Case Study Description of Singapore Airlines (C): Managing a Strategic Paradox
Supplement to case IMD724. The C case takes a broader geographical view, while focusing on Singapore Airlines' strategic differentiation. The airline, while being widely considered as the standard bearer in terms of quality and customer service, has been able to achieve some of the lowest cost structures in the industry, surpassing even some LCCs. To meet this seeming paradox while minimizing trade-offs, Singapore Airlines draws the line between things that are valued by the customer, where procedural and cultural ingenuity are promoted, and things that have no effect on the traveler, where cost efficiency is sought. Learning objectives: To investigate how, why and where SIA manages its cost/service trade-offs. To identify the key internal characteristics that allow Singapore Airlines to consistently beat its rivals in terms of customer service and profitability.
Authors :: Daina Mazutis, John Weeks, Luis Vivanco, Ivy Buche
Swot Analysis of "Singapore Airlines (C): Managing a Strategic Paradox" written by Daina Mazutis, John Weeks, Luis Vivanco, Ivy Buche includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Singapore Airlines facing as an external strategic factors. Some of the topics covered in Singapore Airlines (C): Managing a Strategic Paradox case study are - Strategic Management Strategies, Market research and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Singapore Airlines (C): Managing a Strategic Paradox casestudy better are - – increasing commodity prices, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, central banks are concerned over increasing inflation,
competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Singapore Airlines (C): Managing a Strategic Paradox
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Singapore Airlines (C): Managing a Strategic Paradox case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Singapore Airlines, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Singapore Airlines operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Singapore Airlines (C): Managing a Strategic Paradox can be done for the following purposes –
1. Strategic planning using facts provided in Singapore Airlines (C): Managing a Strategic Paradox case study
2. Improving business portfolio management of Singapore Airlines
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Singapore Airlines
Strengths Singapore Airlines (C): Managing a Strategic Paradox | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Singapore Airlines in Singapore Airlines (C): Managing a Strategic Paradox Harvard Business Review case study are -
Diverse revenue streams
– Singapore Airlines is present in almost all the verticals within the industry. This has provided firm in Singapore Airlines (C): Managing a Strategic Paradox case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Singapore Airlines has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Singapore Airlines digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Singapore Airlines has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Leadership & Managing People field
– Singapore Airlines is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Singapore Airlines in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Singapore Airlines is one of the most innovative firm in sector. Manager in Singapore Airlines (C): Managing a Strategic Paradox Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Singapore Airlines is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Singapore Airlines is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Singapore Airlines (C): Managing a Strategic Paradox Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Singapore Airlines in the sector have low bargaining power. Singapore Airlines (C): Managing a Strategic Paradox has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Singapore Airlines to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Singapore Airlines are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– Singapore Airlines has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Singapore Airlines has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Singapore Airlines has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Singapore Airlines (C): Managing a Strategic Paradox Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Singapore Airlines
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Singapore Airlines does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Singapore Airlines has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Singapore Airlines (C): Managing a Strategic Paradox - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Singapore Airlines (C): Managing a Strategic Paradox | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Singapore Airlines (C): Managing a Strategic Paradox are -
Capital Spending Reduction
– Even during the low interest decade, Singapore Airlines has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Singapore Airlines (C): Managing a Strategic Paradox HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Singapore Airlines has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Singapore Airlines (C): Managing a Strategic Paradox that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Singapore Airlines (C): Managing a Strategic Paradox can leverage the sales team experience to cultivate customer relationships as Singapore Airlines is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Singapore Airlines (C): Managing a Strategic Paradox HBR case study mentions - Singapore Airlines takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Singapore Airlines (C): Managing a Strategic Paradox, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Singapore Airlines needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Singapore Airlines has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Singapore Airlines (C): Managing a Strategic Paradox, in the dynamic environment Singapore Airlines has struggled to respond to the nimble upstart competition. Singapore Airlines has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Singapore Airlines, firm in the HBR case study Singapore Airlines (C): Managing a Strategic Paradox needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Singapore Airlines has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Singapore Airlines (C): Managing a Strategic Paradox, is just above the industry average. Singapore Airlines needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Singapore Airlines (C): Managing a Strategic Paradox | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Singapore Airlines (C): Managing a Strategic Paradox are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Singapore Airlines can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Singapore Airlines can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Singapore Airlines to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Singapore Airlines to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Singapore Airlines can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Singapore Airlines in the consumer business. Now Singapore Airlines can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Singapore Airlines can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Singapore Airlines (C): Managing a Strategic Paradox suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Singapore Airlines can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Singapore Airlines has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Singapore Airlines (C): Managing a Strategic Paradox - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Singapore Airlines to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Singapore Airlines can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Singapore Airlines (C): Managing a Strategic Paradox, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Singapore Airlines can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Singapore Airlines can use these opportunities to build new business models that can help the communities that Singapore Airlines operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Singapore Airlines can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Singapore Airlines can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Singapore Airlines is facing challenges because of the dominance of functional experts in the organization. Singapore Airlines (C): Managing a Strategic Paradox case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Singapore Airlines (C): Managing a Strategic Paradox External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Singapore Airlines (C): Managing a Strategic Paradox are -
Increasing wage structure of Singapore Airlines
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Singapore Airlines.
Regulatory challenges
– Singapore Airlines needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Singapore Airlines can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Singapore Airlines (C): Managing a Strategic Paradox .
Consumer confidence and its impact on Singapore Airlines demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Singapore Airlines needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Singapore Airlines in the Leadership & Managing People sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Singapore Airlines high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Singapore Airlines business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Singapore Airlines.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Singapore Airlines will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Singapore Airlines with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Singapore Airlines in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Singapore Airlines (C): Managing a Strategic Paradox Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Singapore Airlines (C): Managing a Strategic Paradox needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Singapore Airlines (C): Managing a Strategic Paradox is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Singapore Airlines (C): Managing a Strategic Paradox is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Singapore Airlines (C): Managing a Strategic Paradox is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Singapore Airlines needs to make to build a sustainable competitive advantage.