- Measurement of success of Singapore Airlines
- Reasons for Success for Singapore Airline (SIA)
- Outstanding Customer Service
- Low fares and ample facilities
- Safety standards
- Technology used
- Marketing and Branding
- Value Chain Analysis
- Strategy of the company
Measurement of success of Singapore Airlines
• 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)
• The inclusion of newest planes into its fleet.
• Punctuality in timings.
• Effectiveness in flight bookings and related inquiries.
(Wirtz et al. 2008)
• Lower costs
• Grow revenue
• Profit maximization
• Foster creative training of the staffs/crew members.
• Career growth of the employees
• Technology enhancement for marketing
• cost management training
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)
The market share of Singapore Airlines is maximum (33%) in comparison with its major competitors which can be seen in the image below.
Apart from this, the value of shares has also increased that depicted in the image below.
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).
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)
Outstanding Customer Service
Low fares and ample facilities
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)
Marketing and Branding
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
Marketing and sales
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).
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).
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 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.
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.
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.
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.
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.
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 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)
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)
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.
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