OBJECTIVES
As a person with knowledge of strategic management, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how strategic management is thought up, formulated and then imparted down into the subsidiaries of a company or organization. The author hopes to have an in-depth understanding as to how the process of strategic management enables companies and organizations to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon, i.e. innovation and diversity. Innovation was discussed with regard to strategic management where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
EXECUTIVE BRIEF
This essay utilized Singapore Airlines as the model organization to review its present strategies and management and how they dealt with critical situations. From the analysis, key trends in the strategies and management of Singapore Airlines were then identified, how they worked and their effectiveness in dealing with critical situations were ascertained. The paper then moved on to assess these strategies and management with regard to their suitability to critical situations, during which the internal capabilities of these public relations strategies in relation to the company mission and vision being followed by Singapore Airlines was determined also. An overall analysis of the public relations strategies and management of Singapore Airlines was also conducted to assess and compare the capabilities of these strategies with those of others. Gaps in the strategies and management capabilities of Singapore Airlines were then identified.
Finally, several choices of strategies to improve the strategies and management capabilities of Singapore Airlines as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.
OVERVIEW OF SINGAPORE AIRLINES
Singapore Airlines aims for sustainable growth as a broad market leader in the airline industry as well as for segment leadership. In both cases, the services of Singapore Airlines will play a crucial part. The company is able to establish its broad leadership usually by acquiring other strong airline companies and their services, which are then combined into a new, larger company. Offering training to its employees, improving the company operations, and the introduction of new technologies then reinforces the positions of the various services of Singapore Airlines. This practically results in economies of scale that is able to create a distribution network for both the local and international terminals of the company. If a market is already in the control of other airline companies, Singapore Airlines devotes its attention towards the development of a premium segment with its various airline services.
Singapore Airlines has four main objectives:
A) Remain one of the top companies in the airline industry. Being on top of its industry enables Singapore Airlines to command the respect and confidence of its clients. Thus, the company is able to expand its operations through the acquisition of other airline companies.
B) Gain more profit than other international airline companies. The raw materials that are being laid down in the airline services used by Singapore Airlines are able to meet high quality standards. As a result, the company is able to earn more profit as against other airline companies.
C) Build the best airline portfolio, with Singapore Airlines as the international brand of flagship; and
D) Maintaining its independence. Being an independent company allows to Singapore Airlines to continue its tradition of excellence in both its products and services by setting new trends and standards.
QUESTION 1: What are the prevailing strategies chosen and implemented by Singapore Airlines?
A. Resources-based Strategic Management of Singapore Airlines
The mission of Singapore Airlines is to secure the growth of the business in a sustainable manner, while at the same time constantly improving the company’s profitability. The strategy to achieve this involves four elements:
In order to achieve these objectives, Singapore Airlines implements a strategy of promoting a combination of local and international airline services, but maintaining Singapore Airlines as the flagship brand. The company also aims for broader positions as well as either the top or secondary positions in any airline market. Any of these positions would be enough for Singapore Airlines to deliver a high level in terms of production, marketing and distribution. Moreover, these positions create a platform from which the company can promote their premium airline services and other specialties. And with a continued focus on the structures of the costs, the above mentioned objectives should undoubtedly be reached.
B. Position-based Strategic Management of Singapore Airlines
Positioning is a key factor especially in markets where a broad leadership position has yet to be fully developed (Kotler, 1999). In these markets Singapore Airlines strive for strong positions. Therefore, this type of strategic management takes into consideration the important environmental and economic factors that can either hinder or enhance the entry of a company or organization in a particular territory.
Position-based strategic management of Singapore Airlines typically takes into consideration the following components:
A. Analysis of the Macro Environment
This component normally identifies the political, economic, social and technological trends that emanates within the macro-environment. The results of this analysis will simply verify whether the people or the consumers in the macro-environment are aware of the possible benefits and hazards that will be pushed in by a particular company or organization. The overall economic outlook of the macro-environment will also suggest whether the people or the consumers in the macro-environment are ready to embrace the new technologies that could be possibly brought about by companies and organizations. For example, the large number or tourists in the ASEAN Region can suggest that people in these countries have adequate knowledge on various airline companies that will give them excellent traveling experiences.
B. Analysis of the Airline Industry
The assessment of the airline industry attractiveness is based on Porter’s 5 forces model. In summary, the results of the Five Forces Analysis will determine whether the entry of a particular company or organization in a macro-environment will be favorable or not. For example, the threat of new entrants could be considered as serious because the lack of distribution channels of major competitors will damage the good reputation of companies and organizations as well as their products and services (1999). The analysis can also determine whether existing products and services within the macro-environment can be easily substituted by other products and services. Information regarding the bargaining power of suppliers and buyers, whether high or low, as well as the competitive rivalry between a company and its major competitors can also be determined.
Good examples here include Singapore Airlines’ leading position in the airline industry in Singapore as well as the recently established markets in various Asian capitals. In these examples, Singapore Airlines shows its desire to establish autonomous growth through the establishment of more and more airline services and expansion through the distribution networks as well as growth through acquisitions.
Singapore Airlines has been showing steady signs of growth and progress for a couple of years now. This consistent progress can be attributed to the change in strategic directions that was implemented several years ago and is still being further structured up to now. Basically, the critical element of the strategy was that Singapore Airlines started looking at things from the perspectives of the consumers and the customers.
C. Positioning Strategy of Singapore Airlines
In order to sustain its growth on the international level, Singapore Airlines builds its business on four (4) main positioning strategies.
- The first is building a strong local operating platform, and then testing it over time to determine if profitable growth would be possible through the selection of the right airline services and creation of the structures for implementation to supply a local national market.
- The second is broadening the portfolio in order to make way for international airline services to give access to those not supported by the local airline services. Global perspectives are also gathered to help optimize both the local and global airline services. By broadening the portfolio, Singapore Airlines is able to meet the consumer’s needs and minimize the costs of local infrastructures.
- The third positioning strategy involves a balanced portfolio of countries among established and developing markets. In this instance, the established markets such as those in Europe will provide the funds to invest in developing markets like those in Asia that have lower GDPs but possess a tremendous potential for growth and development.
- The last positioning strategy involves market consolidation which would help in the securing of positions and the creation of shareholder values. Singapore Airlines strives to be in the top position on each market
QUESTION 2: Advantages of Strategies of Singapore Airlines
The strategies of Singapore Airlines focus more on the management and access of information rather the creation of irrelevant airline services. For this reason, Singapore Airlines has developed a unique set of guiding principles – simplicity, cost-efficiency and effectiveness. Total commitment to these principles makes the airline services of Singapore Airlines very user-friendly to its customers.
Singapore Airlines was able to achieve a broad market leadership through various acquisition deals over the years. The company also exerts efforts to communicate with their customers in every local culture about their airline services and their impressions. And this is no easy thing because their regular clients and customers have different tastes in terms of airline service preferences. This critical information gathered by Singapore Airlines paves the way for them to make the right decision regarding the appropriate innovations to pursue.
The strategies of Singapore Airlines are focused mainly on driving the growth of its airline services and improving the company’s financial performance. These innovations have also helped secure significant acquisitions and partnerships. And more importantly, these innovations have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture.
The strategies of Singapore Airlines are practically reinforced by the local employees themselves. These moves certainly allow the company to improve even more without the costs of introducing new technologies. These efforts have resulted in increased financial gains for the company and have allowed the establishment of distribution networks for its airline services.
On the other hand, Singapore Airlines’ strategies in the airline industry changed for the better at the start of the new millennium and began pursuing airline service differentiation. True enough, the differentiated airline services of Singapore Airlines were able to satisfy the needs of customers through a sustainable competitive advantage. This allowed Singapore Airlines to desensitize the prices of their airline services and instead focused on the values that generated not only a comparatively higher price but also a better margin.
Profits / Competitive Advantages
Because of Singapore Airlines’ successful implementation of its strategies, the following profits and benefits were achieved over the years:
· Financial Stability
Financial stability is crucial especially in the pursuit of research and development activities. In the airline industry, it is important to remain updated with the latest technological developments to be able to stay competitive in the market.
· Excellent Service Performance and Price
The designing of the best airline services comes as a result of well-funded research and development activities. The strong performance of airline services in the market could also be linked to their cost-effectiveness. However, Singapore Airlines has to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the market.
· Effective Distribution of Airline Services High airline service awareness among the buyers has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new airline services.
· Economies of Scale and Scope in manufacturing and research and development arising from its numerous facilities situated in Singapore and other countries worldwide.
· Unique Quality Airline Technology
Singapore Airlines’ commitment to research & development activities has always been one of its top strategies to remain competitive in the market.
· Differentiated Airline Services Through the production and marketing of differentiated airline services originating from their research and development activities, Singapore Airlines is able to create its own firm-specific advantages. The continuous pursuit of research and development processes enables Singapore Airlines to produce a steady stream of originally differentiated products which makes it difficult for competitors to find substitutes. Because of this differentiated approach, Singapore Airlines is able to market their airline services worldwide, which enables them in turn to maximize the returns on research and development expenditures.
QUESTION 3: Superiorities and Inferiorities of Singapore Airlines
Strengths:
- Singapore Airlines has services that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of products
- Singapore Airlines has grown significantly over the years, and has experienced global expansion.
- Singapore Airlines’ main competence lies on the use of information technology (IT) to fully support its international logistics system. Therefore, Singapore Airlines can see how their individual products perform within Singapore, or even at other countries at a glance. IT also supports Singapore Airlines’ efficient procurement.
- Singapore Airlines is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.
- Singapore Airlines’ lead consultants have established a strong reputation within the market.
- Singapore Airlines can afford to change direction quickly if its management finds that the company’s marketing strategy is not effective.
- Singapore Airlines has little deficits and overheads. Therefore the company can offer good value to customers on a consistent basis.
Weaknesses:
- Singapore Airlines is one of Singapore’s largest airline companies but has a weak control of its empire, despite its IT advantages. This could lead to a decrease in productivity in some areas where they have the least control of.
- Since Singapore Airlines’ airline services push through across many sectors, the company may lack the flexibility that some of its more focused competitors possess.
- Singapore Airlines operates globally, but its presence is located in only relatively few countries worldwide.
- Some of the company’s weaker branches lack market presence or reputation
- Some of the company’s personnel still lack the essential skills base in many areas.
- The company is still vulnerable to the temporary losses of its vital staff (e.g. being sick, leaving).
- The company’s cash flow is unreliable especially in the early stages of a new product development.
Opportunities:
- Taking over, merging, or forming strategic alliances with other airline companies while focusing on strong markets like Europe or the Greater China Region.
- The branches of Singapore Airlines operate only on in a relatively small number of countries all over the world. Thus, this would open the opportunities for future businesses in expanding various consumer markets, such as those in China and India.
- The opening of new locations and branches offer Singapore Airlines the opportunities to exploit market development. This could lead to the diversification of the company’s branches from large super centers to local-based sites.
- Opportunities exist for Singapore Airlines to continue with its current strategy of establishing large branches worldwide.
- Singapore Airlines is continuously expanding, with plenty of future opportunities to exploit for success.
- The local councils of Palm, Inc. are in the process of encouraging local businesses with work whenever possible.
- The competitors of Palm, Inc. may be slow to adapt to new technologies especially the ones that Palm, Inc. releases.
Threats:
- Being number one means that Singapore Airlines is the target of competition, the company to beat, both locally and globally.
- Being a global airline company means that Singapore Airlines might be exposed to political problems in the countries where the company has operations.
- The production costs of most airline services have the tendency to fall because of lower manufacturing costs. Manufacturing costs fall because of outsourcing to low-cost regions around the globe. This phenomenon could lead to competition in prices, which in turn would result in the deflation of prices in various ranges. Intense price competition must definitely be considered a threat.
- The latest developments in information technology which could possibly change the markets might challenge the company’s ability to adapt to these changes
- A slight shift in focus of a large competitor might wipe out any market position that Singapore Airlines has achieved over the years. This could force the company to specialize in rapid response but good value services to local businesses. This would put so much pressure on the company’s consultancy staff to keep informed with the latest changes in technology where possible.
RECOMMENDATIONS
A tie-up or merger with various local airline companies offers tremendous benefits in terms of access to their strategic management policies, infrastructure and even their resources. However, Singapore Airlines must not lose sight of its core competencies while pursuing these tie-ups. Otherwise, the image of this company might be put in jeopardy.
Meanwhile, the collaboration of Singapore Airlines with its major competitors can be seen as a ridiculous move at first. However, upon close examination, this move could pave the way for this company to improve even more its strategic management. The bottom line is both sides would be able significantly gain in such an alliance. The company’s strengths in airline service development combined with the strategic management capabilities of their competitors can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the airline companies involved. Another possible setback could be whether any of Singapore Airlines’ competitors has the need to form alliances.
The third option also focuses on alliances, but this time with either one of the suppliers in airline products and technologies. The benefits of these alliances should outweigh the costs in the long run.
In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether Singapore Airlines could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any merger or alliances may also involve the sharing of expertise. This company has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the company’s values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, Singapore Airlines will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options.
CONCLUSION
The results of the analysis carried out on the strategies of Singapore Airlines indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the strategies of the company could still be expected to improve faster than average.
The review of the company’s strategic management capabilities and resources revealed very little inconsistencies regarding its strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for the company.
The analysis among the environment as well as the strategic management and capabilities of Singapore Airlines revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the company’s competitiveness.
Also, the company has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.
Credit:ivythesis.typepad.com
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