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Recommendation of options that are available for Singapore Airlines for their future strategy direction - Essay Example

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During the recent years, SIA have diversified into hotel chains as well as other travel and tourism sectors. It further implements geographic diversification…
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Recommendation of options that are available for Singapore Airlines for their future strategy direction
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Recommendation of Options That Are Available For Singapore Airlines for Their Future Strategy Direction Singapore Airlines (SIA) has been noticed to implement diversification strategies in its various business activities. During the recent years, SIA have diversified into hotel chains as well as other travel and tourism sectors. It further implements geographic diversification which has resulted in reducing the economic risk to a significant extent. Hence, from an overall perspective, it can be stated that the company has been focusing on its diversification strategies by a large extent in its traditional as well as contemporary performances. Besides, SIA possesses more than 20 subsidiaries which cover a wide array of services related to the airlines industry. These services include variety of services ranging from cargo facilities to engine repairing packages as well. In this context, it can be stated that SIA has been implementing product development strategy with utmost concern towards its long run competency and sustainability. The major subsidiaries of SIA in this regards are the SIA Cargo, SilkAir as well as Tradewinds Tours and Travels among others. In addition, SIA has also been implementing the market penetration strategy by developing the products along with the offered services on a continuous basis. In this regards, SIA allows discounts of almost 50% on the “Exceptional Value Deals” during the holiday seasons focusing mainly upon the seasonal travellers (Kenny, 2009: 153-196; Kumar & Phrommathed, 2005: 50-97).
However, in comparison to all the aforementioned strategies, SIA have been extensively concentrated on the diversification approach as its future strategic direction which is quite likely to influence a few noteworthy risk factors in relation to its operations. For instance, if a business organisation diversifies on a continuous basis and in an extensive way, it may result in increasing complexity at the operational level and likewise creating a negative impact over the productivity level of the company. Therefore, it can be advised that SIA should render equal importance to the product development strategies as well with the intention to fortify the product life cycle and simultaneously boost its profitability in the national as well as international market. This would facilitate SIA to develop its existing products and also aid the group to introduce new products for the current market. It is worth mentioning in this context that the company can also opt for market penetration and market development strategies. However, each of these strategic options is noted to possess certain limitations towards SIA.
For instance, market penetration strategy is not likely to be quite effective or necessary for SIA. It is fundamentally owing to the reason that SIA might have to witness fierce competition from the international players and thereby expose the company towards larger market risks. From a similar perspective, the company had been focusing on its market development strategies in the international forefront being allied with various international airlines service providers such as Air Canada, Air India, South African Airways and EGYPTAIR among others (Hirschey, 2008: 567-570).
Considering the aforementioned various facts regarding the market growth of airlines industry, it can be stated that the product development strategy would facilitate SIA in retaining its already huge customer base. Hence, it can be recommended that product development would be quite effective for the future growth of the airline service provider. The strategies of market development or market penetration as well as diversification would probably lead the organisation towards greater exposure to risks engaging huge amount of investments. Evaluating the currently applied strategy of diversification by SIA and the degree of risk exposure likely to be witnessed by the company owing to its massive diversity, it can be stated that the product development in its future strategic direction would prove as more secured and beneficial.
References
Kumar, S., & Phrommathed, P. (2005). New product development: an empirical study of the effects of innovation strategy, organization learning, and market conditions. New York: Springer.
Kenny, G. (2009). Diversification strategy: how to grow a business by diversifying successfully. United States of America: Kogan Page Publishers.
Hirschey, M. (2008). Managerial economics. United States: Cengage Learning. Read More
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