Sia's Strategy example essay topic

STRATEGIC AVIATION MANAGEMENT ASSIGNMENT NO. 1 SEMESTER 2, 2003 STUDENT: STUDENT ID: LECTURER: DUE DATE: NO. OF PAGES (including this one): 7 Assignment No. 1 Undertake a critical review of the 5 papers on the strategic success of Singapore Airlines, comment on the strategies employed by the Airline since 1947 and its claim to be one of the outstanding Airlines. In your report comment on the critical factors that provide competitive advantage for Singapore Airlines. Also consider the organizational factors, such as management practice, employee performance etc. Singapore Airlines (SIA) is a company that has triumphed through some of the toughest times that the aviation industry, as a whole, has been subjected to.

It has not only survived where others have faltered, but strengthened its position as one of the worlds' truly great airlines. Such events as war, economic uncertainty and the outbreak of SARS are some, and by no means the only, historical curve balls that the industry in general has had thrown its way. This article is written to trace the history of SIA, and realize the key factors that have had, and continue to provide a competitive advantage for the airline. As is the case with many companies through history, the initial foundation from which SIA grew, came from an amalgamation.

In 1937, two shipping companies, The Straits Steamship Co. (of Singapore) and Ocean Steamship Co. (of England) together realized the commercial viability of flight in the region and registered the company name Malayan Airways. Though Malayan was now an entity, it never served on any routes, or even owned a plane, due mainly to the intervention of WWII, until 1947, where it commenced operations with its first commercial flight in an Airspeed Consul from Singapore to Kuala Lumpur under the management of Mansfield & Co. Ltd of Singapore 1. Under this management, the now steadily growing airline operated services in the region until 1957, where management practice was changed to permit Government control, the capital for expansion supplied, in majority, by another partnership, QANTAS and the British Overseas Airways Corporation (BOAT) 2 The fact that these two companies, already well established in their own regions, were keen to participate in this relatively small operation shows their understanding of the possible importance of Singapore as a stepping stone between areas of major aviation development, name Europe, Asia / Pacific and America. In 1963, Malayan went through a name change with the creation of the federation of Malaysia, becoming Malaysian Airways, and then again in 1966 to Malaysia - Singapore Airways (MSA) to show the carriers joint shareholder ship by the Governments of Malaysia and Singapore 3. The airline saw tremendous growth through this period with a strong commitment to new technology, and also the takeover of another of the regions carriers, Borneo Airways, in 1965.

The turbulent times of the area continued, where regions now believing in their own ability to perform as sovereign states, with Singapore separating from the Federation of Malaysia in 1967. The two states shared the Airline as a joint flag carrier until 1971, where the fact that both needed its own identity, and seeing different needs in respect to its own National carrier, Malaysian Airlines and Singapore Airlines were born 4. Now, only new in name, and with some 25 years of experience in the industry, SIA continued to move forward through continued high levels of service, a strategy born through their history of meritocracy, and a solid belief in operating with good quality, economical aircraft. Because of the relatively small size of Singapore, with its main island only covering some 604 square kilometers 5, SIA had no real domestic service to offer. Far from being a negative, this fact helped foster the strategy that to grow, the company must be willing to look further a field, and aim to make themselves the hub for an international market seeing them as a stepping stone to the world. As far as SIA were concerned, size didn't matter.

SIA implemented this as their strategy to success. Having Singapore as an aviation hub, with spokes radiating far and wide made their own network extremely effective. Added to this was the attitude of the Singaporean Government toward an "Open Skies" agreement of operation, where carriers from all over the globe were welcomed to use their airspace and facilities through fifth freedom rights. This attitude went very much against the grain, as most other carriers were using existing bilateral air service agreements to effectively close down their own facilities and route systems in an attempt to maintain viability and achieve profit. From this self recognition that they now occupied a key position in global aviation, simple geographic position was not enough to guarantee success.

For any organization to compete over such a long period of time as SIA has, the need for effective strategy is paramount. Perhaps the worlds' best known Business Academic, Michael E Porter, theories why strategy still matters in a time of relentless change. He has written numerous books which continue to be reprinted time after time, and are core reading for students of Business, and almost Bible-like for many in management positions. "The essence of strategy is that you must set limits on what you " re trying to accomplish. The company without a strategy is willing to try anything. If all you " re trying to do is essentially the same thing as your rivals, then it's unlikely that you " ll be very successful.

It's incredibly arrogant for a company to believe it can deliver the same sort of product that its rivals do and actually do it better for very long" (Michael Porter's Big Ideas, Gruner + Jahr, 2003). From its birth in 1972, and continuing through to today, SIA's strategy has always been a simple one - that of maintaining its focus on its objective of achieving the best service possible for customers. Something a number of carriers, especially in the newly deregulated US of the 1970's, were forgetting, focusing more on the competitive angle of operational effectiveness. This dedication to service can be seen in a number of SIA's practices, but can best be summarized by the marketing tool of the "Singapore Girl". A strong and effective product / service differentiation strategy was born with the introduction of this in-flight service-based marketing idea. "What we needed was a 'unique selling proposition'.

Happily, we found it. Or perhaps I should say we found her, because the Singapore Girl has become synonymous with Singapore Airlines. SIA is an Asian airline, and Asia has a long tradition of gentle, courteous service. The Asian woman does not feel she is demeaning herself by fulfilling the role of the gracious, charming and helpful hostess. What we hope to do is translate that tradition of service into an in-flight reality". (Harvard Business School, 1989 b).

The idea of airlines being a service-based industry also went against the common grain, but a concept that made SIA stand out, with the attitude running right through the organization, not only in the passenger cabin. However, this idea was not alone as SIA's strategy. "The most caring attention from our wonderful Singapore Girl would be insufficient if we do not also provide engineering reliability, ease of reservations, efficient ground handling and all the rest of it, par excellence" (Managing a Global Airline in Singapore, Cheong Choong Kong, 2003). SIA's commitment to service can also be seen in the average age of its aircraft. At present, SIA's fleet of 98 passenger aircraft comes in at an average of five and a half years 6, something the envy of most other major carriers. This policy also shows up as sound economics, with the end result being reliability.

With reliable aircraft, the customer is again the winner with reduced delays due to maintenance and safer air travel. Both of SIA's keys to competitive advantage that have been discussed, that of: 1. Self recognition that they now occupy a key position in world trade, and 2. Maintaining its focus on its objective of achieving the best service possible for customers, would be nothing more than ideas without strong leaders to empower them. "The chief strategist of an organization has to be the leader - The CEO. A lot of business thinking has stressed the notion of empowerment, of pushing down and getting a lot of people involved.

That's very important, but empowerment and involvement don't apply to the ultimate act of choice. To be successful, an organization must have a very strong leader who's willing to make choices and define the trade-offs. I've found that there's a striking relationship between really good strategies and really strong leaders."A leader also has to make sure that everyone understands the strategy. Strategy used to be thought of as some mystical vision that only the people at the top understood.

But that violated the most fundamental purpose of a strategy, which is to inform each of the many thousands of things that get done in an organization every day, and to make sure that those things are all aligned in the same basic direction". (Michael Porter's Big Ideas, Hammonds, Gruner + Jahr, 2003) These qualities can be seen in Dr Cheong Choong Kong, SIA's recently retired CEO. Dr Cheong joined SIA in 1974 following a successful academic career, serving in several management positions. He was appointed MD in 1984, with this position being retitled in 1996 to CEO, and in the same year becoming Deputy Chairman of the Board of Directors of SIA. Dr Cheong is widely recognized as responsible for the focus and drive for the great service SIA continues to offer, being chosen 'Asia's Businessman of the year' in 2002, by Fortune Magazine 7. "The trick is not in blindly following every management fad that surfaces whenever some enterprising guru invents a new set of principles to enrich himself -- - yet another variation of some 7 pillars of wisdom.

The keyword is consistency -- - of Product, Service, Brand. While SIA adheres to some basic management tenets, what sets it apart from others is the culture of excellence and achievement that pervades the entire airline group". (Managing a Global Airline in Singapore, Cheong Choong Kong, 2003). SIA has, with no doubt, been successful in the past through sound strategy and good leadership. Realising their potential early on and capitalizing on their given position, followed by a steely-eyed focus on the customer, has achieved a stature which is the envy of many a competitor.

The hope for SIA now, would be that this could continue into the future, and that their strategies would be able to handle any curve ball that could be thrown its' way.

Bibliography

1, 2 Malaysian Public Transportation History (c) Pre and Post Independence Aviation, Park, May, Berhad, 2001.
Para 2, 3 web 3 The market Achievements History, Page 93. web 4 Singapore Airlines Website - about SIA web 5 Singapore Info Map, Sep 2002 (c) Singapore Snapshot Ministry of Information, Communications and the Arts 6 Singapore Airlines Website - Our Fleet web 7 Louis Kraal, February 7, 2002, Fortune Magazine (c) web Michael Porter's Big Ideas, Keith H.
Hammonds, Gruner + Jahr USA Publishing, Issue 44 March 2001, Page 150 (c) web Harvard Business School (1989 b), "Singapore Airlines (A) ", 9-687-022, Rev.
3/89, 13 September. Managing a Global Airline in Singapore, An SIA Outlook Talk, Dr Cheong Choong Kong, 15 July 2003.