Singapore Airlines

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CASE 3:

STRATEGIC CHOICES AT THE SINGAPORE AIRLINES GROUP

Strategic Management and strategic Competitiveness

Productivity Enhancement

1) Deployment of Technology

2) Total Involvement

3) Incentives

The External Environment

A) General Environment

1) Demographic

• Malaysian Airlines (regional competitor), which is geographically closed to Singapore, were imitating SIA’s strategy (threats)

2) Economic

• Global financial crisis – reduced demand for travel and increasing price sensitivity of its customers

3) Political

• Thailand had witnessed significant political unrest. SIA send relief flight made Changi a temporary hub to deal with massive congestion. (opportunity)

B) Industry Environment

1) Threat of New Entrants

• The industry has always attracted tremendous attention, pulling governments, analysts and wealthy businessmen to own an airline.

2) Intensity of Rivalry Among Competitors

B.C.G. Matrix

[pic]

SIA is in the ‘Stars’ quadrant as it have high market share and high growth. Invest further in these - they incur high costs, but they are market leaders and should also generate lots of cash. Stars may balance on net cash flow, but the organization should try to maintain market share on this would because rewards are likely.

The Internal Environment

Tangible Resources –

A) Financial

• Internal funding. No subsidies from government. One of the most profitable airlines in the world.

B) Organizational

• Total Involvement

C) Physical

• Terminal 3 was build to enhance SIA‘s capacity and image in January 2008.

D) Technological

• Deployment of Technology

Intangible Resources –

A) Human Resources

• Total Involvement

• Incentives

B) Innovation

• Customer conveniences and facilities

(C )Reputational

• Accolades and Awards

Capabilities – ??

Core Competencies - ??

Strengths –

• Accolades and Awards

• Customer conveniences and facilities

• Deployment of Technology

• Strong proponent of deregulation and free competition

Weaknesses –

• Large risk exposures

Building and Sustaining Competitive advantage

Tangible Resources –

E) Financial

• Internal funding. No subsidies from government. One of the most profitable airlines in the world.

F) Organizational

• Total Involvement

G) Physical

• Terminal 3 was build to enhance SIA‘s capacity and image in January 2008.

H) Technological

• Deployment of Technology

Intangible Resources –

C) Human Resources

• Total Involvement

• Incentives

D) Innovation

• Customer conveniences and facilities

(C )Reputational

• Accolades and Awards

Strategy at the Business Level

Cost Leadership strategy

1) Rivalry with Existing Competitors

• SIA’s own budget carrier – Tiger Airways

2) Product Substitutes

• Budget airlines - AirAsia

Differentiation strategy

1) Rivalry with Existing Competitors

• Accolades and Awards

• Customer conveniences and facilities

• Deployment of Technology

2) Bargaining Power of suppliers

• Many Asian countries have heavily regulated flights, thus reducing the ‘supply’ of airline seats. SIA is able to charge at a higher price and enjoy higher load factor as it is able to operate on this routes with less regulation. In other words, SIA has the advantage of provide more airline seats.

Integrated Cost Leadership/Differentiation Strategy

1) Rivalry with Existing Competitors

• SIA’s own budget carrier – Tiger Airways

• Accolades and Awards

• Customer conveniences and facilities

• Deployment of Technology

2) Product Substitutes

• Budget airlines – AirAsia



3) Bargaining Power of suppliers

• Many...
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