Situation Study: Singapore Airlines
Singapore Airlines is among the key players globally inside the air travel industry. It’s employed some core strategies which aim to combine things to look for rich in rates of profitability. While using SWOT analysis tool based on Jobber (2001) it’s a helpful task to check out SIA’s competitive strengths that lead to growing shareholders value. As pointed out over the top quality of their customer support is among the strengths of SIA and it is brand picture of ‘Singapore Girl’ is a that is highly recognizable by global customers. Of interest however is the fact that maintaining service quality at lucrative levels is becoming more and more difficult considering the threats faced by SIA both in macro and micro ecological contexts. In thinking about these threats this report utilizes a PESTEL analytical framework as one example of individuals factors of relevance to SIA competitive abilities and profitability.
Types of these threats include the truth that fuel prices have consistently elevated and can achieve this to return while cost wars between air travel companies have grown to be more and more intensive because of elevated competitive levels in the market. It’s because existing rivalries in addition to new entrants inside the discount air travel market segment. As opposed to its rivals SIA has preferred policies of adding extra value through customer support instead of ones of pure discounts on prices, (Thompson, 2005). Similarly purchase of technology like the growth and development of an e-ticket system enhanced its strength when it comes to economical sales and billing systems. These developments happen to be based on skilled management and governance procedures that have generally led to SIA having a strong financial framework taking advantage of previous effective operations.
Additionally as Porter (1980) suggests competitive forces for example rival, consumer and supplier power, new entrants in addition to substitutes greatly effect on an organization’s competitive abilities in the industrial context. As pointed out above competition levels are full of the air travel industry matched with consumers becoming much more sophisticated when it comes to their purchasing decisions associated with travel. Also of note is the fact that within the thought on terrorist related attacks in america consumers both in america and globally express more concerns with regards to safety in selecting public traveling methods. These broader trends have generated significant threats to air travel companies for example SIA such facets as elevated airport terminal expenses because of enhanced security checks. It’s reasonable to point out that at this time the company picture of Singapore Girl is really a principal icon reflecting the ethos of customer support within SIA. However thinking about altering consumer conduct and attitudes towards flying it’s a difficult challenge for SIA to regulate its online marketing strategy and brand image reflecting these altering psychosocial trends. This indeed is visible like a critical weakness for SIA. A built-in view at board level concerning the altering ecological conditions and using a differentiation online marketing strategy leveraging customer support strengths will enable SIA to keep a powerful competitive position within the lengthy term.
HRM strategies especially staff training and development programs have helped SIA not just maintain its customer support level of quality but additionally produced cost controls associated with staff retention which further enhance its competitive advantages in adding value for shareholders and sustaining lengthy term corporate growth.
Your Budget Sector and Challenges to SIA
Singapore Airlines is recognised globally like a brand emphasising professional and customer orientated service which aspect can also be probably the most important competitive advantages of the organization. However because of altering ecological forces and growing and past concerns over costs within the air travel industry it is essential for SIA to size up competitive pressures from budget air travel companies for example Ryanair. Budget airlines concentrate on delivering lower cost traverse marketing strategies targeting those who are cost sensitive in addition to short-haul business passengers. It’s apparent that SIA has exploited a differentiation online marketing strategy according to accumulating a powerful brand image reflecting top quality customer support air travel and something which seeks to produce added value towards the flying experience with customers when it comes to comfort and luxury.
A vital indicator would be that the load factor represents and determines the breakeven point between cost and profitability. It’s also impacted by other cost related factors in figuring out the profitability of the air travel company. SIA is really a effective example in acquiring better performance according of their load factor for passenger journeys. For worldwide flights SIA chooses secondary catalogues for bigger metropolitan areas staying away from expense associated with airport terminal tariffs for primary airports, (Wirtz & Johnston, 2003). To be able to contend with budget airlines the likes of Ryanair SIA has marketed itself like a value adding air travel operator but has searched for to concentrate also on cost control to be able to improve competitive abilities. The competitive benefits of operators for example Ryanair in comparison are individuals in employing cost like a strategy in attracting consumers especially short-haul business passengers seeking more affordable tickets and discount choices. However as Jobber (2001) suggests cost is frequently utilized by consumers being an indicator and services information level hence Ryanair isn’t regarded as an excellent service offering company. Macro ecological contexts have concern during these advantages as wider economic conditions having an influence on companies have a significant effect on SIA if reductions in travelling expenses are searched for by business passengers.
Budget operators for example Ryanair tend to be more flexible in answering growing cost pressures on profitability that have threatened SIA’s operations and company growth. As you reaction to these pressures SIA committed to technology to be able to control your buck levels while trying to avoid sacrificing customer support quality in achieving profitability. Critical concerns generated at this time in thinking about altering consumer conduct and attitudes towards flying are how much SIA can maintain and enhance its brand picture of superior customer support. Similarly ongoing cost pressures for example high fuel prices in addition to operational costs associated with enhanced security will still be challenging for SIA to maintain profitability in rivaling budget operators. While budget operators up to now happen to be either in your area or regionally based should operators like Ryannair expand to supplying worldwide journeys this can create major threats to SIA when it comes to competition for lengthy-haul passengers also.
Load Factors and Profitability
Load factor is among the most significant figuring out factors of profitability inside the air travel industry. It’s important here to understand macro ecological conditions in searching in the impact of load element in adding to profitability. First of all, effective cost control plays a role in a substantial degree to improvement of profitability considering the outcome of great increases in fuel prices within the lengthy term. The unstable political environments in oil producing countries and regions for example Iraq, Iran and Venezuela have previously led to oil prices being driven upwards to record prices. The uncertain way forward for these political contexts does mean that future economic impacts around the air travel industry remain unclear.
Next the terrorist attacks of 9/11 in america had massive ramifications for profitability within the air travel industry globally with lots of companies for example American Airlines ongoing to see losses and the specter of closure. Not just was domestic travelling by planes reduced but additionally worldwide travelling possessed a decline. At this time load factors were generally disappointing for many air travel companies the performance of SIA continues to be shown to become much better than its rivals within the ensuing period following the attacks. It is therefore unsurprising to notice better revenues and greater income being as stated by SIA (Hoovers, 2006). Perhaps this might have been because of lower terrorist related concerns in Asia but instability arising from the terrorist attacks in Indonesia, Indonesia may later on create more security related pressures for south-east Asian air travel operators. Also disasters like the tsunami and it is effect on holiday passengers in the area might also potentially possess a lengthy term effect on SIA.
Simultaneously it’s interesting to notice that although costs elevated visibly internet earnings after tax improved for SIA generally due to high operating earnings and improved load factor on its flights. Within this then better load factors have to some extent reduced the pressures of expense on air travel companies in attempting to maintaining profitability. However ongoing good performance in load factors faces substantial threats. As pointed out earlier a effective online marketing strategy emphasising quality helped SIA conserve a stable load factor which consequently enabled it to attain stable rates of profitability and enhance its competitive position in the market.
HRM and Marketing Strategies
HRM strategy is a valuable part of corporate strategy and studies suggest that within the service industry hr management is visible as an essential part of promoting strategies also (Beardwell, Holden & Claydon, 2004). SIA exploited a HRM policy where productivity was carefully associated with motivational policies for workers (Thompson, Gamble & Strickland, 2005). Research shows that greater earnings individuals are more inclined than lower earnings visitors to report themselves at greater amounts of satisfaction (David and Smeeding, 1985). It’s unsurprising to determine traditional hr management approach viewing performance management as enhancing individual performance through assessing past performance and rewarding employees in purely fiscal terms (Master, 1992).
This practice can be found in SIA however Jacques (1962) argues that each worker displays strong feelings toward amounts of payment when it comes to evaluating equitable rewards in line with the impossibility of jobs/tasks and skills possessed/needed. This really is to state the workers with greater amounts of education and vocational skills will seek greater pay and achieve this where elevated productivity continues to be achieved. However productivity levels are not only seen associated with financial rewards. Thus pure payment increases aren’t always contributory factors to elevated productivity. As a result the HRM of SIA could be criticised since the encouragement of financial rewards isn’t exclusively enough and factors should be designed for lengthy term staff rise in rewarding and securing elevated productivity.
The differentiation online marketing strategy exploited by SIA is dependant on service and also the picture of Singapore Girl is really a key thing about this brand image. The Singapore Girl means friendly customer orientated staff delivering superior customer support. This is just about the most significant competitive advantage for SIA. Staff training and development programs have helped SIA retain and improve its customer support level through measures for example language courses and attitudinal programs to make sure professional service among employees. Consequently the attention from the Singapore Girl image among global customers is high. This really is advantageous because of the argument that companies who is able to attract clients are individuals who’re with better customer support (Pillay, 1989).
It’s reasonable to state the effective online marketing strategy helped SIA reduce cost pressures in competing within the air travel industry through value adding targeted market segmentation. Using Singapore Girl being an icon for SIA has enhanced its competitive position in the market, (Chan, 2000). Altering consumer conduct though has formed air travel companies’ strategies specifically in thinking about terrorist linked attacks. Customers use safety being an important qualifying criterion in selecting travel methods with substitutes for example trains generating threats to air travel companies particularly markets. New entrants or existing rivals who positioned themselves as safe airlines for example Jetblue have exploited this chance to improve share of the market yet repositioning SIA’s brand image from quality orientated to safety may prove difficult and pricey. However because of the broader political and legal contexts it’s perhaps essential for SIA to pursue this tactic.
Beardwell, I. Holden, L. & Claydon, T. (2004) Hr Management: A Modern Day Approach fourth edition, Foot Prentice Hall, London United kingdom.
Chan, D. (2000) The storyline of Singapore Airlines and also the Singapore Girl, Journal of Management Development, Vol. 19.
David, M. & Smeeding T. (1985) Introduction, in David, M. & Smeeding, T. (eds) Horizontal Equity, Uncertainty, and Economic Well-Being, National Bureau of monetary Research, Studies in Earnings and Wealth, Vol. 50.
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Jacques, C. (1962) Objective Measures for Pay Differentials, Harvard Business Review, The month of january-Feb
Pillay, J. (1989) Singapore Airlines (A), USA, Harvard Business School Press.
Thompson, A. Gamble, A.J. & Strickland, J.E. (2005) Strategy, Winning on the market Place second Worldwide Edition, New You are able to USA, McGraw Hill.
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Wirtz, J. & Johnston, R. (2003), Singapore Airlines: what must be done to sustain service excellence – a senior management perspective, Managing Service Quality, Vol. 13 No.1
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