Contents (SIA) was incorporated as a wholly-owned subsidiary
Contents 1. Introduction1 2. Company background1 3. Business Strategy1 4. Stakeholder Analysis3 5.
Environmental and Organization Audit5 6. Strategic positioning for SIA8 7. An ability to think strategically for SIA10 BCG’s growth / share matrix11 8. Strategic plan for SIA12 9. Conclusion14 10. References14 1. Introduction This report will outline Singapore Airlines (SIA) business’ environment to aid in its future strategy formulation and planning.
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Firstly, this report will analyze the business environment of the organization, which is to be considered in its strategy formulation.Next this report will explain the process of strategic planning that is to be implemented in SIA. 2. Company background The Company (SIA) was incorporated as a wholly-owned subsidiary of the Singapore government through Temasek Hldgs (Pte) Ltd on 28 January 1972 as a public company with limited liability.
Its history began in 1947 when a twin-engined Airspeed Consul under the Malayan Airways Ltd’s insignia started scheduled services between Singapore, Kuala Lumpur, Ipoh and Penang.Malayan Airways Ltd grew steadily and by 1955, international services were added to its operations. With the formation of the Federation of Malaysia in 1963, the airline was renamed Malaysian Airways Ltd. In 1966 the governments of Malaysia and Singapore acquired joint control of the airline, which was then renamed Malaysia-Singapore Airlines Ltd. In 1971, MSA was restructured into 2 entities; Malaysia Airline System Bhd and SIA.
SIA is one of the world’s most successful airlines, with the distinction of having one of the youngest and fastest growing fleets in the world.As at end March 1999, SIA was operating 572 passenger flights a week out of Singapore. Its route network, including Silkair’s and codeshare services, covered 110 cities in 42 countries. In 2000, the Company bought 49 percent of Virgin Atlantic airline for US$950 million. 3.
Business Strategy The definition of business strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives. Strategy is management’s game plan for strengthening the performance of the enterprise.It states how business should be conduct to achieve the desired goals. Without a strategy management has no roadmap to guide them. Creating a business strategy is a core management function.
It must be said that having a good strategy and executing the strategy well, does not guarantee success. Organisations can face unforeseen circumstances and adverse conditions through no fault of their own. The strategy needs to be frequently reviewed against prevailing external and internal environment.This is where business intelligence comes in where you need to constantly monitor how the strategy and the objectives are being executed.
Some experts claim that a strategy should be designed to provide competitive advantage for the organisation. Context of SIA business strategy : *Mission: Every business has its own mission, SIA also have no exception. The priority mission of SIA is to serve great servies, bringing the joy of flying to everyone. * Vision: The vision is always beside the mission, it’s what the company wants to become, the future aspect of this business (BPP, 2009).Vision of SIA also has established since its opening stage : “We are the best flying brand, The most endearing brand , SIA is truly a GLOBAL BRAND “ and “We will lead in flying industry at all times”.
(SIA, 2009) * Goal: Their goal is also made clear at this time: providing the best flying quality and services to customer and expanding to global market. * Objectives: Maintain its best position for airlines company at next 5 years from 2011-2015, to make sure the service quality at a high level. And provide a safety travel for passenger.Building a good relationship with suppliers and change aircraft every 5 years. *Strategic intent : Strategic intent is the process of inspiring SIA intent to achieve its vision , also is the immediate point of view of a long term future that company would like to create (Alagse, accessed 2009). The main tenets of strategic intent planning are direction, discovery and destiny.
According to Tanmantiong, when SIA first ventured into the flying business over 30 years ago, there was only one thing they were sure of, they were committed to become number one, to be the best and to be known worldwide . Core competencies: Core competency of SIA is providing affordable products that suits everybody’s demand. Additionally, SIA have employees working happily and efficiently, and the corporate 5F’s, that comprises of friendliness to clients, flavorful food, flexibility to meeting client needs, and focus on the quality of the flights ( New WordPress Design, 2009) * Strategic architecture: strategic architecture is also one important part in making clear objectives as above.Base on that basis model below, the structure of SIA is made clear *Strategic control: Management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.The management likewise discloses to the Company’s audit committee and to its external auditor: (I) all significant deficiencies in the design or operation of internal controls that could adversely affect its ability to record, process and report financial data; (ii) material weaknesses in the internal controls; and (iii) any fraud that involves management or other employees who exercise significant roles in internal controls.
Their chairman said “Often check how about its finance statement monthly and annually is a good way to know how their business performance, which this trend is appropriate or not. ” 4. Stakeholder Analysis A stakeholder analysis is very important in SIA because all projects depend on selecting stakeholders with whom they can jointly work towards goals that will reduce or reverse the threats to your key conservation targets.
Power/ Interest matrix (odi, accessed 2009) A stakeholder analysis can help SIA identify: The interests of all stakeholders who may affect or be affected by the project; • Potential conflicts or risks that could jeopardize the initiative; • Opportunities and relationships that can be built on during implementation; • Groups that should be encouraged to participate in different stages of the project; • Appropriate strategies and approaches for stakeholder engagement; and • Ways to reduce negative impacts on vulnerable and disadvantaged groups. The full participation of stakeholders in both project design and implementation of is a key to – but not a guarantee of – success.Stakeholder participation: • Gives people some say over how projects or policies may affect their lives; • Is essential for sustainability; • Generates a sense of ownership if initiated early in the development process; • Provides opportunities for learning for both the project team and stakeholders themselves; and • Builds capacity and enhances responsibility (Assets.
panda, accessed 2009) In addition, we also can see their objectives bases on their influence, as following table : Stakeholder| Objective| Power & Influence|Shareholders| Share price growth, dividend| Election of directors| Employees & unions| Salary, job security, job satisfaction| Staff turnover, strike| Customers| Reliable supply, value for money| Revenue is derived from customer| Stakeholder analysis, Business strategy, George, access 2009 Besides, stakeholder mapping help us identify what stakeholder objectives. Type| Stakeholders| Stakeholder mapping| | | Key players| Keep satisfied| Keep informed| Minimal effort| Internal stakeholder| Management| ? | ? | | | | Employees| ? | ? | | | Connected stakeholders| Shareholders| | | ? | | Customers| | ? | ? | | | Competitors| | ? | | | | Suppliers| | ? | ? | | | Bankers| | | ? | | External stakeholders| Central government| | ? | | ? | | Local authorities| | ? | | ? | | Professional groups| | ? | | ? | | Pressure groups| | ? | | ? | Stakeholder mapping, , Business strategy, George, access 2009 5. Environmental and Organization Audit External factors include macro factor and micro factors. Marco factors are one that affects the organization indirectly; there are (PESTEL) Political, Economic, Social, Technological, Environmental and Legal (Oxford University, 2007).Micro factors are those which affect the organization directly it involves customers, competitors, suppliers, new entrant and public, it might be called five factors (Learn Marketing, accessed 2009). PESTEL factor: Economic environment also affect on total business performance. By this reason of entering WTO, the economic situation in Singapore recent years have many changes.
By the influence of inflation, economic crisis on UK 2007, it leads to a lot of fluctuations , thus making plan for operating long time in Singapore where this national always is influence by international changing is very hard.Social factor, one important part that SIA want to expand their operation is about the behavior of customer. PESTLE analysis plays an important role in the value creation opportunities of a strategy.
However they are usually outside the control of the corporation and must normally be considered as either threats or opportunities. Remember macro-economical factors can differ per continent, country or even region, so normally a PESTLE analysis should be performed per country (12manage, 2011). PESTLE Analysis|Political| Open Sky, IATA, Security| Economic| Economic picking up, Bilateral, Agreements, Corporate| Social | Globalization, Desire for Travel, Disposable| Technological| Airbus, WIFI operate in A380,| Environmental| Pollution, Global warming, War| Legally | Trade barriers, New airlines are easily allowable| Porter’s Five Force analysis Analysis the industry competition should use porter’s 5 forces to analysis.
Michael Porter provided a framework that models an industry as being influenced by five forces.The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates (12manage, 2011). 5 Forces Factor for SIA| Threat of substitutes| Significance| Threat of new entrant| High| Threat of bargaining power from supplier| Low| Threat of bargaining power from customer| Low| Threat of competitor| Very High| SWOT analysis: “SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm.SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategyLocation of Factor| TYPE OF FACTOR| | Favorable| Unfavorable| Internal| Strengths * Diversified geographical spread mitigates business risks * Youngest fleet of aircraft * Strong financial performance * Employee productivity| Weaknesses * Unbalanced business portfolio * Lack of scale| External| Opportunities * Global travel and tourism industry * Growing air cargo industry * Changi Airport Terminal 3| Threats * Rising aviation fuel prices * Increasing competition from low cost airlines * Foreign currency fluctuation| 6.
Strategic positioning for SIABecause of the information about airlines company in Singapore currently are made very clear, by the reason of new industry come from foreign country, therefore we have a lot of source and information about market share and market growth rate of flying industry. Besides, based on information about current companies and branches of these company like SIA, such as Quantas or Cathay, it will be better to conduct Ansoff matrix and BCG growth matrix below to analyze position , strategy of SIA and so on. Ansoff matrix Ansoff Growth matrix (tutor2u. com, access 2009)Having the new position in the world with new main product is Airbus 380; surely Singapore has devoted a considerable amount of resources with identification of consumers taste and preferences, development, testing, manufacturing and marketing of products diversification that bases on this main product. With continuous research and development, Singapore has come up with new product lines to cover all new market segments. With SIA superior product lines, it has become a foundation of a continuous consumer excitement with every introduction of products.
Existing products are diversificated.In the future, SIA ‘s plan is to spread its diversification of product to around Singapore and the rest of the world. Ansoff Matrix for SIA| | Existing Products | New Products| Existing Marketing| Market Penetration, | Product Development| New Markets| Market Development| Diversification | 7. An ability to think strategically for SIA GE-McKinsey Matrix : This matrix is a form of portfolio analysis used for classifying product lines or SBUs within a large company. It assesses areas of the business in terms of two criteria: The attractiveness of the industry/market concerned and the strength of the business (BPP,2004). High Strength| Medium strength| Low strength| High attractiveness| X Cell 1| Y Cell 2| Y Cell 3| Medium attractiveness| Y Cell 4| Y Cell 5| Y Cell 6| Low attractiveness| Y Cell 7| Y Cell 8| Z Cell 9| GE-McKinsey Matrix, BPP 2004 By the reason of customer from other market don’t have the overall understanding of this company therefore the attractiveness of SIA is medium. Besides, they have the good internal strength and market share ( as SWOT analyze before) but this strength is still lower than their main competitor such as Quantas and Cathay (analyzing before) thus we can conclude that SIA in Y Cell 5 .
In this position, SIA can close their strategic gap by manage carefully, making forecast and sub-planning day by day, maintain/defend market position, concentrate on selected segments. This is why their can use this matrix to make opportunity from other strategic groups / spaces and new market segment. BCG’s growth / share matrix BCG’s growth/share matrix ( Quickmba, 2009) The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s.The BCG growth – share matrix displays the various business units on a graph of the market growth rate and market share relative to competitors . The growth-share matrix thus maps the business unit positions within these two important determinants of profitability ( Quickmba, accessed 2009 ). Singapore have high relative market share because in Singapore, the turnover of SIA less than Quantas and Cathay a lot recently.
Besides that, SIA belong to high market growth rate because flying belongs to attractiveness industry, have promising for profit and growth in long term.So, SIA belong to Star Marks. Star mark are growing rapidly and thus consume large amounts of cash, and they have high market shares too. 8.
Strategic plan for SIA 1. Proposed strategy To set the plan for Singapore to expand in the world, it is necessary to analyze and determine the factors of financial strength, environment stability, industry strength and competitive advantages. This is the strategic position and action evaluation (SPACE matrix). The SPACE matrix is a management tool used to analyze a company. It is used to determine what type of a strategy a company should undertake.
The Strategic Position ; ACtion Evaluation matrix or short a SPACE matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization(Maxi-Pedia ,2009). | | Internal strategic position| External strategic position| Axis X| Competitive advantage (CA)| Industry strength ( IS )| | -6 worst, -1 bestProduct quality : – 2Market share : – 4Brand ; image: – 3Average : -3| +1 worst , + 6 bestBarrier to entry : + 5Growth potential: + 4Access to financing : + 3Average : + 4| | Total X score : +1|Axix Y| Financial strength (FS )| Environment stability ( ES )| | +1 worst , + 6 bestROI : + 2Leverage: + 1Liquidity: + 2Cash flow : + 1Average : +1,5| -6 worst, -1 bestInflation : -3Technology: -3Demand elasticity: -3Taxation : -3Average : -3 | | Total Y score : -1,5| Singapore SPACE analysis Therefore, based on SPACE analysis above, it’s easy to conclude that SIA in the world market that is competing fairy well in an unstable industry. | 2. Resource 4. 1. Material : They brought the famous aircrafts from a famous brand, Airbus 4. .
Human resource and time line suggestion strategies :In the others regions in the world, SIA can use the decentralize system to expand. The main office Singapore city can control the other business performance of the subordinate brands easily. Coming to the world can be the advantages of SIA as the early comer and gain customer loyalty. Stakeholder suggestion plan in 2009-2010:For shareholder: maintains strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value.For management control : maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.
For competitors: Overcome the high influences of two great competitors like Quantas and Cathay in, to be able to lead the world about flying industry. Long-term plan suggestion : In long term future, SIA can expand to Australia to better maintain market position and market share for SIA.In Singapore, Jollibee should use direct invest to impress on one category. It can become the symbol for Singapore in the area. Its brand can opened to get used the customer in Singapore and the world and mark Singapore in customer’s mind with many interesting activity for children and family. | 9. Conclusion The report gives the analysis of SIA situation, such as SWOT analysis, Pestle analysis and Porter’s five Forces analysis.
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