The Business Strategies Of Singapore Airlines Essay Example

style="text-align: justify;">There is not enough if the SIA brand name is not associated with service excellence based on a deep customer focus. In order to achieve service excellence cost – effective, SIA has two main assets – planes and people (Heracleous and Wirtz, 2010). SIA always ensures that the plane is young because the mechanical failures are rare, fewer takeoffs are delayed, more arrivals are on time and fewer flights are canceled. New planes are more fuel efficient and less repair and maintenance. However, SIA understood that service is mostly about people, so service employees are the key motivation delivery excellent service and increasing productivity. SIA invested many training programs. The employees learn how to take care customers and learn how to communicate by eye levels to them rather than just talking down. The emphasis in service is not only desired customers but also reduced the cost by minimizing customer turnover. Moreover, these created an indirect exchange of skills for skills, services for services and employee skills will adapt to create value with customers (Vargo and Lusch, 2004).

2.4. Functional strategies and programs

The functional strategy is where the business functions, operations or finance or marketing, formulate their long-term plans which support the aims being pursued by the business strategy (Hayes and Wheelwright, 1984).

2.4.1. Marketing strategy

SIA developed the marketing initiative with the Singapore Tourism Board (STB) and tourism agencies. In 2001, SIA sponsored events in Singapore such as Singapore Airline International Cup and the Singapore International Jazz Festival (Singapore Airlines, 2001). Moreover, at the heart of SIA’s service reputation was the Singaporean Girl and the iconic Singaporean Girl was

became the centerpiece of SIA’s marketing strategy. She was the central feature of advertisements, where she was portrayed in a number of settings (Cheong, 2004). It was an effective tool in communication of SIA’s image to customer mind. Also, SIA’s communication has been as consistent in brand strategy.

The message “Singapore Airline – A great way to fly” have been consistently selected in print media and TV commercials of very high production value. In that way, the iconic Singaporean Girl was features in all communication messages in the different settings and themes. Furthermore, the SIA’s effort focused on customers and relationships in their marketing strategy. The centre of service was customer orientation and relation. Customers are connected to SIA through in-flight surveys and customer focus groups. Also, SIA are followed every contact they can make with their customer and keep track to co-create value with them.

2.4.2. Distribution mechanisms

The internet was very helpful for the airline industry in their distribution channel (Cheong, 2004). From the early days, SIA’s customers can gather information, price and book air travel through the internet, travel agents who connected to customer reservation system (CRS) and customers also connected directly to CRS through Internet sites or airline specific booking sites. Based on the concept of the market with and amongst that goods are merely a vehicle for service provisions and become platforms for operant resources in application to create value (Vargo and Lusch, 2004), SIA clear that goods are used to fulfill all the hierarchies of customers and the quality service have to offer to combine of all tangible resource. There was not enough to have best

seats, planes, food services and other tangibles, it is the totally support of service to those tangibles and intangible factors.

2.4.3. Human resource

As mentioned above, SIA human resource is the important asset in service firms. Firstly, service employees are the key input for the service supplying e because of the characteristic of service firm, where employees are expected to be efficient and dynamic in operational tasks, also friendly and helpful in dealing with customers. Secondly, leadership and top management play a key role in SIA’s Human Resource strategy in delivering its business strategy of cost effective service excellence. Therefore, there are five elements inherent in SIA’s Human Resource strategy included (Heracleous, Wirtz and Pangarkar, 2008): Stringent selection and recruitment processes.

Extensive investment in training and re-training. Successful service delivery teams. Empowerment of front line staff to control quality. Motivate staff through reward and recognition. These elements were a drawback for SIA in long term of recruiting and training as following two objectives: Improving courses of training: improving courses of training is very meaningful to SIA because it does not only help SIA to shorten time for every training course but also saving cost and improve the quality of the programs. Classify the employee base on their existing ability. This requires SIA to classify the level of employees. However, SIA will avoid wasting time and cost in to the training and recruiting programs because it helps SIA to have relevant programs of training for every employee.

3. The value chain analysis

As defined as a chain of activities for a company operation in a special industry, a value chain analysis

can provide the obvious view of the pattern of the firm’s activities and behaviors (Porter, 1985). Moreover, analyzing the value chain can help to identify the company’s resources which contribute to formulate the business strategies (Porter, 1990).

By considering carefully each single activity and integrating all of them, primary activities and support activities have been contributing to the success of SIA and continuously building up its cost-effective service excellence and its unique brand in the airline industry for over four decades.

3.1. SIA infrastructure

The firm infrastructure is about general management, finance, and assets (Wheleen and Hunger, 2010). Having one of the modernist fleet in the world allows SIA continue its mission with providing excellent service. SIA has five aircraft families consists of both Boeing and Airbus which also is committed to be maintain as the most young fleet in airline industry (Singapore Airlines, 2010). Moreover, SIA infrastructure is supported by its strong financial resource which allows SIA to pursuit its strategy. The strong financial position is improved by SIA effective cost management as which not only builds its core competency. It not only helps SIA to purchase equipment and airplanes, it also helps SIA to take the advantage of economic of scale from its supplier during recession period. Besides, in terms of management, SIA is operating independent despite being a Singapore Government linked company.

3.2. Human resource management (HRM)

HRM is an essential part of corporate strategy, especially in the service industry HRM can be seen as significant part of marketing strategies as well (Bearwell, Holden and Claydon, 2004). By considering the recruitment, training and development, HRM can contribute

to the effectively of company (Wheleen and Hunger, 2010).

3.2.1. Recruitment

In SIA, entry qualifications for cabin crew applicants are both academic (at least polytechnic diploma) as well as physical attributes. The recruitment process is extensive, involving 3 rounds of interviews, a “uniform test”, a “water confidence” test, psychometric tests and a tea party. Over 16,000 applications are received every year, and the company hires around 500-600 new cabin crew, to cover attribution rates of around 10%. This includes both voluntary and directed attrition. After the Singapore Girls start flying, they are carefully monitored for the first 6 months, through a monthly report by the in-flight supervisor. At the end of the probationary period, 75% get confirmed, around 20% get an extension of probation, and 5% leave.

3.2.2. Training and development

SIA spends almost 14 times more per employee on a Singapore average scale. The famous “Singapore Girl” undergoes training for 15 weeks, longer than any other airline and almost twice as long as the industry average of two months. This training includes not only functional skills such as food and beverage serving and safety training, but also soft skills of personal interaction, personal poise, grooming and deportment, and emotional skills of dealing with the consequences of serving very demanding passengers. Moreover, all performances of staff in SIA are managed by Performance Service Index. This index is the indicator of the success rate of the SIA service which is measured by taking 1800 customers’ feedback in 30 factors like quality of food, check in procedure.

Also, Outstanding Service on the Ground (OSG) Feedback Competition tested staff is used to evaluate

staff performance. Additionally, Outlook in-house magazine is a channel where all SIA staff can be recognized for good ideas; inform problems (Quelch, et al., 1996). Specially, in 1992 SIA opened an S$800 million training complex where 230 professionals conducted specially designed courses for all SIA staff and handling training agents around the world (Quelch, et al., 1996).