Singapore Airlines Overview
Discuss about the Pestle and Porter Five Forces Analysis of Singapore Analysis.
The main purpose of this task is to elucidate and evaluate the external environment of Singapore airlines. It is one of leading and growing airline company in the world that provides innovative flight services to the customers. Apart from this, here is the discussion about the porter five forces analysis and pestle analysis. The report explains that how porter five forces analysis could affect the profitability of the firm. Furthermore, it discusses that how macro environment analysis helps the organization to make a strong position in the rivalries market. More detail of the paper has been discussed below.
Singapore airlines Limited is the flag carrier airline of Singapore that was incorporated in 1st October 1972 in Singapore. The company carries out its business activities and operations globally and it provides flight services to more than 45 nations and approx 94 destinations in the world. It is one of the biggest carries in the world measured by the market capitalization and the company is listed on the SGX. It is one of the biggest and leading national airlines of the country. It also operates its business in Asia and Australia. The main aim of the company is to provide effective and attractive flight services to the customers across the world. Along with this, the organization also uses effective and sustainable human resource management to attract maximum number of customers in the international market. It shall be noted that Singapore Airlines introduces seven schools to provide education and services to the employees and customers as well (Singaporeair, 2018).
The pestle analysis is used by the company to know and identify the political, social, economic, technological, legal and environmental factors that affects the success and growth of the firm. The pestle analysis also provides information about the external market of the country. The analysis helps in the identifying the threats and weaknesses of the competitors (Whyte, Prideaux & Sakata, 2012). The pestle analysis for the Singapore airlines has been detailed below.
Political factor: National political models have a direct impact on the actions and activities of Singapore Airlines Company. The political factors influence the overall business actions and operations of the company. This is refers to the ample of government policies, rules and norms that include the extent of intervention into the specific economy. For example, SIA is trying to withdraw the bid for obtaining a stake in the air India by managing and controlling a severe blow to the privatization blow of the Indian government (Myre, 2015). This can become a biggest political issue for the activities and operations of the firm. Apart from this, the company operates and manages its operations in multiple countries therefore it is essential to understand the political system of the various countries. It is cleared that that each and every country has their own national airlines and they carry the national flag. Therefore, it is quite complex for the firm to mark its presence in different countries. In the home country, it is very significant for Singapore Airlines to get full support from the government otherwise it can affect the results and outcomes of the firm adversely (Søgaard, Mathisen, Rabben, Adolfsen & Leversen, 2011).
PESTLE Analysis for Singapore Airlines
Economic factor: There are ample of economic factors such as interest rate, taxation policies, foreign exchange rate, employment rate and exchange rate that could have direct impact on the success and targets of the firm. The main economic factor that influence the business activities of Singapore Airlines include SGD (Singapore dollar) and emerging markets of Asia as well. Singapore dollar is quite different from the foreign currencies hence it affects the sustainability and revenue of the company. Besides this, stabilization of the fuel costs and other expenses could also affect the business activities and operations of the airline Company. Along with this, volatility of prices of fuel could also affect the actions of Singapore airlines. In addition, the organization operates its business in different countries and they use their own resources therefore, it also affects the growth of the firm (Heracleous & Wirtz, 2014).
Social factor: There are ample of social factors that could also influence the operations of the firm. The social factors that affect the business activities of Singapore Airlines include preferences, tastes and choices of the consumers. Therefore, the organization need to keep an eye on the market trends, preferences and choices of the clients in order to increase and enhance the market share and sales volume of the firm. Along with this, disposable income of the consumers also affects the purchasing behavior of the consumers in the competitive market. The social customs, values, beliefs and aspects of the people have direct impact on the progress of Singapore airlines. The company should focus on the socio-cultural factors to make an effective and unique financial image in the minds of the passengers globally (Rothaermel, 2015).
Technological factor: The technological element includes the attainment of the fuel efficiency for gaining the overall effectual way of running out the activities and operations of the company. It shall be noted that engineering department of the Singapore airlines evaluates and focuses on the maintenance and repairs to stand out against the competitors in the global market. The firm needs to focus on the micro system to increase and enhance the productivity of the firm (Robinson, Fallon, Cameron & Crotts, 2016). It shall be analyzed that advanced technology is used by the company to stay in the rivalries market. It has been found that Singapore Airlines uses technology and resources in an effective and efficient manner and the company has youngest crew in their organization. Apart from this, best entertainment system is used by the company at the workplace (Jaffe, 2016).
Political factor
Environmental factor: The environmental factors also have a direct impacted on the efficiency and effectiveness of the firm. The company focuses on the environmental factors such as globalization, climate change and pollution. The firm is responsible to protect the environment of the country. Apart from this, the organization is responsible to reduce and eliminate the carbon footprints. It has been analyzed that weather also has direct impact on the activities and operations of the firm. It has been found that Singapore Airlines uses greener aircrafts and cleaners to carry out the business activities and operations. Environment is an important factor of the Pestle analysis that should be kept in mind while initiating the business activities and actions (Oum & Yu, 2012).
Legal factor: It is analyzed that each and every company is affected by the legal framework, rules and regulations. As Singapore Airlines operates and manages its operations in different nations therefore it is abide to follow different laws and regulations. The organization abides by the natural environmental law, consumer law, fair trading law and the five freedoms of air. It has been stated that Singapore Airline needs to focus on the legal factors, norms and regulations in order to beat the competitors in the international market.
The porter five forces analysis plays a significant and effective role to analyze and evaluate the position of the competitors. This model helps in evaluating and identifying the degree of the competition in the specific industry and therefore this model helps in development and expansion of the business. By using this analysis, the organization has been able to earn more profits and revenue in the competitive market (Magretta, 2011). The porter five forces analysis for Singapore airlines has been detailed below.
- Threats of new entrants in the global market
- Threats of substitutes in the market
- Bargaining power of the suppliers
- Bargaining power of the customers
- Competition level in the market
If these elements have a direct impact in the organization then it is cleared that any firm has to consider all these elements before formulated their strategies, policies, and future planning.
Threats of the new entrants: It is essential to understand whether how entrants in the airline industry could affect the revenue and outcomes of Singapore airline. The company should focus on the threat of new entrants to meet the needs and requirements of the clients. The threat of substitute is low for Singapore airline Company. This is because the long haul airline industry is saturated and there are fewer competitors in the global market. The company takes ample of support from the government in the country. The threat of new entrants is weak in such company because it requires huge amount of capital in the global market. The huge cost of operations and business as well as various types of political factors also create issues and obstacles for entry to the new leaders (Wang & Hong, 2011).
Economic factor
Competition level: There are high and immense competition exists in the global market. Therefore, it could affect the progress of the firm adversely. The competition is dependent on the route. There are ample of routes which there are various airlines operating and managing very well. Therefore, competitors may influence the outcomes of the firm. There is only way to win such routes is to reduce the prices between the New Zealand, Southeast Asia and Australia. The competition may influence the targets of Singapore airlines negatively (Ramón-Rodríguez, Moreno-Izquierdo & Perles-Ribes, 2011).
Threats of substitutes: The threat of substitutes is one of effective forces of porter five forces analysis that has adverse impact on the operations of the firm. It has been analyzed that threats of substitutes is moderate in Singapore airlines. The threat of substitute is moderate because there are many low cost substitutes in the international market. Along with this, there are advanced and latest technologies that can pose the threat of substitution to the ample of carrier services of Singapore airlines.
Bargaining power of buyers: The bargaining power in the hands of the customer is average. The switching cost is maintained by the company in the competitive market. These switching costs include cost, time, emotion, opportunity and cost be to borne by the buyers. Along with this, the passengers have to bear switching cost in the global market. It is noted that Singapore airlines has also launched various types of loyalty reward programs that can maximized the customer loyalty and supported the firm to attract and retain the maximum number of passengers in the international market. Apart from this, the internet and social media also enable the customers to distinguish the prices of the various types of the services rendered by the different airline companies and select the airlines of their choice. According to porter, buyers have strong bargaining power in the airline industry. Therefore, it helps in increasing the market share of the company (David, 2011).
The bargaining power of suppliers: This is important aspect of the porter five forces analysis in which suppliers can negotiate with trade and business over equipment and material. It has been found that suppliers maintain strong bargaining power in the market. The planes are being supplied by the two biggest suppliers such as Airbus and Boeing. Along with this, there is uncontrollable cost of fuel that raises the power of suppliers. In this way, porter five forces analysis plays an effective and vital role strive and cope with competitors in the marketplace (Kim & Lee, 2011).
Conclusion
The above analysis shows a detailed analysis of macro environment of Singapore Airlines. The paper explains that how external factors could affect the progress of the firm adversely. The macro environment of the company helps in gaining a deep insight into the different social, political, economic, technological, legal and environment that may affect the effective functioning and operations of the firm. On the other hand, the paper also explains the porter five forces analysis in order to gain competitive benefits. This analysis also helps in understanding and identifying the level of competition in the international market. Now it is recommended that Singapore airlines should focus on the diversity and market penetration strategies to capture the entire market. Apart from this, it must focus on the product development strategy to introduce new and innovative services in the global market.
References
David, F. R. (2011). Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Heracleous, L., & Wirtz, J. (2014). Singapore Airlines: Achieving sustainable advantage through mastering paradox. The Journal of Applied Behavioral Science, 50(2), 150-170.
Holloway, S. (2017). Straight and Level: Practical Airline Economics: Practical Airline Economics. Routledge.
Jaffe, S. D. (2016). Airspace Closure and Civil Aviation: A Strategic Resource for Airline Managers. Routledge.
Kim, Y. K., & Lee, H. R. (2011). Customer satisfaction using low cost carriers. Tourism Management, 32(2), 235-243.
Magretta, J. (2011). Understanding Michael Porter: The essential guide to competition and strategy. Harvard business press.
Myre, M. A. (2015). An analysis of airline’s financial performance and its influencing factors (Doctoral dissertation, Dissertation, Aarhus University).
Oum, T. H., & Yu, C. (2012). Winning airlines: Productivity and cost competitiveness of the world’s major airlines. Springer Science & Business Media.
Porter, M. E. (2011). Competitive advantage of nations: creating and sustaining superior performance (Vol. 2). Simon and Schuster.
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Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Singaporeair.,(2018). Our story[online], Retrieved from https://www.singaporeair.com/en_UK/us/flying-withus/our-story/
Søgaard, T. F., Mathisen, E., Rabben, K., Adolfsen, A. H., & Leversen, J. M. L. (2011). Exploring new waters in Singapore(Bachelor’s thesis).
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Whyte, R., Prideaux, B., & Sakata, H. (2012). The evolution of virgin australia from a low-cost carrier to a full-Service airline–implications for the tourism industry. In Advances in hospitality and leisure (pp. 215-231). Emerald Group Publishing Limited.
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