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Singapore Airlines

A

Great Way to Fly

Singapore Airlines

Table of Contents
1. Executive Summary .......................................................................................................................... 3 1.1 Background .................................................................................................................................... 5 2. External Analysis for Singapore Airlines ............................................................................................. 2.1 PESTEL Framework: ...................................................................................................................... 2.2 External Environment of Airline Industry (Asian Context): ............................................................ 2.3 Five Forces Analysis of Singapore Airline: ..................................................................................... 3. Internal Analysis of Singapore Airline: ................................................................................................ Strategic Capability of Singapore airline ......................................................................................... Resources and Competence of Singapore Airline ............................................................................ Unique and Core Competence of Singapore Airline ........................................................................ 3.1 Competitive Advantage of Singapore Airline................................................................................. 4. SWOT Analysis ................................................................................................................................... Strengths ....................................................................................................................................... Weaknesses ........................................................................................... ........................................ Opportunities......................................................................................... ........................................ Threats .......................................................................................................................................... 5. Singapore Airlines strategy ............................................................................................................ 6. SIA s organizational activity system .................................................................................................... 6.1. Rigorous service design and development ................................................................................... 6.2. Total innovation .......................................................................................................................... 6.3. Profit-consciousness ingrained in all employees ...................................................................... 6.4. Achieving strategic synergies through related diversification and infrastructure.......................... 6.5. Dev eloping staff holistically ......................................................................................................... 7. A dual strategy of differentiation and cost leadership ........................................................................ 8. Turbulence on the horizon ......................................................................... ........................................ 8.1 HR Related Issues ......................................................................................................................... 9. Recommendations ............................................................................................................................. 10. References ....................................................................................... ................................................ 10 10 12 13 14 14 14 14 14 15 15 20 22 23 25 27 27 29 30 31 32 35 37 38 42 49

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Singapore Airlines

1.

Executive Summary

The growth of modern Singapore can be traced back to the policies and priorities established by the then prime minister who was a staunch believer in free trade and internally driven growth. Despite of, the Government being the majority share holder Singapore International Airlines (SIA) faced heightened competition f rom the start as the government declared that it would not give any subsidies to the airline. SIA traced its roots to an organization which had proved to be quiet beneficial to the fledgling company. From the crews¶ impeccable safety record to personnel with crucial operating experience helped SIA to reach over 90 destinations in more than 40 countries all over the world by early 2003. SIA established an enviable record both in terms of the operational performance and its profitability history. Using its brand image, geographic location, and outstanding service as the cornerstones of its strategy SIA enjoyed a run of exemplary profitability and service performance by the year 2004. It had built its strategy around the principles of a differentiated positioning. In recent years, there have been many environmental shocks, such as SARS, that have challenged the continued viability of the model. The model of strategy that SIA had built in order to compete in the airline business in the late 1990s¶ is to take some important steps to fortify its position globally. By joining the star Alliance SIA expected code sharing services, fine tune traffic flows and enter destination where it did not had access, like more secondary the alliance network brought some concerns like restoring the brand image of SIA which it so caref ully nourished over the years. The loss of control over some key decisions also posed challenges to SIA. To gain the control of alliance SIA took some decisions which later came out to be a bit costly for them. Such as the partnership with Air New Zealand resulted in loss and hasty retreat from the initial foray to establish control of the key Australia- Asia routes. The second wrong move was to acquire the

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Singapore Airlines
49% of the equity with U K based Virgin Atlantic Airways for 1.6 billion. Virgin¶s decision not to join the Star Alliance placed SIA in delicate position and the threat of invoking the ire of other alliance partners should it favor Virgin over United and other f or channeling some of its transatlantic passengers. On the other hand rejecting the opportunity to participate in the venture of Virgin Blue, which later posted very good returns in the Australasia market was another wide of the mark decision of SIA. The low cost carriers in Asia became one of the greatest threats for now. The Air Asia and Virgin Blue have acquired considerable percentage of Asian and domestic Australian markets and SIA has found itself challenged by the entry of many other low-cost airlines in its home market.SIA is at the cross roads in its history and the next few strategic moves would determine the rise of the best Asian Airline to become a global player commanding the respect of the world¶s largest carriers. The case closes with a decision that SIA needed to make about how it would address the onset of low-cost competitors, and whether it would make sense to move away from its differentiated premium approach.

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Singapore Airlines

1.1 Background
Singapore International Airlines (SIA)-A Benchmark Airline: Over the years the Singapore International Airlines has built up a strong brand name as a trend-setter in the aviation industry, particularly in terms of safely, innovation and service excellence. Its focus on the differentiation of its services from other airlines has made it one of the most successful and recognizable airline brands in the recent past. It is also an industry bellwether for air-craf t purchases. Its major shareholder being the Government of Singapore, SIA has always received tremendous support from them. It is the parent airline of the Singapore Airline Group of Companies. It has diversified into airlinerelated businesses such as aircraft handling, engineering and catering. The Singapore girl as we know is what the hostesses are called- is recognized as a symbol of excellence in service quality. The concept of choice of meals in the ³economy class´ was first pioneered by the SIA. Other tangible and intangible differentiations were first pioneered by SIA which is now copied by all major airlines. The Advent of Problem in the SIA: The problem began during and after the difficult economic conditions such as the SARS outbreak in 2003 and the Middle East crisis. The relation between the group management and the labor unions began to sour, particularly after the wage-cuts and lay-offs of over 400 employees. It was regarded as the highest number of lay-offs in the history of SIA. It went on for a further wage-cut and lay-offs in order to trim its operating costs. The whole incident was being regarded as self-serving by the Unions. The full support from the SIA¶s major shareholder, the Government of the Singapore was also considered by the unions as suspicious and they did not like it a bit. They thought these excuses were used just to downsize the number of employees. Duplication of SIA differentiation strategy by other Airlines: Then came the copycats, the other airlines who did not waste any time in copying many of the remarkable innovations pioneered by SIA. SIA¶s development as a carrier came through their strategy of differentiation. But soon it became a norm, as a result of the other airlines¶ adapting the ways. The sensational additions of luxury such as choice of meals in economy class, innovative entertainment options etc that were introduced by the SIA which became their specialized field, no longer remained so. Main concern was the increasing competition from International carriers headquartered in the neighboring countries, such as Thai Airways, Cathay Pacific, Malaysian and Qantas. They duplicated some of the key features of SIA¶s competitive strategy, which included recruitment, in-flight service, fleet management etc .

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By 2007. In Asia.6 billion. Along with this. where they did not allow the national carriers to dominate rather they encouraged a fair competition among the airlines inside their country. purchased 25% of Air New Zealand. Exception was the United States. SIA bought a 49% stake in Virgin Atlantic Airways worth $1. SIA in order to expand its business. Each country has its own landing rights and local ownership requirements. Europe. This declaration made some believe this would help SIA to compete with other low-cost carriers evenly. Around the year 1999. due to the national and international regulations. The Traditional Airline Industry: Conventionally. terminated the country-specific barriers and allowed free-market competition among the carriers. privatization and the advent of the new technologies. The Government of Singapore on the other hand was on the process to launch a low-cost carrier around that region and with that they also declared that possibilities are there that they might sell its 57% stake in SIA. the airline industry based on the limiting effects was fragmented. Chew Choon Seng the CEO of the SIA was faced with a challenging task of determining the competitive strategy of SIA in turbulent times. The Consequences of the Reformation of the Industry: United States deregulated its airlines in the late 1970s and as a result it has witnessed the severe competition among the airlines in its country. the deal turned sour and SIA lost about $157 million. South Asia. The sole reason being different countries not allowing other airlines to have their business in their countries and only the government owned national carriers were given the autonomy to run their business in their respective countries.Singapore Airlines Buying of stakes of other airlines by the SIA: SIA has a strong presence in the Southeast Asia. East Asia and Kangaroo-route. As a result the business of SIA began to slow-down. some major regions started allowing greater access to foreign carriers. Many said that the partnership was not working because of the different cultures of the respective airlines. Mr. As a result they also entered the world of competition of the airline industry. That¶s the best they could do even being industry¶s biggest airlines. However the scenario eventually changed in the 1990s when the industry began to reform as a result of the deregulation. The large airline companies developed domination only on their own regional markets. it lost 60% of its value. Japan took an enormous step in the process of BMGMT3202 Strategic Management Page 6 . But as the Air New Zealand went bankrupted. The Operational Investments by the SIA in recent times: To make its presence powerfully around the world. But soon after the low-cost carriers began to make their presence felt in the Asian region that also included the routes that SIA ruled for so long. The competition was divided into each region and it was not global. they also believed that this relationship between the SIA and Singapore Government gave the SIA greater Privileges but the SIA has denied it all along. soon after the creation of the European Union.

There were high fare wars among them. The presence of so many airlines competing with each other worsened the situation. contributed in the declining yields in a priceconscious market. many carriers in the process of improving their service offering. There agreements were bilateral agreements between countries that agree to provide landing and take-off facilities for air-carriers coming from any of the partner countries. Due to globalization many regions were witnessing the significant and intense competition among the airline companies. It transformed the fragmented competitive market into a global competition. they became concerned and more pricesensitive then ever before. They concentrated on upgrading their service offerings. in order to provide perfect services across the wider geographic regions. Countries such as Argentina. Since the customers had more options to choose from. Countries such as the European nations were by then having discussions with the United States to operate an open transatlantic market area where landing rights would be determined by free market f orces rather than regulatory process. This trend gained a lot of significance and appreciation. BMGMT3202 Strategic Management Page 7 . The competition became so intense and acute that many carriers started to focus only on their service offerings. many small national flag carriers were privatized. The passenger-revenue yield declined in all geographic regions. Nations started having open-skies agreements between each other. That is they became a group and cooperated with each other in order to provide services to customers. It was seen that most of the large carriers retained their regional powers. These alliances made most of the larger airline companies into de facto global organizations.Singapore Airlines deregulation by selling off its shares in the then state-owned Japan Airlines and authorized All Nippon Airways to serve international markets. The carriers around the world were passing a very tough and challenging stage in order to extract higher levels of efficiencies from their operating structures. But many airlines tried to make alliances with the other leading carriers. They also privatized their national carriers. Mexico removed the anti-competing barriers and infused considerable levels of market competition in their airline industry. Thus the traditional airline industry coming to an end. To sustain the competition. The Globalization Era: The ref ormation through deregulation and privatization helped the airline industry to become global. On the other side of the globe. in South America. It was clearly exposed in case of the f ares offered by the airline companies. The era of globalization started.

Another similar network of partnership included eight carriers across a similar geographical territory to Star. BMGMT3202 Strategic Management Page 8 . and help leverage scale economies in operations. Rather it occurred between two-three carriers and that endangered the scenario f or the alliance. But along with the advantages. As the partnership suggests. By 2004 most of the major airlines were part of mega alliances. These alliances have evolved in order to include several carriers under a single alliance brand.The reason of the existence of these alliances was to redirect traffic. This also happened as the partners were allowed to negotiate side deals with other carriers irrespective of their alliance membership.Singapore Airlines The Evolution into Alliances: It became a norm for the carriers around the world to be a part of the alliances during the late 1990s. and performance standards. The issue that rose first was if all the carriers in the alliances would be able to perform consistently or not. safety records of the partners. One such alliance was called the star alliances and it included ten-carriers representing Asia-Pacific. increase profitability. It had its own problematic issues. and willingness to let go control to an alliance. The other major issue was the cross-shareholdings between carriers especially in the Europe markets as the privatization accelerated. That is the partner carriers were concerned if the level of service across carriers. Inside one big alliance. Latin America and the Europe. In addition differentiate services and convince potential customers to buy their services and make them their regular carriers. came the short comings of being a part of the alliances. It was seen that many carriers were purchasing shares of other airlines but it was not like everyone was purchasing everyone¶s shares. North America. Becoming a partner meant losing the control to some extent. they also had to listen to other members of the alliances and act in accordance with them. small alliances were emerging and it was giving rise to rivalry among them. They have to work as a unity. The crucial factor seemed to be the difficulty in developing a harmony among the partners regarding how they would establish common safety. service.

Mr. In addition to that the small size of the local population and a very low unemployment rate. But with the rising of standard of living meant a higher wage. the most powerful Prime Minister in the country¶s history was the very reason for such change in the country. Lee Kuan Yew. It¶s per capita GNP increased by 32% by the 1990s. He gave emphasis on superior education standards. Kuan¶s vision did pretty well fit together with the Singapore¶s Confucian work ethic. a controlled labor environment. BMGMT3202 Strategic Management Page 9 . caring and service. He announced his intent to develop Singapore so that they could compete head to head with rival Switzerland in terms of standard of living. By 2004. Thus. He was not late to unitize the patriotic spirit of the people. the availability of labor was seen as a potential obstacle in the drive toward further growth. Many large companies were already depending on a considerable number of expatriates that is they were hiring labors f rom other countries. It stressed on responsibilities over rights and placed enormous value on attributes such as hospitality.Singapore Airlines The Successful Saga of Singapore: By the 1990s Singapore became a flourishing nation and was envied by the neighboring countries for its triumphant achievements. particularly from the neighboring countries and west in the workforce. Singapore had the highest rate of literacy rate in the region. He believed that these all helped to enhance the quality of human capital. significant outlays for training and development of the people of the country.the biggest asset of Singapore. Singapore ranked among the best countries in terms of human capital in 2004 and was often regarded as the friendliest place to do business with. as a result of all these. He was able to motivate his fellow countrymen.

social and technological forces.Singapore Airlines 2. But facts have already begun to emerge that point to a number of other causes. The "radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization" (Tsiakkiros. East Asia. The Singapore Airlines offer to buy a 24 percent stake in China Eastern Airlines for 7. In the year 2002 there was a fatal crash of a Singapore Airlines flight SQ006 at Taipei's Chiang Kai-Shek International Airport. 1991. What goods and services does a government wants to provide. The PEST analysis is one of them that are merely a framework that categorizes environmental influences as political. Social factors: Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. This accident makes societal effect on Singapore airline.1 PESTEL Framework: In analyzing the macro-environment. Economic factors: These include interest rates. 2. This is a political barrier for Singapore airline. saying it was obviously a case of "pilot error". Organization must have-to concern about the new upcoming technology. The death toll has risen to 82 people with the death of a survivor in hospital. will be added to make a PESTEL analysis. economic. 2002). Europe and American region. environmental and legal.2 billion Hong Kong dollars (US$923. In addition to providing the world's widest First and BMGMT3202 Strategic Management Page 10 . some of which are directly linked to cost-saving measures by airlines and airport authorities. Singapore Airlines has accepted "full responsibility" for the crash. A number of checklists have been developed as ways of classification the huge number of possible issues that might affect on industry. 1993). inflation and exchange rates. Technological factors: New technologies create new products and new processes. but these themes can easily be subsumed in the others. The classification distinguishes between: Political factor: This refers to government policy such as the degree of intervention in the economy.000 in compensation to the relatives of each of the dead and announced it will meet the medical expenses of the injured and discuss compensation with them. To what extent does it believe in finance firms such as Singapore Airlines has withdrawn its bid for a stake in Air India. The airline has offered $400. Johnson and Scholes.8 million) appeared in trouble Wednesday after a major shareholder criticized the deal as unfair. Singapore Airlines is the first and only airline to install a productivity suite for the benefit of its passengers who can now continue to work after boarding the plane without having to power up their laptops. The present external environment of airline industry also concern for Singapore airline. it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization's supply and demand levels and its costs (Kotter and Schlesinger. dealing a heavy blow to the Indian government's privatization programmed. External Analysis for Singapore Airlines Singapore Airlines Limited (SIA) is the national airline of Singapore. Authorities blamed "pilot error" for the accident. Singapore Airlines operates a hub at Singapore Changi Airport and has a presence in the airline markets of Southeast Asia. taxation changes. economic growth. Another 81 passengers were injured. South Asia. Sometimes two additional factors.

Figure 1 shows the PEST framework for Singapore airline: Figure 1 BMGMT3202 Strategic Management Page 11 . which makes the competitive advantage for Singapore airline.Singapore Airlines Business Class seat and a technologically advanced seat in Economy Class.

The airline industry are more competitive in Asian region because there are more than thirty country operate around thousand of Airline company.2 External Environment of Airline Industry (Asian Context): The external environment has an enormous impact on the Airline industry. Figure 2 BMGMT3202 Strategic Management Page 12 . Singapore airline is one of them operating in Asian region as well as in Europe and American region. more recently. Figure 2 shows the circle of external environment and the airline industry. traffic loss attributable to the war in Iraq and sev eral terrorist activities. These hav e been unstable times for the Asian airline industry. It has been confronted with a marked decline in international tourism in the aftermath of the September 2001 terrorist attacks in the united State and.Singapore Airlines 2.

For example if the jet fuel price increase. will also intensify competition for Singapore airlines. Recently increase in the price of jet fuel. These are: mean and figure 3 shows this five forces and Singapore airline. as U. BMGMT3202 Strategic Management Page 13 . seeking to curb Singapore Airlines' access to their home markets.3 Five Forces Analysis of Singapore Airline: This Porter's 5 forces analysis deals with factors outside of airline industry that influence the nature of competition within it.S. Singapore airline also concern about this factors. Buyer Power & Substitution: The buying power for individual customer is too high in airline industry. Air Canada and Garuda of Indonesia. Singapore Airlines will increase its fuel surcharge for tickets issued on or after December 4. The price of jet fuel has increased piercingly in recent weeks. and European airlines merge or form alliances to cut cost. Growth of global megacarriers.Singapore Airlines 2. There are hundreds of airline company operate in Asian region. the airline company has no choice. Competitive Rivalry & New Entry: Singapore airline has to concern about the competitors because airline industry is so competitive. Supplier Power: Suppliers power is very high in airline industry. and is now hovering around US$115 per barrel. 2007. the forces inside influence that how Singapore airline compete. in this fact individual buyers has so many option to choose which airline he wants to fly. This has already started with two national carriers.

and hot towels with a unique and patented scent. There are several good reasons for this. personal entertainment systems.9 cents. So. Most relates directly to the strong brand management driven primarily by the Singapore Airlines boardroom and top-management. Most relates directly to the strong brand management driven primarily by the Singapore Airlines boardroom and topmanagement.S. most companies discuss their strategic capabilities to get the competitive advantage. Resources and Competence of Singapore Airline Singapore airline is the strongest brand from Asia and it's long-serving. and the cabin ambience and combined experience are key factors of their success. One key element of SIA's competitive success is that it manages to navigate skillfully between poles that most companies think of as distinct: delivering service excellence in a cost-effective way.2 cents). 3. Singapore Airlines has consistently been one of the most profitable airlines globally.A. Internal Analysis of Singapore Airline: Strategic Capability of Singapore airline Strategic capability identifies the capacity of a business to deliver future value to his end user. Singapore Airlines has consistently been one of the most profitable airlines globally. almost iconic.Singapore Airlines 3. They have pioneered many in-flight experiential and entertainment innovations. and Europe (in 2005-6 for example the cost per available seat kilometer was S$7. Unique and Core Competence of Singapore Airline Singapore airline is the strongest and iconic brands from Asia. SIA was the first to introduce hot meals. and has always had the reputation of a trendsetter and industry challenger. or US$5. There are several good reasons for this. and healthy brand equity as the result of a dedicated. SIA also has the high brand attributes.1 Competitive Advantage of Singapore Airline Singapore Airlines (SIA) has achieved sustainable competitive advantage. and video-ondemand in all cabins. and strived to be best-in-class. global organization. BMGMT3202 Strategic Management Page 14 . The company keeps driving innovation as an important part of the brand. free alcoholic and non-alcoholic bev erages. SIA has consistently outperformed its competitors throughout its three and a half decade history. at cost lev els so low that they are comparable to those of budget airlines in the U. The Singapore Airlines brand is unique in the sense that the boardroom takes dedicated leadership of the brand strategy unlike many other Asian companies. professional brand strategy throughout a diversified.

As such. BMGMT3202 Strategic Management Page 15 .Singapore Airlines 4. A scan of the internal and external environment is an important part of the strategic planning process. Such an analysis of the strategic environment is referred to as a SWOT analysis. So building and implementing tactics seems a key success factor for SIA. It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans. Different strategies of SIA that have introduced the airline customers with new era of comfort and luxury. Obviously. Strengths SIA Has A Track Record Around Its Superior Strategy Of Differentiation: SIA has established an outstanding standard on inventing and implementing new strategies in airlines industry. and those external to the firm can be classif ied as opportunities or threats. diversity is a mandatory criterion in any service industry. SWOT Analysis SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. which had helped to dominate in the market for a long time. it is instrumental in strategy f ormulation and selection. Environmental factors internal to the f irm usually can be classified as strengths or weaknesses. Innovation on different sectors within airline industry has given them supremacy over other airlines¶ as the rest of them could not bring such a new thing simultaneously. It always keeps herself up-to date in the industry and introduced diverse types of strategies. The SWOT analysis provides information that is helpf ul in matching the firm's resources and capabilities to the competitive environment in which it operates. had lead them superior in the market.

Middle East. It has reached to all major attractive cities of the world. Due to lack of a good safety record a significant number of airlines that have invested a lot even failed to attract considerable amount of customers. SIA¶s aircrafts are almost very modern and got state or art technology on board. Long routes means more flight. to satisfy customers it is a must to prepare top class menus. Qantas. They serve foods for different world-renowned airlines like British Airways. SIA has got awards for its safety records which naturally influenced travelers both short and long haul travelers to choose SIA. The major thing is SIA have achieved the confidence of customers by its safety records. Safety is a very vital factor upon which an airline¶s success depends mostly. Moreover. Within 2003 they covered 90 destinations in more than 40 countries in Asia. A top-notch airline needs to regularly update and maintain its aircrafts.Singapore Airlines SIA Has deployed It¶s Routes W orldwide Including Very Attractive Tourist Spots: SIA. Most of the aircrafts are a little over five years old. SIA is determined to Give Best Terminal Service for Its Customers: One of the biggest f acilities for SIA is its terminal services like people handling efficiency and cleanliness. Whereas. Many other competitors of SIA have left behind because of poor catering facility. the Southwest pacific and Africa as well. It is well known fact that in long haul flight customers will look for good and hygienic food. Cleanliness is BMGMT3202 Strategic Management Page 16 . Japan airlines and obviously for SIA. It¶s quite impossible to make airline business profitable without expanding new routes. Singapore Airlines Catering Service Is One of the Best among the Other Service Providers in the World: Singapore airline¶s catering service is one of the best in the world which is included in their terminal service knows as SATS (The Singapore Airlines Terminal Service). which is quite unimaginable for most of the airlines. due to increase its profit have reached to almost all major cities of the world. which they consider as a part of comfort and luxury as well. which at the end of the day will bring more profit and enhance customer satisf action. So adding a world class catering service on board has given SIA supremacy over other competitors. and Lufthansa. Europe. So. Singapore airlines can deliver a passenger¶s baggage within ten minutes after arrival in Changi International Airport. This vast expansion ensures their sky superiority as well as their customers¶ appetite. No other airlines can claim that they can deliver baggage like SIA. Its airport known as Changi International Airport produce the meals of 45.000 people for each single day. In-flight catering is definitely a vital point for airline industry. North America. SIA has realized it and take the advantages of its massive fleets. SIA Has Impeccable Safety Records: SIA has a prolonged history of keeping best safety standard. So no matter whether it is a business trip or leisure trip Singapore airline is ready to serve its customers needs. SIA does not keep older aircraft. They go under safety check regularly.

Customers always want to save their time and energy. A passenger has now a lot of options to do in the ground while he or she waits for the departure from the airport. Definitely this is a very attractive f acility for any passenger. So. SIA Has Adopted the Policy to Make the Journey of the Passenger¶s steady and dynamic: Singapore airline has introduced the system of online booking for the customers. Most of the harassment occurs during baggage collection after arriving in the airport. They are technically self-dependent whereas other airlines have to spend a significant amount of money each and every month for routine maintenance and check up procedures. They can do it now from home just by clicking on their mouse. Due to this opportunity many of the travelers blindly select SIA for any short or long distance traveling. Moreover. SIA Provides Best Technical Facilities And Possess Unparallel Engineering Capability: Technical facilities are always very crucial factor for any airlines in today¶s competitive airline industry. In 2003 they had 97 aircrafts. It also test s the status of the aircraft engines and many other services.Undoubtedly. Singapore airline¶s technical department has strong tie up with reputable companies like Rolls Royce.Singapore Airlines another strong point f or Singapore airline¶s terminal service. It has been awarded for several times due to its cleanliness and ground operational procedures. So before give a booking for a ticket for traveling a passenger would certainly think what is the best option for him or her to choose if he/she looks for a smooth journey and of course a pleasant departure from the airport. It¶s not boring anymore like the previous days. SIA¶s Aircrafts Are Capable for Long-Haul Flights with Huge Number of Passengers: SIA has got a large fleet of diverse kind of aircrafts. This unparallel service has also ensured the dominance of SIA over other competitor airlines as well. Even some renowned airliner cannot guarantee hassle free baggage collection for their passenger. Not only for Singapore airlines but also for many other airliners they are offering services. Singapore airline has the option to bypass the queue of passengers. which includes fueling as well. technical superiority brings enormous advantages for Singapore airlines. They don¶t need to stand for reporting as they can do the necessary tasks through online. Online ticket booking system and automated check-in-systems have now helping them to reduce their travel time. But SIA can offer them this unique service. now a day¶s passengers need not to go to the travel agencies or anywhere else for ticket booking. This company provides aircraft maintenance and engine overhauling services. SIA has its own engineering company which is a subsidiary. which is a definite advantage for them. which were capable of carrying considerable amount of passengers for long-haul flight. which includes Boeing 747-400. which is just more than five years old. Pratt & Whitney and others. They don¶t need to come earlier at the airport for checking. This kind of system has made life more easy and dynamic. SIA is the first airline that has ordered for super jumbo jet produced by BMGMT3202 Strategic Management Page 17 . Working jointly with these worlds renowned companies ensure technical supremacy and safety of Singapore airlines over its competitors.

have larger amount of stereo channels and even game channels. which SIA has been operating does. People who like comfort and luxury. Better training is the key point for safety. Long haul flights. French fashion house. which are being used for Ferrari. Givenchy etc. BMGMT3202 Strategic Management Page 18 . SIA has their own flight simulators. Even from other airlines pilots come to learn at Singapore airlines. This usually gives supremacy over other airlines that offer cheap flights with less quality of products on-board. They are the first airline in the world that have installed video screen on the back of each seat no matters whether it is business class or economy class. which in the long run saving passengers journey times. SIA¶s pilots have a significant contribution on building reputation of the SIA. SIA Has Been Providing Top-Notch On Board Facilities: SIA provides some unique facilities for the passengers on-board. Jaguar as well. The leather seats they use are of top quality. which is obviously a big advantage for them and can attract the passengers easily. They show many video channels. In today¶s busy life everyone likes to reach to his destination earlier rather than waiting in the aircraft. SIA has got all necessary equipments to fulfill their needs. Other necessary equipments are imported from top class companies like Clad in Connolly. If one single flight can carry more passengers than two flights. That¶s why SIA has given highest priority to its pilot¶s development program. not need require refueling. Passengers like to pass a nice and comfortable time during their travel period. Moreover. which ensures world-class training for the cadets. The unique capability of SIA¶s pilot have a good demand in aviation industry which on the long run bring benefits for SIA by establishing them as a brand name in the aviation sector. They do have their own aviation college for improvement in quality of the pilots. certainly it will bring more benefit f or any airline rather than running more flights. Singapore airline is providing this opportunity to the travelers. Behind that their extra-ordinary training has worked as a key f actor.Singapore Airlines Airbus that has got double deck. Unparallel training facilities have distinguished SIA from other airlines. As those flights do not halt at any stoppage on the way so it can reach to its destination earlier. certainly SIA is the top most choice f or them both for short and long haul flight SIA Provides Best Training Facility For its Pilots: For any reputable airlines its pilot is one of the most vital f actors upon whom the reputation of the organization depends a lot.

It is also a suitable place for learning a development. They do run cadetship program.SIA has a strong policy for talent hunting. So automatically SIA is getting enormous talents on their pipeline that at the end of the day are brining signif icant change both on technical and operational sides. The environment is truly multicultural and very dynamic. BMGMT3202 Strategic Management Page 19 . which determines the period of existing in any organization. Here SIA has got the biggest success as well. as the human beings are the main assets for any organization who are responsible for making any organization profitable and dynamic. Top quality workplace and on job training has made them first choice among all other Singaporean companies to the young generation. This has brought enormous strength inside of SIA. Among the employees job satisfaction is the biggest criteria. So turnover rate is very low unless it is something worldwide crucial moment or any natural disaster occurs. which is somewhere known as ³Graduate recruitment´ as well. Their corporate atmosphere has been able to retain the employees. The recruitment and selection process is fare and f ree from any kind of biasness.Singapore Airlines SIA Has Provided A Supervene And Dynamic Workplace For Their Employees: For a long period Singapore airline is one of the most exciting place for working. A large number of Malaysians and Singaporean works there.

Singapore Airlines Weaknesses SIA Does Not Receive Any Subsidies Or Protection From The Government Though It Is The National Flag Carrier: A big drawback for Singapore airline is it does not receive any subsidies or protection from the Government. So it¶s very necessary that every airline have to keep a considerable amount of budget behind the pilots. have to close down some operations. SIA is getting deprived from this facility. They have to cut down their workers. as they are committed to maintain top class all the way. Unlike other airline they don¶t get any financial support from the Government. A considerable amount of pilots have come from the different countries that are not native. Many airline of the world that is national flag carrier do receive subsidiaries or some financial protection from their Government. SIA needs to maintain high standard behind pilots training. This helps them to survive during turbulent period. SIA has a diverse and multicultural workplace. So if anything goes wrong they have to face terrible situation. They will be failed to maintain their schedule. On the other hand. These training include flight simulator training. SIA Has To Bear Various Expenditures Behind its Aircrafts Pilots: Pilots are one of the major key players behind the success of any airlines in aviation industry. pilots do demand a lot of facilities for which an airline has to spend more than other employees. They are totally private organization and they have to heavily depend over their shareholders and upon the benefit of the business. BMGMT3202 Strategic Management Page 20 . If they form a group and go for the strike then obviously any airline will suffer. There is a disadvantage of having expatriate pilot in any airlines. They are often expensive and a lot of headache is involved on managing those pilots. Another weakness of SIA is. ground training etc which are highly expensive. As they are expatriates so SIA has to bear various types of costs behind them. These all will certainly decrease the benefit level of Singapore airlines and can jeopardize its position in the aviation industry. which are sometimes expensive. So. they might have to close some other routes. which will certainly be a strong reason f or losing business. Moreover. as these pilots are expatriates so there is always a chance that the pilots can leave the job anytime within a short notice. if any pilot moves to other airlines certainly the investment they have made will be a complete disaster.

They are more interested for saving their money. And SIA is losing business due to its price. That¶s why they have to invest a lot behind different equipments. Generally the cheap airlines like EasyJet. SIA can¶t get their attention due to high price than other cheap airlines. But unfortunately. This. training. So a large chunk of people is always out of SIA¶s service. at the end of the day. They don¶t go f or luxury. BMGMT3202 Strategic Management Page 21 . As much as the low cost airliner is arriving to the industry will that much SIA has been facing competition. influences over the price of the ticket that are being taken from the passengers. as it cannot compromise with its quality. Air Asia etc who have been offering low cost travel are getting advantages.Singapore Airlines SIA Is Unable To Reduce Traveling Cost Due To Keep Highest Standard: Singapore airline is committed to keep the best standard in every service sectors of its operation. operation management etc. Obviously SIA can¶t decrease its price. But there are signif icant amount of passengers who always seek for low cost travel.

Now this enormous market is going to be opened in front of SIA. In this deal they come to a consensus where the skies of the each country will remain open for each other. Delta airlines and of course Southwest airlines. even the continents. This will definitely increase the profitability margin. An individual airliner sometimes faces some difficulties with various types of problems. which other existing airlines in USA don¶t offer generally. SIA has a very good prospect in USA market. SIA will be able to reach to cover up their loses on different zones by forming alliances with its friendly companies. Working under an alliance will give SIA a unique opportunity to work with other friendly airlines and would able them to reach to other different destinations in Europe and USA. aviation industry is not very dynamic there though there are still some competitors are playing vital role like Virgin. It might be technical. and strategic and so on. There are a huge number of people living in different states who were not served before by SIA. Open sky agreement between USA and Singapore is a massive opportunity for SIA. Star alliance. BMGMT3202 Strategic Management Page 22 . the zones that are yet to be served by SIA. Now they are going to land and take-off their aircraft in USA. It will help them to share profit as well because some people might not travel by SIA but they may travel through one of the airlines of the alliance. For an example. Sometimes it¶s not possible to operate flights on some routes due to operational cost though it might have prospects as well. this covers a lot of cities of the world. So. Furthermore. This is known as ³Open sky´. But SIA is getting the biggest opportunity thought the bilateral agreement between USA and Singapore government. The outstanding service of SIA will certainly attract the luxurious people of USA. Building alliance is a massive task but it opens more opportunity for any individual airliner. It¶s very tough to solve those problems lacks lonely. SIA Can Use The Alliance Network Which Is Yet To Serve: This is another good option f or SIA to leverage their business in aviation industry. Forming alliance is a good solution for it where everyone works under same umbrella.Singapore Airlines Opportunities Singapore And United States Had Signed For An Open Skies Agreement: This is a new phenomenon where two or more countries make a deal to do business together. For a single airline it¶s really difficult to cover a large area consisting diff erent routes simultaneously. They can go to any city or state in USA. Financial constraints most of the time create headache as well. Under this treaty countries who will sign will be able to land and take off their aircrafts from any of the airport of the corresponding countries. SIA has lot of extra facilities. The people f rom USA had to depend on other airlines or some low cost airlines like Southwest previously. USA is a vast country where millions of opportunity exists. operational. Moreover. Forming alliance is a new phenomenon in this sector that allows any airlines to tie up with other airlines and share their common values and work under a single alliance brand.

which was unimaginable some days ago. These bring enormous threat for traditional airlines. and so travelers are now getting interested on SIA¶s competitors. Most of the customers are delighted with it no matter whether they are getting world-class luxurious facility or multiple entertainment channels or not. So all other facilities that SIA is off ering is not getting that much value to the customers like before. SIA Has To Struggle With Low Cost Airlines: Low cost airlines are getting a big question mark for Singapore airlines day by day. Thus SIA¶s policies are getting copied in a vulnerable way among other of its competitors. These low cost airlines don¶t off er luxurious facilities but they do offer the minimum amount of service. multiple video channels on-board which were being introduced by SIA the first. In Europe. It¶s very tough to run business when the competitors are copying the corporate strategies rapidly. It¶s continuously making them looser and they are going back in the competition. which is almost one tenth of traditional fare. Other big airlines giant like British Airways. on-board entertainment facilities all these are the brainchild of the executives of SIA. introducing different cabin systems. Traveling through cheap airlines is a phenomenon among the air travelers. For any example.Singapore Airlines Threats SIA¶s Competitors Are Duplicating It¶s Own Corporate Strategies: It is well known that the strategies SIA adopts are world class and effective under any circumstances. SAS. KLM etc have been struggling against them. The advent of Air Asia in Asia continent and Virgin Blue in Australia brought major problems for SIA in both of the continents. BMGMT3202 Strategic Management Page 23 . Now a day it takes very few amount of money to travel from one country to another country. Other airlines now introduced music system. But as those facilities are now being available on other cheap airlines even. online reservation system. RyneAir and EasyJet have changed the conventional system of airline business. These cheap airlines offer very cheap flight within Europe. SIA¶s key business strategies are getting copied ± that¶s mean SIA can¶t have the profit for which they make the decisions. If business secrecy is being leaked out then obviously it¶s crucial for any organization and the survival will be questionable. Some of the old executive who has switched to different airliners is now adopting the same policies that SIA follows in the business. If SIA can¶t bring any solution then rest of the customers will blindly select these low-cost airlines for the coming days. Definitely they are losing their business to the low cost airlines. That¶s why its competitors have started to follow him blindly.

So. any individual airline may have poor standard on safety record. If they do this and get a partner with poor performance then certainly who are the regular passengers of SIA will not show interest to board any of the aircraft of the alliance. A large chunk of passengers may migrate to different alliance or other member of the SIA¶s alliance who are getting benefited in a different way by depriving SIA.Singapore Airlines Individual Airlines Under Alliances Are Making Side Dealing With Other Competitors: There are some potential risks on getting attached with any airline alliance though it is beneficial for some cases. These will seriously damage the reputation of SIA. both ways there are threats for Singapore airlines if they go under alliance. So the poor performance of one member of the alliance may effect on the reputation on overall alliance. Side business of its partner with rivalry group also may jeopardize the business position of SIA as well. First of all.SIA has a very fresh and prolonged reputation on airline industry where very few airlines of the world can dare to reach. as it would directly impact on the business. BMGMT3202 Strategic Management Page 24 . It would be very vulnerable for the alliance. sometimes they might have poor level on service delivery or employees¶ performances standard are not up to the mark. some of the alliance member may run their business in parallel with other airliners that might be rival group. Due to the fault of one airline the whole alliance including the SIA will suffer. But due to turbulent nature of the airline industry SIA is getting forced to tie up with other airlines. Secondly.

4%) (Doganis. Use of inf ormation technology is an essential f eature of SIA¶s strategy both in enhancing customer service as well as increasing efficiency. SIA joined the Star Alliance. The internal organizational practices outlined in this paper. Silk Air on middle ground and Tiger Airways at the low end¶¶ (Outlook. and has made a strategic choice of giving priority to profitability over size. budget carrier Tiger Airways (49%). Singapore Airlines strategy Singapore Airlines is positioned as a premium carrier with high levels of innovation and excellent levels of service. the private family investment vehicle of Anthony Ryan. engineering services and catering). manage their Krisflyer (frequent flyer) account. Singapore Engineering Company (81%). Chew Choon Seng took over in mid-2003. and outsourcing IT functions to IBM. When the current CEO. the founder of Ryanair. According to CEO Chew Choon Seng µµwe intend to play in all the segments ± SIA at the high end. and even choose their meal for their next flight. cost cutting was on the top of his agenda with particular emphasis on cutting non-fuel costs by 20% within 3 years. The shareholders in Tiger Airways include Temasek (the Singapore government¶s investment arm as well as SIA¶s majority owner) and Irelandia Investments. effective use of IT can significantly reduce costs and enhance service levels. check into a flight. buy tickets. and Singapore Airlines Cargo (100%) (Singapore Airlines. one of the world¶s leading budget carriers. 2008). at a level of costs that approach those of a budget carrier. in April 2000. one of the three major airline alliances (the other two being Oneworld and Skyteam). The Singapore Airlines Group has 36 direct subsidiaries and associated companies (Singapore Airlines. and Virgin Atlantic (49%) cover the key customer segments within the industry. The sustained drive for efficiency as well as quality has enabled SIA to increase the spread between breakeven load factor and actual load factor to 6. In the meantime various divisions of the SIA Group have been investing in China and India through strategic alliances with local organizations (cargo division.5% of total operating costs (and reservations/ticketing a further 5. airport services. 2004).8%). SIA f ollows a strategy of related diversification. find out about promotions. Singapore Airlines has managed to deliver premium service to very demanding customers (achieving differentiation). 2008). SIA¶s web site is one of the most advanced and user-friendly in the industry. As part of its international strategy. SIA Group subsidiaries include Singapore Airport Terminal Services (80. This achievement challenges Porter¶s suggestion that differentiation and cost leadership are BMGMT3202 Strategic Management Page 25 . With regard to business-level strategy. such as continuous people development and rigorous service design are key aspects of operationalizing and sustaining this positioning and strategic choice. Its airline subsidiaries which include 100% ownership of regional carrier Silk Air.Singapore Airlines 5. 2006).7% by 2006. where customers can check schedules. At the corporate level. Given that agents¶ commissions can be up to 7.

self reinforcing system of organizational processes and activities. BMGMT3202 Strategic Management Page 26 . Singapore Airlines supports this dual strategy of diff erentiation and internal cost leadership through the core competency of cost-effective service excellence. enshrined in a unique.Singapore Airlines mutually exclusive strategies.

time and motion studies. mockups. structured effort. and developing staff holistically. achieving strategic synergies. SIA s organizational activity system The five pillars of SIA¶s organizational activity system. A trial that fails or an implemented innovation that is removed after a f ew months is acceptable. a cultural element that is also inculcated at the national level by Singapore¶s government. This department undertakes research. services marketing Professor Lyn Shostack (1984) noted that service design and development were characterized by trial and error rather than by a structured process as was the case in manufacturing. 6. whose rules SIA considered too constraining. after its separation f rom Malaysian Airlines. SIA¶s initial commitment to exceptional levels of service and innovation begun in 1972. SIA however views product design and development as a serious.1. SIA has a Service Development department that hones and thoroughly tests any change before it is introduced. Things appear to have changed little since then for most service organizations. trials. it chose not to be a member of IATA. Underpinning the continuous innovation is a corporate culture that accepts change and development as not just inevitable. when. BMGMT3202 Strategic Management Page 27 . are rigorous service design and development. total innovation. described below.Singapore Airlines 6. Rigorous service design and development Almost two and a half decades ago. to ensure that a service innovation is supported by the appropriate procedures. and damages no-one¶s reputation. assessing customer reaction. profit consciousness ingrained in all employees. but as a way of life.

And that every time we reach a goal. your expectations are already sky high. The stakes are raised for SIA. but against the best-in-class service companies. it is just not good enough. not only by its competitors but also by its customers. And if SIA gives anything that is just OK. BMGMT3202 Strategic Management Page 28 . That we have the will to do so. To achieve that.¶¶ (Sim Kay Wee). SIA recognizes that its competition does not just come from within the industry. SIA recognizes that to sustain its differentiation. Combined with its extensive customer feedback mechanisms.the crucial fact is that we continue to say that we want to improve. According to SIA¶s senior management. SIA treats its customers¶ high expectations as a fundamental resource for innovation ideas. be it complaint or compliment. for µµstaff ideas in action¶¶. we always say that we got to find a new mountain or hill to climb. it must maintain continuous improvement. who have sky-high expectations: µµCustomers adjust their expectations according to the brand image..Singapore Airlines At SIA it is expected that any innovation may have a limited shelf life. where individuals travel with competitors and report detailed intelligence on competitive offerings. and SIA¶s µµspy flights¶¶. like SIA. Lastly. Global Airline Performance (GAP) survey.you must be able to give up what you love¶¶ (Yap Kim Wah). There is also a program called µµSIA¶¶. Instead of aiming to be the best airline its intention is to be the best service organization. SIA employs broad benchmarking not just against its main competitors. where staff can propose any ideas they have that would improve service or cut costs. and be able to dispose of programs or services that no longer provide competitive differentiation or that could be offered in a different way. µµIt is getting more and more difficult to differentiate ourselves because every airline is doing the same thing.. creates a reaction within the airline. Weak signals are amplified. When you fly on a good brand. every customer letter. Additional sources of intelligence are the IATA.

It is really about what are the customers¶ lifestyle needs. . According to the Senior Vice President (Product and Service). . all the time. Organizational initiatives include SIA¶s µµOutstanding Service On The Ground¶¶ program. The point is that.2. µµMost new changes that really secure the wow effect are those things that customers never expected. This also means that it does not need to be too expensive. If you want to provide the best food you might decide to serve lobster on short haul flights between Singapore and Bangkok for example.¶¶ (Yap Kim Wah). SIA also implements frequent major initiatives aiming to sustain service excellence. and debates their implications for the future of better service in the air.we have our Product Innovation Department that continuously looks at trends and why people behave in a certain manner. this also supports the notion of cost-eff ectiveness. on that route. . Can you meet these lifestyle needs?¶¶ Examples of such innovations include the Krisworld on-demand entertainment system for all classes. µµTransf orming Customer Service¶¶ and µµSoar¶¶. but delivers that necessary margin of value to the customer: µµIt is the totality that counts. And then we do a projection of 3±5 years of what is going to happen.f or the airline. SIA strives to gain a deep understanding of trends in customer lifestyles. Just a little bit better in everything. however you might go bankrupt. it¶s not just about having a smoother flight from A to B. Importantly. Total innovation SIA does not aim to be a lot better but just a bit better in every one of its functions and offerings than its competitors. This not only means constant innovation but also total innovation ± innovation in everything. .Singapore Airlines 6. As a way of inspiring discontinuous service innovations. In addition to incremental improvements. f or µµService above all the rest¶¶. That will be taken for granted. the full-size BMGMT3202 Strategic Management Page 29 . Internet and phone check-in for all classes. This allows us to make a small profit from the flight to enable us to innovate without pricing ourselves out of the market. Continuous incremental development comes at a lower cost than radical innovation. why they do certain things. we just have to be better than our competitors in everything we do.

Singapore Airlines µµspace-bed¶¶. rather than size. It is a pioneer on innovations that have high impact on customer service (for example in-flight entertainment. SIA has a rewards system that pays bonuses according to the profitability of the company. A solid business case needs to be made to support all proposed innovations and new service offerings. Station managers and frontline staff know that they should balance passenger satisfaction versus cost-effectiveness in their decisions. Profit-consciousness ingrained in all employees Despite SIA¶s focus on service excellence and innovation. that SIA has the second highest market capitalization in the airline industry globally (after Southwest). even though its revenues are relatively modest compared to competitors such as the Air France±KLM Group. Another investment in innovation included a $1m simulator that mimics the air pressure and humidity in the air. such as revenue management or CRM systems. In doing so. there are no grand or expensive decorations and furnishings at the company¶s headquarters for example. managers and staff are simultaneously aware of the need for profit and cost-effectiveness. SIA relies on proven technology that can be implemented swiftly and cost-effectively. and has been working on developing the in-flight offerings in that aircraft. this reduces the implementation risk while delivering the necessary functionality. The importance of efficiency in the company culture is reinforced by SIA¶s physical spaces. it is at the same time a fast follower in areas that are less visible from the customer¶s point of view. SIA has made a clear strategic choice of being a leader and follower at the same time. the ability to order one¶s choice of dishes in advance by internet. functional design that epitomizes the drive for internal efficiency. Further. Singapore doesn¶t need a national airline. This derives from the company culture: µµIt¶s drilled into us from the day we start working for SIA that if we don¶t make money. the same percentage f or everyone ± the same formula is used throughout the SIA Group.¶ That¶s very powerful. Any proposed innovation is analyzed carefully on the balance of expected customer benefits versus costs. In contrast to the company¶s world-class fleet. the prof it sharing bonus formula has shifted to place more weight on the performance of individual companies (subsidiaries) in the BMGMT3202 Strategic Management Page 30 . In 2006. One decision was to reduce spices in its food. gourmet cuisine that includes fine wines. We want to be the most profitable. SIA was the first airline to fly the A380 jet (when it was finally delivered after long delays). British Airways. The HQ is characterized by a simple. the company has made a very important visionary statement that µWe don¶t want to be the largest company.¶¶ (Yap Kim Wah) It is due to this policy of pursuing profitability.3. As a result there is a lot of informal peer pressure from individuals within the organization. or µµa class beyond first¶¶ in SIA¶s words that have helped to perpetuate its differentiated positioning. Second. and staff and managers can challenge decisions and actions if they see resources being wasted. we¶ll be closed down. 6. so that food can be tasted under these conditions. µbeds¶ in the air). which affect taste buds. These include suites. However. or the Lufthansa Group.

but also as sources of learning.2006). as opposed to $3500 in Hong Kong and $7500 at Narita (Doebele. Jetblue at 12. and Southwest is 410 thousand. 2005). Changi Airport is also one of the most cost-efficient major airports. SIA¶s subsidiaries operate under the same management philosophy and culture that emphasizes costeffective service excellence. Calculated per $1000 of labor cost. Achieving strategic synergies through related diversification and infrastructure SIA utilizes related diversification to reap cost synergies and at the same time control quality and enable transfer of learning. 2006). where small teams of 13 crew members are formed and then fly together as far as possible for at least two years. and providing cabin crew the opportunity to meet other colleagues who are not on their team. Jetblue is 522 thousand. Related operations (such as catering. for example landing charges for a 747 are $2000. SIA builds team spirit within its 6600 crew members through its µµteam concept¶¶. SIA¶s Singapore Airport Terminal Services subsidiary f or example provides several ground services at Changi Airport. so that they will be less dependent on the airline (Singapore Airlines.4. to pass through Changi and to choose SIA as their carrier. Based on both cabin crew feedback and efficiency issues. and a corporate rather than a divisional outlook through job rotation. the figure for budget airlines such as easyJet is 494 thousand. Subsidiaries serve not only as the development ground for well-rounded management skills.For comparison. this team concept has recently been under consideration for further refinement. This excellent airport management and infrastructure entices passengers who are traveling on to Australia. This leads to the development of social bonds within the team that reinforce the culture of cost-effective service excellence and the peer pressure to deliver SIA¶s promise to customers. 6. which is regularly voted to be among the best airports in the world.768 available tonne±Kms as compared to easyJet at 14. SIA is at 20. at 1028 thousand available tonne± Kms per employee(Doganis. and airport management) have healthier profit margins than the airline business itself because the industry structure is more favorable in those sectors.Singapore Airlines SIA Group in order to increase cost and prof it consciousness in these companies and motivate them to increase their business with third parties. aircraft maintenance.799 and Southwest at 9348. New Zealand or other countries in the region.629. BMGMT3202 Strategic Management Page 31 . the productivity of SIA employees is one of the highest in the global airlines industry (second only to Korean Airlines). Supported by this mindset and organizational practices. enhancement of the cabin crew evaluation system. The aims include the improvement of rostering efficiency.

British Airways 12. SIA also encourages and supports activities that might. leadership courses... personal poise.2 cents in 2004±2005 and 3. Rynair 4. and we¶re very proud of her and her achievements. SIA¶s training of the Singapore Girl is likened to a µµfinishing school¶¶: µµThe girls are transformed from coming in. The contents of the training change to reflect customer expectations. high quality. A common metric of airline costs is cents per available seat kilometer2.5 cents in 2005±2006. Everyone. be seen as having nothing to do with service in the air. staging full-length plays and musicals. By comparison. µµWhile our Singapore Girl is our icon. up from 4. 2002). Their deportment. Singapore Airline¶s costs per ASK were $ 5. During their initial training and subsequent career. the way they carry themselves«There¶s a great transformation there¶¶ (Sim Kay Wee). and by the time they come out. has a training and development plan with clear goals. Popular courses include µµtransactional analysis¶¶ (a counseling-type course). and Lufthansa 14. These activities help to develop camaraderie and team spirit. and at the same time cost-effectiveness.the enhancement must be continuous¶¶ (Yap Kim Wah). they are quoted separately and are subject to market discipline with very clear profit and loss expectations. This is aimed to help them develop empathy for others and put themselves in the shoes of the passengers. transfer of learning. 4. we continue to improve her ability to understand appreciation of wines and cheeses for example. longer than any other airline and almost twice as long as the industry average of 2 months. but also soft skills of personal interaction. 6.6. easyJet had costs of 6.9 cents in 2003±2004.5±7. we continue to improve her skills. they look totally diff erent. to get a close-up engagement with the less fortunate. Cabin crew can select refresher courses. In SIA the conventional wisdom of outsourcing (outsource µµperipheral¶¶ activities and focus on what you do best) does not readily apply. The famous µµSingapore Girl¶¶ undergoes training for 15 weeks. and budget carriers US 4. grooming and deportment. on the surface. SIA¶s related diversification leads to strategic synergy benefits in terms of reliability of key inputs.5 cents (Binggeli and Pompeo. crew employees also spend time at welf are homes.5.9 cents per ASK in 2003±2004. or our Asian heritage . where flag carriers tend to have costs of US 9±14 cents. and emotional skills of dealing with the consequences of serving very demanding passengers. no matter how senior. who have to depend on others f or their survival. and BMGMT3202 Strategic Management Page 32 . Crew have created groups such as the µµPerf orming Arts Circle¶¶. This training includes not only functional skills such as food and beverage serving and safety training. External suppliers might find it difficult to offer the value offered by SIA¶s own subsidiaries. the µµWine Appreciation Group¶¶ and the µµGourmet Circle¶¶.2 cents in 2006±2007. and on average attend 3±4 days¶ of such courses a year.5. In addition to such training.Singapore Airlines Even though they are part of the group. Developing staff holistically Senior managers at SIA believe that µµtraining in SIA is almost next to Godliness¶¶.8.

a µµwater confidence¶¶ test. they are carefully monitored for the first 6 months. At the end of the probationary period. This includes both voluntary and directed attrition. The recruitment process is extensive. through a monthly report by the in-flight supervisor. involving 3 rounds of interviews. For example. meaning that they have spent 13 years in school). where staff take responsibility f or their own development. 75% get confirmed. there is substantial effort to ensure that the company hires the right staff. to cover attrition rates of around 10%. to one of µµself-directed learning¶¶. The company is moving from a system of directing which courses cabin crew should attend.000 applications are received every year. and the company hires around 500±600 new cabin crew. and a tea-party. Even before development starts. After the Singapore Girls start flying. BMGMT3202 Strategic Management Page 33 . Over 16.Singapore Airlines European languages. around 20% get an extension of probation. psychometric tests. and 5% leave. entry qualifications f or cabin crew applicants are both academic (at least polytechnic diploma. as well as physical attributes. a µµuniform test¶¶.

The five pillars of cost-effective service excellence are interconnected into an organizational activity system characterized by self-reinforcing virtuous circles and high levels of fit. Figure 4 illustrates organizational activity system of SIA. (2009). but incredibly difficult to duplicate the whole system. It is relatively easy to copy individual elements of the system. Singapore Airlines¶ organizational activity system supporting cost-eff ective service excellence. Source: adapted from Heracleous et al. It is this level of fit and mutual reinforcement among the elements that supports the sustainability of competitive advantage at SIA. which has evolved historically and is held together not only by formal processes but also by intangible elements such as organization culture. BMGMT3202 Strategic Management Page 34 .Singapore Airlines Figure 4. where the pillars support the core competencies of cost-effective service excellence.

Table 1 above outlines many of the elements discussed above in relation to the dual strategy of integrating elements of differentiation and cost leadership (Table 1). leading to higher costs than average. This is the basic and key level of strategic alignment. culture. BMGMT3202 Strategic Management Page 35 . SIA achieves a differentiation strategy. and functional strategies) that should deliver the necessary core competencies. SIA¶s core competence is the ability to achieve a differentiated offering with exceptional levels of efficiency. secondly the strategy of the company that should be appropriate for the environmental conditions. and significant investments in innovation.and microelements relating to the industry). which delivers the core competencies of the organization. SIA has significantly higher efficiency than its peer group. staff development and branding. environmental conditions (macro. This capability supports SIA¶s dual strategy. which in turn is aligned with macro and micro-level market conditions (Figure 5). thirdly the core competencies that should effectively support the strategy. A strategy of differentiation for example implies high quality offerings. without a cost penalty. The elements of SIA relating to the pillars are principally located at the level of organization. as noted above. Strategic alignment can be represented as consisting of four key elements. which we labeled µµcost-effective service excellence¶¶. the key feature of a successful cost leadership strategy. First. A dual strategy of differentiation and cost leadership Strategies of differentiation and cost leadership have usually necessitated different and incompatible investments and organizational models.Singapore Airlines 7. and f inally the organizational level (including elements such as processes. In fact. but intriguingly.

A representation of strategic alignment at Singapore Airlines. BMGMT3202 Strategic Management Page 36 .Singapore Airlines Figure 5.

SIA has been seeking rights to fly from Australia to Europe. and prices tickets at levels generally lower than its main competitors. for example. Apart from wildly fluctuating fuel prices and security concerns. In 2000 it acquired a 25% stake in Air New Zealand. Competitors are hot on SIA¶s heels. Emirates has placed successive orders for 45 A380 aircraft (at a cost of about $19billon). Malaysian Airlines¶ service quality is high for example.5% stake is lower perceived debt risk by lenders and therefore lower cost of borrowing (even though SIA does not need to borrow significantly). around just one third of SIA¶s) (Doganis. In 2006 the Singapore media have expressed concerns regarding service issues at SIA (The New Paper. prompting some to wonder about the effectiveness of sustaining the balance between efficiency and quality at SIA.Singapore Airlines 8. down from 4th in 2005. another wildcard for many airlines is the risk of long range aircraft bypassing their hubs. given the importance of Singapore Airlines and the aviation sector to Singapore¶s economic prosperity. enabling SIA to implement policies that would have caused significantly more friction in many other airlines.500 km. Critics also suggest that SIA¶s acquisitions have not f ared that well. critics and competitors complain that much of SIA¶s success is due to environmental factors and the role of government rather than its own capabilities. This is not always easy to do. 2006). Turbulence on the horizon Competitive conditions in the airline industry are becoming more challenging. These planes can allow airlines to by-pass hubs like Singapore on flights from Europe to Australia for example. the need to reduce employee numbers and introduce a variable component to wage packages based on company profitability after the 2003 SARS crisis has been stressf ul for its industrial relations climate. With regard to internal conditions at SIA. which was seriously impacted by the collapse of its debt-laden Australian arm. is capable of flying 17. SIA has regained the top position as airline of the year. and f rom Australia to the US as a way of mitigating this risk. Ansett Airlines. Skytrax World Airline Awards have ranked SIA 7th in their µµAirline of the Year¶¶ rankings in 2006. trying to close the gap in both service excellence and efficiency. and wrote off 95% of the investment soon after 9/11. For example. this investment was also written off. Lastly. Singapore¶s Minister Mentor Lee Kuan Yew intervened to resolve these issues. The industrial relations climate in Singapore is deemed to be less adversarial than elsewhere. many of whom decide to take up new challenges. In 1999 SIA bought 49% of Virgin Atlantic. delays in delivery of the A380 during 2006±2007 have increased SIA¶s launch costs and delayed the realization of its capacity plans. BMGMT3202 Strategic Management Page 37 . but its efficiency is nowhere near SIA¶s (available tonne±kms per employee is 355 thousand. Analysts note that one benefit of Temasek¶s 54. Meanwhile. higher-paying jobs elsewhere regularly tempt SIA employees that are sought after in other service organizations. The Boeing 777-200LR launched in 2005. In both the 2007 and 2008 Skytrax rankings. Other competitors have embarked on aggressive growth while also competing on service quality. almost half way around the world. 2006). Further.

high levels of state aid to airlines that have supported many of SIA¶s competitors (Doganis. According to SIA¶s Chairman µµWe are unlike many of our competitors: we have never had government protection. (Singapore Airlines. an organization is like helpless in a sea because every part of an organization is interrelated with HR. This is a major Human Resource related Issue which should better be dealt with grave importance as it might create a huge amount of negative impact if not properly managed among the employees of SIA. This issue makes a more regrettable position for this airliner as this airline once were the world¶s foremost luxurious and leading airliner of them all and these are the employees that made this airliner a success. There are also problem and rising issues with the low cost airliners competition as it becoming more and more intense SIA have to take some drastic measure for their company in order to keep the competitive advantages and keep their name shine.1 HR Related Issues Human resource is a vital element of an organization. I can assure you we have no intention of doing that¶¶. Senior management salary cuts averaging 22% announced. Due to the effect of SARS and Iraq war in order to cutting down cost Singapore Airliner has went on with some serious done about in term with the company employees. 2005) 8. gave wage cut in the senior management and came to negotiated with cabin and ground stuff employee on their salary. Without it. (Doebele. or underwriting of our business in difficult times. Singapore Airline had laid off about 400 employees in order to bring down the operational cost then almost about hundred and fifty more additional employees were also being laid off so that the operational cost will be more cut down to minimum. To gain competitive edge in the industry. Indeed. Some their measures are directly related to the Human Resource issue to the company and it make a more of a factor on understanding where it will headed next. It is like a nucleus of an organization. The followings are some of the issue that is being recognized as the Human Resource related issues that are being subjected to the Singapore International Airlines: Being a leading Airliner in the world recently SIA had laid off employees. 2006) have never been awarded in Singapore. We operate on a commercial basis and our people know that our customers have a choice of airlines¶¶.Singapore Airlines Many on the other hand disagree with the suggestion that SIA¶s success is due to the state. then that is the day we atrophy. According to CEO Chew Choon Seng. as well as continuously striving f or efficiency. human resources plays a key role in helping companies dealing with a fast-changing competitive environment and efficient and potential employees. on the basis of their precise decision. 2006). where deregulation and encouragement of competition has been the norm. To Salary Cuts and laying of definitely will make them unrest and become a situation with the job security issue. and negotiations were on with cabin and ground stuff for further wage cuts. where employee¶s will left wondering what it will bring for them if they just keep on working for a company like BMGMT3202 Strategic Management Page 38 . µµthe day we stop having visions or objectives to work to. SIA continues its dual focus on the customer experience though service excellence and innovation.

This is one of the major HR related issue.So cutting these employees from SIA is a major HR related factors. This is a grave HR related problem as this became a unfriendly situation in the company with the widespread skepticism will put a negative impact on the morale of the employee in the further role of time. In the job cuts in 2002-2003 left a bad taste in SIA employee during the economic crisis. The unrest that are being seen in the company due to the weak human resource management in the company and also for the SARS and Iraq incident left a negative impact in SIA which should be dealt with capable HRM so that the issue would be minimized. so it will be rational explanatory checking if there is a way to keep check on all of those thing and make a proper justification on all of those things. There is a weak Human resource management is deployed that company is made the employee come to believe that the company is using SARS and Iraq war as a convenient excuses to downsizing in Human resource capital. To cutting jobs of such large number of people for the first time is a huge aspects for HR . Appropriate human resources assure an organization that the right number and kind of people are available at the right time and place so that organizational needs can be met. Many among the rank and file viewed these actions as self-serving and suspect since the company had achieved close to normal passenger loads after the specter of SARS had f aded. BMGMT3202 Strategic Management Page 39 . as because in these employee hands the SIA what it is now became in these employees hands. Employees needed to be acknowledged in a international airliner like SIA this for the first time such incident are occurring.Singapore Airlines that. Due to people is the core of this business as this is a more of the service related industry where the humane are side taken on very importantly than that of others. The normally friendly unions had publicly expressed concern over the layoffs and salary reductions that followed in the wake of SARS and the Iraq war. but it can became a problem in a later on progression with time as the situation for the company became more critical . And to be exact this kind of situation is first in time to be handled by SIA. They never f aced this kind of situation or a problem before so handling all this measurement can become a major problem for them as they do not understand enough of the problem for not knowing how to deal with these before. And consequently this will also put down more negative impact on the airliners passenger service and differentiation strategy. It is be these people who were played major role to make SIA to make them a leading airliner in the international market. This disturbing issue shouldn¶t be going unrecognized or unnoticed as might not be creating a problem for now. This also became the realized issue that a presence of unf riendly union is where about in the company. The negative impact upon the employees never were a better thing for the company it brings more harm than that of good even it a company like Singapore international Airlines. This distrust was indeed disturbing and seemed to spread across all ranks of employees from pilots to ground crew. The company is facing more decisive than its previous and if this misunderstanding is not properly dealt with it will backfire on the company as a vital wave in a bad situation.

This should be done fairly and with extensive care so that the compensation package that expatriate pilots are getting won¶t be rigorously high as pilots get graduated from Singapore. The generous expatriate pilots¶ compensation package should be clarified among the other local pilots. The majority here are the f emale crew and if they being only went through 5 renewable contract where otherwise there counterpart are getting more it is violation of the fact that there should be a proper justification in these entire differential contract which should be clarified among both the parties. schooling for children and other facilities. This shows that SIA clearly not providing similar opportunity to the female exists in the company. These should be balanced and ought to be in a way that local based pilots won¶t be downgraded on to the point of factor that their compensation is justified to the others. Not providing equal amount of salary among both male and female crew though both are being on same position but are not being giving accessed to the same amount of advantages .This arouses the problem of giving dissimilar advantages to the other significant making them a one way to pursue to the fact they are being undermined. There is a violation of Equal Employment Opportunity (EEO) in Singapore International Airline as there are sixty percent of the cabin crew is female and the crew had to work through a five years of renewal contract and there only five such renewable contract are permitted only five times. Unbalanced salary may become an issue in case from both the parties. This is violated issue that give rises to many problem that are still yet to be seen This issue deals with the employees morality towards the company and f ocuses with female getting discriminated in such company is a big deal of human resource factor.Singapore Airlines The Female cabin crews are being deprived by giving them limited time renewal contract which relies on giving them only being less priorities of other cabin crew in the airliner. Understandings also the factor if the women in the company are being considered to be the minorities or really in where they are being prioritize the factor of limited amount of renewable contract. The opportunity should be equal for all but if that not the case giving understanding and providing with adaptable justification would be righteous way of indication that human resource issues are properly recognized. SIA should make a proper adjustment among BMGMT3202 Strategic Management Page 40 . This is a Human resource related issue as this explores that all the employees in the company are not treated equally in a great airliner such as Singapore International airlines. it indeed is global in terms of recruiting pilot from the both the local Singapore pilot who server the country for defense purpose and became the pilots for SIA and the expatriate pilots who are served with more generous salary with pother benef its such as housing. So that the differentiation won¶t be there and understanding that comparison compensation is properly justified among both the parties and no discrimination is doing on mutually base pay and benefits. So in order to do that such contract exists. This may be proper for SIA job category but for understanding how only five years only be appropriate for the female crew is major differentiation to be attractive in this line. The training and recruitment policy in the SIA intensive. This violated the equality of emplacement opportunity among the female cabin crew in the company.

This might create a differential impact on the mind of local pilots that they are being underpaid than the pilots who are being foreigner working among them from different place.Singapore Airlines the both parties salary into a range so that their will not going to be an any dissimilarities among expatriate and local pilots. Though in a case the benefits remain close to similar in a package of compensation and benefits given to them both but the differentiation needed to be clear among the pilots as it might make a proper problem among them . BMGMT3202 Strategic Management Page 41 . The compensation package for pilots with the differentiated issue played a large part in the Human resource management as it is the core issue related in terms of retaining the most important employees in the job.So keeping them in the job by providing the right terms of salary is also the very jobs of Human resource management.

Employees are the heart of an organization. By adopting our suggested plans we believe that it can overcome from its operational problem and by taking the full advantage of its facilities to earn a higher profit to operate their business successfully and also to expand its operation throughout the world. They already started to have problem with their operational management system otherwise downsizing won¶t took place. So HR department need to form a compensation committee to develop a successful and bold. as the combined effect of this action could have a serious negative impact on employee morale and passenger service. We already knew f rom the case that SIA has already established itself as one of the world¶s most admired airlines. PROBLEM 1 Singapore International Airlines (SIA) is minimizing their operating cost by downsizing their employees. so. So there must be some areas that should be focused by them to sustain in the airlines market for longer period. and µwhy¶ those are essential to the company. To sustain in the market with the same leading position HR department of SIA Need to change their current compensation policy of the employees which has already started to demoralize the employees. BMGMT3202 Strategic Management Page 42 . µwhat¶ is our recommendation to solve these current problems. SIA had lain off over 400 employees and 156 cabin-crews in order to trim down its operational cost during the time of SARS and Iraq War. it is now time for recommendation to Singapore International Airlines (SIA) to focus on some specific areas to retain their existing employees and diversified customers. By focusing on Human Resource related issues we have identified in the previous part. downsizing only weakens a company. There are surely other good ways to avoid this destructive method. Recommendations Af ter analyzing the case and identifying the Human Resource issues effectively in the previous part. Senior management¶s salary cuts also averaged 22% as announced. to capture new market in new or innovative ways and also to make profit by increasing their operational efficiency for financial viability. In the following one by one. This is one of the crucial issues. and they were planning to implement further wage cuts. and unjustified salary cuts in all management levels by using SARS and Iraq War issue. at first we will mention µwhat¶ are the specific problems we have identified. It has a superior strategy of differentiation but recently it¶s trimming its operating cost by downsizing its employees. Recommendation 1 Singapore International Airlines (SIA) needs a specific and proper compensation plan.Singapore Airlines 9. and here in the following recommendation we will talk about those ways. now we are going to recommend some solutions that will support the eff orts of quality enhancement of customer service at Singapore International Airlines. by forming a new compensation committee which will help to design a perfect and motivated compensation policy rather than the existed demoralizing one.

Form a compensation committee: HR needs to form a compensation committee to determine the existing difference of compensation level between the employees and the existing market policy about compensation in same position. BMGMT3202 Strategic Management Page 43 . They also have to restructure the benefit programs. and replacing those flights with some new locations could be a good solution. sacrificing human resource for minimizing operating cost is really a destructive philosophy for any company. So restructuring of the compensation level of employees is the only way to sustain in long run and keep on expanding the business beyond the border of home country. Why is it the best solution? For the employer perspective relationship between the compensation and employee satisfaction is a vital element.Singapore Airlines imaginative yet practical compensation strategy to motivate all the employees and increase the efficiency of SIA¶s passenger service. pay-freeze. only monetary rewards are not sufficient. Downsize or lay-off will only bring anarchy in the management. To motivate employee¶s perfect compensation policy is the right tool. They also have to survey the whole SARS and Iraq war situation about how much it actually harmed the performance of the company. Motivation can make impossible to possible that results through non-monetary tools. They can always use other methods like rationing. SIA needs to get rid of this. Everyone wants to be successful by increasing the efficiency and productivity of employees. Even if it harmed the performance. then closing several flights in the affected area. pay-cut in their very desperate situation. and will de-motivate the entire human resource of the company. Moreover. Restructure the compensation philosophy: SIA should develop or restructure a new compensation policy which will motivate the employees more than now. After that they need to decide the salary level whether it will offer how much above and at than industry average to motivate the employees.

By doing this they will conduct a job rotation. Here in the case of SIA. so the overall performance of SIA will be also improved. Sixty percent of their cabin crews are female and they had to work through a five years of renewal contract and there only five such renewable contracts are permitted. Recommendation 2 SIA can start recruiting their male cabin crews exactly the same way they are recruiting their female cabin crews. The term Equal Employment Opportunity (EEO) was created by the 36th President of the United States Lyndon B. Singapore International Airlines (SIA) is violating the Equal Employment Opportunity (EEO) in many ways. then it becomes easier for SIA to replace or shift positions easily. our recommendation is. So. specific action-oriented programs to address problem areas. created to prohibit federal contractors from discriminating against employees on the basis of race. or national origin. This will greatly improve the performance and motivation level of SIA employees. and the establishment of an internal audit and reporting system. Then there will be no question of discrimination or violation of Equal Employment Opportunity (EEO). an analysis of the current work force. after that depending on their performance it should be decided that. the establishment of goals and timetables for increasing employment opportunities. creed. male cabin crews are employed as regular employees in SIA. which helps employees greatly to learn new things. The second reason is the boosted up perf ormance factor by BMGMT3202 Strategic Management Page 44 . First reason confirms that there is absolutely no discrimination in the employee base. identification of problem areas. Also if all jobs are on contract. their contract will be renewed or not. 1965. Why is it the best solution? This is the best solution because of two reasons. color. In my points of view it is always best to recruit employees on contract basis just like hiring Cricket or Soccer Coach. all cabin staffs (regardless of their demographic characteristics) should be hired for five years renewable contract.Singapore Airlines PROBLEM 2 Women employees are not treated equally with male employees in Singapore International Airlines (SIA). This clearly shows that SIA is not providing similar opportunities to the female employees in the company thus violating the Equal Employment Opportunity (EEO). Also they can practice shifting or replacing their employees from one department from another. support for community action programs. and adopt with new environment. affirmative action plans must consist of an equal opportunity policy statement. The Executive Order also required contractors to implement affirmative action plans to increase the participation of minorities and women in the workplace. Then employees will be more enthusiastic to boost their performance up. they are violating the Equal Employment Opportunity (EEO). On the other hand. sex. religion. Johnson when he signed Executive Order 11246 on September 24. Pursuant to federal regulations. so that the contract is renewed in future.

Why is it the best solution? This is the best solution because an organization gets success easily. as a result they can¶t trust the higher authority properly. and will cooperate with them for a common goal. Without a cooperative union it¶s not possible for any company to achieve success in the long run. Moreover. then more and more employees will be motivated to work for the company. The working environment gets better than ever. Establishing a happy and cooperative union might be a tricky one for SIA. If SIA fails to recover the whole situation it will become worst day by the.Singapore Airlines pressure and job rotation. Recommendation 3 Establishing a friendly union can always help and guide about important aspects of an organization. the most crucial resource of their company is not the billion dollar aero planes. But the top management of SIA should always think about the best interest of SIA. definitely the combine effect of this decision will help SIA to get success quickly. and should be ready to sacrifice many things for the betterment of the organization. they are the employees and workers who work day and night to uphold Singapore International Airlines as a brand. The union is confused about many things. and everyone start enjoying their work. So SIA should immediately fix confusions with its union. then no one will have any confusions in his/her mind. BMGMT3202 Strategic Management Page 45 . they became very unsupportive and unf riendly. and cooperate with them 100%. if the top management keeps a friendly relationship with the union. Only then the union will trust the higher authority. PROBLEM 3 SIA is struggling with its union as the union deemed unfriendly. if it¶s union and top management works together by judging each-others decision and evaluating it. The union of SIA is not helping its top decision makers to decide about a particular matter. so no disputes will take place. The management of SIA has to remember that. If both parties remains enough transparent. So. So. and at one point the entire company will be collapsed. The first thing to create a strong but f riendly union is the transparency.

They do can depend on expatriates but those should be preferred who lives in adjacent countries like Malaysia. We are suggesting SIA to restructure their existing processes. Thailand.Singapore Airlines PROBLEM 4 Singapore International Airlines (SIA) uses a lengthy. Moreover. So they would do proper planning for train them effectively. Though SIA has a finely tuned recruitment program. training and development. They can always use their training facilities to train up some Singaporean potential people who will become an asset for their company in near future. They need to change specifically following processes at first: Recruitment & Selection process: The SIA has to think and plan about their recruitment process very carefully. training. India or China can also be a good option as their expected salary is comparatively lower than other job seekers. Indonesia. difficult. otherwise they will never get good employees for their organization. and also the neighboring countries. Singapore has a shortage of population so they are highly dependent on other countries f or their required talents. Especially in the pilot sector expatriates costs a lot. They should avoid gender discrimination at all cost during recruitments. There will be several big changes I the organizational strategies to make this plan possible. Recruitment process should be designed in such a way that it covers the whole country first. Though BMGMT3202 Strategic Management Page 46 . or Philippines. Selecting and recruiting employees from Bangladesh. Recommendation 4 More structured but less costly recruitment system. That will save a lot of money. they are not using that facility properly. compensation strategy. So. because that will save a lot of money. But there is no specific plan for training them. SIA is spending 14 times more per employee as the average Singaporean company. Which we think. Training & Development process: SIA¶s Training and Development process of employees is also not designed properly. To fulfill their requirements they recruit around 50% of their employees from outside world. Also introducing competency management and fast track will create an added advantage on employee perf ormance. they should be very careful about recruiting and selecting their employees otherwise. and training programs for new comers.recruitment. is not feasible at this moment. They should try to recruit people from inside Singapore. It¶s scattered all around the globe and is very difficult to coordinate. and costly method of recruitment. they will be definitely fall under financial crisis during tough economical condition. organizational structure etc. like. selection. In the given case we have f ound that in Australia they are providing training to their pilots. and development program.

those cadets will become powerful managers within a very short period of time. we recommend the competency management system. it doesn¶t have much population. The only thing required here to make these plans work is. by changing or upgrading these factors. Competency management & Fast tracking: For a giant like SIA a more concrete system is needed to evaluate their candidates and employees properly. proper planning and implementations of company strategy. if SIA can successfully trainup their cadets. These people are the future leader of any company. an organization can get pretty good success within a very short period of time. so that the company can get enough time to prepare them for future leadership positions. by using this system they can evaluate their each employee¶s/candidate¶s characteristics and can profile them. BMGMT3202 Strategic Management Page 47 . so they are needed to track down at early stage. So. Why is it the best solution? It is the best solution because it lies in the very core of a company¶s system. Then again. who are inexperienced but with a small guidance they can even challenge their seniors in terms of performance. they will easily evaluate who is better for which type of job. So in this way employees will be trained effectively in a systematic way under an effective plant.Singapore Airlines Singapore is very little country. Also by using competency management they can fast track most potential employees. and how much time it can take to get promoted to next level. By this way. So.

and their new sub brand will compete with those low cost carriers. By doing this SIA will be able to uplift their image as a more superior airlines than that of their new sub-brand. people started to rush on those low cost airlines. As a result SIA will be completely out of the competition. because it removes the threat completely. only USD$10 for a flight from Kuala Lumpur to Penang. SIA is known f or its superiority in passenger servicing.Singapore Airlines PROBLEM 5 SIA is f acing great competitions from some low-cost carriers in Asia. They are planning to use Singapore as a base to conduct their operations in Asia. and the market positioning of SIA starts to decline. instead introducing some low cost flights under a different name to tackle those unwanted competitors. new comer low cost carriers will struggle a lot to copeup with the new sub brand of SIA. These low cost carriers can take away a big amount of market share from SIA. Since SIA has a vast experience in the region their new sub brand will be also doing because of this experience. Where as same flight may cost 10 times more for airlines like SIA. due to their attractive fares almost all of their flights become full. Though they have a very small fleet. Why is it the best solution? This is the best solution. They are offering very low price to their customers. So. SIA is currently facing competitions from some low cost airlines like Air Asia. BMGMT3202 Strategic Management Page 48 . we have suggested not to lowering the ticket cost for SIA. Recommendation 5 SIA should introduce some new low-cost flights under a new sub-brand to overtake the threat of low-cost airlines. Instead under a new sub-brand SIA it will introduce some new flights to those destinations where the low cost carriers are targeting. Since low-cost carriers are targeting some top airlines like SIA. Whereas. now it¶s time for SIA to take a sweet revenge against them. If it lowers the price then it will become almost impossible for them to sustain in the airlines market. and Virgin Blue. and will be able to remove the low cost carriers¶ threat completely from the region. SIA shall not lower its cost to fight back these low cost carriers. So.

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