STRATEGIC

MANAGEMENT
Strategic Analysis Of
Singapore Airlines

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 Table of Contents
1.0 INTRODUCTION.....................................................................................................................3
1.1 Purpose of the Report....................................................................................................3
1.2 Singapore Airlines Profile................................................................................................3
1.3 Strategic Challenge..........................................................................................................4
1.4 Vison, Mission Goal and Objective..............................................................................4
1.4.1 Critical evaluation of Vision, Mission Statement............................................4
1.4.2 Revised Vision Statement.......................................................................................5
1.5 Singapore’s Airlines Mission Statement....................................................................5
1.6 SMART Analysis..................................................................................................................5
2.0 ENVIRONMENTAL ANALYSIS.............................................................................................7
2.1 Macro environment analysis – PESTEL ANALYSIS.................................................7
2.1.1 Summary of PESTEL Analysis................................................................................8
2.2 Industry Issues – PORTER’s 5 Forces........................................................................8
2.2.1 Summary of PORTER FIVE FORCES (MODIFIED) Analysis..........................11
3.0 CAPABILITY ANALYSIS.......................................................................................................13
3.1 Value Chain Analysis....................................................................................................13
3.1.1 air asia Value Chain Analysis – Primaries Activities.....................................13
3.1.2 air asia Value Chain Analysis - Support Activities........................................15
3.2 Resource Audit.................................................................................................................16
3.3 VRIO Analysis Model......................................................................................................17
3.3.1 VRIO Analysis on air asia......................................................................................17
3.3.2 VRIO Analysis Model Rationale.........................................................................17
4.0 KPI AND BENCHMARKING...............................................................................................18
4.1 available seat capacity, passenger traffic and load..........................................18
4.2 Market Capitalisation...................................................................................................19
5.0 PROPOSED STRATEGIES....................................................................................................20
5.1 TWOS Analysis.................................................................................................................20
5.2 Porter Generic Strategy................................................................................................20
6.0 CONCLUSION........................................................................................................................23
7.0 REFERENCES.......................................................................................................................24

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1.0 INTRODUCTION

1.1 Purpose of the Report

The zenith expectation of this report is to feature a key arrangement for

the organization of intrigue which is air asia utilizing guaranteed

examination gears. I will investigate the organization's interior and outer

business condition so I can pinpoint its issues that are reviled in its vital

administration's viewpoint. So as to lead the vital examination for the

organization of enthusiasm as referenced over, the accompanying

investigation will be done:

Vision, mission and worth will be basically assessed utilizing the three

criteria proposed by Johgnson et. al (2004) which is forcus, inspirational

and clear. Examine Mac-condition in which the organization is maintaining

its business, utilizing PESTEL Carryout industry examination utilizing

Porter's five power (Porter, 2008). Ability examination will be directed by

using Value Chain Analysis (Porter's 1985). Bringing forth key choices

utilizing Generic systems proposed by (Porter, 1985). Elaborates the

recommended methodology utilizing SAF (Johnson et al, 2014)

1.2 Singapore Airlines Profile

Singapore Airlines Limited (SIA) is the flag carrier airline of Singapore with

its hub at Singapore Changi Airport. The airline uses the Singapore Girl as

its central figure in corporate branding. It is ranked as the world's best

airline by Skytrax since 2018, while winning the top spot in three other

categories in the same year including "Best First Class", "Best First Class

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Airline Seat", and "Best Airline in Asia". This is an addition to over two

decades of being ranked the world’s best airline by Travel & Leisure

magazine. In 2018, the airline was placed 18th on the top 50 most

admired companies worldwide, first in Asia and the only airline on the list

1.3 Strategic Challenge

Overhauling the purchasing process: Tesla is involved in legal disputes

with car dealerships in several American states because they sell their

vehicles directly to buyers through their website rather than dealerships.

The availability and interpretation of new data: According to analysis by

Accenture, modern cars collect around 25 gb of data per hour from

various inbuilt sensors and cameras. This data allows for real-time insights

to be drawn about performance, speed, condition of components and

much more.

1.4 Vison, Mission Goal and Objective

1.4.1 Critical evaluation of Vision, Mission Statement

Singapore Airlines Vision:

Singapore Airlines has a responsibility not only to be an excellent

Singapore Airlines has a responsibility not only to be an excellent

company, but also to be an excellent citizen of the world by enhancing the

lives of the people we touch. With that aim in mind, we have made many

commitments to the arts and education, to our communities, and the

health and welfare of our country’s citizens, and those in countries we fly

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to. With this goal in mind, we’ve also made a strong commitment to

preserving the environment – and our world for future generations.

1.4.2 Revised Vision Statement

In these areas, we will bring the universal passion of Singapore Airlines to

“serve people worldwide with the joy of expanding their destination.” And

toward this end, we will “lead the advancement of mobility and enable

people everywhere in the world to improve their daily lives.”

1.5 Singapore’s Airlines Mission Statement

Singapore Airlines Mission:

“Singapore Airlines is a global company dedicated to providing air

transportation services of the highest quality and to maximising returns

for the benefit of its shareholders and employees.”

1.6 SMART Analysis

S– To be the best service provider in airline industry and

Specific extend the services to other part of the world and provide
education through social responsibility.

M– Two areas where we are going to create new value:

Measurabl
e Affordable air travel”

Value Creation for People’s Daily Lives.

A– “Singapore Airlines is already a global company dedicated

Achievable to providing air transportation

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R– Providing air transportation services of the highest quality
Realistic and to maximising returns for the benefit of its
shareholders and employees.

T – Timely SIA is committed to preserving the environment and be the

best environment friendliest airline in the 2030

2.0 ENVIRONMENTAL ANALYSIS

2.1 Macro environment analysis – PESTEL ANALYSIS

Political Since airlines serve as a bridge between nations or even as a flying

ambassador for its homeland, it is all but inevitable that they wind up
in the middle of political scuffles. Recent examples include the Trump
administration's ban on travelers from certain Muslim majority nations
and its ban on laptops in the cabins of flights from selected airports in
the Middle East and North Africa (Cederholm, T., 2015).
Economic Every airline executive will tell the most important part of his or her
company are the people. It's true, an airline's employees are its
lifeblood. Which is why poor labor relations can cripple an airline both
financially and operationally.
With the proliferation of smartphones and social media, the actions of
airline employees are under the microscope more than ever. Thus the
actions of a few employees can have a major effect on the airline
(Dhamija, A. K., 2016).
Social- As airlines around the world expanding their fleets, everyone is
Cultural looking for people to do the flying. But there doesn't seem to be
enough people around to fill those jobs. After all, it takes a
tremendous amount of time and money to train a pilot.
Thus, the pilot shortage is real and some airlines are beginning to feel
the pinch. According to Patrick Smith, it is regional carriers that are
bearing the brunt of the shortage (Hunter, M., 2016).
Technologica Technology has been great for airlines. Biometrics is going to be a
l changer for airport experience. While hybridization is expected to
usher in a new age of flight. Technology has already helped
revolutionize everything from in-flight entertainment to freeing flights
crews from their cumbersome flight manuals (Idris, A. N., 2017).
Environment Fume events occur when toxic smoke or odors from the plane's
al engines find their way into the cabin. "A toxic fume event can result in
immediate incapacitation and have a long-term adverse impact, and it
can affect everyone on board," Allied Pilots Association president
Captain Dan Carey said in a statement (Lee, L., 2017).
Legal Over the past couple of years, the sharp increase in the number of
animal-related incidents on board planes has increased dramatically.
Delta Air Lines reported an 84% spike since 2016.
Many attribute this to the widespread abuse of emotional support and
service animal privileges by the flying public.
Recent incidents include the mauling of a passenger by an emotional
support dog on a Delta flight and the death of a puppy on board a

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 United Airlines jet after it was placed in the overhead compartment
(Merkert, R., 2015),.

2.1.1 Summary of PESTEL Analysis

Natural investigation shows how the airline industry stand is and how this

can help investors determine before they can invest in.

2.2 Industry Issues – PORTER’s 5 Forces

The airline business all-inclusive is a multi-billion dollar industry, however

it is exceedingly aggressive, with numerous huge members attempting to

use their upper hands to pick up larger part or complete piece of the pie.

Give us a chance to set the phase by examining the key factors that are

basic for any airline company to be fruitful.

Forces Strength/Wea
k
Threat of new Threat of new entrants is another major aspect of
entrants the five forces. This aspect has a low threat for the
airline industry. There are two aspects that do
however raise the threat level. First, there are
extremely low switching costs. Second, there are
no proprietary products or services involved.
Even with these two aspects the industry still has
a very low threat overall. Existing firms have a
large cost advantage. This industry requires a Weak
large amount of capital and without a strong
customer base there will be little to no profit in the
first few years. Existing firms can and will use their
high capital to retaliate against newer firms with
whatever means necessary such as lowering
prices and taking a loss.
(Vazquez, A. S. Y., 2015).
Bargaining The airline industry is made up of two groups of Strength
power of buyers. First, there are individual flyers. They buy
buyers plane tickets for a number of reasons that can be
personal or business related. This group is
extremely diverse; most people in developed
countries have purchased a plane ticket. They can
do this through the specific airline or through the
second group of buyers; travel agencies and online
portals. This buyer group works as a middle man
between the airlines and the flyers. They work with
multiple airline firms in order to give customers

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 the best flight possible. Between these two groups
there is definitely a large amount of buyers
compared to the number of firms (Pace, S., 2017).
Bargaining Next we look at the bargaining power of the
power of suppliers. In this case the major suppliers are the
suppliers airplane manufacturers. The top two
manufacturers in the world currently are Boeing
and Airbus(Odell,Mark). In this industry the inputs
are extremely standardized. Airline companies Weak
only seem to differentiate with amenities. The
planes are very similar. Currently some
manufacturers are trying to make their plans more
ecofriendly.
(King, D. L., 2017).
Threat of After looking at the threat of entry it is important
substitutes to also consider the threat of substitutes. This
industry has a medium substitute risk level. There
are substitutes in the airline industry. Consumers
can choose other form of transportation such as a
car, bus, train, or boat to get to their destination.
There is however a cost to switch. Some means of Weak
transportation can be more costly than a plane
ticket. The main cost is time. Planes are by far the
fastest form of transportation available. Airlines
surpass all other forms of transportation when it
comes to cost, convenience, and sometimes
service. (Pancholi, J., 2017).
Level of The last area of the five forces is the rivalry among
competitive existing players. The rivalry in the airline industry is
rivalry very intense for many reasons. The industry is
currently very stagnant. It seems to be in the mature Strenth
stage of the business cycle. The number of
competitors stays the same in the long run and it
doesn’t seem to be under or over capacitated.
(Taylor III, 2018).

2.2.1 Summary of PORTER FIVE FORCES (MODIFIED) Analysis

Level

Threat of new entrants Low

Bargaining power of buyers Low

Bargaining power of suppliers High

Threat of substitutes Low

Level of competitive rivalry Low

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 Summary of PORTER FIVE FORCES
Series 1 Series 2
5/1/2002
40

20
9/1/2002 6/1/2002

8/1/2002 7/1/2002

Porter Five Forces analysis indicates that air asia has good competitive

advantage in the industry through its flexible customer service (budget

service) which can help in increasing turnout which could subsequently

help in increasing profit and competitive player in the industry.

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3.0 CAPABILITY ANALYSIS

3.1 Value Chain Analysis

Value Chain Analysis is used to analyzes the capability of the air asia’s

source of competitive advantage (Porter, 1985).

3.1.1 Value Chain Analysis – Primaries Activities

Primary Activities Performed How does it create Value Strengt
Activities h/Weak
ness
Inbound SIA’s inbound logistics includes Customer access, data Strengt
Logistics Aircraft and fuel acquisition; collection, incoming h
route planning, flight material storage, service
scheduling, etc. These
activities are the fundamentals
for air asia since they form an
important platform for air asia
to start its operations and can
have big impact to air asia’s
operations. These activities are
valuable but clearly they are
not rare and can easily be
imitated by air asia’s
competitors. (Thompson,
2018).

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Operation Regarding operations, air Branch operations, Strengt
s asia’s key activities include component fabrication h
ticket selling (through multiple
channels), check-in counter
operations, baggage handling,
in-flight service, etc.
Although these operations are
mostly similar to other airlines
but air asia has adopted a very
high standard and constantly
raise the bar of its operations
standard which distinguish
itself in the airline industry.
(Strickland, 2017).
Outbound The outbound logistics in air Order processing, Weak
Logistics asia includes baggage warehousing, report
handling, flight connection, preparation
rental car and hotel booking.
These activities are primarily
served to meet customers’
basic travel requirements and
to some extent can add value
to customers. But apparently
they are not rare and it is easy
for competitors to copy them
and they
are not air asia’s core
competence. (Kachru Upendra,
2018).
Marketing At air asia, marketing and Sales force, promotion, Weak
& Sales sales play a vital role in its advertising, proposal
success which has seen air writing, website
asia, morph from a small
regional airline brand of a tiny
city state into a globally
highly-recognized airline icon.
This is down to air asia’s being
fully aware of the immense
power of marketing and
branding. From the very
beginning of its establishment,
air asia has been continuously
attaching great importance to
its marketing campaign and
aggressively collaborate with
renowned global
advertisement companies to
smartly
promote its brand, which
resulted in its brand image
being boosted magnificently.
Over the years, air asia
consistently conveys the
message “Singapore Airlines –

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 A Great Way to Fly” to the
world. Now air asia has
successfully became a grand
brand in the airline industry
and beyond which is
synonymous to top quality
service. air asia’s brand image
of Singapore girls is probably
the most well-recognized icon
among the global travellers.
Undoubtedly, marketing
activities were very well
undertaken by air asia and
contributed to air asia’s strong
brand name. And it’s easy to
confirm that strong brand
name of air asia is a VRIO
resource. (P.K Mishra, 2019).
Service In term of after sales services, Installation, customer Strengt
air asia also pay undivided support, complaint h
attention to issues like lost resolution, repair
baggage, customer complaint
follow-up, etc. to help
customers address their issues
arising in their journey as early
as possible. After sales
services is a valuable activity
but we don’t have sufficient
reasons to identify it as a VRIO
capability.
(Lomash Sukul & Mishra P.K,
2018).

3.1.2 SIA Value Chain Analysis - Support Activities

Supporting Activities Performed How Does It Strengt

Activities Create h/Weak
Value
Infrastructu SIA’s infrastructure includes the Financing,
re “hardware” maintenance centre, catering Planning,
centre, Investor
freight terminal etc. which can be used relations
by air asia and other airlines, and
“software” its planning, controlling and
financing system, etc.
Infrastructure like good ground services
in Changi airport, affluent cash flow are
valuable and important for air asia, but
they are can be easily achieved by its
competitors. We can’t find a resource in
infrastructure that can meet VRIO
criteria. (Thomas L., 2018).

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Human SIA has long been aware of the Recruiting,
Resources significance of human resource and Training,
invested heavily on its HRM system Compensati
which is characterized by comprehensive on system
training programme, including on-the-job
training, development programmes and
continuing education sponsorships. Its
cabin crew training school is collaborated
with workforce development agency of
Singapore which offers many workforce
skills qualifications
(WSQ) accredited courses. Additionally,
air asia has Extracurricular activities
(ECA), returning crew scheme, returning
graduates scheme, self-directed learning
(SDL) programme, coupled with Towards
Optimal Productivity(TOP) programme
collectively form a multi-pronged HRM
system that contributed tremendously to
SIA’s growth.
(Singapore airlines Sustainability report
FY2014/15) (H. Vermaak, 2018).
Technology SIA is famous for its constant investment Product
in new technologies which saw them be design,
the first to introduce many technologies process
into its services. They were the first to fly design,
Airbus-380, the first to offer in-flight market
entertainment system for customers, the research
first to provide global satellite in flight
telephone service, among many others
new technologies adoptions, which not
only enhance its operation efficiency,
reduce operation cost but also, more
importantly, attracted huge global
publicity, boost its brand image greatly
and differentiate itself further from its
competitors. (Caluwé L., 2017).
Procuremen Procurement activity is accountable for Service,
t acquiring the resources that are required machines,
in air asia’s operations. This is a basic advertising,
function of air asia, but this is not a core data
competency. From above Value chain and
VRIO analysis, we can identify HRM,
services (operations), marketing are well-
undertaken activities in air asia that
contribute to air asia’s competitive
advantage. And human resource, Quality
service and strong brand name are
identified as VRIN resources (Vosburgh,
R. 2018).

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3.2 Resource Audit

Resource Activities
audit and
value systems
Physical SIA is one among other airlines operating from Singapore with world
resources reputation in air transport and general services.
Leadership While the core competencies provide a value-added to the company and
opens new market accessibility, Prahalad and Hamel (1990), argue that
this proposition is inimitable.
In particular, Immelt's democratic and motivational leadership has
transformed the leadership style into an innovative culture highly
regarded as "Imagination of work" within air asia, thus differentiating
itself from other companies.
Talent SIA employees approximately 14,729 (FY 2017/2018, transporting around
management the world, region and domestic which domenstrated it commitment for
better services. Air transport on the “SIA” which demonstrated Immelt’s
commitment to skilled training and education to employees. This talent
management approach provided employees with necessary business
knowledge and functional skills, enabling a structural change which also
spread the pilot training in different centers.
Technology It has been notable that air asia has more focused on technology and
and providing innovation platform, which drove the organization to being
innovation innovative. Due to the increasing market demands for better air travel,
the company responded by investing in technological innovations.
Diversified The use of synergic strategy has led to the company growth by
portfolios leveraging diversified portfolios. This competency was highlighted by a
reduction in the levels of earnings resulting the reduction of sectors from
the company’s portfolio.
Customer care The transformation of marketing function around air asia was created
through the customer oriented program deployments under Welch
leadership and started in 1980s with work-outs, focusing on productivity
and process improvement and further created the learning environment.

3.3 VRIO Analysis Model

3.3.1 VRIO Analysis on air asia

Resources/capabilities Valuabl Rar Inimitabl Exploited Implications

e e e

Primary Activities

Inbound Logistics Yes No No Yes Competitive

advantage

Operations Yes Yes No Yes Competitive

advantage

Outbound Logistics Yes No No Yes Competitive

advantage

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 Marketing & Sales Yes Yes Yes Yes Temporary
advantage

Service Yes No No Yes Competitive

advantage

Supporting Activities

Infrastructure Yes No No Yes Competitive

Advantage

Human Resources Yes No No Yes Competitive

Advantage

Technology Yes No Yes No Competitive

Advantage

Procurement Yes No No No Temporary

Advantage

3.3.2 VRIO Analysis Model Rationale

Is it Valuable? Result from VRIO model applied in air asia, both primary and
supporting activities are creating and contributing unique values to
the company such as environmentally jet engines.
Is It Rare? In term of rarity, air asia deliver uniqueness of strategic to provide
competitive advantage operation, servicing, sales and marketing.
air asia also established partnership strategy to gain and grows
more potential customer in its portfolio.
Difficult to Almost 2/3 of the primary and supporting activities conducted in air
Imitate? asia is difficult to obtain or imitate by competitors. The strategy in
its servicing the customers such as certification on its pilots
especially well trained that have much flying hours.
Is It Overall, air asia scores a good rating in its sustainability in airline
Organisation business, this indicated that company is maintaining the
Oriented? competitive advantages as one of the leading airline company
around the world.

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4.0 KPI AND BENCHMARKING

The performance of air asia is measured in few of the KPI that provides the

benchmark in contrast of its competitor.

4.1 available seat capacity, passenger traffic and load

The five-year (2010/11~2014/15) available seat capacity, passenger

traffic and load factor chart below suggests air asia’s capacity kept

growing between 2010 /11~2013/14 only dropped marginally in 2014/15.

Passenger traffic followed the same trend. But load factor looks

fluctuating, suggesting the demand remains volatile and lags behind

supply.

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4.2 Market Capitalisation

The five-year air asia revenue and expenditure record (2010/11~2014/15

financial year) listed below suggests air asia revenue kept growing from

2010/11 to 2013/14 but dropped marginally 0.5% in 2014/15 to

12,418million$; expenditure also followed the same pattern. This indicates

air asia need find ways to boost its revenue growth.

The five-year (2010/11~2014/15) operating profit and operating profit

margin chart below suggests air asia can keep a positive operating profit

growth after the profit slump in 2011/12 which was down to a spike in fuel

price. Profit grew 33% in 2014/15 despite marginal drop in revenue,

suggesting air asia’s expenditure was controlled well this year.

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5.0 PROPOSED STRATEGIES

5.1 TWOS Analysis

TWOS was introduced by Johnson et al. (2011) which goes beyond SWOT

analysis to identify suitable strategies for air asia as follows,

5.2 Porter Generic Strategy

Porter generic strategy option (Gregory G. Dess, 1984) is used to develop

strategic options for air asia Aviation. Based on the SWOT analysis

discussed above, strategic choice of differentiation and cost focus has

been proposed.

COST DIFFERENTIATION

Lowest cost across the Better service across the

INDUSTR
Y WIDE

airline industry airline industry

Lowest cost within airline Better service within airline

FOCUS

industry segment industry segment

5 Forces Strong Force Moderate Force Weak Force

Competition Competition reflects the
against air degree of competitive
asia interactions among airline
companies, including air asia,
in the same markets or
industry environments. This
component of the Porter’s Five
Forces analysis model
evaluates the external factors
responsible for competition
that affects the business,
which in this case is Singapore
Airlines.

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Bargaining The bargaining power
Power of air of customers refers to
asia’s the influence that
Customers/B customers have on air
uyers asia and its industry
environments, such as
round trip tickets and
the hotels booking.
This component of the
Porter’s Five Forces
analysis of air asia
assesses the ability of
buyers or customers to
affect prices and
business performance.
Bargaining The bargaining power
Power of air of suppliers is a
asia’s significant force in this
Suppliers external analysis of
Singapore Airlines and
the industry
environments of the
business. This
component of the
Porter’s Five Forces
analysis model
determines the
strategic impact of
suppliers on Singapore
Airlines’ performance.
It is essential that
Singapore Airlines’
management address
the moderate
bargaining power of
suppliers.
Threat of Substitution
Substitutes threatens companies
or like Singapore
Substitution Airlines by competing
for customers who
might prefer to use
substitutes available
in the market. This
component of the
Porter’s Five Forces
analysis model
evaluates the impact
of substitutes on
Singapore Airlines
and its industry
environment. Thus,
substitutes are
among the factors
that shape strategic
management in
businesses.
Singapore Airlines’
managerial decisions

19
 are subject to the
weak threat of
substitution.
Threat of New entry is a threat
New in the industry
Entrants or environment because
New Entry. of potential increases
in competition with
established firms like
Singapore Airlines.
This component of
the Porter’s Five
Forces analysis of air
asia assesses the
degree of influence
of new entrants on
the firm and its
industries of
operations. New
entry can alter
market dynamics and
the corresponding
strategies and
management
practices of
businesses involved.

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6.0 CONCLUSION

This paper has examined the business environment, the resources held by

the company and the threats and opportunities facing Singapore Airlines.

Emerging from this analysis is a picture of a company with an excellent

reputation in fine financial health. While there is little danger of the

company succumbing to the competition any time soon, there are,

however, a number of environmental threats, of which it must remain

cognizant, if it is to remain the leader of what can be an intensely

competitive industry. Importantly, the company will need to develop new

markets, particularly in India and North America, and develop its low cost

arm in order to meet changing consumer demands.

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7.0 REFERENCES

Johnson, A. (2015). “Six Men Built the Modern Auto Industry”

Reliability Index (2016). Manufacturer Ratings. Available at:

http://www.reliabilityindex.com/manufacturer/Engine

Interbrand (2016). Best Global Brands 2016. Available at:

http://interbrand.com/best-brands/best-global-brands/2016/ranking/

Forbes (2016). The World’s Most Valuable Brands. Available at:

http://www.forbes.com/powerful-brands/list/#tab:rank

Strategic Management Insight (2016). Ford SWOT analysis 2016. Available

at: https://www.strategicmanagementinsight.com/swot-analyses/ford-

swot-analysis.html

https://content.accesscommercialfinance.com/blog/challenges-facing-the-

automotive-industry-2018

https://www.ukessays.com/essays/marketing/five-forces-of-the-

automotive-industry-marketing-essay.php

https://articles2.marketrealist.com/2017/09/japanese-automakers-market-

share-expanded-in-us/

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https://tradingeconomics.com/hmc:us:market-capitalization

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