assignment as attached). Your interpretation of the analysis must clearly show how the company has been able to build competitive advantage. (VERY VERY IMPORTANT, MUST HAVE)
 
Part 4 (Contribution of leader)
5. An evaluation of the contribution if leadership to the company’s success, basing this on appropriate theory. Talk about the person leading the company (CEO of SIA) NOT
 
ABOUT THE COMPANY.
A wide range of topics will be acceptable including:
a. Leadership (e.g. styles, attributes)
b. Management theories
c. Organisational culture.
d. Decision-making
 
Part 5 (Strategy of the company)
6. Strategy of the company - A detailed analysis and interpretation based on one further topic area from the following list:
a. Business (competitive) strategy consistent with strategic capabilities
b. International strategy (based on the framework in Exploring strategy)
c. Innovation strategy
d. Collaboration (alliances, joint ventures, mergers and acquisitions)
 
Part 6 (Sustainability)
7. An explanation of any external and/or internal factors that might make it difficult for the company to be successful in the future (cite sources) and suggestions as to how the company can best deal with these. Sustainability of the company based on internal / external environment.

 

Introduction

Singapore Airlines Limited (SIA) was founded in the year 1947 and is one of the most successful airline companies regarding profit and revenue. It started its journey as Malayan Airlines. The company has around 23,963 employees, and it operates in the airline industry from its hubs based in Changi Airport, Singapore. The Singapore Airline was the first customer of Airbus A380 which is the world's largest passenger aircraft. It provides services in a wide range right from passenger and cargo transportation to airport operation and maintenance and kitchen operations. The company ranks in the top 15 carriers all across the world regarding revenue passenger kilometer and stands at 10th position for international passengers carried.  

Measurement of success of Singapore Airlines

Success can be regarded as the accomplishment of pre-determined goal within a specific period. To ascertain whether the company is successful or not, it is essential to evaluate the financial status of the Singapore Airlines. However, having a sound financial condition is not the only deciding criteria, other non-financial measures like employee satisfaction and customer satisfaction also play a key role in deciding organizational success.
 
Balanced Score card
The balanced scorecard of the Singapore Airlines company consists of its management system and strategic planning that are aimed to accomplish its vision. The company aims to provide air transportation services of world class quality to its customers and to maximize returns for the benefits of its employees and shareholders (Kaplan, 2001). Below, we will discuss the key areas of Singapore Airlines’ balanced score card:
 
From Customer point of view
•    Provides comfort, attentive personal services and amenities to the customers with the help of highly trained employees.
•    Lowest cost Airline Company amongst its competitors.
•    Provides free drinks, meals prepared by renowned chefs to the customers.
(O’Connell and Williams, 2005) 
 
Internal business process
•    The inclusion of newest planes into its fleet.
•    Punctuality in timings.
•    Effectiveness in flight bookings and related inquiries.
(Wirtz et al. 2008) 
 
Financial perspective
•    Lower costs
•    Grow revenue
•    Profit maximization 
 
Learning and growth
•    Foster creative training of the staffs/crew members.
•    Career growth of the employees
•    Technology enhancement for marketing
•    cost management training 
 
Net Income
Singapore Airlines has done well in the previous financial year. As seen in the table of fig.1, the net income growth of the company was 2.34% i.e. the net income changed from 359.50m to 367.90m (SGD). The return on asset was 2.79%, return on equity was 4.96%, and the return on investment was 3.93%. However, the company was in a loss in the financial year 2013-2014.
 
(Net income statement of Singapore Airlines for the past five years)                               (Fig.1)
(Heracleous and Wiltz, 2014) 

Market share
The market share of Singapore Airlines is maximum (33%) in comparison with its major competitors which can be seen in the image below.
     (Fig. 2)
Apart from this, the value of shares has also increased that depicted in the image below.
       (Fig. 3) 
 
Customer Satisfaction
Below, we have a graph that shows that the Singapore Airlines has maximum customer satisfaction level i.e. 91% compared with other major rival companies (According to Australian customers).
                          (Fig. 4)
The company emphasizes on making an emotional bond with its flyers. It takes utmost care of the comfort of the customers, and its strategies and innovation are based on its extensive customer feedback process.
(Heracleous and Wirtz, 2014) 

The Singapore Airlines is one of the most successful airlines companies. The data and figures are given above show that the company has done exceptionally well especially in the last financial year. With its business management and proper strategic planning, the Singapore Airlines Company has become one of the leaders in providing world-class airline services to the customers. 

Reasons for Success for Singapore Airline (SIA)

There are numerous reasons responsible for the success of Singapore Airlines, some prominent ones are:
 

Outstanding Customer Service

Providing world class service to the customers is the main objective of Singapore Airlines. The company gives Suites, First Class, Business Class, Premium Economy Class and Economy Class fly categories to the customers where proper care is taken of the luxury and privacy of the customers. 

Low fares and ample facilities

The Singapore Airlines comparatively provides low fare tickets to the customers despite providing facilities like free drinks, meals, outstanding entertainment and dining experience; the customers are even given choice to customize their experience of food. For instance, they can prefer to have a salad instead of soup or homemade chocolates instead of warm nuts.

Innovation

The Singapore Airlines has started making airport lounges that are different from other lounges on the basis that these lounges have architectural and interior designs. For this, the company has made a tie-up with the renowned interior designer company ONG & ONG of Singapore. The company has planned to apply these designs to its airport lounges all across the world in the next five years. The budget for this is around $20 million. It has also developed its mobile app for the convenience of its customers. The company has also thought to provide internet and data services to the customers while they fly along with high-end video games and possible hardware updates.
High aircraft utilization

Singapore Airlines has a fleet of 102 aircraft as of April 2016. These are fuel efficient aircraft and the average age of fuel stands at seven years and five months thus making it one of the world's most young and fuel-efficient company. Also, the turnaround time of Singapore Airlines is very quick that enables the customers to travel without any hassle. Below we have a diagram to show this.  (Fig. 5) 

Safety standards

Every airline company tries to adopt the best safety standards and a mechanism to safeguard the customers and its crew in the air in case of any mishappening and so the Singapore Airlines is no exception to this. Despite providing high-quality service to the customers and possessing innovative ideas and features, the company has not compromised with the safety of the lives of people flying in its aircraft. The company is amongst the top 20 safest airline companies in the world. 

Technology used

The Singapore Airlines use advanced technologies in its business operations, customer management and in its aircraft to ensure maximum satisfaction of the customers and safety of human lives. The company keeps the safety and security at the top priority and therefore, it has decided upon the advancement of CEM (Customer experience management) AC2000 (Standard Edition) access control system secure its operations at various airports.

Marketing and Branding

The branding of the Singapore Airlines has been instrumental since its inception in the airline industry. Its marketing strategy is way better and ahead of all other Asian airline companies; its uniqueness lies in the quality of leadership within the company unlike many other airline companies of Asia. Moreover, the Singapore Airlines was the first Asian and Third World's airline company to be accredited by IATA with IOSA (IATA Operations Safety Audit).

Outsourcing

The Singapore Airlines are outsourcing highly skilled and experienced pilots from all across the world. Apart from this, the company is also likely to shut its flying school located in Singapore. According to the sources, the company is looking forward to opening its flying schools outside Singapore where the air space is less tight, and the costs are lower.
Analysis of Singapore Airlines’ Strategic Capabilities .In this section, we will emphasize on the strategic capabilities of Singapore Airlines. For this, we will take the help of a Value Chain that will be created for the company and which will be followed by the VRIN framework. 
 

Value Chain Analysis

Value chain analysis helps for know how an organization can create the greatest possible value for its customers. Singapore Airlines has been regarded as being innovative in providing premium quality customer services. The operations of the company are very crucial while rendering the services. In the following points, we will discuss the key areas of Singapore Airlines:

Marketing and sales
 
By providing the unique image of ‘Singapore Girl', SIA has successfully created value in the mind of customers that the in-flight crew member provides immense hospitality (Chan, 2000). However, the company markets its brand by using various strategies like Media releases on its official website, events & activities promoted through social media and networking, providing in-flight magazines to the customers and by giving committed to having a proper corporate social responsibility (Heracleous and Wirtz, 2004).
Services
 
The Singapore Airlines gives the miles earned by regular and frequent flying to the passengers with the motive to retain them. The company saves the information of its frequent flyers in its database. It has brought the image of Singapore Girl to the global level and is working on service development to create new services (Morrish and Hamilton, 2002).
 
HR management
For any company which provides services, Human Resource creates value since it is the people who render their services to the customers. The Singapore Airlines which is known for its innovative and unique approaches gives rigorous training to its 7500 staffs to become more efficient and give quality services to the customers. The company follows stringent selection and recruitment methods to hire the employees, and it also invests a lot to train its pilots and crew members with including the staff ideas in the action program (Chong, 2007).

Technology development
The Singapore Airlines has huge investments on technological advancement. It emphasizes and invests in bulk on Research and Development to maintain a world class service. It is an airline company with the youngest fleet. It also invests in the development of energy efficient fuel (Alamdari, 2002).
 
Infrastructure
 
The company is committed to developing such an organization that can earn profit along with giving the customers the value for their money. The management team of the Singapore Airlines has a lot of experience in aviation related industry. The general management is dedicated to creating value by maintaining a quality control. Its membership with Star Alliance has helped a lot in sharing terminal facilities and airport lounges as well as in expanding the route network thereby spreading itself at the pan level and giving the customers frequent flying benefits (Handerson, 2012).
 
Procurement
The Singapore Airlines is unique in itself by providing high-quality in-flight amenities to the customers. The medium of entertainment and quality of food in of supreme class and are far above than the competitors. It focuses on energy efficiency and on fuels that are environment-friendly.
(Wirtz et al. 2003) 

VRIN framework
VRIN framework determines whether a resource is sustainable in competitive advantage or not. This framework states that to serve as a base for a sustainable competitive advantage, the resources should be Valuable, Rare, Inimitable, and Nonsubstitutable. Below, we will discuss the valuable competencies of Singapore Airline along with analyzing them using the VRIN framework.

Capabilities (competency)    Analysis
Marketing and Sales    Value- The marketing and sales of the company are of greater value taking cost and benefits into consideration.
Rare- The strategies of the Singapore Airlines is rare in its demand as it has some unique features and processes.
Inimitability- The strategies are not very difficult to be imitated by other companies as a closer look at them will reveal its uniqueness.
Nonsubstitutable- There is no substitute for the marketing and sales strategies of the company. 

Sustainability- It can be concluded that the Marketing and Sales Strategy of the Singapore Airlines are sustainable.
Capabilities (competency)    Analysis
Service    Value- The services offered by the company is of world class quality hence it is a source of greater value.
Rare- The types of services offered are high in its demand, but no other company can provide such service as of now.
Inimitability- Since the company uses unique methods, so they are inimitable.
Nonsubstitutable- No other resource can substitute these services 

Sustainability- The services offered by the Singapore Airlines are unique and hence sustainable.
Capabilities (competency)    Analysis
Procurement    Value- The quality of in-flight amenities, food and entertainment brings a lot of value.
Rare- These are not the rare services given by the company.
Inimitability-  They are imitable
Nonsubstitutable- These significant procurements cannot be substituted. 

Sustainability- The procurement is sustainable.
 
Capabilities (competency)    Analysis
Technology Development    Value- These are the sources of greater value
Rare- The technological development of the company is rare in its field.
Inimitability- They are very hard to be copied as the company invests a lot of money on it. 
Nonsubstitutable- Any other resources cannot substitute the technological development at any cost.

Sustainability- The technological development of the Singapore Airlines is sustainable and can go very far in the long run.  
 
Capabilities (competency)    Analysis
HR Management    Value- This is the base on which the company is build, so it brings ample value. 
Rare- The process followed by the company are rare.
Inimitability- It is quite tough to imitate the HR management which this company follows to train its employees and staffs. 
Nonsubstitutable- Since the company is a service provider company so this is not substitutable by any other thing.

Sustainability- The HR management of the Singapore Airlines is the crux of the company and hence are extremely sustainable in the long run. 
 
Capabilities (competency)    Analysis
Infrastructure    Value- It is the infrastructure that enables the company to make a profit, and hence it brings a lot of value both for the customers as well as the company.
Rare- The idea used and developed by the company are very rare in itself to be hardly used by any other airline company.
Inimitability- It is very easy for any other competitor company to imitate the infrastructure of the Singapore Airlines.  
Nonsubstitutable- These can’t be substituted. 

Sustainability- The innovative infrastructure (designs, interiors, airport lounges) are quite sustainable for the company. 
 
Contribution of Leaders in the success of Singapore Airlines
The present Chief Executive Officer (CEO) of Singapore Airlines is Mr.Goh Choon Phong. He became the CEO on 3rd September 2010. He graduated from the prestigious Massachusetts Institute of Technology with a Master's degree in Electric Engineering and Computer Science. Before becoming the CEO, he worked for the Singapore Airlines for more than 20 years majorly in China and Scandinavia (Sutcliff and Donnellan, 2006).  

Since his appointment as the company’s CEO, Mr. Goh has successfully lead the Singapore Airlines from the front. He was named as the ‘Asia-Pacific Airline CEO of the year’ last year by the think tanks of the airline industry. He was given this award for his immensely successful implementation of various significant new strategic initiatives that have made the Singapore Airlines much better for future growth and development despite having tough competition from various Gulf and Low-cost carriers (Concil, 2011). He played a key role in making the joint venture with the airline Vistara in India. SIA has made enormous strides with CEO Goh till date. After his appointment, the SIA has done several important and successful strategic changes in its operations than any other airline company in Asia as well as in the world. Mr. Goh was very crucial in the launch of the new premium economy class which gives more comfort to the economy travelers and facilitates for a higher price. It is argued by business thinkers and analysts that the Singapore Airlines has done remarkable work and achieved success under the five years of Goh's leadership. The company has planned to grow its ultra long-haul routes longer than 12 hours in the coming years. The CEO said that the company has embarked on a new direction and approach. He also stated that the Singapore Airlines has moved on to diversify the segment of budget rather than focusing only on full service (traditional thinking of the company).

The CEO admitted that the company has not been rigid or aggressive on growing its long and ultra haul destinations over the past years, but it is only about to change. Under his leadership, the company has planned to take the delivery of its first A350-900 aircraft to start a nonstop airline service between New York and Singapore by the year 2018 (Waldron, 2014). The company has primarily started to target the business travelers as the company's pricing changes also speak to the broader end of fare rules in recent years. It can be said that the Singapore Airlines has done exceptionally well and is giving a very tough competition to the airlines of Asia and in this, the CEO of the company has been pivotal with his strategic plans and futuristic thinking. He has proved to be a successful and thinking leader who leads the company from the front with futuristic attributes. It is because of his leadership that the company has become the top airline company of Asia within a very short span of time. 

Strategy of the company

The business strategy of the Singapore Airlines has been stated below:
•    The company strongly emphasizes on rigorous design and development.
•    The company invests a lot in bringing innovation in its company be it in the organization or in giving services to the customers.
•    The employees of the company have ‘Profit-consciousness’ ingrains.
•    The company plans and works to achieve strategic synergies through related infrastructure and diversification.
•    The company has started targeting business class travelers.
•    It provides world class quality services at a comparatively lower price.
•    With the aim to include the A350-900 aircraft in its fleet, the company is all set to become the leader in coming time.
•    The CEO of the company implements plans to think the future of airline industry; this strategy makes the Singapore Airline different from other companies.
(Heracleous and Wirtz, 2012) (Bloomberg.com, 2016)
A diagram has been given below to show the strategies undertaken by the Singapore Airlines to distinguish itself from the competitors and these strategies implementation helps the company in achieving its targets and objectives (Heracleous et al. 2010).
 
(Fig. 6)
Sustainability
The company is of the view that the environment in which the company is operating will remain challenging, and the demand for travel would be volatile as the company is facing intense competition from the budget rivals. Taking the profit into consideration, the analysts were expecting the average profit to be S$224 million, but the revenue of the company fell by 4% from a year earlier to S$3.9 billion.
Other full-service airlines, as well as low-cost airline companies, are expanding especially in Southeast Asia due to which the Singapore Airlines is feeling the pressure. The value of shares was also seen to go down recently, and therefore, it can be said that despite giving world class services at lower prices to the customers, there are various external as well as external factors that might make it difficult for the company to be successful in the coming time. The competitors have started growing at a rapid pace giving very tough competition to the Singapore Airlines. However, the company with its futuristic plans and strategies may prove to be successful in the future (Nakamura et al. 2011)

Conclusion

From the above discussion, it can be concluded that the Singapore Airlines has done very well within a very short span of time and especially after the appointment of Mr. Goh as the CEO of the company. He with his expertise and skills have implemented such strategies and actions that have made the Singapore Airlines the top airline company of the Asia especially the Southeast Asia. The company has focused more on giving world class services to its customers with the help of its fully trained and dedicated staffs and employees.
The company's innovative ideas and marketing strategies have played a key role in making the company a successful organization. Customer satisfaction has been the main objective of the company and therefore the company is doing every possible thing to attract more and more customers. It has also merged with much other organization and have started its operations outside its operational area to show its pan presence on the globe, and it has proved to be very helpful for the company.

References

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