Singapore Airlines Group Stakeholder and Competitive Advantage Analysis Essay Example
Stakeholder Engagement in Promoting Company’s Dual Strategy
Singapore Airlines Group is fairly placed as a premium airline carrier that enjoys a great deal of firsthand innovation as well as distinctive degree of services; features, which ensured that it has made effective strategic choices of optimising on profits over overall size of operations (Heracleous & Wirtz, 2009). At the company’s corporate level, SIA Group has successfully implemented a diversification strategy. As a result of conforming to this strategy, it can be noted that SIA Group boasts of at least 36 direct subsidiaries as well as other associated companies. According to Singapore Airlines (2008), some of the company’s notable subsidiaries include; Singapore Airport Terminal Services, Singapore Engineering Company and Singapore Airlines Cargo. It is important to mention that the Group’s airline subsidiaries that fairly include more than 100% ownership of some of the well-known regional carrier Silk Air, Tiger Airways and Virgin Atlantic are tasked with the responsibility of ensuring an effective and reliable key customer segment within the overall sector as a whole(Singapore Airlines, 2008).
Notably, as a significant part of its international strategy, Binggeli and Pompeo (2002) notes that the SIA Group recently opted to joining the Star Alliance framework, which is in fact one of the three existing top airline alliances across the globe. Subsequently, numerous segments of SIA Group are vigorously engaged in investment processes across such areas as China and India through a series of strategic alliances with local companies. Following this line of events, it can be established that SIA Group has successfully formulated and implemented a dual-level strategies (Doebele, 2005). In essence, it has managed to provide top notch services to its demanding customers thereby accomplishing product differentiation at costs that are reasonable for a company of its calibre. SIA Group continues to support the dual strategy that is characterised by differentiation and internal cost leadership through its well-known core competencies of cost-effective services excellence that harmonises a distinct self reinforcing system of both company processess and operations as a whole (Shostack, 1984).
In this section, the paper presents the manner for which different SIA Group’s stakeholders have been able to complement the company’s dual strategy.
Due to its employees: the Group has ensured to put much emphasis on its personnel through provision of numerous programmes meant to improve productivity. The fundamental role of employees within any given firm rests with provision of expertise and skills necessary for production purposes (Singapore Airlines, 2015). Through a “Towards Optimal Productivity” (TOP) approach, which was initiated in 2012, SIA Group has managed to conduct a corporate-wide review that has fostered productivity improvements, job optimisation as well as facilitate a platform useful for meeting employees’ expectation of future career growth (Singapore Airlines, 2015). In 2014, the Group made stringent efforts to improve on its existing training facilities for all of its ground personnel by way of offering and updating specific courses in such areas that foster the dual strategy as; customer service, sales and marketing as well as airport overall operations. To ensure that its customers were technologically efficient, the Airline also trained its staff on the immediate application of new Customer Experience Management System through e-learning portals (Singapore Airlines, 2015). The exposure made to employees through the Service Excellence Workforce Skills Qualifications (WSQ), has ensured that they compete equally with international standards especially in terms of providing professional service. The WSQ certification structure is deemed to be fundamental tool that is set to assist the Airline in accessing and attracting the best of talent needed for executing professional customer services; a core element of differentiation strategy (Singapore Airlines, 2015). To ensure that their respective employees remain physically healthy, the SIA Group ensures to arrange a SIA Sports and Social Activities Calendar, which also focuses on promoting employee interaction and thus, exchange of ideas that seek to improve overall Group productivity.
As a result of its customers: the firm continues to be aware of their different needs. Customers’ desire is to enjoy relevant product innovation as well as require real-time service recovery and prompt responses to feedback. All of these expectations are set to ensure that the Group attain its differentiation strategy by way of coming up with products that satisfies customers at all times (Singapore Airlines, 2015). In early 2015, SIA Group made an announcement in relation to the launching of a new cabin class, premium economy in order to cater for overall customers’ needs in regards to their flowing feedback. Particularly important, to ensure that customers enjoying services in all of its business segments are furnished with instant information, the Group has resorted to employ a well-dedicated social media team that ensure to make online customer engagement processess efficient and reliable (Heracleous & Wirtz, 2014).
The shareholders’ and investors groups; are yet another important stakeholders that require the Group to avail a clear and timely communication platform on matters related to the Airline’s operational and financial performances. They have ensured that the Group’s management team is able to generate annual and quarterly reports relating to the overall financial performance of the entire Group. Heracleous and Wirtz (2010) agrees that as a result of this need, SIA Group has made sure to prepare and present all financial results as well as other notable information relating to price-sensitivity through a significant number of media platforms that include the Group’s website and, also through SGXNet. The Group also maintains a well-trained and dedicated investor relations email as well as a hotline for the purpose of the overall investment community in order to access the Group for all queries (Hill, 1988: Markides, & Oyon, 2010). This is especially important for the international strategy where SIA Group has managed to attract strategic investments in international markets. Siggelkow (2007) notes that in order to further improve on shareholders’ trust, the Group ensure to hold regular analyst and media briefings whenever announcing its annual and quarterly results. It also meets with the analysts and all of partners through well-organised road shows and teleconferences.
The Group’s suppliers; call for high catering standards and procedures as well as top notch practices needed for ground handling services. As a result of this fundamental call, SIA has ensured to conduct regular audits in order to serve the very best of meals to customers. Certainly so, regular audits and checks are also executed in order for the ground handlers to comply with established rules and regulations. This call from suppliers complements the Group’s SIA low cost leadership strategy where premium services are offered to customers at a relatively affordable price.
Such regulations authorities; as environmental agencies are stakeholders that continue to play a significant role in SIA Group’s strategy to uphold international standards and regulations. The Group ensures to adhere to notable environmental codes of practices and, also are always transparent in relation to its overall environmental policies and action plans. SIA, has over a substantial period, sustained a policy that seeks to maintain a young and modern fleet of aircrafts while at the same time; it is dedicated to new technologies aimed at harnessing the benefits that arise from greenhouse gas emissions, improve fuel productivity, decrease possible noise levels and also, ascertain an efficient way of resource utilisation. In this manner, the Group seeks to remain as a low-cost leader within the industry. In fact, the Group’s continual improvement towards fuel consumption in its entire operations is an initiative that incorporates efforts meant to reduce the overall climatic changes that are a result of increases greenhouse emissions within the atmosphere. SIA Group currently operates a fuel efficiency initiative in order to mitigate possible carbon dioxide emissions level and this is ensured through processess related to constant fleet renewal as well s more efficient operational mechanisms set in place. The passenger fleet section for the Airlines within the SIA Group- SilkAir, Scoot and Tigerair have all been accredited with 2004 ICAO CAEP/6 Emission Standards for NOx. Outstandingly, SIA Group further promotes and supports the International Air Transport Association four-pillar strategy that seeks to realise carbon neutral growth in areas related to technological efficiency, operations as well as infrastructural platforms.
The larger community; also have significant influences on the operations of the Group as a whole. These communities expect that the Group engages in the protection of the areas for which it operates and, also conduct extensive corporate social responsibility as a way of appreciation for their ability to allow operations without any form of issue. It is noted that SIA Group managed to raise more than $2.5M to promote activities related to education, arts and sports. Recently, the Group organised two major charitable events- the SIA Charity Gala and the SIA Charity Run whose proceedings was forwarded to Community Chest of Singapore that engages in the development of capabilities and capacities of the social service sector need for meeting the ever-rising customer needs. Consequently, in the course of the 2014 financial year, the Group ensured to support the “Give A Hand” initiative that is focused on raising funds for adopted beneficiaries that is later directed towards supporting children with special needs. The partnership between SIA and Harapan Rainforest management team is set to help protect bio-diversity of the eco-systems. This is in line with its dual strategy that seeks to provide efficient services while still benefitting from the efforts of reducing the level of greenhouse gas emissions that are likely to affect the atmosphere.
Total innovation capability; on the part of SIA Group undertakings, is deemed to be a valuable element that seeks to exploit an opportunity for future growth. The Group seeks to execute functions in a much better way than its immediate competition. This is not only attained through a continuous process of innovation but rather engages in total innovation where most processess and activities are subjected to the aspect of innovation (Barney & Hesterly, 2010). Of particular interest, these innovation efforts have also contributed much to supporting the element of cost-effectiveness. Wirtz, Heracleous, and Pangarkar (2008) agrees that a never-ending incremental development occurs at a relatively lower cost in comparison to radical innovation practices but will always provide a proper margin of value to the end-user. For instance, in serving meals within their flights, the management team seek to engage innovation as a way of cutting down on costs while still maintaining a favourable position within the overall market. In relation to incremental improvements, SIA Group also focuses on implementing notable fundamental initiatives that focuses on sustaining a service model of excellence into the future operations. Some of the notable organisation-based initiatives like; “Outstanding Service on The Ground” and “Transforming Customer Service” has all been adopted to promote and inspire constant service innovation (Fan, et al, 2001: Gillen & Lall, 2004). In consequence, the Group has made stringent efforts to acquire a higher degree of comprehension in matters related to patterns in customer current lifestyles while also conduct extensive debates on their relative implications for future better service provision in the air. According to Sultan and Simpson Jr (2000)The Group’s product innovation department focuses on understanding the ever-changing customer needs and ensure to make 3-5 years future projection on the best way to handle thereby resulting to such crucial innovations like the Krisworld on-demand entertainment system for all customer-classes, internet and phone check-ins. Following this line of arguments, it can be noted that SIA remains focused to formulate and implement clear and distinctive strategic choices of being an airline leader as well as a follower. It is indeed a pioneer of continuous and total innovations that have resulted to higher customer service provision. To cut down on unnecessary costs, Heracleous, Wirtz, and Johnston, (2004) notes that the Group focuses on proven technology, which has a capacity to greatly reduce the level of implementation risks in order to avail a proper functionality model for its future operations.
The Group’s rarity component is manifested in its underlying robust service design and development-related processess. SIA Group perceives the aspect of product design and development in a much structured manner and this can be proven by its decision to break away from Malaysian Airlines and IATA (Gittell, 2000). The Group’s Service Development Department is entirely focused on conducting exception tests before implementation process is undertaken. This feature is considered to be quite unique in comparison to how competitors handle their design processess.
“The department is entirely driven by the capacity to conduct extensive research, trials, time and motion analysis, mock-ups and evaluating customer immediate reaction in order to ascertain that specific service innovation is supported by proper procedures set in place” (Gugler,1992).
To make sure that it remains above most of its competitors, SIA Group strives to sustain a differentiation strategy that oversees a continuous improvement while at the same time ensures to dispose-off programs or even services that are perceived to be no longer competitive enough. The Group’s senior management ascertains that while it is in fact getting more and more challenging to differentiate the Airlines’ processess, most of the competitors are also engaged in the same process (Lazzarini, 2007). However, rarity arises when SIA focuses on continuous improvements processess that seems unmanageable by these competitors. It is important to note that both competitors and customers have triggered growth within the Group as each expectation is treated as a fundamental resource for innovation notions.
In the case of imitability, Bowen and Leinbach (2006) notes that SIA Group’s capacity to attain strategic synergies through intensive diversification and infrastructure process is deemed paramount. Presently, SIA embraces diversification process in order to attain distinctive cost synergies while also ensuring to accomplish time control quality and trigger transfer of learning. Unlike competition, Wirtz and Johnston (2003) ascertains that SIA Group subsidiaries seems to not only serve as fundamental platforms for well-rounded management skills and corporate as opposed to a divisional outlook through elements of job rotation but also provides imminent ground for learning purposes. The Group has come to understand that such related activities as catering, aircraft maintenance and airport management results to higher degree of profits in comparison to the airline segment as a whole (Graham & Vowles, 2006). Park (2003) indicates that Singapore Airport Terminal Services, a major subsidiary of the Group, avails numerous ground services at Changi Airport and continuous to receive awards as the best managed airports across the globe. As a result of this top notch airport management capability, the Group has managed to attract a greater number of customers that intend to travel to Australia, New Zealand and other countries within the region. Nejati, Nejati and Shafaei (2009) ranks Changi Airport as one of the most cost-efficient world airports in terms of landing charges as it charges lower compared to others like Hong Kong and Narita. Another unique point to note is that these subsidiaries, although is considered to be part of the entire Group, the quoted separately and they are subjected to distinctive market disciplines with concise profit and loss expectations. The feature has proved useful especially because it has contributed to the elimination of possible outsourcing since external suppliers might even find it challenging to offer the form of value that is being provided by the Group’s own subsidiaries (Francis, Humphreys, Ison, & Aicken, 2006). Thus, it is safe to argue that SIA Group’s diversification focus has resulted to a strategic benefit in regards to aspects of reliability of key inputs, higher level of quality, transfer of learning resources while also ensuring to sustain cost-effectiveness at all times.
The organisation aspect of the analysis focuses on the manner for which SIA Group ensures to develop their existing staff personnel in a much holistic manner. To ensure that it maintains an excellent service provision and continuous product innovation, the Group ensures that all staffing personnel undergo training courses and subjected to development plans that have clear and concise objectives (Chong, 2007). For instance, the popular “Singapore Girl” is subjected to a through training of more than 15 weeks, which is deemed to be longer in comparison to competitors (Chan, 2000). The training is all-inclusive as it even teaches them the importance of acquiring soft skills that are useful in personal interaction, poise and, also emotional skills. SIA Group also encourages and promotes staff on matters that do not relate to daily operations like the formation of “Performing Arts Circle” and “Wine Appreciation Group” all aimed at promoting interaction and team spirit within the overall Airline as a whole. Vaara, Kleymann and Seristö (2004) postulate that
allowing employees to participate in community-based activities assists in developing their empathy skills; an element that is later replicated while offering quality and unique customer experience. The current pillars of cost-effectiveness in service delivery are integrated into a single organisational activity system that is manifested by self-reinforcement and high degree of quality operations. It is this degree of quality as well as employee self-reinforcement capabilities continues to promote and sustain SIA Group’s sustainable competitive advantage. There is no room for competitors to replicate the entire SIA system since it has evolved over time.
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