PTADipMgt39 Management & Strategy Case Study Question and Answer

 

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Assignment Details:-

• Topic: Management & Strategy
• Length:2000 words (+/- 10%)
• Citation Format: APA

 

Management & Strategy

Assignment – 1

Case Study: Singapore Airlines, Reacting to the Asian Crisis

 

INTRODUCTION

On September 11, 1998, Singapore Airlines (SIA) announced its biggest-ever product launch, with brand new product and services being introduced in all three classes on its Boeing 747, Airbus A340 and Boeing 777 planes. The cost of the launch was expected to be S$500 million (Approximate exchange rate, S$1.65 = US$1). Coming in the midst of the worst economic crisis experienced by several East Asian economies, the product launch was viewed with caution by many analysts. Though most analysts agreed that the move would have a positive impact in the long run, they were divided regarding the short- term impact. While arguing that it was a risky manoeuvre, Chia Cheow Ming of Tat Lee Securities in Singapore said:

 

“Singapore Airlines is pulling away from the pack, which is fine if it can attract wealthy Americans and Europeans willing to pay a premium for upgraded services and seating. Otherwise, Singapore Airlines will have to ea2t their loss.”

 

Simultaneously with the product launch, SIA also announced that its earnings for the year ending March 1999 would drop significantly versus previous years. As SIA’s stock price fell 8% on the day the launch was announced, many observers were left 3wondering if SIA’s ambitions had got the better of its judgement. Had it abandoned its policy of prudence? Was it not aware that even its closest competitor, Cathay Pacific, was struggling in the current economic environment?

 

STRATEGY AND ORGANIZATION POLICIES

Singapore Airlines came into existence on October 1, 1972. Since inception, it had followed a set of consistent strategies including the following:

• Maintaining the youngest fleet of aircraft among all major carriers;
• Deploying the latest technology in in-flight & other operations;
• Pioneering customer conveniences such as free headsets, drinks in the economy class;
• Marketing campaigns   emphasizing   its    in-flight   service    (the    Singapore   girl campaign) and young aircraft fleet;
• Building excellence in related operations such as building and maintaining airports, maintaining planes, operating kitchens and transporting cargo.

SIA also followed a series of internal organization policies;

• Rigorous recruitment and selection procedures;
• Heavy emphasis on training at all levels in the organization;
• Actively seeking customer feedback;
• Rewarding staff that provided superior customer service;
• Empowerment and total involvement of employees through creation of smaller units within the company, job rotation and extensive communication between management and employees.

 

PAST PERFORMANCE

SIA was routinely acknowledged as one of the world’s premier airlines. In 1998, SIA was voted the Best Airline in the World by the readers of Business Traveller Asia Pacific for the seventh consecutive year. In 1995, SIA was voted Asia most admired company by the Asian Business magazine.₄

 

SIA had a diversified base of revenues and was not overly dependent on any one geographic region (see Exhibit 1 for a geographic breakdown of SIA’s revenues). SIA group’s financial position was extremely strong. In 1998, the group’s shareholders funds stood at S$11,380 million, enough to pay for most of its purchases of aircraft in the foreseeable future. Over the last five years, the shareholder’s funds had grown at a rate exceeding S$700 million every year. The group had no debt.

 

ASIAN CRISIS’ IMPACT ON ASIAN AIRLINES

The Asian Economic Crisis had adversely affected most Asian airlines. On August 5, 1998, Cathay Pacific Airways announced that it had plunged into the red for the first time in twenty years as tourism dried up in the wake of the Asian Economic Crisis. For the year ended March 1998, Malaysian Airlines posted a net loss of 260 million ringgit (US$62 million) versus a profit of 350 million ringgit (US$70.6 million) the year before, mainly due to amortization of 3.5 billion ringgit in foreign-currency debts.

 

In the second half of 1997, Thai Airways had seen a 40 % drop in passengers. In August 1998, the airline said that it had suffered a net loss of 4,32 billion baht (US$103.4 million) in the third fiscal quarter compared to a loss of 310.3 mill6ion baht for the same period one year earlier. The economic downturn had, coupled with racial riots at home, caused Garuda’s (Indonesia) load factor to drop from around 80% to 49%. Four out of six Indonesian airlines were planning to return all of their leased planes.

 

By January 1998, Korean Air was worth less than three of its fleet of 45 jumbo jets (Boeing 747s). Even reputed airlines from the region were suffering. Australia’s Qantas had issued a profit warning7. ANA (Japan) recorded a 28.9% fall in net profit in the six months to September 1997. Many of the affected airlines were taking one or more of the following steps to mitigate the impact of the crisis: selling planes (Garuda, Korean), returning leased planes (Philippine Airlines, Garuda, Korean), offering reduced fares or special packages for tourists (Cathay Pacific, Asiana, Korean), and reducing headcount (Philippine).

 

SIA’S RESPONSE TO THE CRISIS

In addition to its ambitious product launch, SIA was taking a variety of steps to minimize the impact of the crisis. In February 1998, SIA announced a 2.5% reduction in capacity for flights serving the Southeast Asian region and increased services to the U.S., Europe and Australia. In May/June 1998, SIA offered Hello Kitty, the Japanese character dressed in the costume of a SIA stewardess, to travellers. The promotion proved to be quite popular. In August 1998, SIA Group managers (numbering 316) volunteered to forego annual salary increments for the 1998-99 fiscal year, as a contribution towards containment of costs. The twenty highest ranking executives of the SIA group had also decided to forego their annual salary increments. In September 1998, in another belt-tightening measure, SIA deferred the delivery of eleven aircraft over the next two years.

 

APPROPRIATENESS OF SIA’S STRATEGIC RESPONSE

In the aftermath of the crisis, industry analysts were wondering about SIA’s response to the crisis. Was the response extremely risky or was it cleverly thought out to build on SIA’s competitive advantage? Had SIA become complacent due to its past success or was it unwavering in its ambition to the best airline in the world?

 

Based on the information provided in the case study above, you are required to prepare a 2,000 essay that discusses the key strengths, weaknesses, opportunities and threats (SWOT) of Singapore International Airlines (SIA). You are further required to include in your essay a discussion of what you believe to be the core competencies of the company as well as the relevance of the company’s vision and mission statement. Lastly, you are to provide your opinion on the strategy undertaken by SIA in the case study by justifying the merits and demerits of SIA’s strategic response. You may structure your essay as follows:

• Cover page
• Content page
• Introduction
• Vision
• Mission
• Core Competencies
• Strengths
• Weaknesses
• Opportunities
• Threats
• Appropriateness of SIA’s Strategic Response
• Conclusion

Further details of the assignment will be presented in class by your lecturer.

 

Management & Strategy
Criteria	Performance descriptors			Total Marks	Marks awarded
	Developing	Proficient	Excellent
Introduction	0-1	2-3	4-5	5
	There is incomplete or no company description. Lacks information on key attributes of the company.	Company description is included. Key attributes of the company are identified. However, there is insufficient summarising or paraphrasing.	Company description is well written and clear. Key attributes of the company are succinctly summarised and paraphrased.
Critique of the Vision Statement	0-3	4-7	8-10	10
	Submission did not include a discussion of the company’s vision statement or merely reproduced the vision statement without any analysis.	Submission has included the company’s vision statement and has provided a rather detailed analysis on how the vision statement relates to both theory and the company’s current operations.	Submission has included a detailed analysis on how the vision statement relates to theory arguing how it is effective or requires adjustment. Has further provided strong arguments on how the vision statement either relates effectively to the company’s current operations or needs adjustment by providing an alternative vision statement.
Critique of the Mission Statement	0-3	4-7	8-10	10
	Submission did not include a discussion of the company’s mission statement or merely reproduced the mission statement without any analysis.	Submission has included the company’s mission statement and has provided a vague analysis on how the mission statement relates to both theory and the company’s current operations.	Submission has included a detailed analysis on how the mission statement relates to theory arguing how it is effective or requires adjustment. Has further provided strong arguments on how the mission statement either relates effectively to the company’s current operations or needs adjustment by provided an alternative mission statement.
Analysis of Core Competencies	0-7	8-14	15-20	20
	Submission has no discussion on the company’s core competencies. If a discussion on the core competencies was included, it comprised of a mere listing of the various competencies without any sound elaborations.	Submission included a discussion of the company’s core competencies, but much of the content is descriptive with a rather limited analysis of how the identified competencies serve to benefit the organisation.	Submission has a clear and detailed discussion of the company’s core competencies. Each competency is clearly delineated with an analysis that clearly illustrate how each competency contributes to the benefit the organisation.
SWOT Analysis	0-7	8-14	15-20	20
	Submission has no SWOT analysis or topics are mostly in the wrong sections. Topics mostly stand alone and do not appear in the prior sections. Lacks research from mostly relevant, up-to-date and credible sources (like Proquest) on some or all parts. These parts are not all clearly described and applied to the organisation in question.	Topics are mostly in the appropriate sections (e.g. strengths in strengths) but some are not. Some topics are stand alone and do not appear in the report. Presents and describes research from relevant, up-to-date and credible sources (like Proquest) on all parts but not equally. These parts may not all be clearly described and applied to the organisation in question.	All topics are in the appropriate sections, with no items being stand alone. Presents and describes research from relevant, up-to-date and credible sources (like Proquest) on all parts. These parts are clearly described and applied to the organisation in question.
Appropriateness of Strategic Response	0-5	6-10	11-15	15
	Submission has no discussion on the appropriateness of the strategic response.	Submission has a discussion on the appropriateness of the strategic response with limited detail.	Submission has a detailed discussion of the appropriateness of the strategic response.
Conclusion	0-1	2-3	4-5	5
	Conclusion lacks credible insights based on the preceding analysis of the company.	Conclusion is limited and based loosely on analysis of the company.	Conclusion is insightful and relates well to the analysis of the company.
Clarity of Thought	0-1	2-3	4-5	5
	Viewpoint proffered is unclear, incoherent and under-developed. The author’s voice is lacking.	Viewpoint proffered is discernible. However, it could be further elaborated and supporting considerations could be better linked. There is an attempt at putting forth a personal voice.	Viewpoint proffered is clear, coherent and well- developed. The author’s voice is recognisable.
Use of Evidence	0-1	2-3	4-5	5
	Little or no evidence cited to support viewpoint. Evidence lacks relevance, reliability and recency.	Sufficient evidence cited to support viewpoint. Evidence cited is missing seminal works.	Evidence cited is relevant and sufficiently supports viewpoint put forth. Evidence cited is recent. Evidence cited is from reliable sources.
Citations & Referencing	0-1	2-3	4-5	5
	Little or no in-text citations throughout essay. Referencing format does not follow the APA format. Insufficient sources referenced.	In-text citations done according to APA format with some mistakes. Referencing follows the APA format but with some mistakes. Sufficient resources referenced.	In-text citations done according to APA format with little or no mistakes. Referencing follows the APA format but with little or no mistakes. Sufficient and authoritative resources referenced.
Formative comments on submission				100
WEIGHTAGE				80%

 

 

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