The air travel industry in which Singapore Airlines operates is prone to volatilities and disruptions that don’t augur well for business. The effects of the global financial crisis, high fuel prices, and security issues such as terrorism and epidemic outbreaks have resulted in a decline in profits in the industry (Yosef, 2006). Singapore Airlines has however maintained a strong recovery path registering improved earnings in the 2010/2011 year.
In this report, the income statement of Singapore airlines will be the subject of analysis. The company’s performance will be measured through a comparison of its inflow and outflow of assets as reported in the financial statement.
Analysis
According to the financial statement of the company, Singapore Airlines group achieved a net profit of $1092 million in the 2010/2011 financial year. Asset outflows of the company for the year ending April 2011 equaled $13, 253.5 million compared to 12, 644.1 million for the same period in the previous year, representing a positive growth of + 4.8%. Asset inflows for the financial year ending April 2011 were $14, 524.8 million compared with $12, 707.3 million for the same period the previous year. This marked a positive increase of +14.3%. The income statement also details the revenue achieved by the company section of the group. The overall asset inflow of the company was $11, 739.1 million while the overall asset outflow was at $10, 887.8 million. The profit after taxation for the company was $1,011.2 million. The value addition at both group and company level was positive with that of the company level being +37.8%. The revenue figures posted by Singapore Airlines show both the top-line and bottom-line growth of the company is on course. It is important to note that all figures are in Singapore Dollars.
Revenue drivers
If a business experiences a return on capital that is more than the asset outflows, then a positive value is created. The creation of value in business is directly linked to the revenue management of a company. However, value alone cannot help in the revenue growth of a company. There is a need to enhance the development of the areas of revenue generation in a company to help in diversifying sources of revenue (Alexander, 2007). Singapore Airlines has as result embarked on a fleet modernization and leasing program, upgrading customer services and increasing its partnership with various airlines, all aimed at achieving better revenue management.
According to the 2010/2011 annual report, the company saw the delivery of new Airbus A330-300 aircraft that are on operating leases to various cities in the world. Additionally, six more Boeing 777-200ERs were leased to Royal Brunei Airlines. Furthermore, the company reported the completion of cabin refreshment in another ten Boeing 777-200s. There were also several additions to the airline’s fleet of Boeing and Airbus aircraft. The fleet expansion according to the company is meant to cater for increasing passenger volumes that will in the long run translate to increased revenue.
The company also embarked on a program of upgrading services including redeeming of points for selected flights besides other local offers and privileges. The main aim of the above strategy is to maintain high-quality service delivery as one of the key revenue drivers of the airline.
Partnership with other airlines also emerged as a leading driver of revenue for the company. For instance, the airline in the last financial year increased its list of partner airlines to 29. This has in turn helped the airline’s customers to earn more miles that are redeemed for extra services without pay. The projected benefit, in the long run, will be a rise in revenue.
Reference List
Alexander, J., 2007. Performance dashboards and analysis for value creation. NY: John Willey & Sons.
Disagreements in the workplace are very common. Prudent management of these disagreements is beneficial to both employees and organizations. There are numerous studies on conflict management in the workplace. However, this paper is different in the sense that it incorporates ethical aspects of the mediation process. The study will entail analysis of the policies used by Singapore Airlines to manage conflicts among employees, the ethical dilemma facing the HR staff, and the alternative solutions.
Introduction
Disagreements within the work environment are unavoidable. If managed prudently, they can act as a medium for change and may have a positive effect on workers. On the contrary, if conflicts are not managed well, they may have a negative impact on job performance and employee satisfaction. When disagreements are ignored by the management, it gives an idea that unacceptable job performance and unfortunate conducts are tolerable (Maldonado, 2012, p. 1). Well managed conflicts are most common in organizations and institutions that encourage open communication, teamwork, regular response and prompt resolution of conflicts (Classen & Reiner, 2005, p. 5).
On the contrary, an environment that does not promote conflict resolution may lead to poor conduct among staff members and unacceptable job performance (Maldonado, 2012, p. 2). Regardless of the negative effect of unhandled conflict, most managers tend to ignore the problem until it becomes serious. Routine conflicts are often viewed as minor differences between employees, which do not warrant any action. Regrettably, unresolved conflicts more often than not grow and spread like a bonfire, eventually affecting employees’ job performance and satisfaction (Classen & Reiner, 2005, p. 4).
One of the most recent case studies conducted in the airline industry emphasizes on the importance of in-house mediation in solving individual disputes and providing appropriate solutions (Wensveen, 2010), p. 22). However, this study will be different in the sense that it will incorporate the ethical aspect of the mediation process. In so doing, the study will examine ethical decision-making dilemmas that affect conflict management. The paper will address the challenges facing HR managers and possible solutions. The main focus will be on the Singapore Airlines.
Ethics and Conflict Management
Ethics is a very crucial factor in service delivery. Generally, there are three forms of ethics. The first form of ethics is descriptive ethics, which emphasizes on the disparities of moral standards among societies. The second form of ethics is normative ethics, which describes the norms that are accepted in one society, but are denounced in another society. The third form of ethics is analytic ethics, which fosters the idea of comparative levels of morality (Harris, Sapienza & Bowie, 2009, p. 407).
Business ethic is a combination of all the three forms of ethics. Business ethic is defined as the assessment of the manner in which people or organizations are expected to conduct themselves in the field of business (Harris et al., 2009, p. 409). Business ethic is concerned with the various ethical principles or ethical problems that occur in the different fields of business. In addition, business ethic focuses on the behavior of the business or various stakeholders that run the business (Harris et al., 2009, p. 410).
Business ethic is normally applied in the aviation sector to ensure that airline companies are properly managed in accordance with the ethical standards. Ethics plays the role of moderating ethical behavior that cannot be regulated by the statutory laws. The government normally uses laws to enforce the required standards (Chau & Siu, 2000, p. 367). Business ethics, on the other hand, are used by businesses to set up a standard of behaviors that are not captured by the statutory laws. The development of business ethics has been enhanced by the rise of big business entities that do not pay more attention to the welfare of its workers and other stakeholders (Harris et al., 2009, p. 4011).
Conflict management and ethics in the workplace often act together in a complex system of power relations, hierarchical structure, and contradicting goals of competitiveness and fairness. The human resource department oversees this interaction (Gramberg & Teicher, 2005, p. 2).
Some of the responsibilities of the HR managers include conflict resolution and delivery of justice in the workplace. Nonetheless, the HR managers cannot be regarded as neutral mediators. Therefore, one of the ethical decision-making dilemmas facing many HR managers when managing conflict in the workplace is whether to adhere to the organization’s ethical standards, statutory laws or directives from the top. In other words, the HR managers are often faced with an ethical decision-making dilemma when managing conflict in the workplace (Gramberg & Teicher, 2005, p. 4).
Methodology
The study examined the Singapore Airline through an exploratory context analysis. The purpose of this study was to explore the methods used in managing conflict in the airline company and its challenges. Therefore, the technique used in this research was based on the experiences and viewpoints of representatives of the employees and key members of the human resource department. The study entailed the following:
Analysis of the policies used by Singapore Airlines in tackling conflicts among employees.
Semi-structured interviews with key members of the human resource department and employee representatives.
Analysis of the primary data with the help of secondary research.
Study Design
The study employed the three categories of exploration configuration, that is, exploratory research, descriptive exploration and causal examination (Easterby, Thorpe &Jackson, 2008, p. 45). Exploratory research basically investigates on the way of the issue keeping in mind the end goal to draw derivations. In this situation, the analyst is in a decent position to comprehend the issue under scrutiny.
The stream of exploratory exploration includes recognizing the issue and looking to discover the fitting arrangements and new thoughts. On the other hand, descriptive exploration is generally appropriate in circumstances where the structure of the examination issue is not unequivocal. Lastly, causal examination is the sort of study whereby there is an unmistakable structure of the examination issue. In this situation the specialist is intrigued to investigate on the reason impact relationship. The reasons are recognized, broke down and the degree of the impacts is checked on (Easterby, Thorpe &Jackson, 2008, p. 46).
Sampling
The study population comprised of HR staff and employee representative. The purposive sampling technique was used to select sample based on judgments about the appropriate characteristics required of the sample respondent. This technique allows the researcher to select a sample to serve a specific purpose of sampling. In this design, not every participant in the study has an equal chance of being chosen. Non-probability sampling design does not utilize much cost and time, hence it is widely preferred. The sample frame included 2 HR managers, 10 HR contacts and 8 employee representatives.
Study Procedure
Participation was on a voluntary and confidential basis. The study was done in two phases. The first phase of the study involved examination of the existing conflict resolution mechanism, whereas the second phase involved 20 in-depth interviews with key members of the human resource department and employee representatives. The interviews were carried out strictly on management staff due to the sensitivity of the matter and confidential nature of the conflict management processes. In any case, it is necessary to note that a section of the administrative respondents involved junior managers (HR contacts). This is because they could offer a double perspective of being overseen and as administrators. The interviews were carried out either through the phone and on a one-on-one basis.
Data Analysis Technique
The study used both the qualitative and quantitative data analysis techniques to analyze data. This will ensure that the data will be analyzed in a systematic way in order to come to some useful conclusion.
Assumptions and limitation of the study
The study assumed that the sample size of 20 respondents was large enough as per the requirements for reliable data from which inferences and conclusions can be made. Another assumption was that all respondents were truthful in their answers. On the other hand, the main limitation of the study was translation of questions to respondents since Singapore airline is a global company.
Findings
The researcher successfully managed to interview all the 20 respondents. The majority of the employees were satisfied with their work and only a small section was uncertain. They also agreed that conflict often arises among employees and the main source of conflict is usually communication breakdown. The most common kind of conflict in the company is interpersonal conflict. These conflicts are always destructive in the sense that the company always loses some of its finest personnel as a result of these conflicts. In addition, conflicts in the organization are normally handled by the HR managers through a conciliation process.
The company’s policy is based on the International Civil Aviation Organization (ICAO) code that guides conflict resolution in the aviation industry. The code provides procedures for handling grievances within the industry (Wensveen, 2010, p. 56). The study established that the ICAO’s code does not guarantee fairness and justice. The process often suffers from the problem of neutrality and impartiality. According to the global mediation standards, individuals leading the mediation process should have no relationship or vested interests with the parties involved.
The study also established that ethical behavior of the HR managers is not only a rare function of personal value, but is also dictated by other forces. Therefore, the fear of risking one’s employment prompts HR managers to compromise ethical standard during the negotiation process. In addition, the study found out that the HR managers face numerous challenges in meeting the preconditions of neutrality. These challenges include inability to make informed choices and conflict of interest with the superiors. In a nutshell, the dilemma facing the HR managers is whether to adhere to ethical standards or directive from the top hierarchy.
This ethical decision-making dilemma during conflict resolution is not new. In fact, a study conducted by Gramberg and Teicher (2005, p. 9) on workplace equality established that many managers were basically focused on tasks or results and, therefore, their decisions were more to do with tangible goal achievement and less to do with justice. The prioritization of financial gain over ethics is well explained by Chau and Siu (2000, p. 367). Chau and Siu (2000, p. 367) argues that the main goal of many organizations is capital gain. As a result, long-term commitment to impartiality is impossible to sustain.
Gramberg and Teicher (2005, p. 10) argues that, even if the ethical code was applied, there is no law that prompts organizations to do so. Since ICAO gives airlines power to develop their own policies and procedures for conflict resolution, the HR managers are under no obligation to stick to them as long as they have support from the “above”. Hartman and Desjardins (2014, p. 7) explain that decision makers are always faced with numerous challenges during the mediation process. These challenges include goals to be achieved, inability to make informed choices, the clash of interest with the superiors of the business, and lack of cooperation among various stakeholders.
Hartman and Desjardins (2014, p. 7) add that ethical decision-making is mainly influenced by business environment. Therefore, decisions often change with the environment. In addition, ethical decisions vary from one business to another. For instance, the kind of ethical decisions that are made in the airline industry is different from the decisions that are made in the manufacturing sector (Hartman & Desjardins, 2014, p. 8).
The solution to this dilemma
An effective decision-making model and an efficient code of ethics can help the HR managers make productive and justifiable decisions. The HR managers who make good ethical decisions are in a good position to market themselves as ethical professionals with high integrity (Harris et al., 2009, p. 409). One of the most effective models that can help to prevent the above dilemma is the Fischer’s model for ethical decision-making (Fischer, 2000).
According to the model, conflict management must take into consideration of the following: the mission of the organization, the relationships among the colleagues and other stakeholders, and the level of personal integrity. The mission of the organization should be considered so as to make sure that the decisions that are made do not violate the long-term objective of the organization (Fischer, 2000, p. 13).
It is also important to note how the decision made is going to affect the status of relationships that exist among the employees or between the aggrieved parties and the HR managers, or between the organization and the members of the society. Lastly, it is very important to consider how the decision is going to impact on the individual’s personal integrity (Fischer, 2000, p. 13). Fischer’s model implies that when making ethical decisions, HR managers will always be guided by the culture of the business, the ethical codes that govern the business, and the morals or values of the business (Fischer, 2000, p. 14).
Decision-making through Fischer’s model is very flexible in that it allows for mistakes. However, the mistakes are only allowed after paying attention to the three critical areas. This is because it is easy to correct the mistakes and choose the right decision from many alternatives (Fischer, 2000, p. 13).
In addition, the organization should embrace team roles as a way of solving interpersonal conflicts. According to Aritzeta et al. (2005, p.), team configuration is the best technique for solving interpersonal conflict. They argue that team role is best suited in enhancing cooperation and competition among team members. This is because the relationship among individuals can be affected by competitive conduct, which can result to disagreement. For that reason, employees should be given a chance to handle their differences at the team level.
The alternative solution to the dilemma
The dilemma can also be handled through a comprehensive conflict management program. The airline needs to look beyond the conventional conflict management programs and code of ethics. The programs can be customized for a specific institution or company. One of such programs is the REDRESS program. REDRESS is an abbreviation for Resolving Employment Disputes and Reaching an Equitable Solution Swiftly (Harvey & Ventura, 2005, p. 87). The REDRESS program originated from the postal staff in Florida. The program is aimed at managing disputes in a more effective and prompt manner. The program is currently gaining popularity across different sectors (Harvey & Ventura, 2005, p. 88).
The recommended solution to the dilemma
The problem of neutrality and impartiality can be best tackled by a panel of independent mediators. The panel should incorporate the elements of Fischer’s model and REDRESS program in the negotiation process. Fischer’s model will ensure that the three critical areas are incorporated in decision-making, that is, the mission of the organization, the relationships among the colleagues and other stakeholders, and the level of personal integrity.
At the same time, the REDRESS program will ensure that neutral and impartial solution is reached promptly. However, the approach must adhere to the International Civil Aviation Organization code and conventional practices of conflict resolution. In addition, the approach should be based on an in-house mediation scheme, where differences among employees are resolved at an early stage. The process should involve team members and workers representatives to enhance confidence and to prevent any form of bias. The role of the mediation process should be to “recover” and “repair”.
Conclusion
Well managed conflicts act as a medium for change and may have a positive effect on employees. On the contrary, if conflicts are not managed well, they may have a negative impact on job performance and employee satisfaction. In the aviation industry, the performance and conduct of the employees are very important since they affect the safety of the passengers. For this reason, prudent management of conflict is very crucial. Like many other organizations, conflict management in the Singapore Airlines is handled by the HR department and is based on the ICAO’s code. However, the code does not guarantee fairness and justice.
The Airline’s conflict resolution process often suffers from the problem of neutrality and impartiality. This is mainly attributed to influence from the top. This problem can be tackled effectively by a panel of independent mediators. Nevertheless, the panel should not only incorporate the elements of Fischer’s model and REDRESS program, but also take into account the ICAO’s code and conventional practices of conflict resolution. Last but not least, the process should be based on an in-house mediation scheme where conflicts are resolved at an early stage.
References
Aritzeta, A., Ayestaran, S. and Swailes, S. (2005). Team role preference and conflict management styles. The International Journal of Conflict Management, 16 (2), 157-182. Web.
Chau, L.L., & Siu, W. (2000). Ethical decision-making in corporate entrepreneurial organizations. Journal of Business Ethics, 23 (4), 365-375. Web.
Classen, R., & Reiner, D. (2005). Conflict, Collaboration and Change. Fresno, California: Centre for Peacekeeping and Conflict Studies. Web.
Easterby, M., Thorpe, R., & Jackson, P. (2008). Management Research. London: Sage Publications. Web.
Fischer, M. (2000). Ethical Decision Making in Fundraising. New Jersey: John Wiley and Sons. Web.
Gramberg, B., & Teicher, J. (2005). Managing Neutrality and impartiality in workplace conflict resolution: The dilemma of the HR Manager. Working Paper 57/05. Web.
Harris, J.D., Sapienza, H.J., & Bowie, N.E. (2009). Ethics and entrepreneurship. Journal of Business Venturing, 24 (5), 407-418. Web.
Hartman, L.P., & Desjardins, J. (2014). Business Ethics, Decision-Making for Personal Integrity and Social Responsibility (3rd ed.). New York: McGraw Hill. Web.
Harvey, E., & Ventura, S. (2005). What to do when conflict happens. Flower Mound, Texas: The Walk the Talk Company. Web.
Maldonado, T.M. (2012). Managing Conflict from the Heart: Healthcare Leaders’ Approaches in Transforming Conflict in Better Patient Care (Master’s Thesis. Fresno Pacific University, Fresno, California). Web.
Wensveen, J. (2010). The Airline Industry: Trends, Challenges and Strategies. New York, USA: Dowling College. Web.
This paper explores the need for Singapore airlines to seek more to meet its strategic goals. It shows that competition in the aviation sector is the greatest undoing for the company because it has eroded the company’s profits and limited its operational efficiencies. At the same time, diverse customer needs and high service expectations have forced the airline to seek partnerships with other companies. However, because Singapore laws prohibit full cross-border partnerships, the company’s partnership strategy may be limited in this regard. Nonetheless, because the same government guarantees antitrust immunity, the airline may still yield positive results from such partnership agreements.
Introduction
For over five decades, Singapore Airline has made a name for itself as a reliable airline company (Fickling, 2012). Its reputation in the global aviation sector is good. From its Changi airport hub, Singapore Airlines has developed an expansive service network that spans more than 90 cities around the world (Heracleous & Wirtz, 2009). However, its strongest market presence is in Asia and Oceania (Heracleous & Wirtz, 2009). Besides passenger transport, Singapore Airline also offers other airline services, such as airport engineering and aircraft handling.
The dominance of Singapore Airline has declined in the last few years. For example, the company has since lost the coveted prize of being the world’s best airline to Qatar Airways (a price it held for five years, before 2008) (Fickling, 2012). Since then, it has had trouble regaining it. The company’s dominance in the airline industry is also declining, based on the eroding operational competency of the airline (Fickling, 2012). For example, Singapore Airline outwitted its rivals by operating a fleet of large Airbus A380s (Heracleous & Wirtz, 2009). However, its competitors have caught up with it and are now operating the same aircraft.
For instance, Thai Airways International and Malaysia Airlines operate these aircraft and enjoy the same competency as it does. Based on these developments, Singapore Airline has to find new strategies to address the competitive pressures it currently experiences because they undermine the company’s goals. This paper addresses partnerships as a strategic tool for achieving the company’s long-term strategic goals. However, before delving into the details surrounding this strategic option, it is pertinent to understand what contributed to the current situation of Singapore Airline.
What contributed to the Current Situation?
Competition in the aviation sector is at an all-time high (Akbar & Abdullah, 2010). Many regional airlines are grappling with the problem of reduced profitability and declining passenger numbers because of an influx of major competitors in the aviation sector. The main competitors of Singapore Airlines are in Europe-Asia routes because other dominant airlines, such as Emirates Airlines and Qatar Airlines, have a significant market share (Pasiuk, 2006). Low-cost airlines, such as Air Asia and Qatar airways, are also shrinking the market share of Singapore Airline in the regional and economic market segment (Fickling, 2012). In this regard, competition from low-cost airlines and long-haul carriers shows that the market share of Singapore Airline is declining from both ends of the market (premium and economy market segments).
Since 2008, Singapore Airline has reported a 12% decline in passenger traffic (Fickling, 2012). Compared to its rivals, the airline has reported among the lowest traffic growth as a measure of the miles traveled by paying passengers. The diagram below shows this fact.
Figure One: Performance of Singapore Airlines (Source: Fickling, 2012).
These factors explain why the airline has reported declining profitability in the last five years. In fact, experts are pessimistic about the company’s prospects of reporting double-digit profit margins as it did in the past (Heracleous & Wirtz, 2009). Despite these challenges, Singapore Airline remains one of the most resilient and respectable airline companies in the world (Heracleous & Wirtz, 2009). However, the above-mentioned factors have undermined the company’s long-term strategy, which is to create the world’s best travel experience.
What is the Social/Political/Economic Climate of Topic?
Economic
Some of the challenges that affect Singapore Airline come from lower sales and low passenger numbers. Uncertain economic conditions in the global aviation industry have further worsened this problem because fewer people are traveling, and the cost of operations is increasing. Fuel costs alone account for more than 40% of the company’s operating costs (Fickling, 2012). However, this challenge is not only unique to Singapore airlines because Fickling (2012) says, “a weak economic environment and high fuel prices are particularly challenging to long-haul airlines” (p. 1). While competition is a basis for concern, airline companies also have to contend with stiff competition in industries that supply them with goods and services. For example, the two largest aircraft manufactures (Airbus and Boeing) compete with one another. At the same time, air traffic controls are monopolies.
Political
Competition is central to the operations of airline companies. It fosters innovation, productivity, and growth for most players in the sector (Fischer & Kamerschen, 2003). However, the global aviation market is inefficient. Therefore, it is difficult for companies to compete on an equal platform. Competition has been a hallmark in the aviation sector. It was mild when governments used to be majority shareholders in aviation companies. However, the wave of privatization (that started in the 1980s) jolted the industry by making most airline companies vulnerable to privatization. The lack of government involvement increased the competitive push for players in the sector to seek more passengers through aggressive operational and marketing strategies (Fischer & Kamerschen, 2003). Such intense competition is evident in most parts of the world.
For example, in the US, all airline companies are private and compete with one another in this regard. Competition in the airline sector increased a notch higher after the entry of low-cost airlines, such as Southwest, Ryan Air, and Easy Jet (Fickling, 2012). These airline companies have not only eroded the market share of other short-haul flights but also increased their market shares in segments previously dominated by major airline companies. Existing state carriers have also reported increased competition from other airline companies, such as those that originate from the Persian Gulf (Fickling, 2012).
Some observers say these airlines have introduced stiff competition in the sector because of fuel subsidies, reduced landing costs, and other state privileges offered to them by their governments (Fischer & Kamerschen, 2003). As if these pressures are not enough, the airline industry has continued to suffer from the pressures of increased terrorism threats (especially after 9/11). The rise of global communicable diseases, such as SARS and Ebola, has further compounded operations in the industry.
Social
Observers have criticized the aviation sector for its high carbon footprint. Within the transport sector, experts say it accounts for the large volumes of fossil fuel and greenhouse gas emissions (Schueneman, 2014). In fact, the Air Transport Action Group claims that the aviation sector contributes 2% of the global carbon emissions (Schueneman, 2014). Some observers say this percentage could be higher because the industry prefers to portray a modest contribution of greenhouse gases (Schueneman, 2014). However, independent studies show that the aviation sector is among the fastest-growing contributors to greenhouse gases in the world (Schueneman, 2014). These studies also show that within the transport sector alone, the aviation sector contributes up to 13% of greenhouse gas emissions (Schueneman, 2014). Based on these statistics, the aviation sector has received immense social pressure to reduce its greenhouse gas emissions. To counter this pressure, some airline companies have merged to develop alternative energy. For example, there has been a global push among airlines to develop biofuels as an alternative to fossil fuels. However, without the participation of many airlines, it is difficult to actualize this dream. Indeed, many Airlines have to contribute towards research and development processes that would actualize this dream. This goal has magnified the need for seeking beneficial partnerships in the aviation sector.
What is the Core of the Issue Today?
The doctrine of partnerships in the aviation sector remains misunderstood by many people. Regardless of these facts, it remains a major topic of discussion for most airline companies (Fickling, 2012). Seeking a beneficial partnership is not only a useful strategy in the aviation sector but other economic sectors as well. However, they are more common in the airline sector than all other sectors (Borenstein & Rose, 1994).
Partnerships between aviation companies are not new. This is because airline companies in 1919 (and beyond) used it to overcome industry competition (Pasiuk, 2006). For example, in the 1920s, small airline companies adopted a rationalization and consolidation strategy to compete with long-haul airline companies that enjoyed government subsidies (Borenstein & Rose, 1994). Furthermore, in 1924, four airline companies (Instone Air Line Company, British Marine Air Navigation, Daimler Airway, and Handley Page Transport Co Ltd) collaborated to form a new airline company – Imperial Airways to counter competition that came from other airline companies (Pasiuk, 2006). These intrigues show that most partnerships in the airline sector emerged during the 1980s and 1990s when mergers and acquisitions characterized changes in the airline sector (Borenstein & Rose, 1994). Experts feared that this trend would create an increased concentration in the industry and deny customers the benefit of a deregulated industry (Borenstein & Rose, 1994).
However, these fears were unfounded because new low-cost airlines, such as Southwest airlines, slowed down the trend towards industry concentration (Borenstein & Rose, 1994). Nonetheless, partnerships in the airline sector transferred the business to major airlines. For example, Riwo-Abudho et al. (2013) say, the ten leading airline companies shared 95% of domestic passenger trips in Europe. In fact, the top five airlines shared 70% of the domestic business (Riwo-Abudho et al., 2013). This outcome showed that most partnerships in the airline sector yielded increased business.
Why is the Issue relevant to the Industry?
There are different kinds of partnerships in the aviation sector. They include joint ventures, built, operate and transfer (BOT), build, own and transfer (BOT), Built, own, lease and transfer (BOLT), lease, develop, operate (LDO), build, own, and operate (BOO), and management contracts (MC) (Singapore Press Holdings, 2007). To foster partnership agreements, all the parties involved must meet their objectives. While such objectives may vary, success is the common denominator for all the players involved. Simply put, all the players involved striving to have a win-win outcome in their agreements (Singapore Press Holdings, 2007).
Northwest Airlines and KLM are examples of airlines that have successfully pursued this strategy. There have been other smaller domestic partnerships between airlines, but experts posit that the greatest alliances in the aviation sector include the Star Alliance, Sky Team Alliance, and One World Alliance (Fischer & Kamerschen, 2003). Singapore Airline belongs to the Star Alliance (Heracleous & Wirtz, 2009). The power of such an alliance stems from their high capacity in international aviation circles. For example, Riwo-Abudho et al. (2013) say they provide an 80% capacity over the aviation routes that span across the Atlantic and Pacific. They also command the same percentage over Europe-Asia routes. These factors show that most partnerships are relevant to the aviation industry.
What are the Effects of the Issue from the Smallest to the Largest?
Improved Operations
Through its elaborate partnership strategy, Singapore airline has joined the Star Alliance, which has helped the airline to expand its global presence in more than 140 countries (Heracleous & Wirtz, 2009). Indeed, partnership agreements are important for aviation companies because their customers have an increased need to have seamless services (despite the logistical hardships of delivering such services).
However, few airlines can deliver such services without seeking the help of other airlines. For example, few airlines can generate sufficient passenger traffic to justify a seamless service itinerary. To overcome these operational problems, airline companies have to seek partnerships to provide the network and service expectations required by their customers. This is the case of Singapore airlines because its customers have strong networking and service requirements. Nonetheless, legal requirements restrict partnership agreements (especially foreign participation in local company operations). Therefore, this provision stifles cross-border partnerships.
Increased Sales
The decision to collaborate with another airline is an important one for any management body that oversees the activities of airline companies (Borenstein & Rose, 1994). This strategy has been of more concern to domestic airlines that fear that such a strategy could attenuate competition (Borenstein & Rose, 1994; Riwo-Abudho, Njanja, & Ochieng, 2013). Legal considerations are also important because governments often supervise partnership agreements after evaluating how they affect the competitive landscape of the sector. Studies by Riwo-Abudho et al. (2013) show that airline companies, which operate in areas where they enjoy strong market power, likely build higher capacity markets. This outcome suffices because such partnerships are likely to enjoy the benefits of higher pricing as opposed to high demand. In fact, evidence shows that such companies could charge $9 more for every ticket sale, compared to what their competitors could offer (Borenstein & Rose, 1994).
Customer Loyalty
For a long time, airlines have sought partnerships in the aviation sector to increase their customer numbers. For example, airline companies find it easier to handle large volumes of passenger traffic by using common airport facilities (Singapore Press Holdings, 2007). In hindsight, these partnerships are useful in identifying areas of weakness for the airline companies and seeking better ways of solving them. Airlines could realize these improvements by identifying unique customer needs and requirements and using the partnerships to know how to meet these needs and requirements. Through these partnerships, airlines can also increase customer loyalty, especially for customers who are loyal to either of the parties involved in the partnerships.
Discussion
Despite increased competition in the aviation sector, Singapore airline has never reported an annual loss since its inception in 1972 (Fickling, 2012). Its large cash deposits have spurred its growth trajectory. Competition has led to significant losses for Singapore Airlines. According to Fickling (2012), the company has reported a net loss of about $31.7 billion between 2001 and 2010. The cutthroat competitive environment has also eroded shareholder value during the same period.
Competition has also seen Singapore Airline lose its market share in some of its key routes. For example, Air Asia recently accused Singapore Airlines of preventing it from operating in the Singapore-Kuala Lumpur route (a highly lucrative route for the airline) (Singapore Press Holdings, 2007). Because of political pressure, the government of Singapore had to open the route to the competition. Consequently, Singapore Airlines lost more than 40% of its market share. Malaysia Airlines, which also profited from the limited competition in this route, lost more than 17% of its market share after the entry of new players in this route (Singapore Press Holdings, 2007). To maintain some semblance of market dominance in the route (and other routes), Singapore Airline pursues many partnership agreements. They appear below
Codeshare agreements
Besides being part of the Star Alliance, Singapore Airline shares codes with other major global airlines such as Virgin Atlantic, Malaysia Airlines, JetBlue airlines, Japan Airlines, and US Airways (Singapore Press Holdings, 2007). Other airlines that seldom codeshare with the airline include, Vistara, Garuda Indonesia, Silkair, and Transaero Airlines (Singapore Press Holdings, 2007).
Bilateral Aviation Agreements
Bilateral aviation agreements help companies to expand their network presence around the world. Singapore Airlines has benefitted from such agreements and expanded its networks as expected. The company’s greatest success is the bilateral trade agreement between Singapore and Thailand (Singapore Press Holdings, 2007). A similar bilateral agreement with the United Arab Emirates has helped the company to expand its route network to Dubai and other parts of the Middle East (Singapore Press Holdings, 2007).
Conclusion
Seeking partners is a common operational strategy for aviation companies. Partnerships in the aviation sector have bolstered the corporate strategy of Singapore airlines, which has succeeded in increasing its service network in this way. Such arrangements have reduced the need for mergers and acquisitions, as alternative strategies for managing competitive pressures. Partnerships have increased the company’s service quality and created more value for its customers, based on the services offered. These partnerships have brought significant benefits to the airline’s customers. Although this paper highlights the benefits of business partnerships, it is crucial to note that these partnerships cannot occur in a vacuum. Businesses have to share the same vision and goals. This principle should guide future partnerships of Singapore Airlines.
Stated differently, the airline should seek partnerships with other airlines that share its vision and goals. Overall, this paper’s findings are useful to policymakers and airline companies because they would enable them to find better ways of managing competition and improving their operations (Fischer & Kamerschen, 2003). Based on the same importance, Singapore Airline needs to foster existing partnerships because it is the best way for the company to give its customers what they want. Similarly, it is the best way for the company to realize greater efficiencies in its local and global operations.
References
Akbar, T., & Abdullah, T. (2010). Competition in the airline industry: The case of price war between Malaysia Airlines and AirAsia. Central Asia Business Journal, 3(9), 57-71. Web.
Borenstein, S., & Rose, N. (1994). Competition and Price Dispersal in the US Airline Industry. Journal of Political Economy, 102(4), 653-683. Web.
Fischer, T., & Kamerschen, D. (2003). Measuring Competition in the U.S. Airline Industry Using the Rosse-Panzar Test and Cross-Sectional Regression Analyses. Journal of Applied Economics, 6(1), 73-93. Web.
Heracleous, L., & Wirtz, J. (2009). Strategy and organization at Singapore Airlines: Achieving sustainable advantage through dual strategy. Journal of Air Transport Management, 15(1), 274–279. Web.
Heracleous, L., & Wirtz, J. (2014). Singapore Airlines: Achieving Sustainable Advantage through Mastering Paradox. The Journal of Applied Behavioral Science, 50(2) 150–170. Web.
Pasiuk, L. (2006). Vault Guide to the Top Transportation Industry Employers. New York, NY: Vault Inc. Web.
Riwo-Abudho, M., Njanja, L., & Ochieng, I. (2013). Key Success Factors in Airlines: Overcoming the Challenges. European Journal of Business and Management, 5(30), 84-89. Web.
The new commercial joint that recently concluded between Lufthansa Grouped and the Singapore Airlines at the end of November 2015 seems to bear more fruits than expected. The partnership agreement of deciding to operate between Europe and Singapore in the JV basis continues to expand the codeshare bond; deepening the commercial cooperation. However, there are some differences between these two airlines.
According to the vision, Singapore Airlines have expressed their responsibility not only to remain excellent but also stay exemplarily among the competitors in the world, through enhancing the lives of people served (Lufthansa Cargo AG, 2016). With all this in mind, the airline has made several commitments to the art, communities, education as well as health sector in the countries where they fly. The mission of this airline firm is to become a global organization and offer air transportation services of high quality, hence maximize the return of benefits as well as employees and shareholders.
The central hub for this organization is Singapore Airlines Airport, and has its headquarters at Airline House, 25 Airline Road, Singapore 819829 as well as Singapore. Singapore Airlines is a very busy company and lies in 63 destinations around the world specifically in 3 countries from its key hub. One of the regions where this company enjoys its strongest presence is the Southern Asia. The parent company for Singapore Airlines is Temasek Holdings and has annual revenue of s$16 billion (Singapore Airlines, 2015).
Its operating income is s$450 million for the same financial year. The net income for the airline is S$340 million and a total employee team of 25,000 members. On the other hand, Lufthansa Group is a well-known global aviation team and has a total of 550 subsidiaries as well as equity investments. The major service in this airline group is the transportation of passengers. Its main hubs include the Munich Airports as well as Frankfurt Airport, with 220 destinations from its main hub (Deutsche Lufthansa, 2015).
The headquarters for this organization is Cologne in Germany. It has a revenue of E35 billion and an operating income of s$2 billion for the year ended 2015. The net income for this organization is approximate s$2.5 billion with a total assets accumulation of s$39 billion.
It has a large working team of 130, 000 employees for the year ended, 2015 (Deutsche Cargo AG, 2016). The mission of this airline company is to be a leading air carrier in the global network coverage with strict compliance to the safety of flights, product lien, reliability, and competitiveness. The vision is to maintain zero major crashes or accidents, continued growth in the industry. According to Global Market Directs (2008), the core values of this organization include teamwork, innovation, leadership, productivity, and an open door policy as well as customer satisfaction.
Competitive strategy
Using the Porters matrix, it is possible to come up with an analysis of the level of completion among these two airline firms. Basing the argument on the “cost leader vs. differentiation” and “mass market vs. niche”, it is possible to know which airline is more competitive that the other. Unlike the Singapore Airlines, Lufthansa Airlines are more competitive; with many destinations, workers, and services that the rest.
For instance, while Singapore airline has only 25, 000 employees, Lufthansa group have more than five times, the number of staff (Research and Markets, 2013). Consequently, revenue and profits also differ in the same magnitude where Lufthansa leads far ahead of its competitor. When the porter’s strategy, it is easy to determine whether an organization is falling below the performance average of it is above the profits. Competitive advantage for cost leadership is by cost leadership vs. differentiation.
It is good to admit that, the competitive rivalry remains a dominant force of the five forces in the model by Porter as used to assess completion in the industry (Chen, He, & Wong, 2014). In this case of the airline industry, it remains one of the major organizations globally and exists in the intensely competitive market.
Since Lufthansa Group has proved competitive than Singapore, all this can be attributed to its excellent services. It majors in passenger’s transportation and offers the services at fair prices (Lufthansa Cargo AG, 2016). It is more of leisure to use the services of this organization; has competitive in-flight entertainment, high technology, and better catering services in comparison to the customer’s services in Singapore Airlines.
Lufthansa maintains the base of their clients through sustenance of the differentiation in the services offered to the customers. According to the recent report released from both of these airline firms, it is evident to see that, the air industry has gone to some degree that makes it more attractive to the new entrants (Pearson, Pitfield, & Ryley, 2015). The next force of the Porters forces is the threat of new entrants in the industry. The airline is so saturated that, there is no fee space for newer firms in the industry to join. The most significant factor is the new way in which entrants appears.
Lufthansa is still likely to enjoy more market favor since the chances of other firms with similar services, entering the industry are minimal. The cost that is involved in starting up a new airline company and makes it competitive as the ones that are already in the market is too high since it has to make considerations of overheads, wages, and salaries, maintenance, market penetration as well as the costs of maintaining existing customers (Global Market Directs, 2008).
In this regard, bureaucracy, as well as larger financial, outlays which are involved in the establishment of a firm can serve as a barrier to the newer organization to join the industry of airline, where the already competitive ones keep going higher regarding market share and revenues. Unlike Singapore, Lufthansa has clearer air traffic infrastructure and is one of the leading in the destinations which it serves (Pearson, O’Connell, Pitfield, & Ryley, 2015).
It can be said that the airline traffic congestion is still going higher, and the slots of specific airports have defiantly turned to be commodities of particular carriers. It can well explain why the new airline firms find it difficult to join and negotiate primetime slots at the airports that are busy and can well result in the restriction of to offer flights at peak hours and having a routine fly in airports that are considered as not very busy.
According to the third forces of the Porter’s model, the focus can be used to explain why Lufthansa group keeps it’s foot far much ahead of its competitor Singapore Airlines due to cost and differentiation focus. This generic strategy rests on choices of narrow competition scope in the airline industry. The focuser opts to segment or even group the sectors in this industry as then decided to tailor its strategy so that it can serve them excluding others.
Taking the attention of the cost focus Lufthansa Airlines seeks to receive some cost advantage due to its economies of scale (Research and Markets, 2013). On the other hand, since Singapore airline is still smaller in comparison to its competitor, it finds it difficult for it to survive in the highly competitive environment. One can choose to use the differentiation segments; a firm can seek differentiation in the target segment. Both of these variants of the focus strategy rest on the differentiation of the entire industry. The cost focus exploits the differences in the Singapore Airlines regarding price behavior in some of the segments while other sections focus on exploitation of particular needs of the buyers of the carrier services (Singapore Airlines, 2015).
Adaptations
Due to the dynamic world we live in, organizations should try their level best and be accommodative of changes, primarily technological, for them to remain relevant and up to date. Most airlines in the world have even gone out due to inability to adapt to changes like overcapacity. Unlike Singapore Airlines, Lufthansa does not struggle to hold constant changes such as many carriers as well as changing economic environment (Pearson et al., 2015).
As a result of an inability to accommodate changes in Singapore Airlines, there has been countless civil and labor unrest, where employees complain about working in an environment that is not entirely conducive. Recently Singapore was hit by a loss of more than 5000 euros due to a 14-day pilot strike. Even though Lufthansa has also suffered the same effect, it has never caused as many economic pains as Singapore Airlines have already caused it (Singapore Airlines, 2015).
For the legal requirement in this industry, both Lufthansa and Singapore Airlines have been at a position to adapt successfully with the help of their respective governments (Lufthansa cargo AG, 2016). Besides, the government has aided them in controlling the customs duties as well as air tickets so that they can be in line with the economic status of the country.
Sustainability
The airline industry is one of the most delicate industries and requires to be attended with sustainable investments to ensure its continuity without barriers. The sustainability initiatives employed by Lufthansa remains very significant since they help it stay competitive in the environment. However, these variations do change from region to region depending on the type of sustainability in question (Deutsche Lufthansa, 2015).
For instance, Lufthansa has added massive capacity carriers that can carry more people and cargo than it is the case in other airline firms such as Singapore Airlines. Besides, the plane can survive in the sky for a much extended period of the air due to its security measures. The investment is critically sustainable since it has resolved the problem of high traffic, customer waiting, and client’s safety (Chen et al., 2014).
Risk analysis
One other significant risk involved in the airline is energy issues, inflation among some destinations as well as completion various from one destination to another. For Lufthansa, the major challenge is the issue of inflation in most of its principal target (Pearson et al., 2016). For instance, the airline mainly operates in Africa and Asia, where countries have not adequately been at a position to manage their economic status.
In this regard, when rapid economic changes occur, the operations of this company are severely affected, making the profit and revenue projection unattained (Chen et al., 2014). According to Singapore Airlines (2015), competition is a significant threat. Giant airlines like the American Airlines and the Eastern China Airlines real threat in the destinations where Singapore Airlines operates.
Personal Perspective
According to this study, it is clear that Lufthansa has a more effective and efficient strategic direction when it comes to the approach of international business that has proved most successful in the global market (Research and Markets, 2013). The fact that, Lufthansa has a workforce of more than one hundred thousand employees is a reason, convincing enough that, it has global domination regarding airline services. According to the decision matrix which evaluates and frequently prioritizes on the list of options, it becomes very easy to narrow down to one choice which is more successful in a market (Pearson et al., 2015).
Besides, making use of decision matrix enables one to reach the said action on numerous criteria. After the listing of the various options, there will be manageable lists reduced and in this case, there are only two instances to consider; Singapore Airlines and the Lufthansa Airlines. Turning the focus on Lufthansa, it is evident to see that, the airline has been able to acquire more global destinations that its competitor Singapore Airlines (Deutsche Lufthansa, 2015).
Conclusion
From the comparative analysis above, it can be noted that, international expansion is directly proportional to the competitiveness of a firm in the global market. Lufthansa has invested heavily in the destinations, some employees (both local and international) as well as domination on the world market. Besides, Lufthansa has also embarked on suitability through owning overcapacity carriers as well as maintaining high-level services to both existing and potential customers. As it can be seen in adaptability, Lufthansa is quicker to respond to changes in the evolving world, which gives it better chances of remaining competitive. The study could highly recommend that Singapore airlines should adopt the strategy of Lufthansa groups for it survives in this competitive industry.
References
Chen, Z., He, M., & Wong, K. (2014). A Case-based analytical study on the strategic evaluation of common equity performance of SIA in a global organic environment. Journal of Contemporary Management, 2(1), 51-63.
Deutsche Lufthansa: AG SWOT analysis. (2015). Web.
Global Market Directs. (2008). Deutsche Lufthansa Ag travel, tourism, leisure & hospitality strategic report. Web.
Pearson, J., O’Connell, F., Pitfield, E., & Ryley, T. (2015). Competition between Asian network airlines and low-cost carriers. Transportation research record: Journal of the Transportation Research Board, 25(1), 56-65.
Pearson, J., Pitfield, D., & Ryley, T. (2015). Intangible resources of competitive advantage: Analysis of 49 Asian airlines across three business models. Journal of Air Transport Management, 47(1), 179-189.
Research and Markets: Analysis of Deutsche Lufthansa (2013). Web.
Singapore Airlines (2015). Annual report. The Path of Progress. Web.
In the modern world of business, companies have to engage in stiff competition in order to survive in the market. In the airline industry, this competition is particularly severe, but Singapore Airlines (SIA) has been able to achieve sustainable competitive advantages and exhibit outstanding performance over decades (Heracleous & Wirtz 2009). It is important, therefore, that the company keeps its performance at this level while growing internationally. In this paper, the operational control, supply chain, and human resources management of SIA will be discussed; recommendations for SIA’s international expansion pertaining to these issues will be provided.
Operational Control, Production and Distribution/Supply Chain Management
In SIA, the function of operational control is carried out by a separate unit created specifically for this purpose, the SIA Operations Control Center (SIAOCC), which works 24/7 and coordinates not only SIA itself but also other services performed by this company, in particular, Scoot, SIA Cargo, and Silkair (Singapore Airlines 2013). Importantly, SIAOCC consists of a Manager Operations Control, Flight Control Center, SIA Engineering Line Operations, and Cabin Crew Control Center (Singapore Airlines 2013, p. 3).
Among the possible issues pertaining to the work of SIAOCC, the suboptimal monitoring of ground operations and the dearth of provision of transparency of the main operational tasks, as well as not fast and efficient enough communication which may hinder the decision-making process, are noted (Singapore Airlines 2013). Thus, it is possible to recommend enhancing communication between the units of SIAOCC (which will be especially important if the company is to grow internationally), as well as introducing additional control measures to improve the transparency of the operations.
The company of SIA is supplied by the necessary goods, materials, fuels and so on by its own subsidiary, SIA Cargo; thus, SIA Cargo, apart from providing cargo flights to its customers, is one of the main units responsible for supply chain management of SIA (Supply Chain Leaders n.d.). SIA Cargo has received a number of significant awards, in particular, for its supply chain efforts (Singapore Airlines Cargo 2015).
As it was already pointed out, the operational control of SIA Cargo itself is conducted by SIAOCC. On the whole, it is paramount to stress that Singapore Airlines Group owns a large number of subsidiaries (in 2009, this number was equal to 36, according to Heracleous and Wirtz (2009, p. 2)), such as the SIA Engineering Company, which conducts aircraft repair and maintenance, or Singapore Airport Terminal Services, which provides solutions pertaining to food and hospitality services supply. The distribution is also conducted mainly by the units of the company. Thus, it is possible to state that the supply chain if SIA is vertically integrated to a certain degree.
However, it might be assumed that the enterprise will have no choice but to make its supply chain at least somewhat more horizontal while expanding internationally. It might be recommended, however, that the organization should still aim at creating a vertical supply chain where possible, for this allows the business to implement the principles according to which it operates and which have proven efficacious in most of its operations.
Human Resources Management
Human resources are of the essence for the airline industry, for the front-line employees are what the clients see first when they come to an airport. Thus, SIA has adopted such principles of the human resources management as the attraction of the best employees and their long-term retention, providing its workers with holistic training and significant motivation via recognition and rewards in order to supply an excellent quality of service to the clients; in addition, much attention is paid to the cost-effectiveness of the workforce (Wirtz, Heracleous, & Pangarkar 2008). These principles are applied in all the locations where the company operates.
Heracleous and Wirtz (2009, p. 4) state that the service excellence is maintained by rigorous service design (i.e., feedback mechanisms from demanding customers) and holistic staff development, whereas cost-effectiveness is achieved through profit consciousness among employees; in addition, both strategic synergies (such as diversification of services and strong infrastructure) and the constant implementation of innovation enhance both the quality of service and the cost-effectiveness of the company and its workforce.
It is possible to note that there seems to be a paradox between the cost-effectiveness of the workforce and their motivation through rewards; however, the company has been able to maintain both these aspects for years, which is why it is stated that SIA possesses a certain type of ambidexterity (Heracleous & Wirtz 2014). Because the company has been profitable over decades, it is possible to recommend that it continues operating in this way, keeping its employees well-trained and motivated, and simultaneously stimulating them to make conscious efforts aimed at increasing the company’s profitability. Because these principles are at least partially responsible for the company’s success, it is of the essence to keep to them while expanding internationally.
Conclusion
Therefore, it should be stressed that SIA has achieved and retained sustainable competitive advantages over decades. The company’s operational control is carried out by SIAOCC, and it might be recommended that the business enhances communication between the units of SIAOCC, which may be crucial in international operations. SIA is vertically integrated to a significant degree; it is might be recommended to maintain this vertical integration of the supply chain where possible while expanding internationally.
As for the company’s human resources management, the business should also attempt to retain its ambidexterity and keep aiming at providing employees with high-quality training and considerable motivation while developing the conscious orientation for profit among them.
Reference List
Heracleous, L & Wirtz, J 2009, ‘Strategy and organization at Singapore Airlines: achieving sustainable advantage through dual strategy’, Journal of Air Transport Management, vol. 2009, no. xxx, pp. 1-6. Web.
Heracleous, L & Wirtz, J 2014, ‘Singapore Airlines: achieving sustainable advantage through mastering paradox’, The Journal of Applied Behavioral Science, vol. 50, no. 2, pp. 150-170. Web.
Singapore Airlines 2013, Request for proposal. Web.
Wirtz, J, Heracleous, L & Pangarkar, N 2008, ‘Managing human resources for service excellence and cost effectiveness at Singapore Airlines’, Managing Service Quality, vol.18, no. 1, pp. 4-19. Web.
The case study on Singapore Airlines revolves around the decision to enter the Indian market. Singapore International Airlines (SIA) aimed to enter the Indian market by partnering with TATA, a local company. The Indian market, in general, is complex, and the government strictly regulates the ability of foreign companies to enter it. SIA considered the partnership after the government allowed foreign investment in the aviation industry (Mazutis et al., 2004). One issue, however, was that TATA also planned to partner with a Malaysian company to create a low-cost airline in India. Therefore, this case study shows the complexity of entering the Indian market and the specifics of the national environment.
Discussion
On the one hand, the decision to enter the Indian market would be beneficial for SIA since the potential revenue and development opportunities in this region are vast. According to the case study, “the Indian aviation market was the ninth largest in the world in terms of passenger traffic and reported total revenues of $9.5 billion, with losses of $1.65 billion, in the fiscal year” (Mazutis et al., 2004, p. 2). However, despite the attractiveness of this market and field, the state has also had several significant issues. For example, the Indian rupee has been weak, and the high costs associated with maintaining the airline in this country could create serious constraints for SIA.
A partnership would be a necessity for SIA since the Indian government has put several restrictions on foreign investment in the national aviation industry. Moreover, a joint venture provides the benefits of having a partner company that understands the local market. However, a point of concern with this case study is Air Asia’s concurrent debut. This company is a pioneer in low-cost aviation, and its possible local partner, the TATA Group, wanted to create ventures both with SIA and Air Asia. Therefore, despite the benefits and the profit potential, SIA should not enter the Indian market. The TATA Group’s decision to partner with two foreign airlines significantly undermines the efforts needed to launch an airline. Moreover, in that case, TATA’s resources for the partnership with SIA would be limited.
On the other hand, SIA has been considering the opportunities that would allow this company to enter the Indian market. A relationship with TATA would offer the finest assurance of influence, financial support, and professionalism for starting a top-tier full-service domestic airline in the nation, which was something SIA had been searching for for a while (Mazutis et al., 2004; Kulkarni, 2018). TATA’s concurrent partnership with AirAsia to enter the low-cost airline market could be addressed contractually by outlining the potential conflict of interest and addressing the areas in which the two joined ventures would develop. While the two represented specific markets with distinct tactics on a global scale, the dynamics in India were such that the distinctions between the two were fuzzing as the price gap shrank. When SIA first started talking to TATA, its main priority was to ensure that the business case for joining the Indian airline market was strong.
Conclusion
In summary, by collaborating with a local business, TATA, Singapore International Airlines (SIA) sought to break into the Indian market. TATA also intended to collaborate with a Malaysian business to establish an inexpensive airline in India. In terms of passenger traffic, the Indian aviation market was the ninth largest in the world. The TATA Group’s choice to collaborate with two foreign airlines seriously jeopardizes the work required to start an airline. The best guarantee of influence, financial support, and professionalism for launching a premium full-service domestic airline in India would come from a connection with TATA.
References
Mazutis, D., Weeks, J., Vivanco, L., and Buche, I. 2004. Singapore airlines: The India decision (abridged). IIMD, 10.
Kulkarni, S. 2018. Analysis of Z Score for BSE listed airline companies in India. PARIDNYA, 6(1).
Singapore Airlines (SIA) belongs to the list of few companies that have managed to reconcile the opposing and contradictory elements of management. Applying dual strategy to carry out business, therefore, constitutes the foundation of the company’s activities, which allows it to sustain economic growth and receive constant benefits. In particular, SIA integrates four main paradoxes of management – providing high quality at attractive prices, introducing innovation in a centralized and decentralized way, sustaining leadership in technological development and achieving personalization and standardization in its activities (Heracleous & Wirtz, 2010). Thus, all the above-mentioned elements permit a company to meet the rigorous competition and sustain constant growth and development. The problem is that the chosen set of strategies is quite challenging because of the growing competency of other airlines which could outperform SIA, despite its long-term list of successful activities.
Overview of the Case
Despite the fact that many Western oriented companies have given up following this approach, the Eastern oriented companies, such as SIA continue handling the business successfully through the application of dual strategy. In particular, the preservation of high quality of service is ensured by efficient management of planes and human resources that are the major assets of the company. As a result, such a strategy allows the company managers to spend less time and resources for repairs and delays. Heavy investment into employee training is highly rewarding because it guarantees exceptional service as well. SIA Company is also regarded as a pioneer in innovating technologies. Interestingly, innovation is not confined to improving technology. Rather, the concept also entails constant upgrading introduced by employees at a local level through suggestions schemes (Heracleous & Wirtz, 2009). In addition, SIA dual strategies support the image of the company as a technology leader that introduces innovation by small improvements and risk project. Finally, the policy of standardization and personalization imposes no restriction to employees’ constant development, as well as to the presentation of services to customers because the scheme of training and reward is cost-effective enough to provide the employees with sense of pride of working with SIA. The analysis of the implemented strategies reveals SIA’s straightforward orientation on predicting and meeting customers demands in terms of services, technologies, and innovations, which has become the key to sustaining a competitive advantage over other leading airline companies.
Discussion
Discussion of Issues and Supported Findings
The company applies to many important strategies and combines various approaches to sustain constant growth and remain on the top of the competition. Heracleous and Wirtz (2010) underline that SIA follows a number of significant conditions to exercise excellent service in the most cost-effective way. To begin with, the company introduces a firmly developed organizational culture that is oriented on improvement and innovation in each segment of production and service. Further, Singapore Airlines has introduced linear ecosystems that involve chains of interconnected actors and organize virtuous circles within the presented dual strategies. As such, SIA has established ties with leading restaurants, hotels, and retails to offer attractive discounts and encourage customers to use their services. What is more important is that the company welcomes risky project launches to be pioneer in innovation techniques and industrial trends. In such a way, SIA manages to be ahead of its competitors.
Main Thoughts with regard to the Identified Findings
The overview of the case shows the complex unity of strategies and approaches, as well as important organizational elements that SIA makes use of to stay afloat in a highly competitive environment. In particular, Heracleous and Wirtz (2009), expand on the policy of diversification that is based on use of “information technology…in enhancing customer service as well as increasing efficiency” (p. 275). The exposition of the strategies allows the company to identify specific issues and guiding principle that make up a picture of the companies competitiveness. Specifically, rigorous design development, constant innovation in all spheres, profit consciousness and suggestion schemed encouraged in all employees, and holistic approach to staff training and development are the main pillars of company’s successful business.
Arguments: Application of theories
In order to understand the main guiding principle in SIA, it is purposeful to analyze the main management strategies and concepts, including cost leadership, innovation, change management, and organizational development. In this respect, a cost leadership model introduced by SIA has much higher potential in comparison with peer competitors. Specifically, its major principle is confined to lower maintenance costs, fuel efficiency, and optimal fuel hedging (Inderwildi and King, 2012). Closer study of cost leadership is introduced by Michael Porter who offers three major strategies leading to a competitive edge in an industry. These strategies involve differentiation, focus strategies, and leadership (Eldring, 2008, p. 4). Other strategies result in synthesis of the ones mentioned before. According to the model, the company that applies to focus strategies has a win-win position in comparison with those applied to synthesized strategies (Porter, 1985). However, a deeper analysis of Porter’s generic strategies triggers discussion on other factors contribution to successful accomplishment and organizational development (Gonzalez-Benito & Suarez-Gonzalez, 2010). Specifically, considering the link between business strategies and financial performance is essential for carrying out business within the established period.
The strategy of differentiation involves “high quality offerings, and significant investment in innovation, staff development and branding, leading to higher costs than average” (Heracleous & Wirtz, 2009, p. 278). However, there are still some other elements that need to be constantly introduced to the field to meet the competitive environment. This is of particular concern to the development of transparency reporting through online channels. Specifically, the internet “…means tangible advantages in the form of lower distribution and transaction costs, customer-ownership as well as a reduction in time-to-money” (Delfmann, 2005, p. 100). In addition to rational distribution of customer ownership via Internet, there should be a rational distribution of IT support that would enhance constant dialogue between the company employees and their customers. In this respect, differentiation strategy can be defined as a means of facilitating the delivery of customized offering, proper segmentation, and delivery of information sustaining the dialogue. In this respect, Mohd Zulkeflee Abd and Ilias (2011) emphasize the significance of internet services, including electronic transactions, customer service and support department, and receiving feedback from customers.
Improper implementation of differentiation strategies exemplifies many cases of airline companies whose profit rates were extremely low. Such company included the Virgin Express and Spirit (Fojt, 2006) At the same time, the implemented strategies demonstrate incredible results for such airline industry as Ryanair (Fojt, 2006; Shaw, 2011). In fact, the company has managed to combine skillfully low-cost model with differentiation strategy. It also discovers the complexity of implementing differentiation strategies because there should be optimal balance between the cost leadership and distribution of responsibilities in all segments of the industry.
Change management in airline industries is the core condition for surviving in a highly competitive world. The example of human resource management in the British Airways proves that attention to employees’ development is indispensible to sustaining improvement and producing the profitable outcomes (Balmer et al., 2009; Wilson, 2005). Specifically, it approves alignment with such aspects as dynamics of external setting and shaping identity and culture within the employed environment.
Synthesis of Theories
The above-presented theories of change management and organizational development reveal a number of new perspectives for developing and sustaining competitiveness by Singapore Airlines. Specific attention should be given to the changing customer needs, and orientation of innovation with regard to the supply and demand rates. With regard to the presented changes, as well as existing theories, SIA provides a good example of how business should be conducted. Nevertheless, there are still specific aspects and factors that the company must consider to sustain a competitive advantage. The actual matter of the oppositions works effectively so far, but further management should still anticipate change because it is the main basis of progress.
The point is that the adoption of simplistic or generic strategies introduced by Porter cannot always be beneficial for the airline companies, such as SIA, because customer needs should be concerned with regard to the complex circumstances (Nilakant & Ramnarayan, 2006; Mills et al., 2008). Therefore, along with the focus strategies, differentiation, and cost leadership, the company should analyze alternative paths and perspective of implementing new approaches to keep pace with the newly emerging competitor. In other words, SIA should introduce a platform for practicing and developing behavioral knowledge in order to achieve effectiveness (Waddell et al., 2007). Using paradigms of organizational transformation with regard to the globalization context is another important condition for successful strategic management.
Constant development and transformation in SIA Company can be significantly enhanced in case change management is properly implemented. Specifically, it is strongly suggested to apply to various types of change, including discontinuous, anticipatory, and reactive change. Anticipatory change takes place when an organization makes rapid shifts to advance its efficiency and gain a competitive advantage whereas reactive change is used to respond immediately to the external factors (Chaffey, 2007). Mastering these change models is beneficial for the Singapore Airlines because it contributes to better organizational transformation.
Conclusion
An in-depth analysis of the strategies implemented by Singapore Airlines has discovered a unique complex of approaches that the SIA managers use to meet the challenges of competitive world. In particular, their orientation high quality services and cost-effective leadership, innovation in all segments of service and production, profit consciousness and employee training, and a complex synergy of existing business strategies. The case has highlighted Porter’s generic business strategies being at the core of the company’s strategic management and organizational development, combined with specific elements. This is of particular concern to employees’ inner awareness of the necessity to introduce improvements to the company’s work, as well as launch of risky innovation projects. Change management and human resources analysis also indicates company’s awareness of the important to shape a unique culture that would correspond to existing international standards. Specific improvements, however, should be encouraged in technological sphere through the introduction of online tools, as well as in the fields of predicting and anticipating change. In other words, the company should pay closer attention to managing the external environment to sustain a competitive edge in future.
References
Balmer, J. T., Stuart, H., & Greyser, S. A. (2009). Aligning Identity and Strategy: Corporate Branding At British Airways In The Late 20th Century. California Management Review, 51(3), 6-23.
Chaffey, D. (2007). E-Business and E-Commerce Management: Strategy, Implementation and Practice. New York: Pearson Education.
Delfmann, W. (2005). Strategic Management in the Aviation Industry. US: Ashgate Publishing.
Eldring, J. (2009). Porter’s (1980) Generic Strategies, Performance and Risk: An Empricial Investigation with German Data. Germany: Diplomica Verlag.
Fojt, M. (2006). The Airline Industry. US: Emerald Group Publishing.
Gonzalez-Benito, J., & Suarez-Gonzalez, I. (2010). A Study of the Role Played By Manufacturing Strategic Objectives and Capabilities in Understanding the Relation between Porter’s Generic Strategies and Business Performance. British Journal of Management, 21, 1027-1043.
Heracleous, L., & Wirtz, J. (2009). Strategy and Organization at Singapore Airlines: Achieving Sustainable Advantage through Dual Strategy. Journal of Air Transport Management, 15, 274-279.
Heracleous, L., & Wirtz, J. (2010). Singapore Airlines’ Balancing Act. Harvard Business Review. 145-149.
Inderwildi, O., & King, D. (2012). Energy, Transport and the Environment: Addressing the Sustainable Mobility Paradigm. US: Springer.
Mills, H. J., Dye, K., & Mills, A. J. (2008). Understanding Organizational Change. US: Taylor & Francis
Mohd Zulkeflee Abd, R., & Ilias, A. (2011). Seven Unique Differentiation Strategies to Online Businesses: A Comprehensive Review of Malaysia Airline System (MAS). Journal Of Internet Banking & Commerce, 16(2), 1-16.
Nilakant, V., & Ramnarayan, S. (2006). Change Management: Altering Mindsets in a Global Context. US: SAGE.
Porter, M.E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press, New York.
Shaw, S. (2011). Airline Marketing and Management. US: Ashgate Publishing.
Waddell, D., Cummings, T., & Worley, C. (2007). Organizational Development and Change. US: Cengage Learning.
Wilson, S. (2005). Human Resource Management in the Airline Industry – the Example of Star Alliance. Germany: GRIN Verlag.
Environmental and behavioral analysis of a company forms an intrinsic examination of the key aspects that determine an organization’s ability to effectively operate both from internal internally and externally.
Effective understanding of the environment at Singapore airlines has been necessary towards improving management standards at the company. In addition, it has enhanced higher customer value in services delivery besides increasing levels of productivity and profitability.
Its leadership has remained steady and quite efficient since the establishment of the airline. This is due to the fact that the company has emphasized on the need for effective planning, technological development and shrewd leadership that provides the necessary focus for the company to achieve its objectives and strategies.
Introduction
Environmental and behavioral analysis of a company forms an intrinsic examination of the key aspects that determine an organization’s ability so that it can effectively. It is worth noting that an airline can hardly evade challenges in its operations just like other businesses units.
However, the effectiveness of daily operations is subject to other related and different business applications. Moreover, effective understanding of the environment and behaviour of an organization is necessary in enhancing better management in a company, higher customer value in services delivery, and increased levels of productivity and profitability.
In order to effectively bring out the behaviour of Singapore Airlines, the paper employs theoretical frameworks to explain both the environmental and strategic analyses. When Singapore Airlines came into being, that is in 1972, it enrolled 6000 members of staff.
It had 10 aircrafts while it operated in 18 countries within their cities. It has done exemplary well since then. It is currently operating in about 40 countries having a network of 90 destinations (Huselid, Jackson & Schuler, 1997).
It is an engineering company stationed at Changi Airport in Singapore and provides engineering services to other air carriers who are about 80 of them spread in other continents The paper concludes by emphasizing on the need for the correct organizational culture based on continuous improvement that is dynamic to technological progress as well as the need for modernistic consumerism patterns.
A brief background of the company
Singapore Airlines Limited (SIA) is one of the major airlines which ply various destinations across South Asia, East Asia and South East Asia (Varey, 2006). It is worth mentioning that its airbus A304-500 operates from Singapore to Los Angeles Ns Newark.
The SIA forms the main airline of Singapore with its hub at Changi Airport. Studies indicate that the company was formed in 1947 and was able to fully develop through technical assistance from Qantas Empire Airways and British Commonwealth airlines (Varey, 2006).
Figure 1: A diagram showing Singapore airline flight
Today, the company has numerous fleets and has diversified its structure into different industries and sectors.
The company’s leadership
The leadership at Singapore Airlines has remained steady and very efficient since its establishment. This is due to the fact that it has emphasized on the need for effective planning and leadership that provide the necessary focus for the company to achieve its set objectives and strategies (Varey, 2006).
The company has been able to generate the necessary demand for higher returns through effective leadership. The latter has been enhanced by the positive effects of the market.
Its leadership has also been able to empower the organization’s staff at the lower levels in terms of addressing the different problems of the company (Cunningham & Gerrard, 2000). This has been made effective through vertical and horizontal communication in the company.
Figure 2: A figure showing the organizational structure of the company
Decision making and negotiation process
As indicated form the above figure, it is evident that decision making and negotiations in SIA are processes that involve all stakeholders and employees. Communication acts as a good avenue for solving different problems that affect staff members and the rest of management (Cunningham & Gerrard, 2000).
It is worth noting that majority of the tasks within the company are directly linked to enhance better management and rational decision making as employees progress with their various duties.
It is from this consideration that the role of its human resource department is very essential in guaranteeing the necessary harmony between the staff as they continue with their major operations (Varey, 2006).
Besides, provision for response mechanisms and reporting networks at the field and the company level raised the overall assessment capacity of the company’s progress.
Communication networks
Communication is one of the major factors that dictate the ability of an organization to effectively articulate its goals and objectives both at the internal and external levels.
Cunningham and Gerrard (2000) argue that communication between the major departments, staff, and the top management acts as a major indicator of the progress to be expected from a given company.
In cases where effective communication is established, there is general harmony between the production systems, the overall production capacity and the expected target goals and objectives.
As the mission of the organization states, Singapore Airlines is mainly oriented at providing its consumers with safe and reliable transport services that meet the expectation of the shareholders.
It has therefore been the role of its human resource department to ensure that the correct communication considerations are articulated into the existing staff and new staff as time progresses.
As indicated by the term ‘reliable’ in the mission of the company, the total manifestation of reliability invokes the demand for interdepartmental cooperation with prompt response for the short term and continuous improvement of the organization.
Organizational change
Organizational change is an important aspect in modern business operations because it involves all stakeholders of a company. Their views are incorporated with the aim of enhancing their participation, and most importantly, generating their identity in order to reduce resistance (Varey, 2006).
Therefore, ensuring that change demands are acceptable in an organization requires intrinsic understanding of an organization’s culture and also operating within its outline. This should be projected towards an organization’s mission and objectives.
Mary Jo Hatch posits in her model of culture dynamics that employees form the most critical element in a change process because they are directly involved in a project’s implementation.
Even so, Varey (2006) observes that the ability to ensure organizational change is one of the hardest aspects that companies faced on a regular basis. As indicated earlier, it is largely due to the inherent demands of an organizational system that calls for all stakeholders to conceptualize the requirement and also internalize its possible repercussions.
Wirtz and Johnston (2003) assert that management should view an organization as a highly interdependent system that cannot effectively run with one malfunctioning unit.
In Singapore Airlines, the process of effecting organizational change has experienced a very slow pace of implementation due to poor cooperation and resistance from some units (Cunningham & Gerrard, 2000).
The extent of change at this Airline has been very minimal due to the perceived negative impacts of making adjustments among employees.
Organizational change demands effective employees at all levels of an organization while harmonizing the efficacy of the set strategies. One of the key strategies that Singapore Airlines has sought to implement is the establishment of effective communication systems.
Communication in this airline company is essential for relaying the correct information between employees and the top management. This would seal possible loopholes for employees who obtain wrong formation.
Power and politics
The influence of power and politics in its macro-environment has had massive influence in the operations of the company (Cunningham & Gerrard, 2000).
It is worth mentioning that the involvement of politics in its leadership and control has boosted its image while slowing down its operations.
The culture of the organization has also been eroded by the introduction of fresh initiatives and processes dictated by the political environment.
Organizational culture and innovation
One of the major roles of the human resource department in Singapore Airlines is to establish and promote the necessary objective-oriented organizational culture. Wirtz, Heracleous and Pangarkar (2008) point out that organizational culture dictates the values, beliefs, relationships, and harmony both at the internal and external levels.
Moreover, many organizations have neglected the role and notion of establishing effective organizational cultures. Although organizational cultures from most organizations are exercised in a more formal mode, it is the main subculture that dictates the ability of the main culture when it comes to effective application of culture.
Employees operate in major circles that do not merely dictate their inner perceptions of different organizations’ management, but also act as the main drive by either accepting or rejecting the ideas they perceive to have less value among them (Cunningham & Gerrard, 2000).
It is against this backdrop that Singapore Airlines has enshrined the roles of its human resource segment to the basic notion and understanding of various demands of the staff in order to reduce their overall resistance to the much desired progress.
As indicated earlier, by striving to infer positive images and relation networks between its management and workers, Singapore Airlines emphasizes that the roles of employees are indeed the most crucial bit in ensuring that consumers get the best services (Varey, 2006).
The creation of the belief system that employees are not just the main anchors for progress, but they also determine the future of the company is indeed true. Such a philosophy encourages them to boost their efforts in setting the necessary footprints in the company.
It is from this notion that the human resource management has effectively derived the necessary identity for the employees as they associate more with the company and participate in its decision making (Cunningham & Gerrard, 2000).
Furthermore, one of the main pillars at Singapore Airlines is the value for innovation. The company has directed its human resource department with the responsibility of ensuring that all procedures that lead to improvement of customer value are achieved.
As a major part of the organizational culture, recruitments, staff development, promotions, and internal relations have assimilated the necessary platform in dictating the ability of the organization to meet its own strategic objectives (Cunningham & Gerrard, 2000).
Needless to say, its management structure has been greatly sub-branched to ensure that the staff value is maintained at the highest possible level.
Besides, it is important to note that an effective organizational culture requires efficient cooperation between all the systems involved in the management of different aspects in order to ensure a stronger interlink with the external world (Varey, 2006).
Hence, the airlines’ role has perhaps been intertwined in a possible delicate balance where all aspects of staff needs in addition to those of the consumers are carefully articulated for the sake of improvement. It is worth noting that in all instances, consumers must be held much higher than all other factors bearing in mind that it is only through consumers that an organization like Singapore airlines is able to operate.
From this consideration, Singapore Airlines has effectively brought in major observable positive effects for the staff and management as a factor of cultural consideration.
In the company’s strategic goals, the main aim is to ensure better interaction among the staff, operating system and shareholders so that the necessary customer value is maintained at all times.
This has been the overriding force as the company continues to enrich its culture to fit in the new market amidst myriads of challenges.
Goals and structure
According to reports from the company, Singapore Airlines assimilated an effective structure that was based on the general call to enhance higher levels of efficiency in supplying the highly demanded services.
It is from this consideration that the company assimilated a phase-based organizational structure since its formation in order to ease major operations, provide room for assessment, and offer space for change and improvement (Varey, 2006).
Though the structure has attracted criticism from different scholars on its hierarchical outlook, the company insists that the whole system is highly efficient both in terms of design and application.
As the Singapore’s most crucial Airline Company, the government plays a major role in its operations and derivation of different policies (Cunningham & Gerrard, 2000). It is in this regard that its vision is tied to the citizens of Singapore.
The vision and goals of the company are tied to the people’s satisfaction through enhancing their lining standards by promoting the economic competitiveness of the country. From this notion, all the derivative principles and policies are derived in search for excellent services for the best values to achieve the same.
Though the values of the company as presented may seem to negate the very notion of stability previously advocated for by calling for imminent change, its consideration for progressively tracing modern technology, human satisfaction, and economic development actually gives the prior call for service to the people.
Particularly, the vision and values gives special reference to the role of its human resource department by calling for enhanced staff development as a key factor in determining the levels of success that can be realized in the organization.
According to Cunningham and Gerrard (2000), the call for optimization of resource utilization for greater development carves a special notion for human resources managers in an airline company.
It is especially emphatic on the need to ensure that all considerations for innovations and modern technological development are assimilated in the system for faster and even development.
As exemplified by the notion and considerations for the of the mission and the values of the company, it is no doubt that human resource development not only forms the centre for their realization, but in progressively determining their ability to fit in the highly dynamic globe.
It is the view of many analysts that energy globally acts as the main icon for development at the local level and international considerations too (Varey, 2006).
As a result, Human Resources development links the vision of the company, harmonizes the national laws demands, and projects the results to the national and outside community upon which its progress is determined.
Strategy and organizational design
Strategic analysis provides an examination of the strategies that an organization employs to competitively remain competitive in the market. They form the core of the organizations ability to succeed in the market and therefore dictate its internal and external operations in light of the competitive world.
According to Wirtz and Johnston (2003), assimilated strategies form the core determinant of an organizations ability to address its developmental demands in the market.
With the leadership of Singapore Airlines understanding the nature of the Asian region market, it opted for a low cost model that satisfies travelers of all social classes. This has perhaps been the major strategy used to attract its consumers in the region.
Besides, it also seeks to get a stronger grip of the regional and international market by merging with continental airlines and therefore extending its operations to the lucrative United States market through California’s Los Angeles and San Francisco International Airports (Varey, 2006).
Further expansion is considered essential in giving the company an international repute and therefore promoting its competitive advantage.
In order to counter the soaring competition in the country, the company woes more customers by giving special offers to frequent travellers through frequent flier program. The program extends preferential treatment for the customers who frequently travel using the airline and therefore encourage them to stick to the airline to enjoy the benefits.
According to Wirtz, Heracleous and Pangarkar (2008), special flier programs have been effectively applied in over 20% of the global major airlines with great success. By extending special offer to the customers, it becomes easy to win their loyalty.
Loyal customers are generally open and provide an organization with the necessary criticism to improve a system as they are able to associate with it.
It has a well established ground handling strategy. Services like aircraft security, linen laundry, cargo and passenger handling are well provided. In addition, they offer services such as catering, ramp handling and baggage among others. These services are provided by the airline in order to improve its market base.
Organizational behavior in Singapore airlines is highly rated in terms of job rotation. A worker is usually periodically shifted from one work to another but on a similar level (Schneider & Bowen, 1995). For example, a person who is handling tickets may at other times find him/herself handling baggage.
This strategy aims at maximizing flexibility while minimizing layoffs. Equally, this shifting promotes personal as well as career development. It also enables employees to become multi-skilled by enlarging their experience base and improving competency at the same time.
This job rotation system is beneficial due to the fact that it breaks monotony. Eventually, it guarantees efficiency of performance by employees. By spreading the scope of employee activities, it ensures that there is increased motivation since they are assisted to realize how organizational performance is boosted through their work.
In terms of managing services, delivery is usually given from the perspective of the customer. Consequently, an additional attention is offered to customers. Some of the services given have been termed as unwanted and excessive.
Their flights are cheap while there are many affordable hotels near Singapore’s Changi Airport which are booked online.
In addition, there are cheap car rentals within the same vicinity. The flight performance of Singapore airlines has always been rated to be timely with very limited cases of lateness.
Another outstanding feature in Singapore Airlines is their managerial approach. The manager allocates various portions of available tasks with respect to the experience of employees. The management style is also democratic.
Authority is delegated from up going downwards. Moreover, responsibility is given key attention instead of the servant-master relationship as seen in some other companies.
In cases where culture is involved, Singapore Airlines has a tendency towards being sensitive and considerate to various cultures. Customers are given total attention. Their stewardesses are well trained in matters related to effective communication.
The brand of this company is attached to the organizational culture whereby an employee becomes a part of the entire system especially after being in the system for a considerable length of time. This company has a belief system that the products being delivered to the market are goods and therefore should be handled with care
In terms of decision making, Singapore Airlines has an able and experienced management. Delays and cancellation of flights have been highly minimized.
Such a decision can only be reached after collective and thorough consultations have been carried out among the top management or if the prevailing situation such as bad weather does not allow any flights.
Even in such a case, the problems are usually solved promptly to ensure that things return to normalcy. Crisis is thus managed in the most amicable way.
The company hires employees who can withstand high pressure in a dynamic environment. In addition, they are given an additional training and equally advised on how they can improve on service delivery (Yagil, 2002).
Technology
Technology is perhaps one of the greatest developments that have been witnessed in this airline company. Singapore Airlines has been on the forefront in embracing the modern technology (Varey, 2006).
Latest advances in technology have been used it to enhance communication with consumers by obtaining quick feedback, facilitating smooth airline operations as well as assisting in overall design improvement of the airline.
The presence of technology within its environment is critical in ensuring that all the management, manufacturing and communication processes are carried out effectively (Chan, 2000).
Conclusions
Management of organizations in the 21st century is highly dependent on the ability to analyze the overall operating capacity in addition to understanding their strengths and weaknesses.
In the case study of Singapore Airlines, it is imperative t note that the company has been faced with stiff competition that has seen major players assume strategic approaches in order to remain relevant in the market.
Even so, it has managed to remain quite competitive in the market following its management ability to understand the Asian market in terms of holistic integration of customer quality and incentives.
Besides, the environmental factors such as politics and technology have impacted on its efforts of building positive consumer relationships, devising effective organizational change and overall improvement of performance.
References
Chan, D. (2000). Beyond Singapore Girl: Brand and product/service differentiation strategies in the new millennium. Journal of Management Development, 19(6), 515–542.
Cunningham, J. B. & Gerrard, P. (2000). Characteristics of well-performing organizations in Singapore. Singapore Management Review, 22(1), 35-64.
Huselid, M. A. Jackson S. E. & Schuler, R. S. (1997). Technical and strategic human resource management effectiveness as determinants of firm performance. Academy of Management Journal, 40 (2), 171–188.
Schneider, B. & Bowen, D. (1995). Winning the Service Game. Boston, MA: Harvard Business School Press.
Varey, R. J. (2006). Flying high in a competitive industry: Cost-effective service excellence at Singapore airlines. Australasian Marketing Journal, 14(2), 51.
Wirtz, J., Heracleous, L. & Pangarkar, N. (2008). Managing human resources for service excellence and cost effectiveness at singapore airlines. Managing Service Quality, 18(1), 4-19.
Wirtz, J., & Johnston, R. (2003). Singapore airlines: What it takes to sustain service excellence–a senior management perspective. Managing Service Quality, 13(1), 10-19.
Yagil, D. (2002). The relationship of customer satisfaction and service workers’ perceived control: Examination of three models. International Journal of Service Industry Management 13 (4), 382–398.
