Strategic Management Singapore Airlines Group

Question: Discuss about theStrategic Managementfor Singapore Airlines Group. Answer: Competitive Landscape of Singapore Airlines Group using the Five Forces Framework: The competitive landscape of Singapore Airlines Group (SIG) could be assessed using the five forces framework of Michael Porter, which are enumerated as follows: Threat of New Entrants: The Asia Pacific region is now encouraging free trade and airspace deregulation to create more opportunities. In addition, with the introduction of Low Cost Carrier (LCC), 60 new airlines have been operating in the Asian region at low cost for the cost-conscious travellers (Homsombat, Lei and Fu 2014).. Although LCC has not posed any significant threat to SIG, these airlines might target the premium market sector, which might affect business profitability of SIG in future. However, in the current market scenario, the threat from new entrants is relatively low. Threat of Competition: The major competitors of SIG in the Asia Pacific region comprise of Malaysian Airlines System, Cathay Pacific, Japan Airlines and British AirwaysThese airlines are adopting differentiation strategy by focusing on booking services and in-flight aids. In addition, these airlines have initiated frequent flyer program for retaining the existing customers, which would generate brand loyalty (Heracleous and Wirtz 2014). On the contrary, SIG has been providing superior in-flight services coupled with innovative system of entertainment. However, the competition is high in the industry, which might result in loss for SIG, if it fails to maintain its service quality. The competitive level is medium in the aviation industry of Singapore. Threat of Substitutes: The business travellers form the key customers for SIG, who look for better service quality by ignoring the cost structure. However, the technological advancements like video conferencing for meeting purpose renounce the business needs. In this context, Pearson, Pitfield and Ryley (2015) advocated that superior quality video conferencing could be conducted at an initial investment of $18,500 having low cost of maintenance. However, although video conferencing has emerged out as a strong substitute for meeting, there are other functions of business travels like inspection and contractual support. These functions could not be conducted through video conferencing. Thus, the intensity of substitutes is medium for SIG. Bargaining Power of the Buyers: Most of the customers visit the travel agents to buy flight tickets. These agents generate large portion of ticket sales in return of commission from the airlines. However, SIA has disallowed the travel agents to sell its flight tickets, which reduced the sales volume by 80% in India. As a result, it has compelled SIG to reduce the frequency of flight arrivals (Heracleous and Wirtz 2012). Thus, the bargaining power of the buyers is high. Bargaining Power of the Suppliers: SIG owns a subsidiary in the form of Singapore Airport Terminal Service to manage ground services like handling of baggage and supply of food and beverages inside the flight. Boeing and Airbus are the two major organisations from which SIG purchases its planes. Despite the absence of strong substitute, the demand has declined for these suppliers in recent times about 10% of the global fleet in store. Thus, SIG enjoys greater bargaining power over the manufacturer. References: Heracleous, L. and Wirtz, J., 2012. Strategy and organisation at Singapore Airlines: achieving sustainable advantage through dual strategy. InEnergy, Transport, the Environment(pp. 479-493). Springer London. Heracleous, L. and Wirtz, J., 2014. Singapore Airlines: Achieving sustainable advantage through mastering paradox.The Journal of Applied Behavioral Science, p.0021886314522323. Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-airlines strategyPricing and route entry patterns.Transportation Research Part E: Logistics and Transportation Review,63, pp.1-16. Pearson, J., Pitfield, D. and Ryley, T., 2015. Intangible resources of competitive advantage: Analysis of 49 Asian airlines across three business models.Journal of Air Transport Management,47, pp.179-189.