Strategic Management is a term that is non new, first used in the 1970 ‘s it was conceived that a squad of strategic contrivers would come up with strategic thoughts to sell to determination shapers. It is all about designation and guideline used by the directors in order for the company to hold a competitory border over the competition. Joel Ross & A ; Michael Kami ( Fred 2011, 35 ) mentioned that ; Without Strategy, an organisation is like a ship without a rudder, traveling unit of ammunition in circles. It ‘s like a hobo ; it has no topographic point to travel.
Harmonizing to Wheelen and Hunger ( 2006,3 ) A set of determinations and actions that are used to rent the public presentation of a corporation can be defined as Strategic direction. The procedure of this would take into history the scanning of external and internal environmental factors, long term and strategic planning for scheme preparation every bit good as the execution and rating and control procedure. Wheelen & A ; Hunger ( 2006,3 ) strongly focused on the analyzing and evaluating of external chances and menaces compared to the company ‘s strengths and failings. A SWOT ( Strength, Weakness, Opportunities and Threats ) analysis is an ideal tool for strategic directors to program for both predictable and impracticable eventualities.
In the point of Dess and Miller ( 1993 ) , the combination of three major interconnected activities ; strategic analysis, strategic preparation and scheme execution can be called strategic direction. These activities are a uninterrupted procedure that helps evaluates and controls the company and the industry it is in, benchmarks the competition and set realistic marks and schemes to run into its bing and possible competition.
Lamb ( 1984 ) states that strategic direction is a uninterrupted procedure that evaluates and controls the concern and industries the company is in ; it besides assesses the rivals to put ends and schemes so reevaluates them every quarterly or yearly to make up one’s mind on the execution of the scheme is successful. It so reevaluates the if there is any new factors such as engineering, competition, economic market, societal, fiscal and even political environment that can be used to make a new scheme.
As a drumhead, Strategic Management and Planning is the apprehension of the procedure of scheme preparation, execution and rating. For company an organisation to derive the border over its competition regardless of size, graduated table ; each organisation needs to hold a well planned strategic direction in order to endeavor and vie in the market while optimising its potency for tomorrow ‘s tendencies of today.
Background of company
The birth of Singapore Airlines was from Malaysian Air Limited where it foremost started in 1947, because of political grounds, the company was renamed to Malaysia-Singapore Airlines and eventually the company split its portions to Malaysian Airlines System and Singapore Airlines in 1972 on which Singapore Airlines is owned by Singapore province owned investing house ; Tamasek Retentions
Singapore Airlines was forced to concentrate on the international market that was subjected to intense competition because there was no domestic path available to after the separation. The hard start of was one of the factors that drove Singapore Airlines driving spirit to vie and dedication to stigmatization. It started the stigmatization scheme by prosecuting a Gallic haute-couture interior decorator in 1972 to come up with a particular version of the Malay Sarong Kebaya for the air hose air hostess uniform and following a stigmatization ‘Singapore Girls ” that provide top quality in-flight cordial reception. This characteristic became one of the most accepted signatures for Singapore Airlines.
The human resource direction country was given a supporter with an investing of 20million for its preparation installations. With a good selling scheme and sound backup, the return was shown at 1973 when SA was ranked 3rd for the Asiatic part. But in 1973 to 1977 period was forced to cut cost due to the billowy oil monetary values. Singapore Airlines joined its operations with British Airways to supply its Concorde services but was terminated in 1980. Even though the coaction was a failure, it took advantage of the selling run to do itself known around the Earth. At the same clip, Changi Airport was constructed therefore taking the industry to higher service criterions. With all that in topographic point Singapore Airlines became the top preferable Airlines for the Asia Pacific part in 1981.
Singapore Airlines experienced a steady growing rate in the 1980s with enlargement of its fleet and paths, it was privatized in 1985 and listed in the stock exchange with Tamasek Holdings having a 63 % of the company and was bit by bit reduced to 54 % in 2008. SA underwent alterations in the 1990 ‘s with alterations made to provide for the lower cost market cleavage every bit good as the SA technology focal point on increasing productiveness and chase of better chances for concern. The globalisation in 1990 besides made the air hose expand overseas every bit good as puting on other companies. With its strong fiscal backup, it spend to restitute its fleet, therefore giving benefit to the air hoses during crisis leting the air hoses to hold more bargaining power over its provider ( Scott, 2008 ) To day of the month, SA group has provided a broad assortment of services for the air power industry from rider, lading, terminus, enginnering, preparation and even tour services as a whole. The air hoses operates over 36 states with hebdomadal flights to them.
The organisation is divided by map and its disadvantages as the low duty of the bottom staff every bit good as the compartmentalisation on its troughs. In order to undertake this, SIA have made their organisation chart more planate with fewer degrees of hierarchy in the organisation, therefore leting authorization and creative activity of a flexible and yet dynamic concern that allows its employees to do determinations to leads to occupation enrichment. SIA besides encourages independency and encourages its senior staff to develop and moo its junior employees to do determinations.
To get the better of the occupation compartmentalisation, not proficient troughs are rotated on the occupation and therefore let them to hold a better position of the organisation for a better image. The SIA direction besides stresses for the importance of keeping a healthy and good work civilization. Teamwork and coaction is placed high on importance by the company.
With the growing of the company and enlargement of gross revenues office to over 80 states, the gross revenues operations have been divided to geographical countries. To get the better of the job of control, the company focuses on the terminal consequence nonsubjective authorising its site directors to hold flexibleness and to do accommodations based on the state of affairs. Full power is given to the abroad regional general director to do determinations and to react quickly in order to cover with local jobs and to custom-make the operations to accommodate the local scene.
In general, SIA is easy deconcentrating its organisational construction and it encourages autonomy leting faster response to the concern therefore making chances that are critical in the fast and dynamic air hose industry.
4.0 Analysis of External Environment
The political environment of Singapore is stable with its dominant political party People ‘s Action Party ( PAP ) commanding the authorities since the independency. Singapore authorities has allowed the freedom in corporate administration and has small set limitations to the industry. Singapore Airlines make 90 % of the determination on its ain and has merely act upon the assignment of the manager over the company ( Sikorski, 1995 ) . Singapore Airlines was allowed to emphasize on net income in comparing with public or societal duty and was even backed by the authorities during its retrenchment pattern during the economical crisis. ( Sikorski, 1995 )
With a strong foreign policy that maintains good relationship with 175 states, Singapore has a peculiar good relationship with immense economical states such as France, United Kingdom, and Germany. It besides has a common free trade understanding between Japan, Korea, Australia, New Zealand, India, United States of America and late with China in 2008. With Singapore subscribing the Gulf Cooperation Council-Singapore Free Trade Agreement in December 2008, it embarks to construct strong ties with the in-between east states every bit good.
Singapore is a stable base for the operations for SIA comparing itself to other parts in the Asia Pacific that have seen unrest over the recent old ages. Terrorism qui vives affected some states in the Asia part with India ( 2008 ) and Pakistan ( 2009 ) hit with the doomed of 100s of life. The touristry industry for Thailand was affected in 2008 during the protest and heavy inundations every bit good as the Tsunami event that happened in Langkawi, Malaysia every bit good as Thailand that affected the inflow of tourer at that place. There was besides the public violences in China and the Korean Missile crisis that consequence the Singapore Airlines to re-route its flight to other locations.
Fiscal Crisis in 2007 affected many states over the universe that brought recessions to most of the affected states. This slum lasted through 2008 that made the planetary fiscal establishments really cautiousnesss on its loans of money and many companies had to underwent a cost film editing step to remain afloat. The IMF predicted the regeneration of the universe broad economic system by 2009 and it the up market tendency has steadily grown from at that place.
The Singapore Tourism Board ( STB ) besides contributed to advance Singapore as a finish for MICE ( Meetings, Incentives, Conventions and Exhibitions ) . In SGD 90 Million BOOST ( Constructing on Opportunity to Strengthen Tourism ) plan was launched in February 2009 and was followed up in October with an proclamation for a new Tourism Compass 2020 roadmap to turn touristry 2015, with the end to put Singapore as the taking metropolis for MICE ( STB,12 Oct2009 ) . The growing was farther spurred by the edifice of two incorporate resort undertakings, Marina Bay Sand and Resort World at Sentosa. Singapore has besides continued to host the Formula One Night Race and with all this factors certainly has a positive impact for the travel and touristry sector for the state.
4.3 Social Cultural
Singapore ‘s population comprises of more so 75 % Chinese, followed by Malay and Indian ; the chief faith of the state is Buddhism, Islam, Christian, Taoism and Hinduism. Having a rich Asiatic civilization in the state, Singapore is one of the most westernized states within Asia. With the turning China economic system and its unfastened door policy ; Singapore has landed a great pool of foreign labour geting from China. This in return has created a cultural struggle among many Singaporeans. With a extremely diversified civilization with stopping point to 35 % of its population is non citizen residing in the state, ( 25 % of is foreigner and 10 % are lasting occupant ) ; Singapore can be considered as an immigrant state. Although holding high non-citizen to citizen ratio, the state ne’er stops to advance foreign endowment and believes that if the immigrant policy were to be stopped, Singapore would confront a deficit of quality labour.
Having a strong Chinese influence over its on the job civilization that has made it a civilization of high in power distance with the lower employees accepting the subsidiaries places that seldom inquiries the directions determinations. The on the job civilization besides stresses on good squad work and keeping group harmoniousnesss. ( Warnstam,2007 ) . This has made Singapore to go a really concerted employee to employer relationship and its labour brotherhood is in good footings with companies throughout.
The growing in the use if Internet around the Earth has prompted the growing of customized web references to be used around the universe. This has besides given the potency for the use of Chinese characters to organize the web reference ( Choe, Oct 2009 ) . With the outgrowth of such technological promotion, the electronic devices has besides evolved to go more portable with increased public presentation and now about every family in Singapore would hold a portable laptop, manus phone and digital cameras loaded with individualized music, games, exposure and picture.
The growing of such engineering has prompt an enlargement of invention over the past decennary. The development of high velocity webs and compaction has allowed faster transportation of informations and transportation rate, ensuing in the handiness to hold high quality existent clip picture conferencing with people around the Earth from the office or even without go forthing the house. This has made it a really good replacement for companies to utilize alternatively of holding to direct its employees for concern traveling. ( Yu, 23 Jun 2009 ) .
5.0 Evaluate Current Strategic pick and deductions
5.1 Analysis of Current Strategic Position
5.1.1 Fiscal place
Singapore Airlines has maintained its net income over the old ages, the group has maintained its net income even through the 2008 fiscal crisis. After the growing in 2009 the group assets are deserving SGD 22.04 million and debt of SGD 1.077million with an equity debt ratio of 0.08. With a general modesty of SGD 11.264 million the company is poised to be able to prolong its operations in any instance of crisis. ( SIA, Annual study 2012 )
5.1.2 Product place
( Million )
Entire ofA AAPA member
Table 1 Comparison of RPK
Airlines market size can be measure by Revenue Passenger-Kilometer ( RPK ) . Having based in Asia Pacific part, SIA, Cathay Pacific and Qantas all falls into the same class of medium cost, developed air hoses. These air hoses have similar offering and monetary value degree. It can be seen that SIA, Cathay and Qantas have market portion of similar size [ AAPA, 2009 ] .
The company is graded figure two in Skytrax Best air hose award ; the air hose is in the top five ranking for 10 out of the 12 award Skytrax have. The air hose has the Best 1st Class and best in-flight providing award in 2009. The lone portion the company do n’t hold a ranking is on the airdrome sofa service [ Skytrax, 2009 ] .
5.1.3 Selling capableness
The initial distribution of SIA is chiefly by the travel agents or through internet engagements, SIA has come a long manner by supplying a ticketless system for its riders that even allows embarkation every bit good even for linking flights with its spouse air hoses ( SIA,2009 ) . SIA besides engages societal networking web site in Facebook though rather limited in its presence. This is a drawback with the current tendency of younger coevals who associates more with societal networking sites.
Another factor that is a little disadvantages for Singapore Airlines is that the sphere www.sia.com and www.sia.com.sg is non owned by Singapore Airlines, but to antagonize this, they company has engaged to actively print itself as the preferable hunt referee if anyone hunts for SIA online. SIA has besides made good arrangement in the hunt engine for utilizing the cardinal universe “ Singapore air hoses ” and “ Air Ticket Singapore ” which prompts SIA at the top of the hunt list.
5.1.4 Organizational construction
The organisation is divided by map and the disadvantages of low duty for the employees at the underside every bit good as the compartmentalisation on the directors. To get the better of this, SIA has level organisation chart with few hierarchal degrees for its organisations, this enables autonomy and make a more flexible but yet dynamic concern that empowers its people to do determinations and lead to better occupation satisfaction. The publicity of independency and promoting its senior employees to develop and give opportunities to the junior forces to do determinations are a cardinal factor for SIA.
Non proficient direction forces are rotated on occupations and this gives them to hold a broader position for the occupation. This is farther beef uping by the emphasis on the importance of holding a good and healthy work civilization for the company. Great importance is stressed on holding good squad spirit.
To get the better of gross revenues operation issue, SIA has focused on terminal consequences while giving its site directors to exert flexibleness to do necessary alterations based on the state of affairss. The full power is given to its abroad regional general director to guarantee fast response clip for local issues and a more localised concern operation to site the clime. The company focuses on the growing scheme that focuses more on profitableness instead than size, therefore leting slow and steady growing with opportunities for leaders to be groomed decently.
In general, the organizational construction of SIA is decentralise encourages autonomy leting speedy response to concern dainty and chance which is important in the air hose industry which are really fast and kineticss.
5.1.5 Human Resources
SIA has a strong accent on human resources. The demands for entry degree to the company is merely for sheepskin holders are accepted, these employee would so travel through the enlisting procedure. After the assignment, these cabin crew is trained for 15 hebdomads, 2 times longer the industrial criterions. The SIA employees have a 6 month probation that needs to be reported continuously by their supervisor with a verification rate of 75 % while 20 % will be on extension. These preparations are changed sporadically to set to demo the clients outlooks. While on the occupation, the employees are besides required to prosecute in assorted voluntary community services, humanistic disciplines and cultural activities.
Refresher classs will be available for employees leting 3 to 4 yearss per twelvemonth, this is a signifier of motive for the employees to prosecute in ego acquisition and the employees will be accountable for their ain growing and development. Consequences from these rigorous preparation has been obvious by bring forthing Stewardess that have high regard, motivated and capable in managing the clients in the company ‘s best involvement ( Heracleous and Wirtz. 2009 ) .
The focal point on endowment signifier within the company, the company focuses on development of the human capita given developing disbursement of SGD100million for its employees. The company besides offers scholarship plans for enrolling direction trainees from the universities.
5.1.6 Condition of installations and equipment
Having one of the newest fleets in the universe, with an mean age of 6 old ages, Singapore Airlines is one of the most updated planes compared to the world-wide norm of 15 old ages ( Prystay, 28 Aug 2009 ) . By following the newest planes and engineering this impacts in the decrease of care and gasoline cost. Other than that, SIA besides went through an upgrading of its plane cabins to supply clients with the most updated amusement systems and a better seating agreement.
Training equipment for its pilots is besides provided from the SGD 1 million flight simulator that is capable of imitating the high height scenario. SIA besides updated its preparation centre in 1999 to guarantee the enlisting is capable to ease a better and efficient preparation environment.
Overall the air hoses does hold a great preparation faclilities for its forces every bit good as their committedness to conveying top quality service with a strong fiscal background but because of the fiscal crisis in 2008 and the deficiency of demand over supply, SIA is loaded with surplus aircraft that has non been utilized.
5.1.7 Past aim and schemes
SIA corporate degree uses a diversified scheme whereby it expands its concern to air hose catering, airport terminal services every bit good as into aircraft care. These double scheme in cost leading and distinction enables SIA to hold first-class cost efficient service through high concern efficiency.
SIA has secured its high concern competency through the executing of five organisational systems. The first is the structured service development and design that allocates dedicated sections for its sweetening of service and thorough testing to guarantee that there will be a quality service that will be able to run into the latest client ‘s outlooks.
Second is the focal point on consumer tendencies over the old ages, with a specific section that proctors closely to guarantee that invention is tailor to concentrate on bettering and enabling a cost effectual and extremely productive service invention. The focal point will besides be on the company ‘s weak point, accommodating the best patterns from other successful developments while cut downing the cost and hazard involved for the invention.
The 3rd set is the focal point on a net income witting civilization, with the instruction of its forces on the precedence of net income and client satisfaction. SIA besides focuses on a wages based system that gives proper acknowledgment to employees based on their public presentation to promote squad work and productiveness while cut downing wastage.
The 4th is the end for the organisation to accomplish success through the variegation and substructure of its subordinates. These integrating allows the focal point and control that will heighten the cognition while decrease of cost at the same clip. The direction of its subordinates is based on a clear outlook that enables the subordinates to be subjected to market subject.
The last focal point for the company is the development of its forces through preparation and development while promoting the development of a direct ego uninterrupted larning system to hike their ego regard.
The overall schemes that SIA has adopted has made the company to hold a high competency nucleus with the overall ability to accomplish a differential offering through exceeding degrees of efficiency ( Heracleous et al 2009 )
6.0 Strategic Potential & A ; Justifications
Choices for scheme for SIA should be based on the logical elements for the procedure and have a cardinal function. The company should concentrate their picks of scheme through based on the internal and external factors while taking into history its nucleus competence to endeavor for profitableness and service excellence of its forces.
Strategic Choices for Singapore Airlines
Business Level Strategy
Corporate Level Strategy
Direction and Method of Development
Scheme for competitory advantage
Adhere to authorities ordinance and satisfaction
Internal preparation and development
Net income mensurable success for schemes
Diversification in market
Creation of value added services to derive competitory advantage
6.1 Business Level Strategy
Monetary value Based Strategy
This scheme takes into consideration of the merchandise to monetary value to derive a competitory advantage. There are many low cost air hoses company as of this minute that is carry oning concern in the Asia part. This causes the market to be really competitory and Singapore Airlines is one of such company that faces challenges. Low cost air hose companies such as Air Asia is one of the rivals that are concentrating on the use of monetary value based scheme to capture a market portion in the current market.
Acceptable and executable pricing scheme:
The focal point for the monetary value based scheme is of import as the current completion from the low cost air hoses besides focuses on the same paths of travel while supplying a lower air menu. One of such paths traveled is from Singapore to Bangkok, from this illustration, Air Asia is selling its seats for a unit of ammunition trip for a monetary value of $ 150 while compared to SIA that cost $ 500. Because of this the company is losing money as client tendencies are now easy exchanging over the low cost seats.
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4.2 Corporate Scheme
Direction Policy Matrix
Used to mensurate the wellness of the industry for the Asiatic parts and the capablenesss of Singapore Airlines. Below is the representation of Singapore Airlines in comparative to Air Asia ad MAS in the Asiatic Region.
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Beginning: Johnson G, Scholes K. 2005. P 320
Acceptability & A ; Feasibility of Directional Policy Matrix
From the analysis it can be seen that the market positing of Singapore Airlines is aimed towards the in-between concern category strength that offers a extremely attractive market. The bargaining power, menaces for replacement and competitory competition is high for the Singapore Airlines. In the event of a cost addition for jet fuel to USD 115/barrel, the provider has the upper manus the the dainty of replacement is potentially high for the market. For this the feasibleness and credence of a directional policy matrix for Singapore Airlines is High.
6.3 Directional and Method of Development
Through the analysis of the internal and external environment, the coevals of a TOWS based matrix. This will enable Singapore Airlines to concentrate on the strategic options available to provide for any possible alterations or adapt schemes to farther beef up its market portion while restricting its failing.
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Actioning the strength and chance for Singapore Airlines, there is possible for market variegation. To get the better of the possible dainties, SIA can hold a amalgamation or acquisition with certain air hose companies. Avoidance of failing for Singapore Airlines can follow a cost leading scheme. The air hoses can develop their internal factors to avoid the dainties and failings.
The current air hose industry for the Asiatic part is extremely competitory. There are many air hose operations in the part and one of such competition comes from the low cost air hose Air Asia. Air Asia flies twice daily from Malaysia to Guangzhou. Currently Air Asia has 86 paths that offers no frills service and has garnered broad acknowledgment from the China market comparing to Singapore Airlines which has 88 finishs in 38 states. Singapore Airlines would necessitate to beef up and diversify its market by be aftering out more executable paths to high concern locations and take a competitory advantage though enlargement of the Asiatic market.
Amalgamation and Acquisition:
Singapore Airlines needs to hold a strong apprehension on its competition and to avoid the dainties they possess. With their strong fiscal background, the potency for amalgamation and acquisition is a great pick for Singapore Airlines. Presently there are two national bearers that are seeking to restrict Singapore Airlines to entree their place market therefore decelerating down the growing for the air hose. Because of this Singapore air hoses joined the Star Alliance to take advantage of its international scheme. This is besides boosted by the investing of SIA groups into China and India to guarantee strategic confederations with the local organisations for their lading divisions, airdrome services, enginnering and catering.
During the old old ages, Singapore Airlines recorded a low plus turnover ration in comparing with its rivals. Because of this, the weaker plus turnover ratio has a possible to demo that the companies ineffectiveness to use the assets to bring forth net income and will finally take to the diminution in the groups growing. Singapore Airlines can accommodate to this by utilizing better usage of information engineering to heighten its services to the clients and addition back better response and efficiency. Singapore Airlines web site is now one of the most beforehand and user friendly in the industry that offers the clients to look into their agendas, purchase tickets, cheque in and pull off their histories every bit good as even taking the repast for their flights. Because of this value added service, the company is able to farther keep its market portion and easy cover up the losingss by making a portal for clients and possible clients to interact with Singapore Airlines. The efficient usage of IT has proven to significantly cut down the cost and enhance service degrees for Singapore Airlines.
Singapore Airlines is the national bearer for Singapore and is one of the industry leaders in Asia. Currently the operations path carries Singapore Airlines to South East Asia, East Asia, Europe, Middle East and the Australia. The analysis for the external factors indicates that Singapore Airlines does confront some barriers due to the international economic and political sector. The monetary values of oil over the old ages have been really volatile and would play a major impact on the profitableness of the air hose industry. Other than that with some ups and downs in the economic system and the growing of high velocity webs through the use of information engineering has played an impact for the overall public presentation in the air hose industry in general with people become less nomadic piece still being able to work with their opposite numbers across the Earth.
The internal factors with the successful stigmatization of Singapore Airlines is one of the pulling factors that is able to prolong its competitory border every bit good as with strong direction background that guarantee a quality of service for its clients gives the company its nucleus competences. For Singapore Airlines to maintain evolving towards the new market tendencies, the company should take into history the internal and external milieus.