International Management Singapore Airlines

Question: Discuss about theInternational Managementfor Singapore Airlines. Answer: Introduction Singapore Airlines is the flag carrier of Singapore. It has a hub at Singapore Changi Airport. It is considered as the national symbol and icon. It was founded in the year of 1947 and commenced operation on 1st October 1972 (Singaporeair, 2016). There are more than 60 destinations in which the company provides Airlines service. The revenue of the company is $ 15 billion (Fu et al., 2012). It has been fund that there are more than 24,350 employees working in the company. The company has various subsidies related with airlines. The SIA Engineering Company is handling repair, overhaul and maintenance across more than 9 countries (Singaporeair, 2016). The company has 27 joint ventures. It includes Singapore Airlines Cargo, Roll-Royce and Boeing. Singapore Airlines has launched Airbus A380 for customers, which is the largest passenger carrying aircraft (Singaporeair, 2016). It is ranked 15th globally in terms of revenue passengers kilometers. In the year of 2010, Singapore Airlines is ter med as the second largest airlines worth 14 billion US dollars (Singaporeair, 2016). It has been found that majority of the company share is owned by Singapore government investment and holding company Temasek Holding (56%) (Oum Yu, 2012). The company emphasizes on improving its brand reputation by promoting the female flight attendants known as Singapore Girls. In this section, a PESTEL analysis of the company has been provided, to analyze how the factors such as political, economic, social, technical, legal and environmental factors have affected the company. Political: It has been found that the National Political Frameworks have major impact on the business operation of the airline industry of Singapore. It refers to the government policies or the degree of intervention in the economy (Oum Yu, 2012). As Singapore Airlines is carrying the national flag, the government of Singapore has supported the company significantly (both financially and legally). However, there are still many barriers that the company has to face outside Singapore. For example, Singapore Airlines has withdrawn its bid for the stake of Air India (Heracleous Wirtz, 2012). It caused a heavy blow to the privatization program taken by Indian government. It is one of the major political barriers that the company has to face outside Singapore. Economic: Fu et al. (2012) mentioned that economic factors include various factors such as change of taxation rate, interest rate, inflation, economic growth and exchanges. It has been found that slight changes in all these factors can cause huge change in a business operation of a company. For example, it had been found that the company Singapore Airlines had tried to buy 24% stake of the China Eastern Airlines for approximately 7 billion Hong Kong dollars. However, this contract appeared in trouble when majority of the shareholders had criticized this deal as unfair one (Foltran et al., 2012). Social: According to Meltzer (2012), changes in the social environment and trends can affect the demand of a product and availability. It also can affect the willingness of individuals to work within a company. It has been analyzed that travelling to faraway or tropical location has long being the provision of wealthy society. However, due to the increase of disposable income during 1980s has enabled the types of travel that was out of reach previously for the middle class family. Aaker and Joachimsthaler (2012) mentioned that presently the customer preference has shifted from premium types of airline to low cost carriers. For this reason, the company has shifted its attention to increase share in low cost carriers of Southeast Asia in spite of the lack of profit (Tsai et al., 2012). Technical: Heracleous and Wirtz (2012) mentioned that, in the saturated market like haul passenger air travel, technical innovation has played an important role in the market competition. In order to increase the sales, Singapore Airlines has increased investment in Research and Development (RD). It helps the company to develop new fleets and cabin products that can improve comfort level of customers. Hall and Page (2012) stated that these carriers are the youngest fleets. They also have adopted new innovations like reclining seats, headsets and seatback entertainment system (Tsai et al., 2012). All these technical innovations have helped the company to increase customer satisfaction and brand image of the company. Legal: According to Daft and Albers (2012), change in the regulatory framework has also affected the business operation of airlines industry especially the national carriers. Different government brings different types of political outlooks and strategies that have significantly affected the airlines business. For example, due terrorist attacks, in the year of 2001, significant regulatory changes had occurred that had changed the customer screening process adopted by Singapore Airlines (Merkert Morrell, 2012). Environmental: Hall and Page (2012) mentioned that, in recent years airline passengers have become more concern about the environment friendly services. Daft and Albers (2012) stated that, this trend will grow more in future due to the national target of carbon reduction and increase of the price of energy. It has been found that most of the major global airline industries have started to take care of the green issues. They have combined their Corporate Social Responsibility (CSR) policies with their marketing plans. However, it has been found that so far Singapore Airlines is responding slowly to the eco-friendly demands of customers. In this section a Porter's Five Forces analysis for Singapore Airlines has been undertaken. It helps to understand the condition of company's competitive environment. In the year of 1985, Michael Porter had identified five factors that have impact on the performance of a company. They are such as threat of new entrants, threat of product substitution, bargaining power of suppliers, bargaining power of consumers and intensity of competitive rivalry. Threat of new entrants (low): It has been found that the long haul passenger airline is highly dominated by the Singapore Airlines. In addition, Jones (2012) mentioned that the long haul passenger airline industry is highly saturated with one or two national carriers that represent every economy. They receive fair amount of support from the national government bodies. Pearson and Merkert (2014) mentioned that congestion in the skyways is the major evidence of long haul passenger airline market saturation. For this reason it can be stated that the threat of new entrants in the long haul passenger airline is relatively low. However, the picture is slightly different in short haul passenger airline. There are several new entrants have been witnessed in recent years. For example in the Southeast Asian market where Singapore Airlines operates, Jest Star and Air Asia have entered as new competitors. Threat of product substitution (moderate): Before discussing this point, it is required to mention that the threat of service substitution is distinct for long haul and short haul airlines. In case of short haul airlines industry, the chance of service substitution is moderate. For example, availability of high speed trains in Eurasia has affected the short haul airline business significantly (Lin, 2012). Bargaining power of suppliers (High): Unlike the transportation industry, the suppliers of the airline industry have better position in the bargaining. Jones (2012) mentioned that, duopoly exists in the field of supply of Airline industry (Boeing and Airbus). On the other hand, oligopoly exists in the supply of engine (Rolls Royce, Pratt, Whitney and General Electric). As there are only few suppliers exist, they have the capability set price and delivery time in accordance to their needs. Bargaining power of consumers (moderate): It has been found that, in the airline industry the bargaining power of customers are moderate. Teo and Chang (2012) stated that the switching cost in the airline industry is considered as very low. According to Aaker and Joachimsthaler (2012), the declination of travel agents and high street airline offices and proliferation of the internet has decreased the switching cost for customers in recent years. The Singapore airline has tried to increase the switching cost for the customers by initiating different loyalty schemes. The company has developed these strategies along or conjunction with one or two strategic partners. They always encourage customers to remain loyal to their company as regular usage of service can help them to get points or air miles. These points can be exchanged for free flights or discount on flights. Intensity of competitive rivalry (high): There is an intense rivalry can be witnessed in the airline industry. Teo and Chang (2012) argued that, in airline industry, rivalry differs from route to route. For example routes like New York to London or Paris to London are well served by various airlines. In order to capture majority of the market share, airline companies have to adopt price reduction strategy. In addition, they have to make sure that quality of service still remains high. Lin (2012) mentioned that lack of punctuality in well served airlines routs can have adverse impact on the Airlines business operation. However, in recent years, Singapore airline has shown an exceptional performance and captures the Kangaroo Route (Cabon et al., 2012). In this section four strategic recommendations have been provided to the Company depending on the PESTLE analysis and Porters five force analysis. They are discussed below: Improvement of security system: It has been found that, the increased number terrorist attacks have increased the concern of customers about security system available system. For this reason, new regulations and policies have been developed by governments to improve airport security system. Hence, Singapore Airlines has to change the screening strategy used to scan the customers. Adoption of environmental friendly strategies: In recent years airline passengers have become more concern about the environment friendly services. It has also been found that, this trend will grow more in future due to the national target of carbon reduction and increase of the price of energy. It has been found that the Singapore airline is not much concerned about the environmental issues. No strategy has been adopted by the company to take care of the environmental issues like carbon foot print reduction. It can affect the business performance of the company in future. Hence, the company has to start to take care of the green issues immediately. The company has to combine its Corporate Social Responsibility (CSR) policies with its marketing plans. Emphasis on short haul airlines: It has been found that, in recent years the cost of traveling in airlines has been reducing. People are inclining more towards short haul airline. For this reason, in recent years, Singapore Airline has started to increase focus on short haul airline. However the competitive rivalry in this industry is higher than log haul airline. For example in the Southeast Asian market where Singapore Airlines operates, Jest Star and Air Asia have entered as new competitors. In addition, availability of high speed trains in the Eurasia has increased the chance of service substitution in short haul airline. For this reason, the company needs to adopt modern technologies to gain advantage in the competitive market. The company needs to cut down the cost of service while maintaining the service quality, in order to increase switching cost for customers. Providing better service continuously: The Company has successfully developed its reputation as one of the most successful airlines all over the world. In order to stay successful in this business, the company has to keep on providing best quality service to customers. For example, the company can install new space bed with 50 aircraft. In conclusion it can be mentioned that this easy is all about analyzing the present business condition of the company Singapore airline. The company was founded in the year of 1947 and commenced operation on 1st October 1972. There are more than 60 destinations in which the company provides Airlines service. It has been fund that there are more than 24,350 employees working in the company at present. The company is recognized as the second largest airline in term of revenue passengers kilometers travelled. As the company is the national flag carrier of Singapore, it acquires ample support from the government. However the company has to face various economic, political and environmental issues in recent years. It has been found that factors such as change of taxation rate, interest rate, inflation, economic growth and exchanges have affected the business operation of Singapore Airline. Different government brings different types of political outlooks and strategies that have significa ntly affected the airlines business. In addition, the increased amount of terrorist attacks has affected the business performance of the company in recent years. For this reason, The Company has to increase effort on research and development. All the issues have been identified with the help of PESTLE analysis and Porters five force analysis. Depending on the issues found form these analyses, some recommendations also have been provided to the company for future improvement. Reference List Aaker, D. A., Joachimsthaler, E. (2012).Brand leadership. Simon and Schuster. Cabon, P., Deharvengt, S., Grau, J. Y., Maille, N., Berechet, I., Mollard, R. (2012). Research and guidelines for implementing Fatigue Risk Management Systems for the French regional airlines.Accident Analysis Prevention,45, 41-44. Daft, J., Albers, S. (2012). A profitability analysis of low-cost long-haul flight operations.Journal of Air Transport Management,19, 49-54. Foltran, F., Ballali, S., Passali, F. M., Kern, E., Morra, B., Passali, G. C., ... Gregori, D. (2012). 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