Analysis of Singapore airlines on various factors

Question: Write a report about the Singapore Airlines. Answer: Company Background Singapore Airlines is the most awarded 5 star standard carrier in Singapore and a subsidiary of the Singapore Government. The airline company is primarily based at Changi International Airport and is among the members of the IATA bearing the designation SQ 3 digit code numbered 618 as well as ICAO with (ICAO title SIA). The Singapore Airline carries out its operations worldwide and offers flight services to more than 45 nations and across 94 destinations across the globe. Singapore Airlines is publicly listed on the SGX and is considered one of the largest carriers in the world in terms of market capitalization that amounts to SGD 11.6 billion. The company operates more than 102 aircrafts having an average fleet age of approximately 7 years ("Welcome to Singapore Airlines | Official Website", 2016). Geographic Segments: The geographic segments of the company include the East Asia, South West pacific, Europe, Non-scheduled services as well as incidental, West Asia and Africa and the America. Figure 1: Geographic Segments Source: ("Welcome to Singapore Airlines | Official Website", 2016) Nature of business: Singapore Airlines established itself as the flag carrier of Singapores and thereafter inherited MSAs intercontinental route system that connected more than 20 airports located in 18 different destinations. These destinations include the Europe, Australia, various parts of the Middle East as well as other parts South in addition to different destinations of Southeast as well as North Asia. Different facets of the services of the SIAs comprises of offering for diverse range of preference of meals especially for the economy-class passengers , complimentary drinks as well as headphone sets that were essentially business-class privileges that many others airlines also tender to the passengers. Therefore, the management of SIA has focussed its strategy of differentiating itself by means of implementation of enhanced services and for that the company has invested profusely for service innovations as well as in-flight assistances. In addition to this, SIA has also introduced seven new schoo ls in order to educate and staff in the serviceable areas of the cabin crew, flight functions, business-related schooling, information technology, safety measures, airport services as well as engineering for the purpose of development of service culture ("Welcome to Singapore Airlines | Official Website", 2016). PESTEL analysis of Singapore Airlines As rightly put forward by Chernev (2012), PESTEL analysis provides a framework or else a tool that the marketers can utilize for the purpose of analysis as well as evaluation of the macro factors of the environment particularly the external marketing environment in which the company operates. This particular analysis also helps in the detection of the threats as well as the weaknesses of the business operation that in turn can be used in carrying out a SWOT analysis (Clow Baack, 2012). PoliticalThe political factors exert immense influence on the overall, external business environment of the corporation Singapore Airlines. This primarily refers to different government policies that include the extent of intervention into the specific economy (Dahlstrom, 2011). For example, the Singapore Airlines has withdrawn the bid for acquiring a stake in the Air India by handling a severe blow to the privatisation blow of the Indian Government. This also has become a political barrier for the operations of the company ("Welcome to Singapore Airlines | Official Website", 2016). Economic The economic factors of the business environment generally refer to the rate of interest, taxation policies as well as foreign exchange rates (Kotabe Helsen, 2010). The primary economic factors that affect the business environment of Singapore Airlines include the emerging markets of Asia as well as the strengthening SGD (Singapore Dollar) in comparison to different foreign currencies. gain, the company offered to acquire a stake in the China Eastern Airlines against 7.3 billion Hong Kong Dollars that posed several challenge as a chief shareholder criticized the entire business deal On the other hand, the global demand is still slow-moving that exerts immense on the economic environment of the business concern (Kotabe Helsen, 2010). Apart from this, the stabilization of the fuel costs primarily in the short is also supposed to affect the business environment of the Singapore Airlines. Furthermore, the volatility of prices of fuel in the long run also influences the economic scenari o of the aviation industry and consequently influences the operations of Singapore Airlines. Social The social factors that influence the social environment of the Singapore Airlines include the altering preferences of the consumers (Kotabe Helsen, 2011). The company therefore needs to keep a close eye on the changing trends of the tastes and the preferences of the consumers in order to make the products and the services of the company more customer centric (Kotler Keller, 2012). Apart from this, there is increase in the disposable income of the consumers that in turn implies greater purchasing power of the consumers. Technological The technological factors include the attainment of the fuel efficiency for achieving the overall effectual way of carrying out the operations of the corporation (Marshall Johnston, 2014). Again, the engineering department of the Singapore Airlines focuses on the repairs as well as maintenance that is considered to be largely out of the hands of the company. The Singapore Airlines is also considered the first carrier that installed the productivity suite to serve the interests of the passengers who can work on board without the need of providing power to the laptops. The company also deploys Sun a particular micro system that essentially powers the productivity suite in the flight ("Welcome to Singapore Airlines | Official Website", 2016). Environmental The analysis of the environmental factors reveals the fact that the general public of Australia expects Singapore Airlines to be very much socially responsible and take steps towards reduction of the carbon footprints. Again, the weather as well as the seasons also affects the operation of the carrier (Clow Baack, 2012). The company therefore makes use of cleaners as well as greener aircrafts in order to carry out sustainable operations. Legal The regulatory changes also affect the business operations of Singapore Airlines especially the chinas aviation regulator boosts the private airlines operating in the airline industry. In addition to this, there are several investment limitations as a government body. In addition to this, the company abides by the Fair Trading Law, Consumer Law, Natural Environmental law and the Five Freedoms of Air (special license to travel to various destinations) (Paliwoda, Andrews, Chen, 2012). Figure 2: PESTEL Analysis Source: (Paliwoda, Andrews, Chen, 2012) Porters Five Forces Analysis of Singapore Airlines The Porters Five Forces Analysis is essentially a significant framework or structure that attempts to critically evaluate the degree of competition in a particular industry and thereby helps in the strategy development of the business (Paliwoda, Andrews, Chen, 2012). Therefore, the model of Porters Five Force Analysis helps to recognize the effect of different factors on the operations of the corporation and the way the company can tender its service to the customers and earn profits (Ramachandra, Chandrashekara, Shivakumar, 2010). The current section examines the five different factors of the Porters Five Forces with special reference to the operations of Singapore Airlines. Industry Rivalry The critical assessment of the intensity of rivalry reveals the fact that Singapore Airline might face in the aviation sector discloses the fact that there are full service airlines in the market that operate in niche markets. Again, there also exist price wars among different competing airlines (Ramachandra, Chandrashekara, Shivakumar, 2010). As per the detailed analysis of this factor, it can be hereby inferred that the intensity of rivalry in the market of Singapore Airlines is moderate. Potential New Entrants The analysis of the potential entrants in the market of Singapore Airlines operating discloses the fact that the threat of probable new entrants in the aviation sector is relatively weak. This is primarily because the industry requires huge amount of capital outlay and the market is fairly saturated. Apart from this, there is high congestion in the significant airports and more importantly the government carriers enjoy greater advantages of business operations. Furthermore, it is also difficult for other carriers to enter the market owing to different economic factors (Reid Bojanic, 2014). There are also increasingly challenges in acquiring airport slots as Singapore has only one airport. Nevertheless, the huge cost of operation as well as different political factors also creates barriers for entry to the new players. Threat of Substitutes The threat of substitutes is one of the most important factors of the Porters Five Forces Analysis. The critical evaluation of the factor reflects the fact that the threat of substitute in case of Singapore Airlines is moderate. The threat of substitution in case of SIA is moderate as there are many low cost carriers operating in the aviation industry and there is provision of very high speed railway services (Shaw, 2011). Besides this, there are advanced communication technologies that can pose the threat of substitution to the carrier services of Singapore Airlines. Bargaining Power of the Purchasers The bargaining power of the purchasers of Singapore Airlines is also moderate as the cost of switching to different airline is quite low. The management of the company Singapore Airlines has also introduced different loyalty reward programs that has increased the customer loyalty and helped the company to retain more consumers (Shaw, 2011). Besides this, the internet also enables consumers to compare the prices of the services offered by different companies and choose the airlines of their choice (Sheehan, 2011). Bargaining Power of the Suppliers The critical evaluation of the level of competition also analyses the bargaining power of the suppliers of Singapore Airlines. The analysis reveals the fact that the bargaining power of the suppliers of the company is quite strong owing to the fact that there is effectual duopoly of different Boeing as well as Airbus for various planes. Again, there s uncontrollable cost of fuel that raises the power of the suppliers (Sherlekar Gordon, 2010). Figure 3: PORTERS" FIVE FORCE ANALYSIS OF SINGAPORE AIRLINES Source: (Sheehan, 2011) Strategic Recommendations A detailed analysis of the business operations of the Singapore Airlines helps in gathering adequate information that in turn can help in framing different strategic options of the company (Venugopal, 2010). The strategic management of the company can employ both the Ansoffs Matrix as well as Porters generic strategies to implement different alternative procedures of developing the growth strategy. Diversification Strategy: The management of Singapore Airlines can consider introducing a brand transit hotel managed by the airline. This can be considered as a very good chance for the carrier to endorse an all-inclusive package to the travellers. Therefore, this strategy can help the airline to differentiate its offerings in a market that poses stiff competition in the saturated market of Airline industry. Market Penetration: The management of Singapore Airline can consider penetrating new markets. This particular airline carries out its operations in Africa and can target mostly the leisure passengers. The company can also consider introduction of a family package that is all inclusive in its offerings. The management of the company might also consider entering into a partnership with another company that can offer different safaris, facilities of camping as well as other facilities that include accommodation and food (Winer Dhar, 2011). Niche Market: The management of the Singapore Airlines can take into consideration the use of airbuses that can serve as the banquet halls. This space can have the capacity of holding around 160 to 250 passengers. This can help the company to target a niche market that is essentially people who can conduct conferences and other events in flights. This in flight events as well as conferences can be regarded as an innovative idea that can save both the time and the money of the passengers. Product development: The management of the Singapore Airlines can consider segmentation of the market properly in order to develop the services of the company according to the needs of the target segment of the consumers (Kotler Keller, 2012). The market essentially consists of different types of consumers, products as well as needs. Therefore, the marketer can determine the target segments appropriately to offer the suitable opportunities. The customers of the airline can be categorised into different sections and thereafter served in different ways depending on the demographic, geographic as well as behavioural facets of the segments. Conclusion The above study presents a detailed analysis of the external business environment of the Singapore Airlines in order to understand the effects of the different factors on the business operations of the firm. This critical of the external business environment of Singapore Airlines helps in acquiring a deep insight into the different political, economic, social, technological, environmental as well as legal factors that influences the effective functioning of the corporation. Thereafter, the present study also elucidates in detail the Porters Five Forces analysis in order to gain to gain comprehensive understanding regarding the level of competition in the market of the airline industry and assesses all the five factors that helps in understanding the competitive position of the company. In the end, the current study also presents strategic recommendations with reference to the Ansoffs Matrix based on the challenges identified using the PESTEL analysis and the Porters Five Forces Model . References Chernev, A. (2012).Strategic marketing management. [Chicago, Ill.]: Cerebellum Press. Clow, K. Baack, D. (2012).Cases in marketing management. Thousand Oaks, Calif.: SAGE. Dahlstrom, R. (2011).Green marketing management. Mason, Ohio: South-Western / Cengage Learning. Kotabe, M. Helsen, K. (2010).Global marketing management. Hoboken, NJ: Wiley. Kotabe, M. Helsen, K. (2011).Global marketing management. Hoboken, N.J.: Wiley. Kotler, P. Keller, K. (2012).Marketing management. Upper Saddle River, N.J.: Prentice Hall. Marshall, G. Johnston, M.Marketing management.(2014) Paliwoda, S., Andrews, T., Chen, J. (2012).Marketing management in Asia. New York: Routledge. Ramachandra, K., Chandrashekara, B., Shivakumar, S. (2010).Marketing management. Mumbai [India]: Himalaya Pub. House. 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