case report - the singapore airlines group - rod rojas

The Singapore Airlines Group February 10, 2011

BA 236 Global Marketing – Prof. Benjie Sandoval 3rd

Trimester 2010-11

De Leon, Estanislao, Gumabon, Lope, Rojas, Ronquillo

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I. PROBLEM

What strategy should the Singapore Airlines Group (SAG) adopt to sustain its growth and

financial performance in light of the challenges in the global airline and airline-related industries?

II. ASSUMPTIONS

The group assumed that SAG will adopt a strategy that plays on its inherent strengths to minimize

risks over the short-run while investing prudently for long-term growth and sustainability.

III. POINT OF VIEW

This report will take the perspective of senior management of SAG with our recommendations

dealing mainly on the strategic initiatives that the company may choose to deploy to manage short-

term issues as well as long-term plans for growth.

IV. ANALYSIS

SWOT ANALYSIS

S-O Strategy

• SAG should use its financial and marketing strength to expand its market share while its

competitors are being hit hard financially and may be unable to counteract adequately.

• SAG should continue to seek out applications of new technology for its operations and in the

services it offers. SAG should continue to play on its reputation as an innovation leader.



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S-T Strategy

• Being financially sound means that SAG is better able to weather the economic storm than

most of its competitors. Furthermore, SAG should use its financial strength to aggressively

fight back competitors like Thai Airways or Cathay Pacific.

W-O Strategy

• Now is not the time to incur additional risks by investing in related, but maybe non-core

businesses. SAG should do a deep analysis of its other holdings and business units. It

should diversify losing units while carefully investing in its core businesses.

• SAG should focus more on marketing its more visible offering and further reinforce its

reputation for service and innovation.

W-T Strategy

• SAG should pick its battles – it must only compete in areas it has better than average chance

of winning. This means sticking closely to its businesses within its core-competencies

PEST Analysis

From the SWOT analysis we see SAG as an inherently strong company with very good

fundamentals especially in marketing and finance. What might undo these inherent strengths would

be external factors that may be beyond the control of the company. This is especially true for SAG

which does not have a local market to fall on and from the start had to compete on a global scale.

Hence the group decided to do an environment scan of the global airline industry in general to further

analyse the external factors (threats and opportunities) facing SAG. We used the PEST Analysis

framework for this purpose.



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Porter’s Five-Forces Framework

To round-off our analysis, we also decided to use Porter’s Five Forces model to analyse the

competitive pressures in the industry where SAG competes in.



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From the five-forces analysis, we can see that the threat of substitutes in the form of

competing airlines is very high especially in times of economic downturns and security uncertainties.

The bargaining powers of customers also become a significant challenge to SAG as long as these

global issues persist.

RECOMMENDATIONS:

SAG can count on its management and financial strength to whether the downturns in the

global air travel market. The group thinks that these conditions are temporary. As a matter of

necessity, human development will inevitably ensure the volume of air travel will continue to grow in

the long run. SAG must therefore position itself to be ready to take the initiative if and when the

conditions become right again.

The present market condition affords SAG the chance to use its marketing savvy to better

position the business, underpin its image with consumers. In this aspect, SAG must aggressively

pursue opportunities to gain more market share. However, we also think that SAG must concentrate

only on areas where its core-competencies in marketing will give it the upper hand over the

competition.

It can strengthen its low budget unit (Silk Air) so that it can continue to cater and expand into

the budget/tourist/leisure travel sector. It can mitigate the negative image brought about by the crash

of one of its Silk Air planes by employing clever PR tactics.

Furthermore, high valued investments could be put in halt in the meantime until the economic

conditions start to normalize. As mentioned in the SWOT analysis, SAG should rather focus more on

keeping their image of having high quality service. It would also need to continue to invest in its

image as a technology and service leader even through the current economic challenges. The

economic downturn, in effect would cause more business travels to countries with low cost such as in

Asia as companies more and more think leveraging these countries by outsourcing their business. For

example, SAG might want to look at the possibility of spinning of its in-flight catering arm. This is a

business unit that could be considered non-core. On the other hand it can continue to retain its cargo

unit as well as its engineering company as these two businesses complement its airline operations.

With SAG having the right focus, championing quality service, business leaders who might be

flying more frequently would definitely choose them over their competitors.

case report - the singapore airlines group - rod rojas

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