Miss. Kai-Hsin Cheng,
IBM4811 International Strategy Management
Singapore International Airlines
Singapore International Airlines is the largest leading airline service in Singapore. It has a competitive advantage and differentiation over its rivals. The purpose of the SIA is placing a priority on quality service to satisfy customers.
In the case, SIA offers the best in-flight service to their customers throughout many regions. Moreover, they use differentiation strategy and strong recruiting and training strategy to improve their airline service in order to compete with their competitors. More analyze will be discussed in the following five forces analysis and SWOT.
Five Forces Analysis of Airline Service Industry
Competition from Established Rivals: High
There are many existed rivals in the airline service industry, both domestic and international. SIA’s main domestic competitors are Air Asia, Japan Airlines, Malaysia Airlines, QANTAS, Lufthansa and also other American and European Airlines. These are the competitors that are trying to compete in the airline service industry market in South and Southeast Asia.
Competition from New Entrants: Low
New entrants have difficulties in entering the airline service industry, because the new firms will need to have heavy investment in investing in lands for airport, buying aircraft and recruiting people. Moreover, it is hard for new entrants to compete with other leading airline service company, because there are already too many competitors in the airline service industry.
Competition from Substitutes: High
There are many other airline service companies in the airline industry. Therefore, the substitutes are very high. Customers tend to switch to different airline services due to the price competition between each Airline services. The lower price the company offers the higher customer will switch into their services.
Bargaining Power of Suppliers: High
Supplier power is very high in airline industry. When the fuel price increase then the airline service industry has no choice. So they have to increase the fuel surcharge for tickets in order to balance the cost too.
Bargaining Power of Buyers: High
The buying power for customer is high in airline service industry. There are many hundred of Airline companies in Asia for customers to choose.
TABLE 1: SWOT Analysis of Singapore International Airlines
|STRENGTHS |WEAKNESS | |Good Reputation |Not be able to success in Air New Zealand. | |Excellent in flight Service |SARS outbreak. | |Encourage employee motivation and employee productivity. |Hard to establish common safety, service, and performance standard. | |Good recruitment strategy and training for young aircraft and cabin | | |crew. | | |OPPORTUNITIES |THREATS | |Decrease regulatory barriers will help increase airline’s demand. |Compete with the low cost airlines | |Open-skies agreements. |SARS and Iraq War leads to high lay off workers. | |The outbreak of SARS can be a good opportunity to expand airline |Global economic weakness. | |service to other region....
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