Table of Contents
Introduction of Strategic Challenges to Singapore Airlines
The primary purpose of the present report is to identify and address the strategic challenges faced by Singapore Airlines and to recommend a 5-year strategic plan that will cater to the growth and development needs of the company. The report will first discuss the corporate background of the company and the section will be followed by a discussion on the strategic challenges that Singapore Airlines has continued to face while operating in domestic and international airline market. Finally, the report will recommend a 5-year strategic plan that will fit to the business’ growth strategic development purpose before drawing a conclusion.
Singapore Airlines Company Background
Founded on May 1, 1947 as Malayan Airway, Singapore Airlines Ltd (Singapore Airlines) is the national carrier of Singapore and it also operates as a major carrier in the Pacific region, having routes to Europe and North America (Reference for Business, n.d.). The company is 54 percent owned by the Singapore government and minor shares are held by Delta Airlines and Swissair (Reference for Business, n.d.). Before facing some major strategic challenges and crises, Singapore Airlines continued to remain one of the most profitable airline companies that had remained a virtual stranger to debt, spending in innovations targeted at upgrading its carriers and related technologies (Reference for Business, n.d.).
Strategic Challenges Faced by Singapore Airlines
In the course of integrating set of commitments and actions designed for gaining a sustainable competitive advantage (taking into account the firm’s internal and external environment, and resources) Singapore Airlines, over the years, have faced some specific challenges. Primarily, failing to envision a growth strategy with a resource-based view, the company has been faced with the challenge of missing strategic opportunities, like the one that provided scope to Singapore Airlines to wholly own a subsidy in the form of Tiger Airways, which is presently known as Tigerair (CAPA, 2014). Lacking a farsighted investment strategy, Singapore Airlines became a minority shareholder of Tigerair as the management did not have the strategies that could support full ownership of Tiger Airways as a subsidiary (CAPA, 2014). Moreover, Singapore Airlines’ overseas ventures into short-haul low-cost carrier (LCC) has also been a strategic challenge for the company and the company is now faced with the challenge of developing a sustainable short-haul LCC strategy for its domestic market (CAPA, 2014). Besides, over the years the void of an effective alliance strategy (in the form of joint ventures), which has been the result of the apathy of the management towards partnering with other airline companies due to the fear of getting diluted, has continued to limit the international growth and expansion of the Singapore Airlines (CAPA, 2014).
5-Year Strategic Plan
To obtain competitive advantage, Singapore Airlines must implement the strategy of diversification, especially through entering the LCC market which seems quite profitable both in the domestic (Singapore) and international contexts. In this respect, envisioning a profitable future for the next five years, the company should invest in LCCs because the concerned segment’s attractiveness is high and the company has the infrastructure to support such diversification (Corporate and Competitive Strategy, 2022; Porter, 1996; Gamble, Thomson and Peteraf, 2016). Moreover, investing more in LCCs will help Singapore Airlines in gaining the competitive advantage. Already, Singapore Airlines has witnessed profit with its low-cost long-haul subsidiary airline, Scoot Tigerair Pte, Ltd., but lack of robust investment into the segment has resulted in conservative revenue growth that can be made more dynamic through more investment (CAPA, 2014). Besides, as Singapore Airlines is already in the course of bettering its diversification into low-cost long-haul carriers, the cost of entry is not going to affect the company’s core investment strategies (CAPA, 2014). Moreover, as Singapore Airlines already have the resources for supporting diversification, like knowledge, innovation, plant and equipment, it is better for the company to invest more in the LCC segment to ensure sustainable profitability in the course of next five years because the market of low-cost long-haul carriers seems promising both in the Singapore and international market (Statista, 2019). And in this respect, it should be noted that LCCs are becoming increasingly important in the global air travel industry, almost doubling their market share to 31 percent in 2019 (Statista, 2019). Moreover, from the perspective of corporate-level strategy, the company must implement strategies for altering the organisational structure so that processes like joint venturing for expansion purpose can be supported. The company has already experienced structural changes for accommodating partnerships with Air New Zealand and Turkish Airlines, and for ensuring more international expansion and perennial revenue inflow, particularly in the LCC segment, Singapore Airlines must indulge in more joint ventures with airline companies from North America so that accessing the North American market becomes easier for the company (CAPA, 2014).
The report discussed the corporate background of the company, followed by a discussion on the strategic challenges that Singapore Airlines has continued to face while operating in domestic and international airline market. Finally, the report recommended a 5-year strategic plan that will fit to the business’ growth strategic development purpose.