Singapore Airlines External Factor Analysis - Essay Example

Download file to see previous pages Singapore Airlines, initially the Malaysia-Singapore Airlines, started operations as an independent airlines company in 1972. The company has gained a strong position in the airline industry and the route network now has expanded to over 90 destinations in more than 40 countries. The company has been able to achieve competitive advantage through product and experience based differentiation as it pioneered the concept of entertainment and innovation in flight. It was the first airline to introduce hot meals, alcoholic and non alcoholic drinks, fragranced towels, and video on demand for the cabin crew members. The crew members are youngest in any airline industry in South Asia and they use the “Singapore Girl” as the symbolic representation of the company’s commitment to quality excellence and service delivery (Singapore Tourism Report, 2011).
Further, the airline keeps the youngest fleet of aircrafts in order to minimize its fuel costs and has an impressive business model which is responsible for its astounding success. It has an efficient financial infrastructure developed and incorporates innovation and strategic management to adapt to the rapidly changing external environment of the industry. As it is the national airline, it is present in the markets of South Asia, East Asia, Europe and America. Therefore, Singapore Airline operates in a highly competitive market thus external environment is of particular importance to its strategic management and leadership.
The External environment has an important impact on the airline industries in Asia especially after the augmentation of terrorism across the world. With the changing external trends globally Singapore Airlines is faced by many micro and macroeconomic pressures, socio-cultural changes, political and legal factors and also the technological pressures to constantly innovate. Below is an analysis of the four external factors affecting Singapore Airlines. Political This refers to the political set up and government intervention in the business sector. The government usually discourages private monopolies and hence would encourage competition. This means Singapore Airlines has to watch for political barriers in host countries for example it withdrew the stake in Air India because of the privatization programme of Indian government (BBC News, 2001). The government’s lobbying activities or policies regarding privatization, protection of domestic industry, contracts or subsidies can all affect the international firms like Singapore Airlines. In politically unstable countries like India and Pakistan, the Airlines will be subject to much uncertainity in operations and will have to incur additional security costs. Even in Singapore, it does not receive any government subsidies despite the fact that it is a national airline (John, 2010) Social Factors Social factors pertain to the societal changes in tastes, preferences and consumption patterns of the consumers. A change in income levels of the society means more people can afford to travel by air rather than by rail or car hence, there can be an increase in the sales of Singapore Airlines domestic and international flights (Hill, 2008). Moreover, changes in social habits like increased preference of entertainment on flights poses a greater pressure on Singapore Airlines to provide such features to the travellers. The crash of Singapore Airline flight SQ006, at the Chiang Kai Shek International Airport in Taipei, meant that the company had to compensate the agitated families of victims with a total amount of $400,000 (BBC News, 2001). Moreover, the increased trend of online shopping also requires Singapore Airlines to regularly update its website and offer online selling and booking of airline tickets in Asia. The increase in terrorist activities however, has a ...Download file to see next pagesRead More