Singapore airline - Literature review Example

? Singapore airline Contents 3 Chapter Introduction 3 Chapter 2: Literature Review 4 SWOT Analysis 4 VMOST Analysis 5 Strategic Alliances7 Chapter 3: Analysis and Finding 8 Analysis made through the 7Ps of Service Marketing of Singapore Airlines 8 Financial Analysis of Singapore Airlines 11 Chapter 4: Conclusion 12 References 14 Abstract Singapore Airlines holds a place of pride in being the national flying carrier in Singapore catering to both the international and local consumer base. The company strategically performs to gain a large number of consumers both in the international and local markets and also in forming productive alliances with other key international players. The paper divulges to understand the strategic position of the company in regards to the airlines industry of Singapore and the world at large. Further an analysis is presented both in terms of the market and financial structure to understand the potential of the company in meeting external challenges like recession and change in consumer expectations. A number of strategic tools are used in the paper like SWOT Analysis, VMOST Analysis and also the Marketing Mix aspects is used to understand the potential of the company in being the market leader in the field of airline services. Chapter 1: Introduction Singapore Airlines holds the honour of operating as the national airlines of Singapore. The airlines company operates from one of the main stations located in the Changi airbase of Singapore. From its central airbase the airlines company conducts its flights along several regions of the world pertaining to both Asiatic and other foreign nations. The Asiatic nations comprise of both South East Asian and other East and South Asian countries while the foreign flights consist of moving over to Australian and American regions. In terms of market capitalization the Airlines Company occupies the largest market share in the international domain. However in regards to Asian countries Singapore Airlines ranks eleventh. The Singapore Airlines had its birth during 1947 under the name of Malayan Airlines. It took the name of Singapore Airlines during 1972 and gradually started occupying the flying space in the Asian skies. By the end of 2010 the company grew to possess around 108 airplanes to render services on an expanded sphere. The company now also possess a subsidiary unit known as SilkAir and also helps the regular passengers avail offers and discounts. This policy of the flying company has helped it to gain a large number of consumers on a worldwide basis (Flylowcostairlines.org., 2011). Chapter 2: Literature Review SWOT Analysis According to a report published by Datamonitor (2010) Singapore Airlines operating in the international markets works on some key strengths and also suffers from certain weaknesses in the light of external opportunities and threats. Singapore Airline’s key strengths occupy its operation based on a diversified marketing base which helps the company to counter the potency of business risks. Further Singapore Airlines operates based on highly productive airplanes which helps the company to render enhanced services to the consumers. The company has also a large number of productive workforce which helps in enhancing the revenue and profitability position of the concern. The company also works on a diversified service and product portfolio which helps it to minimise the chances of business risks. Internal strengths of the company helped it to gain a huge chunk of revenue of around $15,996.3 million. However in regards to other airline companies like All Nippon Airways and Air France the number of flight resources which Singapore Airlines possess is found to be quite low. Due to the low number of flight resources Singapore Airlines fails to gain large number of passengers as compared to the other competitors. Significant opportunities which are emerging in the external market consist of growth in the number of airline passengers for expansion of tourism activities and also in the use of flights for expanded commercial use. Growth in tourism activities gained impetus with the rise in tourist population by around 7 percent during 2010 which made the international tourist figure reach to around 119 million. The demand for faster movement of products along the international borders to satisfy the consumer demands had led to the commercial growth of the air lines. Datamonitor (2010) however also tracks significant threats in the international scale which render obstacles to the flight operations of Singapore Airlines. Considerable threats like the price hike in petroleum products and also large number of fluctuations in the currencies of different countries disturbs the flying operations. Further the consumers have started preferring low cost flight services for which the expensive players like Singapore Airlines faced the threat of losing market share. Again the rise in terrorism activities on an international scale has also disturbed the consumer traffic leading to loss of potential revues by the flight companies and thereby causing a disruption in the flight operations (Datamonitor, 2010, p.5-9). VMOST Analysis The VMOST Analysis would be done on Singapore Airlines based on certain parameters like vision, mission, objectives, business strategy and organisational tactics. The Vision of Singapore Airlines can be observed from the statement given by company. Singapore Airlines (2006) observes in this respect that the organizational vision consists of enhancing the services to cater greatly to the needs of the passenger communities. Further the company also targets to meet the needs of the several communities in the different regions in which the company operates. The company through such actions helps in the development of the people residing in the different zones. Singapore Airlines in order to fulfil such values aims to help the people develop along related areas pertaining to education, health and rendering overall development of the different communities (Singapore Airlines, 2006). In the light of the above vision the objectives of the organizational mission of Singapore Airlines can be underlined as follows. Singapore Airlines (2011) to this extent states that the first mission which the company reflects is the enhancement of the airlines brand through the enhancement of relationships with the different stakeholder groups like customers, business alliances and with the social communities at large. The second objective of the company is to encourage the growth of recreational activities to help in the all round development of the community groups. The third mission of Singapore Airlines is to help in the development of the people who have been deprived of their social rights. The deprived communities in this aspect consist of underprivileged children and other people suffering from old age problems. In this direction it also works in protecting the natural environment (Singapore Airlines, 2011). In terms of organizational objectives the company Singapore Airlines sets some specific goals which are measureable and reasonable in nature. These goals must also be based on relevant time scales. According to a presentation produced by Asia-Pacific Marketing Federation (n.d.) the objectives of the company can be underlined as under. Firstly the company desires to develop the business parameters pertaining to conducting air transport and other commercial activities. Secondly the company also desires to expand along the stated objectives to gain larger markets in the international arena. Thirdly Singapore Airlines desires both to enhance the quality of the services rendered and also to work on reducing the cost parameter. Fourthly the business objectives also focus on enhancing the profitability dimension of the company (Asia-Pacific Marketing Federation, n.d.). Singapore Airlines works on some key strategic parameters to help in the achievement of organisational objectives. To this end, Heracleous & Wirtz (2008) observe that the company works on large amount of innovation to help in the enhancement of the service parameters. Further strategic activities also focused on reducing the cost of the services but in also helping the company earn huge profits. To fulfil the strategic enhancement of innovation the organisational policies helped in rendering large focus to the training and development functions. Strategic activities of the concern also involve diversifying into other related areas which helps the company in mitigating the amount of business risks (Heracleous & Wirtz, 2008, p.275). Strategic Alliances Strategic Alliances of Singapore Airlines consist of entering strategic partnership with other potential firms to enhance on their service parameters. To this end, Datamonitor (2009) observes that Singapore Airlines’ strategic alliance with Citibank has helped in the service enhancement in regards to international tourists. The strategic alliance framed has helped in helping the tourists get the advantage of a better tour package on landing at Singapore. Value addition to the service quality of Singapore Airlines enabled through the strategic alliance would help the firm in getting large number of passengers (Datamonitor, 2009). Citing another example of strategic alliance, Kamath & Tornquist (2004) observe that Singapore Airline’s strategic alliance with Lufthansa airlines helped the company to gain increased hold of foreign markets like Germany and other international European markets. This strategic alliance developed during 1998 made the company helped its customers to tour to large international areas (Kamath & Tornquist, 2004, p.11). Velez (2006) also observes in the above regard that Singapore Airlines to enhance the service delivery systems pertaining to cargo and commercial segments had entered into a strategic alliance with firms like Lufthansa and SAS of Scandinavia. This strategic alliance developed helped the company to render better protection and security to the activities pertaining to shipment of cargo. Thus the WOW Alliance formed helped the company to strategise their distribution and logistics operations to augment the productivity of the firm (Velez, 2006, 10). Chapter 3: Analysis and Finding The Analysis and Finding part would consist of rendering analysis pertaining to the marketing and financial conditions of the company. An analysis of Singapore Airlines can be rendered based on the marketing mix segments. Singapore Airlines being a company acting in the service sector would be analysed based on the 7 Ps. The analysis made based on the 7Ps viz. product, price, place promotion, people, process and physical evidence would help in throwing light on the performance parameters of Singapore Airlines. Analysis made through the 7Ps of Service Marketing of Singapore Airlines Product Singapore Airlines works to render continuous innovation to the products and services rendered to gain the apprehension and liking of a sophisticate consumer base. The company introduced into the existing product segment Airbus A 330-300 Airplane which helped the business level consumers travel on specially designed seats which would help the travellers feel a home like experience. Personalization of the product portfolio helped the company to gain the attention of the consumer profile. Further value additions enhanced with the products rendered are augmenting the privacy element in which the consumers can draw specially designed screens between the seats. Moreover the passengers can also avail entertainment while travelling along the airplanes through specially designed systems with the seats (Singapore Airlines, 2009, p.15; Singapore Airlines, 2010, p.15; Entertainment, 2011). Price Singapore Airlines does not fall categorically in the low-cost airlines occupying the international flying arena. The cost of the tickets rendered by Singapore Airlines is a little higher and thus is availed by people pertaining to business class. Further it is observed that during 2010 the airlines company had worked to augment the prices of its tickets around a range of $200 to $1000. This price hike rendered by the airlines shows that it wants to draw a niche market of international travellers. Again the airlines company also is found to charge fines from passengers carrying extra luggage (Pacific Asia Travel Association, 2010). However the airlines company to encourage the movement of sports people through their vehicles has decided to move the amount of fine implied for luggage weighing above 50 kilograms (Sail Melbourne, 2005). Place Focusing on the place parameters it is observed that Singapore Airlines renders effective service to the customer profile by operating through both local and international airports. In the local segment the airlines company operates through the Changi airport which not only helps the taking off and landing of international flights but also renders several value additions to the travellers. The airport is now being expanded to gain more number of visitors taking international flights (Changi Airport Group, 2011). Further working on the place parameter the company also encourages the consumers to avail the mobile services to effectively book the flights and also check-in for other services rendered by the airlines (Singapore Airlines, 2011). The official website of Singapore airlines is developed to help international passengers gain the knowledge of the different flight schedules of the company from airports pertaining to countries like United States (Singapore Airlines, 2011). Promotion The airlines company also renders several promotional activities to help gain the extended attention of the consumer groups around the world. The promotional campaigns generated by the firm work on rendering special holiday packages and offering additional discounts to the corporate class passengers. The consumers are encouraged to avail such discounts and offers through participating in lucky draw campaigns where exciting prizes are rendered to the people by providing the people visits to several attractive places around the world. Thus customers around the world greatly feel attracted to such services festive organised by the firm and go to enjoy such benefits in an encouraging manner. Promotional aspects help in attracting new pool of customers from newer market bases to avail the level of services offered by the airlines (Singapore Airlines, 2011; KrisFyer Promotions, 2011). People Singapore Airlines operates to help enhance the productivity parameter of the staffs involved in its operations. The staffs are adequately trained to gain high amount of expertise in regards to gaining flexibility to adequately transform them by keeping track to the external changes. Further the organisation also renders voluntary retirement schemes to the older and non-productive people in the concern to help the newer people gain further scope to rise up the organisational ladder. Similarly the concern also focuses to generate increased number of benefits to the consumers (Singapore Airlines, 2009, p.18). Process The Singapore Airlines operates on a very flexible process to help render effective service to the large number of consumers taking its flights. The entire operational process is divided along both the operational and non-operational or support staff. Singapore airlines thus work to render specialised services by dividing the entire work along several work groups which help to satisfy the organisational objectives (Singapore Airlines, n.d.). Physical Evidence The physical evidence parameters analysed in regards to Singapore Airlines shows the number of value additions rendered by the airlines company to augment the level of customer service rendered. The airlines company offers superb quality breweries to entertain the onboard passengers. Further value additions consist of helping the passengers get the service of booking tickets and seats on an online basis (Singapore Airlines, 2009, p.17; Entertainment, 2011). Financial Analysis of Singapore Airlines The financial analysis of Singapore Airlines can be incorporated as follows. It is observed that during the 2008-09 periods the company’s operations were greatly hit by events like huge rise in the petroleum prices and also a huge slump in the movement of both commercial and domestic traffic. The group as a total recorded a decline of around 57.5 percent during the period of 1990 while for Singapore Airlines the revenue declined by around 50 percent. Further the amount of operational expenditure of the firm was also found to cover the revenue aspect of the firm where the amount of expenses rose by around 9 percent. This rise was counted because of the increase in the price of fuel. The impact of the expenditure element was countered by the firm through reduction in the number of staffs and also through the elimination of the bonus system. On account of the above reasons Singapore Airlines’ profit aspect countered a decline by around 48 percent during the 2009 period as against the 2008 period. The financial position of the company can also be shown through graphical analysis as follows (Singapore Airlines, 2009, p.50-51). Figure 1 (Source: Singapore Airlines, 2009, p.51). Chapter 4: Conclusion Singapore Airlines is considered as the flagship carrier in the airlines industry of Singapore. This airlines company caters to both the local and international consumers by opening up sophisticated airports in Singapore to host both national and international carriers. Again the company renders large number of flight services in international zones like United States to gain a large number of visitors. Similarly Singapore Airlines also forms key strategic alliances with airline companies like Lufthansa to gain more enhanced exposure in international markets. Value addition services of the company helps the passenger traffic to book tickets and seats on the aircraft on an online system which thereby helps in enhancing the factor of consumer loyalty. In terms of promotional services Singapore Airlines helps in attracting the consumers to large number of events like competition and lucky draws which thereby helps in augmenting the interests of the consumer profile to take advantage of the flight services. Moreover the company also works on rendering continuous innovation to the product and service patterns by augmenting on the product patterns. Consumers pertaining to the business class can gain enhanced sophistication by reclining them on the seats and also in gaining large amounts of entertainment. Singapore Airliners however endeavours to draw maximum revenues by enhancing the price aspect of the flights. Further extra charge is also rendered by Singapore Airlines to the excess baggage taken up on board. Singapore Airlines focusing on the segment of sophisticated consumer groups is however reviewing its price policies to help encourage celebrity groups to largely avail the airline services offered by Singapore airlines. Still despite the operational activities of Singapore Airlines in gaining a large consumer base and enhancing its market structure the airlines company suffered largely from the event of recession. Owing to the recessionary event and increase in the price of petrol the company suffered from large amount of financial losses. The consumers also owing to recessionary trend shifted their focus to low cost airlines which thereby caused the revenue and profit factor of the firm to get adversely affected. It is found that Singapore Airlines got a huge slump in both its revenue and profit aspects in the 2009 period by countering losses of around 50 percent in respect to the 2008 period. Moreover the operational expenditure of the firm also covered the revenue earning potential of the concern thus making the company get stagnated heavily. Singapore Airlines in order to counter such increased financial pressure started working on the system of retrenching non-productive and old workforce from the organisational levels. This helped firstly in enhancing the productive parameters of the young workforce and also in lowering the manpower cost of Singapore Airlines to help counter new challenges. References Asia-Pacific Marketing Federation. (No date). Corporate Strategic Planning. [Ppt]. Available At: http://www.apmf.org.sg/Lt1--CorpStragPlanning.ppt. [Accessed on May 21, 2011]. Changi Airport Group. (2011). Changi Airport Singapore. [Online]. Available At: http://www.changiairport.com/. 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