Business Model Changes of Singapore Airline - Myassignmenthelp.Com

Question: Discuss about the Business ModelChanges of Singapore Airline. Answer: Introduction Management of the organization performs its functionalities on the basis principles, ethics and the standards in order to accomplish the tasks in an effective manner. Business organization consist of numerous departments and upper level management team control the other department in order to perform the task on the basis of the expectations made by the upper level management. For maintaining the smoothness in the functionalities of the organization, management controls and directs the other departments of the organization to perform their functionalities on the basis of rules, regulations, standards and principles. This report will focus over the managerial practices of Singapore Airlines and along with the managerial practices, objectives of the company, external environmental analysis, competitive analysis and SWOT analysis will also be covered. About the company Singapore Airlines Limited is a national carrier for the country with the motive to represent their national at the international level. The company was founded in 1972 and since then, they have developed their effective image in the international airline industry through rendering high qualitative services along with effective safety and security measures. With their existence at the international level, companys primary focus is over Australian and Asian markets. Singapore Airlines acts as the corporate branding figure for the nation and the company was ranked on the second position across the globe in terms of market capitalisation by the International Air Transport Association with the capital worth of US $14 billion. Singapore Airlines has huge resources along with the range of young fleet of planes. The group of Singapore Airlines includes various small and medium level companies engaged in the same sector. Singapore Airlines Airbus A380 was the largest passenger aircraft and i t was the first company to perform this act. In the same scenario, organization was ranked on the 10th position in terms of large number of international passengers carried (Singapore Airlines, 2018). Singapore government investment and Temasek Holdings are the owners of Singapore Airlines and Temasek Company holds 56% of the total market shares of the company. The company operates from Singapore Changi Airport. Objectives of Company Companys primary objectives are to provide qualitative air transportation services to its target audience. Along with this, company is also seeking towards the expansion and the growth in the international market. Currently, organization is performing their functionalities mainly in Asian and Australian market while to enhance the market share of the organization, expansion will be required. Along with rendering qualitative and exclusive services to its target audience, organization is also seeking towards the developing customer relations through which customer retention objectives could easily be attained. Singapore Airlines has quite effective goodwill in the international airline industry but to attain the competitive advantage in the market, organization needs to adopt certain unique strategies from its competitors (Camilleri, 2018). Other objectives of the organization are: To raise their revenues and the profitability; To develop effective customer relations; To raise the quality of their services as compared to their competitors; To lead the international airline industry in coming future. PESTEL Analysis Every organization needs to suffer from two types of environments i.e. internal and external. External environments include the macro environmental factors which are out of controllable from the management. The impact of the macro environmental factors over the business performance is huge in comparison with the impact of internal business environmental factors. Organization needs to perform PESTLE analysis in terms to match up with the external environmental factors. Internal environmental factors are manageable and controllable at the end of management of the organization but external environmental factors are not (Clarke, 2014). Thus, Singapore Airlines needs to execute the PESTLE analysis in relevance to analyse the market conditions of the target market as well as to adopt certain crucial measures in terms to reduce the impact of those factors from the performance of the organization. Following is the PESTEL analysis of the Singaporean market in relevance to the Singapore Airlin es Limited: Political National political frameworks majorly affect the operations and the functionalities of airline industry. With the political stability, Singaporean governments policies and the regulations does not impact over the international as well as over the domestic companies functionalities. They do not believe in trade barriers while they promote national and international companies to execute their functionalities in the Singaporean market. But as Singapore Airlines is owned by government bodies, thus, it is the duty of the organization to perform their functionalities on the basis of the policies and frameworks described by the management. Along with this, it is essential for the organization to operate its functionalities on the basis of consumers requirements. Singapore Airlines renders its services and products directly to the customers and it is the duty of the organization to manage its operations on the basis of governmental requirements (Dombrowski, 2014). Organization also needs to consider the governmental rules, regulations, policies and frameworks in relation with the customers requirements. Along with this it is also essential for the organization to get the support from the government bodies as the company is a representative of the nations flag at the international level. Thus, it is the duty of the organization to perform their functions on the basis of governments policies and along with this, it is the duty of the organization o set up their plans and the policies on the basis of standards described by the government bodies (Fan Lingblad, 2016). Economic In the airline industry, fuel cost plays crucial role and to perform the functionalities in a smoother manner, consideration of the economic conditions is must for the organization. The Singapore Airlines Limited is owned by the government and being the part of the governmental organization, it is the duty of the organization to maintain the prices through which all segments of the market could be approached. Governmental organizations are supposed to provide cheapest services to the citizens of their country and Singapore Airlines is a major part of the government organizations, thus, it is the duty of the organization to cut off their costs and profits in relevance with maintaining the affordable fare prices through which large segment of the market could be approached. Airline companies are already operating their functionalities on premium pricing strategies and government has imposed some regulations through which companies cannot overrule those impositions. Hence, airline compa nies are required to adopt the strategies through which the governmental as well as the market needs could be fulfilled easily and effectively (Heracleous Wirtz, 2012). Social Social trends have great impact over the functionalities of airline companies. Society plays essential role in the success as well as in the failure of an organization as they are the part of target audience which consumes or experience the products and services delivered and rendered by the organizations respectively. Airline services are bit expensive in comparison with the other modes of transport, thus, target market for the airline companies are limited to an extent. And the companies are required to adopt certain strategies which plays essential role in terms to increase the profitability or to maintain the profitability. With this, the market share of the organization remains constant and limited to an extent because availing the airline services are not affordable for the middle and lower class income segment groups (Heracleous Wirtz, 2014). In recent periods, airline companies have adopted certain crucial and unique strategies through which they are able to target the rest part of the market along with the high level income group. These strategies include providing discount offers on the fair prices, providing various benefits such as insurance and food facility within the flight, etc. This has generated the competitive business environment for the airline companies and this has also increased the option for the organization to enhance their market share by targeting middle and lower income groups. Singapore Airlines is leading the market in relevance with providing all possible airline services at cheaper rates in comparison with their competitors. Being the part of the government, it is the duty of the Singapore Airlines to contribute certain part of their earnings towards the social welfare and towards development of the society. Generation of the employment opportunities will also lead to the development of the society as well as increase in the economy of the country (Heshmati Kim, 2016). Porters five forces This technique is helpful in analysing the competition in the target market. With the help of this analysis, organization will be able to determine the micro environmental conditions in relevance with the competitors and their strategies. Outcomes generated from this analysis will help the organization to evaluate the effective measures through which competitive advantage could easily be attained along with determining the ways to become the leader of the target market. Industry Rivalry In airline industry, rivalry is intense and to manage the rivalry in the industry, Singapore Airlines is supposed to implement evaluation techniques in relevance with determining the current market trends as well as the consumers demands so that competitive advantage could be attained. The busiest routes of the airline industry face the intense rivalry situations. Such busiest routes majorly exist in the popular cities or famous cities for their attractions, culture and for unique activities (Joo Fowler, 2014). Along with it is also essential for increasing the efficiency of the organization through providing them unique experiences along with leisured travelling experience. The busiest route across the globe is Kangaroo Route and this route connects New Zealand, Southeast Asia, and Australia. Industry rivalry in this route is quite intense and to gain the leadership position and to gain competitive advantage in that market, Singapore Airlines Limited is supposed to develop unique s trategies along with effective managerial activities to attain their desired goals and the objectives (Luo, Olechowski Magee, 2014). Threat of Substitute Impact of threat of substitute for the airline services is weak in relevance to other factors because aeroplanes takes less time in comparison to the other modes of transport in travelling. But the fact of high prices also cannot be ignored. Apart from this, other means of transport are rail network, roadways and waterways. All these transport services took large amount of time in comparison with the airline services. But with the introduction of the bullet trains by Japan rail network is a great threat for the airline industry because it takes approximately same time in comparison with the airline services. Various countries had already adopted this idea from the Japan for moving towards the suitable development along with providing better and reliable experience to the citizens of the country. To avoid these kinds of circumstances, Singapore Airlines along with the other airline companies needs to adopt certain strategies for attaining their desired goals and the objectives (Mhlang a Steyn, 2017). Threat of new entrants This factor too does not create much impact over the existing business organizations in the industry. This is because entering into the airline industry is quite difficult as well as expensive task. Setting up an airline company requires huge capital investment along with highly qualified and skilled manpower. Whereas, some of the cheap airline companies have set up their market share and have affected the business of premium airline companies. Such companies are Air Asia and Jet Star. Thus, premium airline companies Singapore Airlines needs to decrease their fare prices in relevance to gain the competitive advantage in the target market (Min Joo, 2016). Bargaining power of customers With the entry of cheap airline companies, bargaining power of customers have been increased. This has leaded the premium companies to adopt appropriate pricing strategies through which the prices could be reduced and an effective market position could be acquired. To gain the customer base and to maintain the same, organizations engaged in the industry needs to develop some unique and attractive strategies. Bargaining power of suppliers Fleets, airbuses and other related services are being supplied by the outsiders to the airline companies. Thus, this factor consist a major role in terms of airline companies success and growth. Air transportation includes various unique services such as food, beverages and other leisured services. Companies engaged in production of fleets, boing and airbuses are facing duopoly while companies industries of manufacturing of engines are facing oligopoly. With the development relationships with suppliers, organization would be able to gain competitive advantage amongst the international airline industry (Nesset Helgesen, 2014). SWOT Analysis This is the strategy through which internal and external factors of the target market are evaluated along with the strengths and the weaknesses of the organization. Companys strengths, weaknesses are analysed and compared on the basis of external environmental factors such as opportunities and threats. With the help of outcomes generated from this comparison, companys survival is being evaluated in the target market. Strengths It is a strong airline brand in the domestic as well as in the international airline industry. They have a strong backing from the government. At the international level, Singapore Airlines is strongly present in Australia, Asia and in Europe (Sengupta Sengupta, 2014). Their customer satisfaction rate is high as well as it is the most preferred choice for the passengers. Weaknesses Singapore Airlines majorly rely over the international traffic. With the increase in the competition, market growth is decreasing rapidly for the organization. Opportunities In order to expand their network in the rest parts of the globe, organization could tie up with various other international and domestic airline companies. This will help the organization to enhance their market share along with increasing the revenues and profitability. Introduction of new and improvised fleets in relation with increasing the customer satisfaction. Threats Rapid fluctuations in the fuel costs are the major threat for the organization as it is affecting the profit margin of the company. Aggressive promotional strategies used by its primary competitors could reduce their market share (Vieira Loures, 2016). Recommendations Following are certain points which are recommended to the Singapore Airlines Limited for increasing the effectiveness and efficiency of their management and the managerial practices: In terms of market capitalisation and large number of passengers carried, Singapore Airlines is ranked amongst the top airline companies. Organization is supposed to maintain the same position along with they need to concentrate over acquiring the rest part of the market. Their hospitality services, premium services and qualitative products are their USPs. Being a premium airline brand, they have limited customer base. To maintain their unique goodwill in the market, management of the organization needs to execute the market analysis on regular basis along with determining the current market trends and consumers requirements in order to maintain their effective image in the target market. Organizational management is required to perform certain strategies through which the major issue of entry of cheap airline companies in the industry could easily be managed because it reduces the profit margins as well as the customer base. With the help of effective and efficient pricing strategies, organization would be able to gain the competitive advantage along with attainment of the desired goals and the objectives. Conclusion From the aforesaid information, it can be concluded that strong and effective management is very necessary for the every organization to acquire the satisfactory position in the target market. Under this report, Singapore Airlines Limiteds managerial activities were discussed. Apart from this, report also concludes managerial actions effectiveness in terms to control the internal as well as external environmental conditions. Further, report includes the recommendation part through which the growth and expansion related objectives could easily be attained. References Camilleri, M. A. (2018). The Marketing Environment. InTravel Marketing, Tourism Economics and the Airline Product(pp. 51-68). Springer, Cham. Clarke, A. P. (2014). Strategic analysis, valuation and market mechanisms: the 2012 Initial Public O ering and subsequent trading of Japan Airlines. Dombrowski, J. (2014).Business Model Changes of an Incumbent Player in the European Airline Industry: A Case of the Lufthansa Group(Bachelor's thesis, University of Twente). Fan, T. P. C., Lingblad, M. (2016). Thinking through the meteoric rise of Middle-East carriers from Singapore Airlines' vantage point.Journal of Air Transport Management,54, 111-122. Heracleous, L., 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., Wirtz, J. (2014). Singapore Airlines: Achieving sustainable advantage through mastering paradox.The Journal of Applied Behavioral Science,50(2), 150-170. Heshmati, A., Kim, J. (2016). Introduction to Efficiency and Competitiveness of International Airlines. InEfficiency and Competitiveness of International Airlines(pp. 1-14). Springer Singapore. Joo, S. J., L. Fowler, K. (2014). Exploring comparative efficiency and determinants of efficiency for major world airlines.Benchmarking: An International Journal,21(4), 675-687. Luo, J., Olechowski, A. L., Magee, C. L. (2014). Technology-based design and sustainable economic growth.Technovation,34(11), 663-677. Mhlanga, O., Steyn, J. N. (2017). Impacts of the macro environment on airline operations in southern Africa. Min, H., Joo, S. J. (2016). A comparative performance analysis of airline strategic alliances using data envelopment analysis.Journal of Air Transport Management,52, 99-110. Nesset, E., Helgesen, . (2014). Effects of switching costs on customer attitude loyalty to an airport in a multi-airport region.Transportation Research Part A: Policy and Practice,67, 240-253. Sengupta, N., Sengupta, M. (2014). Singapore Airlines: Gliding with People Excellence. Singapore Airlines. (2018). Accessed on 10th January 2018 from https://www.singaporeair.com/en_UK/in/home?gclid=EAIaIQobChMIx9GKtpvN2AIV0A0rCh03EAUHEAAYASAAEgKbLfD_BwEgclsrc=aw.dsdclid=CJqk-b2bzdgCFUmajgodj6kIbQ Vieira, D. R., Loures, P. L. (2016). Maintenance, Repair and Overhaul (MRO) Fundamentals and Strategies: An Aeronautical Industry Overview.International Journal of Computer Applications,135(12).