Singapore Airlines :Case Studies - Managing Change
Singapore Airlines (SIA) is one of the world’s leading players of the international airline industry. The Singapore Girl carrier, it is a prominent brand in providing high quality service standards to its customer. The current pressures of the contemporary business setting necessitate change on its managerial strategies. There are problems and issues in its operations like serving customers with high expectations and competitive pressures including technology innovations, travel cost, and labor issues.
This case study looks on the ability of the Airlines to cope up with change. It also looks on the opportunities and challenges of change affecting the whole business functions. By providing case-based examples, the issue of corporate costs, security, and service are evaluated.
Despite the outstanding performance of the Airline, it was recommended that innovations should be deliberate and continuous. Moreover, labor trends, changes and issues must be addressed immediately. Also, SIA should keep up on their research and development (R&D) initiatives as it is an important way of determining future forces that will directly or indirectly affect the overall business environment. There should be optimization in marketing strategy. Lastly, SIA must reach out to a broader target market and must project an image of good corporate governance practice and social responsibility.
In sum, change is inevitable yet SIA will always be well-equipped with the needed characteristics to sustain its advantageous position and expand high quality standard management.
Organizations today operate in an environment characterized by hypercompetition (D’ Aveni, 1995). While organizations strive to survive the challenges of the niche market they operate, different environmental factors came into surface and have changed the way organizations perform their tasks. The airline industry all over the world is now living in an interesting era. More and more people have been using the services of the industry for every purpose they want and for their travel satisfaction. The process of change from the old economy to the new global economy has brought a tremendous changes and developments to aviation, aerospace and airport industries. Part of the changes brought by the competition of these industries globally is the new economics, new market structure, new marketing strategy as well as the new structures of each and every industry within this field. Nowadays, people are more willing to use these aerospace, aviation and airport industries especially those individuals who wanted their travel to be convenient and satisfying, which makes all such industries to be in demand. Further, the emergence of the new markets and their demands has made the aviation, aerospace and airport industries to use the management and marketing strategies in order to survive with the stiff competition in the niche market. Thus, most of these industries are being careful on how to utilize its management and marketing strategy to achieve their individual objectives.
Considering the current state of affairs of the global marketplace, several market players are there in advantageous position while others are struggling to cope up against business challenges including competition and forces of globalization. In this dynamic global economy, the list of companies resorting to organizational change is endless. Organizational change is a normal business response as part of and a result of struggles between contradictory forces and change management practice is related with endeavoring to manage competing demands within the business niche. Singapore Airlines (SIA) is among the surviving companies that surpasses the challenges of a very unstable industry. One of the strongest brands in Asia, leaders in service and competitive airline companies in the world, Singapore Airlines consistently maintains its position as supported by its long duration of serving its clients. It successfully increases its profitability, with $2.13 billion profits attributable to equity holders for the financial year 2006-07 or 71.6% growth from the past year. The Airline operates to approximately a hundred cities and 65 destinations across the globe. SIA's success has contributed to rapid economic development in Singapore. The Airline is an important generator of skilled employment, a channel for the introduction of high technology into the local economy, and a force to the emergence of higher value-added services and manufacturing in Singapore. Tapping its strong market position and financial background, SIA has so much bargaining power that it can exchange aircraft orders for aerospace jobs with the world’s largest aircraft company (Yeung, 1998). Singapore Airlines is well known as having the youngest fleet and best service among all airlines in the world. The distinctions for SIA have a long way to go considering that the Airline is a leader in airline high quality service and innovation of firsts.
PROBLEMS AFFECTING SINGAPORE AIRLINES
Despite the current success experienced by SIA, there are still problems and challenges that affect its line of services. These problems and challenges are rooted in demanding customers with high expectations and competitive pressures including technology innovations, labor issues, and terrorism among other factors of the increasingly competitive marketplace.
Serving Customers with High Expectations
Most companies find it impossible to create any kind of sustainable competitive advantage based on product or service alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage. Hessan and Whitely (1996, p.8) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself. Aiming for competitive advantage, the decision of the management on how to put on the products and services in the market becomes a significant strategic question particularly on what kind of customer experience is offered.
Consumers are considered as the fuel of any business venture. They are the ones who purchase the products and/or services of the company. According to Rintama¨ki and colleagues (2007), the customers are always the one who identify what is valuable and what is not. With this fact alone, companies like SIA are limited in creating value propositions deliberately aimed at sustaining customers in their value-creating consumption activities (Vargo and Lusch, 2004). Furthermore, consumers may choose particular products/brands not only because these products provide the functional or performance benefits expected, but also because products can be used to express consumers’ personality, social status or affiliation (symbolic purposes) or to fulfill their internal psychological needs, such as the need for change or newness (emotional purposes) (Kim et al., 2002). Understanding their behavior is the most elementary solution in providing their varying demands and expectations.
Aside from considering customers’ high expectations, SIA is facing other competitive pressures such as technology innovations, travel cost, and labor issues. Technology (or scientific) innovations, according to Edquist (1997), is the introduction of new-fangled ideas, goods, services, and practices which are essentially intended to be constructive. Technology has always been a major means for creating new physical and human environments. It is possible to ask whether technology will also destroy the global civilization that human beings have created (Heath and Luff, 2000). The utilization of technologies is the involvement of its use in improving the traditional operations and machineries of most organizations and at the same time the technical skills of every individual. These technological advancements have brought people especially those in the business world to utilize a strategy that would be helpful in enhancing the business value of any organization (Ramsdell, 2001). The intricacies of achieving business achievement through increased efficiency and competitiveness, combined with innovative applications of information technology (IT) has heightened the awareness of both IT and business managers towards more strategically oriented approaches for planning and management (Luftman et al., 1993). On this case, it is practically the introduction of latest advances in technology and its standard applications. The provided technological capabilities to businesses like SIA is the intrinsic ability to distribute available resources within the context of the operations provided the deliberate target of coming up with competitive products and services (Cantwell, 1994; Cohen and Levinthal, 1990; Teece and Pisano, 1994). Ironically, SIA is a global leader in innovations. In the recent years, SIA launched the newest cabin products designed to improve the in-flight experience in all cabin classes particularly on the case of Boeing 777-300ER. The increasing worldwide awareness on the protection of the environment is another challenge in the innovative capability of SIA. Airlines are threatened with the advances of information and communication technologies (ICT) such as video conferencing due to the possibility of decreasing the need to travel. Technology is dynamic. More so, SIA is obliged to continuously evaluate its technological inclination in reference to providing the array of customers with varying needs and high levels of expectations.
Travel cost is among the most imperative problem that SIA is facing. Pricing is a marketing issue. Marketing can be considered as one of the most important element underpinning successful business creation (Hills, 1994). Provided that the airline niche market battles on the most effective pricing strategy, the unique marketing strategy on providing their consumers reasonable and affordable costs of flight with a quality service is the biggest menace. The pressures in the airline industry stemming from low-cost carrier competition caused a number of the full-service airlines to begin charging for on-board services which used to be free. This is a violation to the commitment of providing quality customer service. Also, the economic recession in various areas of operations as well as the changing lifestyle of the customers are among the immediate considerations.
On the labor issues, the need to continuously train members of the staff based on the high expectations of customers is to be addressed. While competition becomes even more complex, training subordinates is a potent solution to cope up with the emerging challenges of the global workforce. Training is usually done prior to actual employment yet it extends beyond the requirement for both organizational and subordinates’ competitiveness and competency. According to Hornsby and Kuratko (2005), training and development activities can help companies acquire a staff with the right combination of skills and motivations which a company needs to be competitive. Most organizations and their management invest on human resources as human capital is known to be a resource-based competitive advantage. Training remains one of the key aspects necessary for high quality service delivery (Lowe et al., 2007, p.38). Schermermon (2001) identified training benefits as it improves communication between groups and individuals; aids in orientation for new employees and those taking new jobs through transfer or promotion; provides information on equal opportunity and affirmative action; provides information on other governmental laws and administrative policies; and improves interpersonal skills. In this case, airline industry professionals need training and education to ensure their adequacy and preparations to serve their role. Given the appropriate training programs for subordinates, it is tantamount to productivity and success yet requires significant amount of financial resources.
With the identified problems in the case of SIA, the question of consideration, development, and management of change is necessary. According to Conner (1994), major changes are occurring in most of today’s organizations. Perhaps the space between the new organization design and implementing it into actuality is the whole coverage of organizational change and development. The subsequent discussion is based in the case presented by Jick (1993).
- Could the Airline contain costs without sacrificing service?
The ability of SIA to extend superior service to its customers is the only possible source of competitive advantage. Current financial conditions of SIA will remain outstanding while consistently holding and developing its high quality customer service. This is attributed to the policy of steady organic growth, strong organizational culture, effective HR function, and overall strategy and commitment of management towards balance in growth and quality service.
SIA recognizes the changes that affect their business operations. The varying needs and demands of the airline market and the consumers are the driving factors to incessantly move towards progression (Hitt et al., 2003). The policy of steady organic growth is the rejection of the managers to the idea that consolidation will lead to an industry consisting of a handful of megacarriers and a few industry players. In the early years of the Singapore Girl carrier, the members of the corporate management are afraid that growth within the organizational environment is fast paced. Even if SIA is financially capable, it did not immediately take hold of the opportunity of acquisition. Strategic management planning is evident to SIA and its executives. In the end of 1999, SIA bought 49% of the Virgin Atlantic Airways. The reason behind this acquisition is the reputation of SIA and Virgin as string players in innovation and high standard service. SIA also expand to promising and new markets (e.g. the US) and strategic alliances (e.g. Swissair and Delta). Everything in SIA is a product of long-term planning and strategic management. Thus, the financial resources of the company is directed to productive ventures rather than futile and aggressive spendings and aimless decision making directed to temporary solutions toward difficulties in their operations.
Committed to developing continuous and outstanding airline services, SIA invested on standardization of service, efficiency of transfers, and realization of their core principles. It is, however, impossible to believe that financial cost is unnecessary on these actions. There are significant amount of money involved and spent yet it is not as high as expected. One of the most admired corporate managerial attributes of SIA is its ability to be cost efficient in undertaking its given programmes. For instance, the launching of the Outstanding Service on the Ground (OSG) or ground service programme is focused on improving reservations, ticketing, and general airport services. Training is supposedly directed to airport personnel who are directly in contact to clients. SIA purchased technological systems that will speed up or automate manual works. Being a leader in innovations, SIA invested on technology advancements. The ground service is the springboard for the other corporate plans and programmes. These programmes no longer involve financial resources but the inherent managerial abilities and HR functions. In relation to efficient transfer, each airport unit was given standards reflecting the values of punctuality, baggage handling, speed and friendliness of check-in, efficiency of seat assignment, number of compliments and complaints from customers and professionalism in handling delays. There was additional standard given to the region’s hub – Changi, wherein managers are obliged to achieve the mentioned standards as awards are given to stations that perform the finest. Motivation among employees is palpable in line to SIA’s commitment to high standard service. The emphasis on the core principles of SIA: “Show You Care”, “Dare To Care”, and “Be Service Entrepreneurs” among its workforce is a cost-efficient mechanism. It only includes standard (i.e. oral or written) inculcation or instruction among the direct personnel involved such the pilots, flight attendants, stewards and stewardesses, and airport staff members. To supplement the achievement of these pillars in service, seminars, trainings, reminders, and reinforcement mechanisms through monthly reports, publication, monitoring, recognition, and other activities including posters decorated in staff quarters are implemented. This is another remarkable effort of the management to motivate their workers in general. The effective application of the three pillars in service reaped its fruitful benefits through increased financial performance and expansion of operations. SIA recognize that behind these successes were policies as well as practices that were deliberately and systematically developed and similarly implemented by management.
- Were security and service inevitably in conflict with each other?
Provided the core competencies of SIA, chances are less in terms of conflict in security and service. The brand strategy of SIA is, in theory, a relatively high-cost strategy. The management decided on a fully branded product/service differentiation strategy from the very beginning. Innovation, best technology, genuine quality and excellent customer service were to become the major drivers of the brand. With these attributes, the question of corporate security and service surfaces. There will still be minor issues and challenges that will be faced by SIA but the established corporate structure and leadership is the key to solve such. Leaders play a key role in change implementation. It can be argued that the effective planning and management of change require careful consideration of the impact of structural changes on middle managerial work roles and work satisfaction levels. Drucker (1995) sees leaders as the basic resource for an organisation as well as the key factor for a healthy growing economy and supply, which is critical to the survival and further development of any organisations. For example, the management expertise of Chew Choon Seng as the CEO of the Airline is unquestionable. Like any other business leader, Seng is supported by clear corporate governance initiatives that possess outstanding ability to cope with uncertainty, position in information network, and control over physical and financial resources. The leadership emphasises on achieving consistency and stability by following procedures and practices, high level of conformity and collaboration among employees, and focused efficiency and consistency are the key objectives.
- Could it grow, yet maintain its high service standards?
Airlines worldwide have been trying to strike a balance between cooperation and competition. SIA will definitely grow and maintain its high standards. This is supported by the continuous progressive performance in the current market. In its 61-year history, SIA is committed to their brand attributes. According to their corporate history posted in their web domain, SIA have pioneered many in-flight experiential and entertainment innovations, and strived to be best-in-class. SIA was the first to bring in various assortments of services like hot meals, free alcoholic and non-alcoholic beverages, hot towels with a unique and patented scent, personal entertainment systems, and video-on-demand in all cabins (Roll, 2004). The company keeps driving innovation as an important part of the brand, and the cabin ambience and combined experience are key factors of their success. As stated earlier, SIA launched its new generation cabin products while continuously delivering operational efficiency, environmental improvements and customer benefits. Today, SIA faces a future of firsts. This means that there will be more new offerings to come directly aimed to improve their services. SIA made Aviation milestone when they became the first to operate the world's largest aircraft – the A380 in October 25 last year between Singapore and Sydney. In addition, SIA introduced its Suites - in a class beyond First, together with cabin improvements in all other classes while still providing excellent service. Accordingly, the future promises to bring more firsts like these because SIA continually strives to drive quality service through innovation.
- Could it in fact further improve its already high quality of service?
According to Kay (1995), the success of an organization is based on its distinctive capabilities that are continuously developed all throughout the organizations life cycle. SIA, with its given core competencies and current competitive position will undoubtedly further improve in its high quality service. By looking on the three pillars of service, it is definitely as lifetime commitment on their part. The high quality service of SIA is their main selling point. They will continue to improve by striving for more customer service innovations that will generally cater to high expectations or demands. In customer welfare, consumer feedback system must be reinforced. The resolution of customer complaints and problems, for example, is a key for companies like SIA to be able to maintain the loyalty. Dissatisfied customers are more likely to tell people about their experience than satisfied customers are (Ganey and Hall, 1997). The possibilities are coming and there are high stakes to pay and numerous risks to take. In SIA, the challenge is on beyond doubt.
According to Moran and Avergun (1997, p.146), “Change consists of a series of closer and closer approximation of increasingly ambiguous goals which are embraced by more and more members of the organization. For this reason, change often seems endless and confusing. Often those involved in the change process feel overwhelmed and powerless.” Looking on the main troubles of SIA, innovations should be deliberate and continuous. The need to be innovative and the need to explore new approaches in the future are integral parts of the company’s culture. Daft (2003) pointed out that managing global environment requires managers the ability to manage change through innovation and creativity. Moreover, labor trends, changes and issues must be addressed immediately. In general, it is suggested that organization’s HR policies are responsive to the needs and welfare of the whole workforce. The HRM role must be proactive rather than reactive, that is, serving the employers and employees needs and welfare as directed to the achievement of competitive advantage. It should not only on the basis of attracting the best employees but taking care, developing and grooming them as organization’s indispensable assets. Also, SIA should keep up on their research and development (R&D) initiatives as it is an important way of determining future forces that will directly or indirectly affect the overall business environment. R&D programs must be directed to the progress and growth of the company. This will also help in developing more products that will address the competition in the market. In implementing marketing strategies, there is a need for continuing optimization – the ability to assess a myriad of possibilities in order to find the best one or near best one (Hoctor and Thierauf, 2003). In cooperation with the other elements of marketing and business management, strategies must be evaluated and improved. In building the impression of people about the company, SIA must reach out to a broader target market and must project an image relevant to every members of the society. Its corporate and social responsibility must be defined according to the expected demands of the community it operates.
Change is always directed to the eventual development of the organization including in its management and overall functions and operations. In sum, Singapore Airlines, like any other business that operates in the global marketplace, is subject to the pressures of change. Yet considering the core competencies of SIA as part of its withstanding reputation as a leader in the airline industry, it will soar as high as its flights – breaking barriers and opening more opportunities for high quality service for the fulfillment of customers’ high expectations.
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