EM-SIA - Problem The image of Singapore Airlines(SIA...

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lines: Global Challenges arkets
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Problem The image of Singapore Airlines’ (SIA) Singapore Girl has long become iconic in the airline industry as a symbol of superior in-flight services that is admired worldwide by customers and competitors alike. Through its history, SIA has built upon its reputation as an industry leader by differentiating the airline from its competitors through excellence in its level of service and care for customers. SIA’s innovative culture has resulted in constant improvements in its product offerings, allowing SIA to continuously offer unsurpassed comfort and service to customers. Since its humble beginnings as a regional carrier, SIA has grown to become the world’s most admired airline. However, as SIA matured, it was confronted with issues of slowing growth, consolidation, and the impact of terrorism on the airline industry. The underlying problem faced by SIA is defining an appropriate corporate strategy that will position it for growth in an industry that is facing globalization, changes in its regulatory environment, and consolidation, as well as facilitate its transition from a national airline into a global one. Situational Analysis Political: While SIA enjoys political stability in Singapore, it is still afflicted by the problem of terrorism (9/11), which has raised concerns regarding air safety. Further terrorism will likely damage profits through drastic demand reductions across the airline industry as well as significant increases in insurance premiums for airlines. Airport security and regulations will become more stringent, implying longer lines and wait time, which may result in dissatisfied customers who will try to reduce their need to fly in the future. The airline industry is highly regulated by individual countries through anti-competitive regulatory barriers, which works to limit SIA’s international growth opportunities. SIA overcame some of the restrictions by forming alliances with other airlines, which opened the doors to the domestic networks of foreign countries, increasing SIA’s growth prospects. Alliance members also benefited from increased sales due to coordinated schedules and savings from shared resources. Furthermore, deregulation of the U.S airline industry through the open skies initiative will likely increase SIA’s share in the U.S market as the initiative eliminated landing and service frequency restrictions. Economic: Competitive advantages in the airline industry stem from sources such as the ability to control cost and protect revenues. SIA is well positioned to compete under these circumstances, as it is able to leverage its alliance partnerships to minimize operating costs and use its reputation to retain and attract customers, thereby protecting its bottom line profit. Its incentive structure ties compensation to the profitability of the airline, thus encouraging efficiency by employees. Constant investments in aircrafts contribute to long run profits through increased customer
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EM-SIA - Problem The image of Singapore Airlines(SIA...

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