Pestle Analysis of Singe pore Airlines†Free-Samples for Students

Question: Do Pestle Analysis Of Singepore Airlines. Answer: Introduction Singapore based reputed company who has built great reputation for superiority in consumer service is Singapore Airlines, also known as SIA, has gained much attention for its detailed and improved stand in designing strategic management. By giving consideration to all available sources of competitive advantage and establishing a well nurtured management system, the company has been able to survive the airline industry with gaining significance. SIA was commenced on 12 October 1937 with the incorporation of Malayan Airlines by the Ocean Steamship Company of Liverpool, Imperial Airways, and Straits Steamship Company situated at Singapore.(Singapore Airlines: Sustainability Report FY2016/17, 2017) The company was successful in expanding its business with technical assistance of British Commonwealth Airlines and IATA. The company started to schedule regular flights from Singapore to Kuala Lumpur and Ipoh to Penang. In 1957 the company became public after the fleet included Douglas DC-3s in large numbers and was named as Malayan Airlines. Again in 1963, with the formation of federation of Singapore, Sabah, Malaya, and Sarawak the company was renamed as Malaysian Airlines. Finally in the year 1966, when Singapore got separated from the federation, it renamed the company under Singapore Airlines and made its company high rise headquarters based in Singapore.(Singapore Airlines: Sustainability Report FY2016/17, 2017) Since its formation, the mission of the company is to provide with high quality transportation service and return utmost revenue to its stakeholders.(AYOB) Pestle Analysis Of Singepore Airlines With the help of PESTLE analysis; factors relating political, technological, legal, economic, social and environmental forces that affects the company externally but is relevant to the firm will be considered.(Frue, 2017) Politically, any airline industry is prone to government instability in the areas where it conducts its operation. For example, incidents of revolution in Arabian countries have led to curtailing of flight takeoffs in this region which had affected the cost operation of SIA. On the other hand opportunity that lies are most of the airlines carries National Flag of the country as its main carrier sign and represents the country itself and thus the government are likely to support them in all ways. Airline industry cannot limit its economic boundaries to its homeland and has to depend on various international economic conditions and are economic threat for the company. Other economic threat to SIA is growth in fuel rates as it composes main element in aircrafts and is used on regular basis in large quantity. Any rise in it can bring instability in the company operation directly or indirectly as if the overall economies of countries destabilizes it can affect the GDP of countries and hence people may become more concentrated in their expenditure for extensive travelling.(Jurevicius, 2013) Although SIA utilises best pricing strategy, it is possible that to some extent strategy also might not prove fair. Socially, the company has to face many challenges as operations of SIA are not limited in few countries only. For example, tourists travelling to far country with altogether different culture and language, it might become difficult for them to understand and take assistance from flight attendants during their long journey. Thus SIA requires appointing attendants who are well conversant in different language and culture which requires a huge expenditure to spend significant amount in staffing and for the management who are able to take initiatives.(P estel and Five Forces analysis of Singapore Airline, 2015) Climatic threat has also been prominent in airline industry as any weather disruption like earthquakes, flood, or any other uncertainty in climate can lead to cancellations in flights relating those countries. On the other hand increased concern for environmental friendly services among passengers is increasing in a significant way which makes it a priority concern topic for the management part.(Together We Grow: Environmental Report, 2011) Global warming issues have affected and have been taken into consideration by many industries due to which airline industries have also started undertaking carbon reduction processes to assimilate their part of corporate social responsibility (CSR). SIA lacks some reputation here as it has been slow in responding in this case and hence is been demanded to rise in global prospective from customers.(Singapore Airlines Social Responsibility - Singapore Airlines Results, 2017) In gigantic market of airline industry where people prefers air travelling, mainly in top marketplace, the main arena in which competition is played relates to technological innovations. For this, airline industries spends considerable amount in research and programming division not only to provide technological assistance and comfort to passengers but also to evoke a sense of security among them. Technological factors is far superior in case of SIA as it holds youngest fleets of aircrafts and is a self-righteous holder in adopting new and innovated reclining seats, entertainment systems, headsets, etc. and is still improving on this ground by adopting new and advanced ways. For booking tickets online, the technological factor has great influence and SIA holds good position as it provides great support to its customers by providing easy and correct way of choosing their preference regarding price and class.(Singapore Airlines, 2017) Although countries with poor internet connectivity might not be able to utilise this service and can get astray from SIA whic h might led in losing customers for the company in those areas. Changes in governmental rules and regulations can impact the business politically. The organisation has to take permissions from the government to enter into new routes and to operate in countries where legislations are different which is another challenge the company has to face constantly.(Singapore Airlines: Sustainability Report FY2016/17, 2017) Therefore it can be said that airline industry is much depended on legal factors like government support to sustain in the market Five Forces Analysis Of Singapore Airlines To identify major external forces with which a company is affected, Michael Porter has created a tool, Five Force Analysis with the help of which companys performance within market boundary is identified and can be evaluated accordingly.(Martin, 2017) Threats of new entrants, threat of substitute product, bargaining power of suppliers, bargaining power of consumers, and competitors of industry are few areas that are been identified in this analysis. With the help of this tool the management can predict future threats and opportunities that come in the way of attaining goal of the company. The force relating threat of new entrant refers to the scope in which new competitors can accommodate itself within the industry. In airline industry, this force seems weaker for SIA as the airline industry is highly dominated by it. The government support and national carrier attached to it representing the country itself makes other competitors tough to penetrate in Singapore airline industry and passengers prefer to travel more in nation supported company. (Singapore Airlines: Sustainability Report FY2016/17, 2017)Also, the clogging of the atmosphere and airports enables increase in congestion level and is considered negative from government and passengers view point. Although there are few entrants possessing weak threat who are constantly trying to enter in the long-haul airline sector, while strong threats witnessed recently are the one dealing in short-haul airline passenger sector. The bargaining power of suppliers seems strong in airline industry as it depends highly on other resources like oil and manufacturing parts.(BUSINESS REPORT ON SINGAPORE AIRLINES PRINCIPLES OF STRATEGIC MANAGEMENT, 2015) Porter has described in its theory that if the bargaining power of suppliers is high then it weakens the relative position of business. In the year 2010, SIA declared that out of its total costs, 33% was due to oil purchase and constant increase in the prices of oil have mad e suppliers power strong enough to make contracts under their conditions.(GALLEZO-ESTAURA, 2016) Boeing and Airbus are the prime suppliers of aircraft and possess bargaining power and monopoly in supply of engines sector. With limited suppliers in manufacturing area, SIA has to constantly face difficulties in its supply and also for their maintenance.(Sustainability Report FY2015/16, 2016) Another weak force which airline industry faces is high bargaining power of customers. Over hundreds of Asian airline companies operate in the Asian region which enables customers to make choices among them according to rates and services provided by them. Increase in access to internet and websites showing comparisons between different flight operators makes it difficult for the company to maintain price. Normally a customer will prefer Airline Company with lower fare which makes their bargaining power strong. Switching costs are also fairly low and lack of customer loyalty can easily make customers switch to other company. SIA has managed to some extent in reducing this force by offering loyalty points and discounts to its regular customers which has saved the companys sustainability. According to Porter, intense rivalry can affect the business and demands change to respond accordingly.(Martin, 2017) There are several routes in which other airline companies provide sufficient amoun t of takeoffs with providing enhanced on board services. In order to sustain in the business the company must adopt price cutting strategies and ensure high service so that threat regarding competition in minimised. Competitive rivalry of SIA seems moderate with its exceptional performance in Singapore Airline industry and presence of few routes like Kangaroo Route in which the company plays control, gives its competitors tough competition.(The way how Singapore airline managing the business) Threat of substitute service according to Potter refers to the extent to which product or service can be replaced by other company with similar range. Due to requirements of government permissions and regulations in international connections, airline industry faces threat of substitutes highly in regional sector. Increase in availability of substitutes has also been a matter of concern for SIA. Although in international service, the company gains prominence. There are other issues also like increase in possibility of introducing high speed rail connections very soon. The scope of telex- communication and technology has also increased which had made people get connected and work from abode rather than making long travelling which was done by them earlier.(BUSINESS REPORT ON SINGAPORE AIRLINES PRINCIPLES OF STRATEGIC MANAGEMENT, 2015) References Airline Suppliers: Tags Singapore Airlines. (2017). Retrieved from https://www.airline-suppliers.com/tag/singapore-airlines/ AYOB, A. M. (n.d.). SINGAPORE AIRLINES LIMITED: BUILDING A CULTURE OF SERVICE EXCELLENCE . Retrieved from https://mahdzan.com/papers/sia/singapore_airlines.pdf BUSINESS REPORT ON SINGAPORE AIRLINES PRINCIPLES OF STRATEGIC MANAGEMENT. (2015). Retrieved from https://essaymonster.net/business/109258-business-report-on-singapore-airlines-principles.html Frue, K. (2017). PESTLE Analysis in Strategic Management. Retrieved from https://pestleanalysis.com/pestle-analysis-in-strategic-management/ GALLEZO-ESTAURA, K. (2016). Will cheap jet fuel costs continue to save Singapore Airlines from declining revenues? Retrieved from https://sbr.com.sg/aviation/exclusive/will-cheap-jet-fuel-costs-continue-save-singapore-airlines-declining-revenues Jurevicius, O. (2013). PEST PESTEL Analysis. Retrieved from https://www.strategicmanagementinsight.com/tools/pest-pestel-analysis.html KALPI?, B. (2002). Strategic management theory. Retrieved from https://www.dphu.org/uploads/attachements/books/books_5029_0.pdf Martin, M. (2017). Porter's Five Forces: Analyzing the Competition. Retrieved from https://www.businessnewsdaily.com/5446-porters-five-forces.html Pestel and Five Forces analysis of Singapore Airline. (2015). Retrieved from https://www.ukessays.com/essays/marketing/pestel-and-five-forces-analysis-of-singapore-airline-marketing-essay.php Singapore Airlines. (2017). Retrieved from https://www.singaporeair.com/en_UK/in/home Singapore Airlines Social Responsibility - Singapore Airlines Results. (2017). Retrieved from https://www.companyowl.com/s/Singapore%20Airlines/3152?s=singapore%20airlines%20social%20responsibility