a. Critically assess the chosen organizations strategic capabilities and its current strategic position. 20 Marks
Singapore Airlines strategic position.
Singapore Airlines (SIA) is a national or the flag carrier in Singapore. It has evolved for a long time since its foundation in 1972 growing from a regional airline to one of the most respected and worldwide recognized passengers and cargo carrier. At its launch, this company had modest fleets that had ten aircraft, 6000 staffs and a network spanning across 22 cities in 18 countries (Airlines, 2013). This company has a modern fleet of aircraft. The airport where these airlines are base, Changi Airport, is usually voted as the world best airport. The mission statement of this airline shows that it exists to provide high-quality air transport and maximize shareholders returns. Innovation and investments are the reasons behind the growing reputation and profitability.
As Porter focused on that, Competing globally is a need as opposed to a matter of care for a couple of affiliations, this impacts the accomplishment of essentially every general affiliation will rely on how adequately they can fight on a comprehensive scale (Heracleous & Wirtz, 2012, pp. 479). This area would like to perceive the basic flow position utilized by Singapore aircraft obliged effectively, inside the period of globalization. In the transporter condition, Singapore carriers have always beaten its competitors. It has never posted a hardship on yearly begin, has satisfied immense and favored returns contemplated over its industry and has turned into various accomplishments presents for its association quality. This achievement has been the master by the relationship through the twofold method of the segment through association perfection, and movement joined with cost action among its mates. Singapore conveyor has accomplished sensible high ground and has constantly out played out its foes each through it three and half decade history (Arlines, 2013, pp.41). The key accomplishment to this might be said to be the way that it comprehends how to examine through two shafts which most affiliations acknowledge are particular.
The main driving forces for change inside an industry are outer components which make change the arrangement important to partners in that they are thought to be outside the ability to control of these partners. Main impetuses can incorporate changes in social, innovative, ecological, financial and political variables. An examination of the components affecting an industry is a general approach to start the business investigation, and such an investigation is utilized to build up the upper hand of the association to empower it to crush its opponents. (Zhong, 2012, pp.59). This is constantly done by the doormen five strengths system examination. The outside condition enormously affects the aircraft business (Johnson, 2014, pp. 207). There has been unsteady time for the aircraft business. It has been defied with a market decrease in universal tourism in the result of September 2011 psychological oppressor assault in the unified states and all the more as of late movement misfortune owing to the war in Iraq and a few fear based oppressor exercises.
b. Evaluate the internal and external environment of the organization chosen using SWOT and PESTLE respectively. Support your arguments with sufficient evidence that are well referenced.
Solid money related position with a high reserve.
Sizable market share
Solid and established R and D capacity
The organization elevates self-rule subsequently ready to react to change of condition rapidly
Solid human asset administration with fitness staffs that is profoundly energetic benefit situated and proficient.
Extensively new airplane fleet and the cabin with overabundance limit.
Very respectable in the business with many honors (Wu et al., 2013, pp. 35).
Low online presence on the Internet
Not great at level reconciliation with a couple of fizzled procurement.
No domestic market, income exceedingly subject to whole deal cross-country flights and premium class (Oum & Yu, 2012, pp.364).
The organization utilizes interior development methodology that eases back to increase measure.
Have abundance flying aircraft because of low requests.
Obligingly high amounts of money spent on promoting and marketing
The government is strong and limited confinement on the aircraft's operation enabling the opportunity to change.
Singapore has great association with other nation
Other nations are turning out from the budgetary emergency.
Singapore Tourism Board (STB) advancing MICE with great prospect of premium business explorer (Wirtz et al., 2008, pp.4).
Local culture underscores on collaboration, concordance, and persevering.
Low substitution on item advertised
Have high haggling control over the airplane maker
Terrorism influencing carrier industry
Fluctuating cost of oil.
Video conferencing picking up notoriety as the substitute for the business travels.
The budget carrier in the locale was getting build up and conceivable to wander into premium market.
Facing wild rivalry within the business with many equivalent size player
Commoditizing of flight benefits and diminishes in separation as contender getting up to speed with advertizing.
High bartering energy of traveler and travel agents (Merkert & Hensher, 2011, pp.686).
External environmental factors.
Pestle framework help understanding the political, economic, technological, social, legal and environmental factors that affect a business.
Political support or interference has an impact on the operation of airlines. Singapore airline carries the national flag, and it is viewed as representing the nation to other nations thus it receives government support and remains government owned. Withdrawal of this support by the government can lead to poor performance or operations failure. Political environment can also be viewed regarding a country political stability (Rothaermel, 2015). This stability favors the growth of airline business. Singapore is a stable country that has a low risk of political disturbance. The dominance of people Action Party promotes stability in this nation. Location of Singapore headquarters in this stable nation is a great deal that helps it to grow and expand
Since the company operates across borders, it is affected by the national and international economy. The major economic threat faced by this company is the increased cost of fuel which directly increases their operation cost. Politics in the Middle East has highly contributed to the increased cost of fuel. Some companies opt to pass this additional cost to customers while Singapore airlines bear the increased cost due to the pricing strategy they apply. Additionally, inflation is another factor that affects the operation of this business (Buhalis, 2004, pp.805 ). Inflation will increase the cost of operation and lower profits.
Looking at the trend in the demographic structure of Singapore, its aging population is growing at a higher rate than the young population. The aging people do not like traveling as compared to young people. This implies that if the trend continues, then there is the threat of reduced consumption of Singapore services. Additionally, the social trends like the change in customer preferences also affect Singapore Airlines (Bateman & Snell, 1999, pp.57). For example, the shift of preference from a premium type of travel to low-cost travel leads to increased low-cost carriers. Despite the premium positioning strategy that was highly treasured by this airline, it had to enter the low-cost carrier market to meet the needs of clients.
The airline markets are saturated, and therefore innovation is the only way to go to remain in the market and be ahead of the competitors. Suppliers in airline business do a lot of research and development to create new fleets and cabins with the aim of boosting sales and satisfying customers needs for conforming, prestige and security (Maria, 1996,pp.19). SIA has embraced technology in a recommendable way. It has the modern as well as the youngest fleet in the industry it also boasts of being the first airline to innovations such as reclining seats and seatback entertainment.
Singapore airline being a national carrier is likely to be affected by the regulatory framework. For example, after 2001 terrorist attack the government issued an order that all air travel must be screened. This policy impacted Singapore airline by adding operational cost. Additionally, different governments will come with different strategies and policies that have an impact on the aviation industry. Taxes for firms in Singapore are more favorable compared to other countries like U.S, England, and Japan which charges more than 30% corporate taxes. The agreement of landing in particular countries in discussed at the national level between governments and is highly influenced by legal policies of countries influenced (Heracleous, and Wirtz 2014).
Singapore airline contributes to global warming by increasing the amount of carbon dioxide in the environment. Recently people have raised concern over environment pollution and seek to have environmental friendly services. According to Heracleous, and Wirtz (2014), the preference for these environmental friendly services is likely to increase due to the set national carbon reduction targets. Some airline has begun to handle this issue, but Singapore airline has been responding slowly probably due to the challenge of striking a balance between costs and becoming environmentally friendly.
Porters Competitive Forces
Competitive rivalry within the industry-High
Singapore Airlines is facing high competition from existing local airline firms and international firms. Despite the high returns in this industry many airline companies including Singapore airline are still struggling to grow due to the high cost of fuel and overcapacity. When Fly Emirate launched non-stop Dubai to Auckland flight, they took the mantle of the longest flight which was once a bragging right of Singapore Airlines (Merkert & Hensher, 2011, pp.686). Additionally, the aggressive move by Qatar Airways of launching a flight to Sydney affected Singapore airline market. Competition can also be viewed by the route followed. There is an intense competition where routes are served well by different airlines.
The threat of new entrants-Low
This aspect of Michael porters analysis assesses the extent to which new firms can be accommodated in the industry (Schefczyk, 1993, pp.301The threat of new firms entry into the business is low. Traditionally the business was seen as capital intensive, and the one very few could afford to venture in, but recently, there are many sources of finances available to provide the capital required thus lowering the barrier. However, the industry is highly saturated, and only one or two firms are taken as a national flag carrier. This means that even if a new competitor comes in, it cannot receive government backing enjoyed by SIA (Aaker & McLoughlin, 2009, pp.57). Getting approval and license from various aviation organization and government department is hard and can take years which threats new entrants. Even if the threat of entry is low, some firms have successfully entered the market. Threats of substitutes-Low
Substitute products are the type of product that can be used in place of the existing ones. This aspect assesses the extent to which similar services can replace Singapore Airlines services or products. Availability of substitute goods...
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