Singapore Airlines Company: Dual Strategy Analysis

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Table of Contents

Introduction
Discussion
Arguments: Application of theories
Conclusion
References

Introduction

Background of the Case

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.

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