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Case no.

1
HRM 380
Group “D”

HRM 380 | Case 1

“Singapore International Airlines:


Preparing For Turbulence Ahead”
Prepared for:

Mr. Tajuddin Ahmed


Faculty Member,
School of Business,
North South University, Bangladesh

Prepared by:

S. M. Tanveer Saad
ID no. 041-154-530

Kazi Mushruqul Huq


ID no. 051-307-030

Saiful Azam Zulfiquer


ID no. 052-030-030

Syeda Sabrina Ameer


ID no. 053-288-030

Syeda Ishrat Fatema


ID no. 061-525-030

Nusrat Sikandar Amreeta


ID no. 061-679-030

Monday, January 26, 2009

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Executive Summary:
The growth of modern Singapore can be traced back to the policies and
priorities established by the then prime minister who was a staunch believer in
free trade and internally driven growth. Despite of, the Government being the
majority share holder Singapore International Airlines (SIA) faced heightened
competition from the start as the government declared that it would not give
any subsidies to the airline. SIA traced its roots to an organization which had
proved to be quiet beneficial to the fledgling company. From the crews’
impeccable safety record to personnel with crucial operating experience
helped SIA to reach over 90 destinations in more than 40 countries all over
the world by early 2003. SIA established an enviable record both in terms of
the operational performance and its profitability history.

Using its brand image, geographic location, and outstanding service as the
cornerstones of its strategy SIA enjoyed a run of exemplary profitability and
service performance by the year 2004. It had built its strategy around the
principles of a differentiated positioning.

In recent years, there have been many environmental shocks, such as SARS,
that have challenged the continued viability of the model. The model of
strategy that SIA had built in order to compete in the airline business in the
late 1990s’ is to take some important steps to fortify its position globally. By
joining the star Alliance SIA expected code sharing services, fine tune traffic
flows and enter destination where it did not had access, like more secondary
cities of USA and South America. However, despite the obvious advantages,
the alliance network brought some concerns like restoring the brand image of
SIA which it so carefully nourished over the years. The loss of control over
some key decisions also posed challenges to SIA.

To gain the control of alliance SIA took some decisions which later came out
to be a bit costly for them. Such as the partnership with Air New Zealand
resulted in loss and hasty retreat from the initial foray to establish control of
the key Australia- Asia routes.

The second wrong move was to acquire the 49% of the equity with U K based
Virgin Atlantic Airways for 1.6 billion. Virgin’s decision not to join the Star
Alliance placed SIA in delicate position and the threat of invoking the ire of
other alliance partners should it favor Virgin over United and other for
channeling some of its transatlantic passengers. On the other hand rejecting
the opportunity to participate in the venture of Virgin Blue, which later posted

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very good returns in the Australasia market was another wide of the mark
decision of SIA.

The low cost carriers in Asia became one of the greatest threats for now. The
Air Asia and Virgin Blue have acquired considerable percentage of Asian and
domestic Australian markets and SIA has found itself challenged by the entry
of many other low-cost airlines in its home market.

SIA is at the cross roads in its history and the next few strategic moves would
determine the rise of the best Asian Airline to become a global player
commanding the respect of the world’s largest carriers. The case closes with
a decision that SIA needed to make about how it would address the onset of
low-cost competitors, and whether it would make sense to move away from its
differentiated premium approach.

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Table of contents

Title Page

Background ……………… 05

Theme ……………… 23

Main Issue ……………… 25

SWOT Analysis ……………… 27

HR Issues ……………… 41

Recommendation ……………… 46

Implementation ……………… 56

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Background

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Back Ground
Singapore International Airlines (SIA)-A
Benchmark Airline:
Over the years the Singapore International Airlines has built up a strong brand
name as a trend-setter in the aviation industry, particularly in terms of safely,
innovation and service excellence. Its focus on the differentiation of its
services from other airlines has made it one of the most successful and
recognizable airline brands in the recent past. It is also an industry bellwether
for air-craft purchases. Its major shareholder being the Government of
Singapore, SIA has always received tremendous support from them. It is the
parent airline of the Singapore Airline Group of Companies. It has diversified
into airline-related businesses such as aircraft handling, engineering and
catering. The Singapore girl as we know is what the hostesses are called- is
recognized as a symbol of excellence in service quality. The concept of choice
of meals in the “economy class” was first pioneered by the SIA. Other tangible
and intangible differentiations were first pioneered by SIA which is now copied
by all major airlines.

The Advent of Problem in the SIA:


The problem began during and after the difficult economic conditions such as
the SARS outbreak in 2003 and the Middle East crisis. The relation between
the group management and the labor unions began to sour, particularly after
the wage-cuts and lay-offs of over 400 employees. It was regarded as the
highest number of lay-offs in the history of SIA. It went on for a further wage-
cut and lay-offs in order to trim its operating costs. The whole incident was
being regarded as self-serving by the Unions. The full support from the SIA’s
major shareholder, the Government of the Singapore was also considered by
the unions as suspicious and they did not like it a bit. They thought these
excuses were used just to downsize the number of employees

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Duplication of SIA differentiation strategy


by other Airlines:
Then came the copycats, the other airlines who did not waste any time in
copying many of the remarkable innovations pioneered by SIA. SIA’s
development as a carrier came through their strategy of differentiation. But
soon it became a norm, as a result of the other airlines’ adapting the ways.
The sensational additions of luxury such as choice of meals in economy class,
innovative entertainment options etc that were introduced by the SIA which
became their specialized field, no longer remained so. Main concern was the
increasing competition from International carriers headquartered in the
neighboring countries, such as Thai Airways, Cathay Pacific, Malaysian and
Qantas. They duplicated some of the key features of SIA’s competitive
strategy, which included recruitment, in-flight service, fleet management etc

Buying of stakes of other airlines by the


SIA:
SIA has a strong presence in the Southeast Asia, South Asia, East Asia and
Kangaroo-route. But soon after the low-cost carriers began to make their
presence felt in the Asian region that also included the routes that SIA ruled
for so long. As a result the business of SIA began to slow-down.
The Government of Singapore on the other hand was on the process to
launch a low-cost carrier around that region and with that they also declared
that possibilities are there that they might sell its 57% stake in SIA. This
declaration made some believe this would help SIA to compete with other low-
cost carriers evenly. Along with this, they also believed that this relationship
between the SIA and Singapore Government gave the SIA greater Privileges
but the SIA has denied it all along.

The Operational Investments by the SIA


in recent times:
To make its presence powerfully around the world, SIA in order to expand its
business, purchased 25% of Air New Zealand. But as the Air New Zealand
went bankrupted, the deal turned sour and SIA lost about $157 million. Around
the year 1999, SIA bought a 49% stake in Virgin Atlantic Airways worth $1.6
billion. By 2007, it lost 60% of its value. Many said that the partnership was
not working because of the different cultures of the respective airlines. Mr.
Chew Choon Seng the CEO of the SIA was faced with a challenging task of
determining the competitive strategy of SIA in turbulent times.

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The Traditional Airline Industry:


Conventionally, due to the national and international regulations, the airline
industry based on the limiting effects was fragmented. Each country has its
own landing rights and local ownership requirements. The large airline
companies developed domination only on their own regional markets. That’s
the best they could do even being industry’s biggest airlines. The competition
was divided into each region and it was not global. The sole reason being
different countries not allowing other airlines to have their business in their
countries and only the government owned national carriers were given the
autonomy to run their business in their respective countries. Exception was
the United States, where they did not allow the national carriers to dominate
rather they encouraged a fair competition among the airlines inside their
country. However the scenario eventually changed in the 1990s when the
industry began to reform as a result of the deregulation, privatization and the
advent of the new technologies.

The Consequences of the Reformation of


the Industry
United States deregulated its airlines in the late 1970s and as a result it has
witnessed the severe competition among the airlines in its country. Europe,
soon after the creation of the European Union, terminated the country-specific
barriers and allowed free-market competition among the carriers. As a result
they also entered the world of competition of the airline industry. In Asia, some
major regions started allowing greater access to foreign carriers. Japan took
an enormous step in the process of deregulation by selling off its shares in the
then state-owned Japan Airlines and authorized All Nippon Airways to serve
international markets. On the other side of the globe, in South America, many
small national flag carriers were privatized. Countries such as Argentina,
Mexico removed the anti-competing barriers and infused considerable levels
of market competition in their airline industry. They also privatized their
national carriers.
This trend gained a lot of significance and appreciation. Countries such as the
European nations were by then having discussions with the United States to
operate an open transatlantic market area where landing rights would be
determined by free market forces rather than regulatory process. Thus the
traditional airline industry coming to an end. The era of globalization started.
Nations started having open-skies agreements between each other. There
agreements were bilateral agreements between countries that agree to
provide landing and take-off facilities for air-carriers coming from any of the
partner countries.

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The Globalization Era:


The reformation through deregulation and privatization helped the airline
industry to become global. It transformed the fragmented competitive market
into a global competition. It was seen that most of the large carriers retained
their regional powers. But many airlines tried to make alliances with the other
leading carriers, in order to provide perfect services across the wider
geographic regions. These alliances made most of the larger airline
companies into de facto global organizations. That is they became a group
and cooperated with each other in order to provide services to customers.
Due to globalization many regions were witnessing the significant and intense
competition among the airline companies. It was clearly exposed in case of
the fares offered by the airline companies. There were high fare wars among
them. Since the customers had more options to choose from, they became
concerned and more price-sensitive then ever before.

The competition became so intense and acute that many carriers started to
focus only on their service offerings. They concentrated on upgrading their
service offerings. To sustain the competition, many carriers in the process of
improving their service offering, contributed in the declining yields in a price-
conscious market. The presence of so many airlines competing with each
other worsened the situation. The passenger-revenue yield declined in all
geographic regions. The carriers around the world were passing a very tough
and challenging stage in order to extract higher levels of efficiencies from their
operating structures.

The Evolution into Alliances:


It became a norm for the carriers around the world to be a part of the alliances
during the late 1990s. By 2004 most of the major airlines were part of mega
alliances. These alliances have evolved in order to include several carriers
under a single alliance brand. One such alliance was called the star alliances
and it included ten-carriers representing Asia-Pacific, North America, Latin
America and the Europe. Another similar network of partnership included eight
carriers across a similar geographical territory to Star.
The reason of the existence of these alliances was to redirect traffic, increase
profitability, and help leverage scale economies in operations. In addition
differentiate services and convince potential customers to buy their services
and make them their regular carriers.

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But along with the advantages, came the short comings of being a part of the
alliances. It had its own problematic issues. The issue that rose first was if all
the carriers in the alliances would be able to perform consistently or not. That
is the partner carriers were concerned if the level of service across carriers,
safety records of the partners, and willingness to let go control to an alliance.
Becoming a partner meant losing the control to some extent. As the
partnership suggests, they also had to listen to other members of the alliances
and act in accordance with them. They have to work as a unity. The crucial
factor seemed to be the difficulty in developing a harmony among the partners
regarding how they would establish common safety, service, and performance
standards. The other major issue was the cross-shareholdings between
carriers especially in the Europe markets as the privatization accelerated. It
was seen that many carriers were purchasing shares of other airlines but it
was not like everyone was purchasing everyone’s shares. Rather it occurred
between two-three carriers and that endangered the scenario for the alliance.
Inside one big alliance, small alliances were emerging and it was giving rise to
rivalry among them. This also happened as the partners were allowed to
negotiate side deals with other carriers irrespective of their alliance
membership.

The Successful Saga of Singapore:


By the 1990s Singapore became a flourishing nation and was envied by the
neighboring countries for its triumphant achievements. It’s per capita GNP
increased by 32% by the 1990s. Mr. Lee Kuan Yew, the most powerful Prime
Minister in the country’s history was the very reason for such change in the
country. He was able to motivate his fellow countrymen. He announced his
intent to develop Singapore so that they could compete head to head with
rival Switzerland in terms of standard of living. He was not late to unitize the
patriotic spirit of the people. He gave emphasis on superior education
standards, a controlled labor environment, significant outlays for training and
development of the people of the country. He believed that these all helped to
enhance the quality of human capital. By 2004, Singapore had the highest
rate of literacy rate in the region. Kuan’s vision did pretty well fit together with
the Singapore’s Confucian work ethic. It stressed on responsibilities over
rights and placed enormous value on attributes such as hospitality, caring and
service- the biggest asset of Singapore. Thus, as a result of all these,
Singapore ranked among the best countries in terms of human capital in 2004
and was often regarded as the friendliest place to do business with. But with
the rising of standard of living meant a higher wage. In addition to that the
small size of the local population and a very low unemployment rate, the
availability of labor was seen as a potential obstacle in the drive toward further
growth. Many large companies were already depending on a considerable
number of expatriates, that is they were highing labors from other countries,
particularly the from the neighboring countries and west in the workforce.

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Learning it the hard way:


Mr. Lee supported free-trade and internal driven growth. He believed that the
business organizations must be self-sufficient, like in the air-sector he
declared that SIA although a national carrier of the country would not receive
any subsidies or protection from the government. The company has to be
completely on its own and has to use only the resources and skill it owns.
Singapore adopted the free-skies agreement policy at that time and allowed
foreign flag carriers from other countries to serve the city-state without any
restrictions. This increased the competition among the carriers, especially
SIA. But the free-market policy on the other hand resulted in sharper rates of
market growth. As during that time, almost 35% of the equity base shares of
Singapore were foreign in origin. In addition, 17% of shares of all companies
in the country were owned by foreign investors. Both of these demonstrated
the successful programs that attracted foreign capital and commerce to the
country. In the all over development of the country, Tourism played a very
significant role. Since the country was small in size, and lacked natural
resources, Singapore heavily had to rely on service industry such as tourism
and finance to generate growth. On of the advantages the country has is that,
it has always enjoyed a status as an important geographic hub since the
British colonization era. It has become an important Asian tourist hub since
during the time when Singapore was a British colony, it acted as an important
stop-point for the travelers from Europe to the outlaying colonies of Australia
and New Zealand.

The Tale of the Singapore Airlines: The


Company:
Singapore Airlines began with the incorporation of Malayan Airlines (MAL) in
the year 1947.That is it started its first commercial passenger service. In the
year 1972, due to political disagreements between Singapore and Malaysia
resulted in the formation of two entities: Singapore International Airlines (SIA)
and Malaysian Airlines System. Thus we can say the birth year of the SIA is
1972. The long association with the Malaysian counterpart proved very useful
for SIA. The crew working there gained significant flight experience by
working jointly through out the South-East Asia. Their safety records were
flawless. The over all association worked out pretty good for SIA. The SIA
personnel were able to experience and learn more about their works. In
addition, they also gained crucial operating experience which varied from
flight operations to administrative importance. Following the separation, SIA
received half the combined assets. These included most of the overseas
offices, the headquarters building in Singapore and also one almost new
computer reservation system. By 2003 SIA became one of the most

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established and popular airlines in the world. It reached over 90 destinations
in over 40 countries in Asia, Europe, North America, the Middle East, the
South-West Pacific and Africa.

SIA’s subsidiary is called the ‘Silk-Air’. It covers 24 destinations in the


South/Southeast region. This was mainly publicized and promoted as an
option for vacation travelers who wanted to travel short distances between
various tourist spots in the region such as Penang, Yangon etc.

Both in terms of operational performance and its profitability history SIA was
doing really great. The record it had created was envied by the other airlines.
SIA was one of the few Asian airlines which continuously posted profit even at
times of economic downturns in the 1990s in Asia. However, its short-term
performance record began to decline as a result of SARS attack in the south
east region and the Middle East crisis and the global economic conditions that
had taken hold of most of its key markets. In view of all these major issues,
the company was looking for alternative courses of actions to survive in the
industry

Ground Services:
SIA has been all along known for its ground services. They were known for
giving superior services and they did it by building a strong network of wholly
owned subsidiaries and joint ventures to offer operational support in the areas
such as catering, terminal management, and aircraft maintenance. The
subsidiaries were largely managed as an autonomous entities and it had to
bid for orders from the parent company. In many of the core areas they were
rated as number one. One of the largest of the groups was The Singapore
Airlines Terminal Services (SATS). This group specialized in terminal
management which includes management services such as catering,
passenger and baggage handling, and ramp operations. SATS are one of the
largest flight kitchens in the world at Changi International Airport. On average
they produce about 45000 meals a day. Some of it’s clients were the British
Airways, Quantas, Lufthansa and Japan Airlines. In addition to that SATS
serves 70% of all airlines that fly in to Singapore. SATS also went global by
going in to joint ventures in Beijing, Hong Kong, Chennai, Manila etc.

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The Changi International Airport, The


SIA, and It’s Subsidiaries:
The Changi International Airport was indeed very significant for the SIA. The
SIA being the national flag carrier was also very important for the Changi
airport. The SIA managed the airport. It was considered as one of the best
airports of the world and often got top honors for people handling efficiency
and cleanliness. One such example would be the delivery of passengers’
baggage within 10 minutes after arrival. It was really hard to sustain such high
standards but thanks to the efficient subsidiaries, especially for the SATS, the
SIA could continue offering such services
Changi was also the home for the SIA Engineering Company, another
subsidiary of the SIA. They provided aircraft maintenance and engine
overhaul services. The SIA Engineering Company was made of expertise and
skilled employees and for that many global carriers chose to engage SIA
Engineering Company to service their fleets This Engineering Company also
went global by going in to joint-ventures with very reputed companies such as
the Rolls-Royce and Pratt & Whitney.

The Services Offered By the SIA at the


Changi International Airport and Other
Airports:
The SIA was one of the first airlines to introduce the electronic ticketing
through its website. Online ticket booking was allowed all over the world
where the SIA had their hubs. For its customer’s convenience, it introduced
the automated check-in systems on certain flights and it attracted a lot of
travelers. The company adopted technologies in variety of forms, allowing
check-in via e-mail, telephone and fax. For the first-class and business-class,
the SIA offered the Silver Kris Lounge, which was an illustration of
sophistication and a demonstration of exoticness that reflected the culture of
Singapore. The lounge consisted of plush armchairs, deep-pile carpeting,
aquariums, tropical gardens and paintings by the original Singapore artists. It
also comprised the top of the line business equipment such as computers, fax
services etc. It was undoubtedly one of the world’s largest and most luxurious
airport lounges.

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The Fleet Acquisition Mode of the SIA:


The SIA started very small. When it started it just had a fleet of just 10
aircrafts and covered 22 destinations. But gradually, over the years SIA’s
position became stronger and stronger. By 2003, it was operating a fleet of 97
aircrafts and most of them were capable of long-haul, large-capacity flights.
The SIA was also in the process of ordering more aircrafts and was one of the
first airline companies in the line to purchase the 500-plus passenger, double-
decker mega liner that Airbus would unveil shortly. The SIA followed a very
careful and expensive fleet acquisition policy. The policy was such that its fleet
average was a little over five years old. It was the world’s largest operator of
Boeing 747-400 Mega tops, a specious aircraft capable of long distance
flights. The major difference between SIA and other airline was the fleet age
was that most of the airlines’ average fleet age was 14 years plus whereas
SIA’s one was a little over five years. SIA was able to maintain such short
average fleet age and it was a big accomplishment and the company took this
issue very seriously. Just for the aircrafts, SIA maintained an office in Seattle,
Washington in order to be near to the Boeing designers and oversee the
developments of the new additions to the SIA fleet
The advantages with newer aircrafts were that, the aircrafts were more fuel
efficient. Besides less maintenance were required than the ones that were
old. The SIA Acquired fleet of aircrafts through two ways: By leasing and by
purchasing it outright. This was done primarily during economic lulls to
acquire more new fleets, thus taking out the maximum value for its
investment.

The Significance of Fleet Selection:


SIA’s Fleet selection reflected their outstanding ability to satisfy their potential
customers. They emphasized on fleet selection because the company
believed that this indicated the fact that they as an airline would provide top of
the line technology, comfortable seating and a safe trip. All of these were
considered as an important feature as far as differentiation strategy was
considered. It has probably concentrated the most on the customer
satisfaction as far as the airlines were considered. The SIA always designed
the interior of their aircrafts that for all the times included the latest amenities.
As we know the SIA has been one of the very first airlines to offer personal
video screen in every seat, including the economy class. The in-flight
entertainment ‘The Kris World’ that it offered, delivered 22 video channels, 12
audio stereo channels and nine Nintendo game channels at every seat, with a
Dolby surround-sound system and it was specially designed by the SIA. The
First Class Cabin became a benchmark for the industry. They had four
variations in the First class and they were truly something to look at. The first-
class consisted of arm-chair seats types that converted into comfortable beds
with switches. It used the most sophisticated and expensive type of seat

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covers. It used Connolly leathers for the seat covers. The seats had built-in
communication devices and inflatable air mattress. On long trips the bed
linens in the first-class were changed by the cabin-crew. It truly showed how
much the SIA gave importance to customer satisfaction. All the service wares
were designed by the famous French Fashion house “Givenchy”. The SIA
wanted to make all its passengers feel special. Starting from the first class to
the economy class.

The Exclusiveness of the Economy Class:


The SIA made sure that the economy class passengers feel the differences
and superiority offered by the company. The seats they provided were wider
than average with spacious leg room, leg rests, video screens, and its
ergonomic headrests.

The Drive to be Number One in Providing


Service:
SIA always was ahead in the race as far as providing services were
concerned.19 years ago, SIA introduced in-flight telephone using the
advanced communications technology. SIA was the first to introduce Dolby
surround sound and personal video screens in coach. The SIA was also
started the fax services in the air. Discussions were on the way to upgrade the
communications package to allow Internet access on flight. The SIA also
introduced an entertainment system called the ‘‘WISEMEN’’. It was available
for the first class and the business class. The specialty of this entertainment
system was that it functioned like a personal home theatre and featured a
range of movies and other entertainment options that passengers individually
could choose and control.

The Human Resource of SIA:


The SIA always respected its employees and considered them to be the most
important asset for the company. As without them there nothing would have
been possible. It was for the services provided by the employees that the
company was in such an enviable position in the industry. The SIA offered top-
of-the-line services and the company was known for the splendid services
they provided. SIA turned its human assets into a remarkable source of
competitive advantage through a brilliant combination of organizational
culture, training and rituals. The main source of employees was Singapore
and Malaysia. In 2003, the SIA employed around 14000 employees
worldwide. It was the highest number of recruitment by any private

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organizations in Singapore. The SIA also started a Training Centre in
Singapore. Its main objective was to train the cabin crew, commercial staff,
and flight crew and flight operations personnel of SIA.

The Making of A SIA Employee:


SIA followed a synchronized recruitment and training policy which enabled
them to have a group of exceptional talents. The employees who were
employed usually had to complete a cadetship program which was like an
internship program and functional experts in areas such as computer services
and finance had to go through specialist programs. The cadetship that was
offered by SIA was an on the job extensive training program. The employees
had to go through various functions in the program and this way they moved
up the hierarchy. SIA was very particular about the training and development
of the employees. They would spend almost 14 times more per employee on
a Singapore average scale. The employees went through extensive training.
The company had proven controls and mentoring guidelines which were
suppose to help the employees develop their potentials in order to add more
value to the organization and help the company have more success. The
employees as a result developed a greater sense of commitment for the
company. In due course, they also nurtured a strong sense of identity and
belonging and were very proud to be a part of the organization.

The Dissatisfaction of Employees:


In the beginning when the company announced and discussed the financial
conditions of the company and about taking initiatives like cutting down the
operating cost, the employees were very cooperative with the authority; they
agreed upon the wage-cut decision in a friendly manner and were very
understanding. They believed that they were a part of the organization and in
such economic downtimes; it was a way of showing their commitment to the
organization. The incident of cut-offs during the 2002-2003 session brought a
change in the employees judgment. They started to recognize the whole
situation and felt vulnerable. Many employees who, previously have
cooperated and understood the situation were publicly expressing their
concern regarding the wage-cuts and lay-offs. They viewed the whole event
as self serving, since although they gave reasons of financial crisis due to
SARS attack and middle crisis, even when the situation was under control, the
organization did not take any steps. It was difficult for the employees to trust
the company. They were always worried about their jobs, since it was the very
first time that SIA has had a large number of lay-offs and the employees
suspected that their job is at risk too.

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The Origin of the Specialized Employees:


The employees were recruited from worldwide. The pilots recruited, came
from over fifty countries. They were drawn to the SIA mainly because of
attraction of flying the latest equipment under professional working conditions.
For this very reason they did not mind working at a very generous level of
compensation. It was very apparent as SIA gave a lot of importance to the
latest equipments and having a superb quality working conditions. The SIA
had its own flying college with facilities in Australia which focused on
improving the training efficiency and producing qualified pilots. The SIA also
made this college a base for the learning Singaporean pilots in order to meet
the demands. The SIA also had a high-tech flying facility in Singapore which
had eight flight simulators to taint he pilots. All the employees were required to
go through the mandatory biennial proficiency checks. The company believed
the reason they were able to achieve the high levels of safety was because
the training centers were quite well-administered. The company’s long-term
target was to get as many Singaporean pilots as possible because the
Singaporean pilots represented a very little of the total number of pilots the
company had. The Singapore Armed Forces graduates were given
responsibilities to train the pilots for defense purposes. After the training some
of the pilots joined SIA. The company’s half of the pilots were expatriates. The
expatriates were generally paid more then the Singaporean pilots. As the
compensation for the expatriates included variety of expenses such as
housing, travel etc.

The Recruitment Process of the Cabin


Crew:
SIA believed that the cabin crew acted as the brand ambassadors for the
company. So they had to reflect the high standards of service excellence that
its passengers expected. For this reason the complement of the cabin crew
was chosen through a very rigorous selection process. The cabin crews were
hired from the south, south-east Asia region but most of them were from
Singapore. The SIA’s main pool for recruitment was Singapore but this was
constrained by the shortage of labor available in Singapore market. Hiring
employees from Singapore had a lot of advantages including the fact that the
fellow people were paid less than the foreign employees. Since SIA had been
one of the airlines with lower labor costs among leading carriers, they had to
have more recruitment from its own country. Failing to do so would directly
affect its operating costs as then they had to go for hiring expatriates.
This fact would also contradict with their historic branding approach, “The
Singaporean Girl” if they had to fit in cabin crew from other countries.
This factor was crucial as when SIA started off; it had to compete with other
established carriers. In order to differentiate itself from the rest, the company

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launched the Singaporean girl as the embodiment of caring, comfortable,
hospitable service. This paid off immensely as all this Oriental mystique was
then a big attraction for the western world.

The Image of the Singaporean Girl:


Since the Singaporean girl image was a part of their business strategy, they
nurtured it very carefully. They wanted their cabin crew to be perfect. That is
why; it started off with a rigorous selection process and ended with an
extensive training. They trained them on areas such as passenger handling,
social etiquette and grooming. The SIA programs were long and more
extensive then the other carriers programs. The programs also included some
nontraditional aspects, for instance, the company went as far as making the
trainees stay at homes of the aged to gain a better knowledge on the special
needs of this fast growing passenger segment. The cabin crew adopted
service-oriented behavior and followed the rules strictly. These training
programs were repeated periodically so that the crew could get acquainted
with new cabin management technologies and service standards every time
they were altered. Once they were in the fold of the organization, they learned
to help each other in order to provide the best services for the organization.
For the betterment of the employees and to become accustomed to their job,
toward the end various practices such as detailed performance reviews and
feedback at all levels, career counseling and performance based reward
system were designed.
The SIA took advantage of the local labor laws and practices while recruiting
cabin crew. The male staff was hired as regular employees. However, the
female employees worked on a five year contract basis, which was renewed
at best for five years. The female employees were 60% of the total number of
employees.

The SIA’s Legendary In-Cabin Service:


SIA’s in-cabin service became the gold standard in the industry. It was the
benchmark for the other airlines. It was ranked overall as the “Best
International Airline” by a recent survey done by a well-known and respected
travel magazine’s for the tenth time was chosen for this prestigious honor. To
add, the award has been given for eleven years. This award, though were
nothing new for SIA. The company has been receiving awards such as Zagat,
Conde Nast, OAG Worldwide, ASEAN Tourism Association and magazines
included Asia Money, Business Traveler etc.

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New Challenges in the New Millennium:


Although few carriers could legitimately claim to be global carriers, by the late
1990s the competition in the airline business had become distinctly global.
Carriers of Asia-Pacific region had offering the low fares which was the
premium services of SIA and had strengthened their positions in Europe and
North America through the alliances. The strategy SIA fixed to compete in the
airline business was to take some important steps to fortify its position
globally. SIA joined one of the powerful networks of carriers in Lufthansa,
United, Ansett, Air New Zealand, All Nippon Airways, South Africa Airways, Air
Canada, Thai, Varig, and SAS named the Star Alliance. SIA expected that this
would let the members to increase revenues and their efficiency by core
sharing services, fine-tune traffic flows. They combined their buying power to
secure the inputs like; food and allied services. By joining the Star Alliance,
SIA had entered into several destinations that they did not serve yet. By using
the code sharing, SIA took off with a large number of passengers to their
destinations within Europe and the United States. Before joining to the Star
Alliance, SIA served only four major cities in the U.S., Los Angeles, San
Francisco, Las Vegas and New York. But for joining them the limited set of
destinations changed to the large number of primary and secondary cities of
United and the relationship extend between SIA and United. The new
relationship with Varig also influenced to fly to more destinations in South
America which was not well represented region in SIA’s route structure.
Despite this advantages, the alliance network brought with it some concerns.
It remained to be seen whether the other network carriers would be able to
rise to the levels of SIA’s hallmark service standards. However, despite the
obvious advantages, the alliance network brought some concerns like
restoring the brand image of SIA which it so carefully nourished over the
years, specifically with its loyal first-class and business-class passengers. The
collective group of companies joined the network which delegate some
aspects of brand management such that the identity of the network would go
beyond to the individual identities of the members. Some loss of controls also
creates future challenges for SIA like; scheduling and flight frequency. It also
raised critical questions about the immutability of core competences. Would
the partner firms be able to learn more about the critical aspects of SIA’s
recipe for sustainable competitive advantage?

Partnership Movements of SIA:


To gain the control over alliance SIA took some important decisions which
later came out to be a bit costly for them. Such as, SIA acquired an 8.3%
equity stake in Air New Zealand to strengthen the partnership with the New
Zealand carrier. Since Air New Zealand already owned 50% of Ansett Airways,
SIA would have the benefit of the additional alliance with Ansett as well.
These things expected SIA to make position in the Australasian market which

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was growing rapidly but it destroyed when Sir New Zealand’s fortunes turning
into worst position. The Government raises capital to hold up the company but
it weakened SIA’s ownership in this company. SIA left the company with a
large amount of loss and hasty retreat from the initial foray to establish control
of the key Australia- Asia routes.

The second move of SIA was to acquire the 49% of the equity with UK based
Virgin Atlantic Airways for $1.6 billion. This was the fairly steep price to pay for
a deal that offered little operating control in the near term for SIA, but the
Virgins thought that this partnership would give SIA the ability to control their
transatlantic routes, among the most lucrative worldwide. Virgin was popular
for their exacting service standards. They were constantly going up to the 2nd
position behind SIA in most surveys of customer satisfaction. The partnership
ultimately goes wrong. Virgin’s decision not to join the Star Alliance placed SIA
in delicate position and the threat of invoking the ire of other alliance partners
should it favor Virgin over United and other for channeling some of its
transatlantic passengers. On the other hand rejecting the opportunity to
participate in the venture of Virgin Blue, which later posted very good returns
in the Australasia market was another wide of the mark decision of SIA.

Rejection of Partnership with Virgin:


Virgin was an innovative and modern company. The founder and CEO of
Virgin, Sir Richard Branson, had designed his company with an aggressive
style of management. He was a bit publicity seeker so he used to revel in
periodically taking controversial public positions. For example, when British
Airways decided to retire its fleet of the supersonic Concorde jetliners, Mr.
Branson offered to pay £1 in exchange for the fleet, believing it was a fair
price for British Airways, which had been almost given the fleet for free by the
British government. After the partial purchase Branson decided to move to a
new company in the Australasia market named Virgin Blue, a company which
deals with low cost services. He offered SIA to participate in the venture of
Virgin Blue, but SIA rejected the offer thought of that they had established the
market with its partial ownership with Air New Zealand. SIA took the wrong
step because when the Air New Zealand failed, they had no alternative to
capitalize on growth of the region. And surprisingly Virgin Blue was turned up
with high returns in that region. So, some believed that the swashbuckling
management style of Virgin was different from the traditional conservative
style of SIA. When the Company was subjected to loss from the adversity of
the post-9/11 era, its alliance partner virgin was also going through with the
same problems that they required injection of capital. The partners had to
plough in more funds at a particularly difficult time. It remained to be seen how
well the partnership would be able to weather the sequential shocks that
plagued global aviation.

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New Competitors Setting its Channels in


Asia:
Asia had slow in responding to the phenomenon of low cost carriers. But to
saw the success of such companies like easyJet and Ryanair in Europe and
Southwest and Jet Blue in the U.S., many new competitors engaging on the
Asian market. On the earlier years, the Asian market were only fly the longer
flight distances, they had only few alternative airport options for take off, and
lower passenger destinies, but now a days these barriers had broken, and low
cost carriers were alternate to these positions. Early 2003 they were six main
competitors in the market and another one wants to enter this market using
Singapore as a base. After the arrival of easyJet and Ryanair in Europe using
their experience of the large network, the large players in Asia, such as SIA,
were facing unbelievable pricing pressures. Many of the new players were
focusing on South Pacific and East Asian routes, prime SIA territory.

Air Asia and Virgin Blue faced threats. Air Asia was based in Malaysia and
offered services at highly discounted rates to domestic destinations within the
country. Its operations model used Kuala Lumpur as its central hub, but plans
were on the anvil for expanding into Johor, a location that was within driving
distance from Singapore. It plans to fly with approximately two million
passengers by 2004 even though it had a small fleet of seven Boeings 737.
Its attractive price drove passengers to this way. It offered a round trip from
Kuala Lumpur to the resort island of Penang for only US$10, while Malaysia
Air, charged US$101 for the same trip. Air Asia also boasted that it had the
lowest cost for any passenger airline in the world at US2.5¢ per available seat
kilometer compared to US5.1¢ for SIA. Air Asia set challenges to SIA in the
near future. It had recently scouted Changi international and Seletar Airport in
Singapore to explore to setting up its operations there. The company
suggested that it offers a one-way fare of US$28 from Changi to Kuala
Lumpur, a sector where SIA was currently charging US$109.

Introducing a New Carrier in Singapore:


A group of investors in Singapore had built up a reasonable amount of money
to introduce a low cost carrier called Value Air which would be operated from
Singapore. Deputy Chairman Mr. Lim Chin Beng, the innovator of SIA had
promised to give challenge in the near future.

Virgin Blue, the developed alternative of Virgin Airways had captured 30% of
the domestic Australian market within three years. For the aggressive move to
dominant the market, Virgin Blue, had control over in airports such as Sydney.
Virgin Blue and Qantas eliminated the possibility of another carrier the

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national flag carrier, built rivalry air service networks in that country. Virgin
Blue was also contemplating service offerings from Australia to New Zealand
and Fiji. In the very short period Virgin Blue was active in Australia and
weakens the network carrier competitors to demonstrate that how vulnerable
they were to low cost competition. Qantas was at the receiving end of this
onslaught in Australia and came up losing a significant amount of its market
share. It was clear that SIA could not wish away the imminent threat.

SIA in the Future:


Mr. Chew Choong Seng had faced challenges in competitive issues in front of
him. How should SIA be distinctive from the copycats who copy and made a
great job in terms of cabin service and amenities? What tactics could SIA do
from which it separate itself from the copycats? The amount of people who
gave their best to built up SIA at the top most level, they were now disgruntled
after the salary cut offs and stuff cuts, SIA started to motivate those people to
help again to reach SIA up again like its past days. It was the time to face and
conclude the threat of low cost competition before it became a larger
phenomenon. How should the emergence of low-cost carriers be addressed?
SIA is at the cross roads in its history and the next few strategic moves would
determine the rise of the best Asian Airline to become a global player
commanding the respect of the world’s largest carriers. SIA needed to
compete with the low cost competitors and it’s the time to pass away from
their distinctive premium approaches to rise again in this newly competitive
airline business.

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Theme

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Theme
Being the one of the most foremost & leading top airliner in the international
industry , SIA is facing challenges from redefining strategically complication
to outgrowing competition to low cost carriers like virgin blue and air Asia
coming up to the continent. Also facing problem with the fleet accusation and
management. Air New Zealand’s and the deal with the virgin Atlantic also
needed to be managed as it put Singapore International Airline into a delicate
position. Their significant feature were also being copied by the competitors
and fallout from SARS and Iraq war they were turmoil with extreme employee
problem on human capital side. Lay off salary cuts and cutting down operation
cost are also among them to be exact. In this moment of crisis the next few
strategic movements will be the future line for SIA.

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Main Issue

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Main Issue:
What strategy Singapore international Airline Services should follow in front of
the confrontation of continuing differentiate itself from the copycats who
seemed to be doing a very creditable job at imitating SIA amenities, retain
back the very people who had been instrumental in helping SIA into leading
airliners, becoming once again the global player in this time of crisis?

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SWOT Analysis

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SWOT analysis
SWOT analysis is a simple framework for generating strategic alternatives
from a situation analysis. It is applicable to either the corporate level or the
business unit level and frequently appears in marketing plans. Such an
analysis of the strategic environment is referred to as a SWOT analysis. A
scan of the internal and external environment is an important part of the
strategic planning process. Environmental factors internal to the firm usually
can be classified as strengths or weaknesses, and those external to the firm
can be classified as opportunities or threats. The SWOT analysis provides
information that is helpful in matching the firm's resources and capabilities to
the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT
analysis fits into an environmental scan:

Strengths refer to a firm's strengths are its resources and capabilities that
can be used as a basis for developing a competitive advantage in the market
place

Weaknesses are the absence of certain strengths that may hinder


organization to run successfully.

Opportunities refer that the external environmental analysis may reveal


certain new opportunities for profit and growth.

Threats refer as changes in the external environmental that is uncontrollable


also may present threats to the firm.

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Strengths
SIA Has A Track Record Around Its
Superior Strategy Of Differentiation:
SIA has established an outstanding standard on inventing and implementing
new strategies in airlines industry. It always keeps herself up-to date in the
industry and introduced diverse types of strategies, which had helped to
dominate in the market for a long time. Innovation on different sectors within
airline industry has given them supremacy over other airlines’ as the rest of
them could not bring such a new thing simultaneously.

Obviously, diversity is a mandatory criterion in any service industry. Different


strategies of SIA that have introduced the airline customers with new era of
comfort and luxury, had lead them superior in the market. So building and
implementing tactics seems a key success factor for SIA.

SIA Has deployed It’s Routes Worldwide


Including Very Attractive Tourist Spots:
SIA, due to increase its profit have reached to almost all major cities of the
world. Within 2003 they covered 90 destinations in more than 40 countries in
Asia, Europe, North America, Middle East, the Southwest pacific and Africa as
well. This vast expansion ensures their sky superiority as well as their
customers’ appetite.

It’s quite impossible to make airline business profitable without expanding new
routes. SIA has realized it and take the advantages of its massive fleets. It has
reached to all major attractive cities of the world. So no matter whether it is a
business trip or leisure trip Singapore airline is ready to serve its customers
needs. Long routes means more flight, which at the end of the day will bring
more profit and enhance customer satisfaction.

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SIA Has Impeccable Safety Records:


SIA has a prolonged history of keeping best safety standard. A top-notch
airline needs to regularly update and maintain its aircrafts. SIA’s aircrafts are
almost very modern and got state or art technology on board. They go under
safety check regularly. Moreover, SIA does not keep older aircraft. Most of the
aircrafts are a little over five years old, which is quite unimaginable for most of
the airlines.

Safety is a very vital factor upon which an airline’s success depends mostly.
Due to lack of a good safety record a significant number of airlines that have
invested a lot even failed to attract considerable amount of customers.
Whereas, SIA has got awards for its safety records which naturally influenced
travelers both short and long haul travelers to choose SIA. The major thing is
SIA have achieved the confidence of customers by its safety records.

Singapore Airlines Catering Service Is


One of the Best among the Other Service
Providers in the World:
Singapore airline’s catering service is one of the best in the world which is
included in their terminal service knows as SATS (The Singapore Airlines
Terminal Service). Its airport known as Changi International Airport produce
the meals of 45,000 people for each single day. They serve foods for different
world-renowned airlines like British Airways, Qantas, and Lufthansa, Japan
airlines and obviously for SIA.

In-flight catering is definitely a vital point for airline industry. Many other
competitors of SIA have left behind because of poor catering facility. It is well
known fact that in long haul flight customers will look for good and hygienic
food, which they consider as a part of comfort and luxury as well. So, to
satisfy customers it is a must to prepare top class menus. So adding a world
class catering service on board has given SIA supremacy over other
competitors.

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SIA is determined to Give Best Terminal


Service for Its Customers:
One of the biggest facilities for SIA is its terminal services like people handling
efficiency and cleanliness. No other airlines can claim that they can deliver
baggage like SIA. Singapore airlines can deliver a passenger’s baggage
within ten minutes after arrival in Changi International Airport. Cleanliness is
another strong point for Singapore airline’s terminal service. It has been
awarded for several times due to its cleanliness and ground operational
procedures. A passenger has now a lot of options to do in the ground while he
or she waits for the departure from the airport. It’s not boring anymore like the
previous days.

Most of the harassment occurs during baggage collection after arriving in the
airport. Even some renowned airliner cannot guarantee hassle free baggage
collection for their passenger. But SIA can offer them this unique service,
which is a definite advantage for them. So before give a booking for a ticket
for traveling a passenger would certainly think what is the best option for him
or her to choose if he/she looks for a smooth journey and of course a pleasant
departure from the airport. This unparallel service has also ensured the
dominance of SIA over other competitor airlines as well.

SIA Provides Best Technical Facilities And


Possess Unparallel Engineering
Capability:
Technical facilities are always very crucial factor for any airlines in today’s
competitive airline industry. SIA has its own engineering company which is a
subsidiary. This company provides aircraft maintenance and engine
overhauling services. It also tests the status of the aircraft engines and many
other services, which includes fueling as well. Not only for Singapore airlines
but also for many other airliners they are offering services.

Undoubtedly, technical superiority brings enormous advantages for Singapore


airlines. They are technically self-dependent whereas other airlines have to
spend a significant amount of money each and every month for routine
maintenance and check up procedures. Singapore airline’s technical
department has strong tie up with reputable companies like Rolls Royce, Pratt
& Whitney and others. Working jointly with these worlds renowned companies
ensure technical supremacy and safety of Singapore airlines over its
competitors.

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SIA Has Adopted the Policy to Make the


Journey of the Passenger’s steady and
dynamic:
Singapore airline has introduced the system of online booking for the
customers. So, now a day’s passengers need not to go to the travel agencies
or anywhere else for ticket booking. They can do it now from home just by
clicking on their mouse. This kind of system has made life more easy and
dynamic. Moreover, Singapore airline has the option to bypass the queue of
passengers. They don’t need to stand for reporting as they can do the
necessary tasks through online.

Customers always want to save their time and energy. Online ticket booking
system and automated check-in-systems have now helping them to reduce
their travel time. They don’t need to come earlier at the airport for checking.
Definitely this is a very attractive facility for any passenger. Due to this
opportunity many of the travelers blindly select SIA for any short or long
distance traveling.

SIA’s Aircrafts Are Capable for Long-Haul


Flights with Huge Number of Passengers:
SIA has got a large fleet of diverse kind of aircrafts, which includes Boeing
747-400, which is just more than five years old. In 2003 they had 97 aircrafts,
which were capable of carrying considerable amount of passengers for long-
haul flight. SIA is the first airline that has ordered for super jumbo jet produced
by Airbus that has got double deck.
If one single flight can carry more passengers than two flights, certainly it will
bring more benefit for any airline rather than running more flights. Long haul
flights, which SIA has been operating does, not need require refueling. As
those flights do not halt at any stoppage on the way so it can reach to its
destination earlier, which in the long run saving passengers journey times. In
today’s busy life every one likes to reach to his destination earlier rather than
waiting in the aircraft. Singapore airline is providing this opportunity to the
travelers, which is obviously a big advantage for them and can attract the
passengers easily.

SIA Has Been Providing Top-Notch On


Board Facilities:

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SIA provides some unique facilities for the passengers on-board. They are the
first airline in the world that have installed video screen on the back of each
seat no matters whether it is business class or economy class. They show
many video channels, have larger amount of stereo channels and even game
channels. The leather seats they use are of top quality, which are being used
for Ferrari, Jaguar as well. Other necessary equipments are imported from top
class companies like Clad in Connolly, French fashion house, Givenchy etc.

Passengers like to pass a nice and comfortable time during their travel period.
SIA has got all necessary equipments to fulfill their needs. This usually gives
supremacy over other airlines that offer cheap flights with less quality of
products on-board. People who like comfort and luxury, certainly SIA is the top
most choice for them both for short and long haul flight

SIA Provides Best Training Facility For its


Pilots:
For any reputable airlines its pilot is one of the most vital factors upon whom
the reputation of the organization depends a lot. That’s why SIA has given
highest priority to its pilot’s development program. They do have their own
aviation college for improvement in quality of the pilots. Moreover, SIA has
their own flight simulators, which ensures world-class training for the cadets.

Better training is the key point for safety. SIA’s pilots have a significant
contribution on building reputation of the SIA. Behind that their extra-ordinary
training has worked as a key factor. Unparallel training facilities have
distinguished SIA from other airlines. Even from other airlines pilots come to
learn at Singapore airlines. The unique capability of SIA’s pilot have a good
demand in aviation industry which on the long run bring benefits for SIA by
establishing them as a brand name in the aviation sector.

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SIA Has Provided A Supervene And


Dynamic Workplace For Their
Employees:
For a long period Singapore airline is one of the most exciting place for
working. The environment is truly multicultural and very dynamic. It is also a
suitable place for learning a development. A large number of Malaysians and
Singaporean work over there. The recruitment and selection process is fare
and free from any kind of biasness. They do run cadetship program, which is
somewhere known as “Graduate recruitment” as well.

SIA has a strong policy for talent hunting. Top quality workplace and on job
training has made them first choice among all other Singaporean companies
to the young generation. So automatically SIA is getting enormous talents on
their pipeline that at the end of the day are brining significant change both on
technical and operational sides. Among the employees job satisfaction is the
biggest criteria, which determines the period of existing in any organization.
Here SIA has got the biggest success as well. Their corporate atmosphere
has been able to retain the employees. So turn over rate is very low unless it
is something worldwide crucial moment or any natural disaster occurs. This
has brought enormous strength inside of SIA, as the human beings are the
main assets for any organization who are responsible for making any
organization profitable and dynamic.

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Weaknesses
SIA Does Not Receive Any Subsidies Or
Protection From The Government Though
It Is The National Flag Carrier:
A big drawback for Singapore airline is it does not receive any subsidies or
protection from the Government. Unlike other airline they don’t get any
financial support from the Government. They are totally private organization
and they have to heavily depend over their shareholders and upon the benefit
of the business.

Many airline of the world that is national flag carrier do receive subsidiaries or
some financial protection from their Government. This helps them to survive
during turbulent period. On the other hand, SIA is getting deprived from this
facility. So if anything goes wrong they have to face terrible situation. They
have to cut down their workers, have to close down some operations; they
might have to close some other routes. These all will certainly decrease the
benefit level of Singapore airlines and can jeopardize its position in the
aviation industry.

SIA Has To Bear Various Expenditures


Behind its Aircrafts Pilots:
Pilots are one of the major key players behind the success of any airlines in
aviation industry. So it’s very necessary that every airline have to keep a
considerable amount of budget behind the pilots. SIA has a diverse and
multicultural workplace. A considerable amount of pilots have come from the
different countries that are not native. As they are expatriates so SIA has to
bear various types of costs behind them, which are sometimes expensive.

There is a disadvantage of having expatriate pilot in any airlines. They are


often expensive and a lot of headache is involved on managing those pilots. If
they form a group and go for the strike then obviously any airline will suffer.
They will be failed to maintain their schedule, which will certainly be a strong
reason for loosing business. Moreover, pilots do demand a lot of facilities for
which an airline has to spend more than other employees. Another weakness
of SIA is, as these pilots are expatriates so there is always a chance that the
pilots can leave the job anytime within a short notice. SIA needs to maintain

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high standard behind pilots training, as they are committed to maintain top
class all the way. These training include flight simulator training, ground
training etc which are highly expensive. So, if any pilot moves to other airlines
certainly the investment they have made will be a complete disaster.

SIA Is Unable To Reduce Traveling Cost


Due To Keep Highest Standard:
Singapore airline is committed to keep the best standard in every service
sectors of its operation. That’s why they have to invest a lot behind different
equipments, training, operation management etc. This, at the end of the day,
influence over the price of the ticket that are being taken from the passengers.
Generally the cheap airlines like EasyJet, Air Asia etc who have been offering
low cost travel are getting advantages.

As much as the low cost airliner is arriving to the industry that much SIA has
been facing competition. Obviously SIA can’t decrease its price, as it cannot
compromise with its quality. But there are significant amount of passengers
who always seek for low cost travel. They don’t go for luxury. They are more
interested for saving their money. But unfortunately, SIA can’t get their
attention due to high price than other cheap airlines. So a large chunk of
people is always out of SIA’s service. And SIA is loosing business due to its
price.

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Opportunities
Singapore And United States Had Signed
For An Open Skies Agreement:
This is a new phenomenon where two or more countries make a deal to do
business together. In this deal they come to a consensus where the skies of
the each country will remain open for each other. This is known as “Open
sky”. Under this treaty countries who will sign will be able to land and take off
their aircrafts from any of the airport of the corresponding countries.

Open sky agreement between USA and Singapore is a massive opportunity


for SIA. USA is a vast country where millions of opportunity exists. Moreover,
aviation industry is not very dynamic there though there are still some
competitors are playing vital role like Virgin, Delta airlines and of course
Southwest airlines. But SIA is getting the biggest opportunity thought the
bilateral agreement between USA and Singapore government. Now they are
going to land and take-off their aircraft in USA. They can go to any city or
state in USA. There are a huge number of people living in different states who
were not served before by SIA. Now this enormous market is going to be
opened in front of SIA. The people from USA had to depend on other airlines
or some low cost airlines like Southwest previously. The outstanding service
of SIA will certainly attract the luxurious people of USA. Furthermore, SIA has
lot of extra facilities, which other existing airlines in USA don’t offer generally.
So, SIA has a very good prospect in USA market.

SIA Can Use The Alliance Network Which


Is Yet To Serve:
This is another good option for SIA to leverage their business in aviation
industry. Forming alliance is a new phenomenon in this sector that allows any
airlines to tie up with other airlines and share their common values and work
under a single alliance brand. For an example, Star alliance, this covers a lot
of cities of the world, even the continents. For a single airline it’s really difficult
to cover a large area consisting different routes simultaneously.

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Building alliance is a massive task but it opens more opportunity for any
individual airliner. An individual airliner sometimes faces some difficulties with
various types of problems. It might be technical, operational, and strategic and
so on. It’s very tough to solve those problems lacks lonely. Sometimes it’s not
possible to operate flights on some routes due to operational cost though it
might have prospects as well. Financial constraints most of the time create
headache as well. Forming alliance is a good solution for it where everyone
works under same umbrella. Working under an alliance will give SIA a unique
opportunity to work with other friendly airlines and would able them to reach to
other different destinations in Europe and USA, the zones that are yet to be
served by SIA. This will definitely increase the profitability margin. SIA will be
able to reach to cover up their loses on different zones by forming alliances
with its friendly companies. It will help them to share profit as well because
some people might not travel by SIA but they may travel through one of the
airlines of the alliance.

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Threats
SIA’s Competitors Are Duplicating It’s
Own Corporate Strategies:
It is well known that the strategies SIA adopts are world class and effective
under any circumstances. That’s why its competitors have started to follow
him blindly. For any example, online reservation system, introducing different
cabin systems, on-board entertainment facilities all these are the brainchild of
the executives of SIA. Some of the old executive who has switched to
different airliners now adopting the same policies that SIA follows in the
business. Thus SIA’s policies are getting copied in a vulnerable way among
other of its competitors.

It’s very tough to run business when the competitors are copying the
corporate strategies rapidly. SIA’s key business strategies are getting copied –
that’s mean SIA can’t have the profit for which they make the decisions. It’s
continuously making them looser and they are going back in the competition.
If business secrecy is being leaked out then obviously
It’s crucial for any organization and the survival will be questionable. Other
airlines now introduced music system, multiple video channels on-board
which were being introduced by SIA the first. But as those facilities are now
being available on other cheap airlines even, and so travelers are now getting
interested on SIA’s competitors.

SIA Has To Struggle With Low Cost


Airlines:
Low cost airlines are getting a big question mark for Singapore airlines day by
day. In Europe RyneAir and EasyJet have changed the conventional system
of airline business. Other big airlines giant like British Airways, SAS, KLM etc
have been struggling against them. These cheap airlines offer very cheap
flight within Europe, which is almost one tenth of traditional fare. These bring
enormous threat for traditional airlines. The advent of Air Asia in Asia
continent and Virgin Blue in Australia brought major problems for SIA in both
of the continents.

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Traveling through cheap airlines is a phenomenon among the air travelers.
Now a day it takes very few amount of money to travel from one country to
another country, which was unimaginable some days ago. These low cost
airlines don’t offer luxurious facilities but they do offer the minimum amount of
service. Most of the customers are delighted with it no matter whether they
are getting world-class luxurious facility or multiple entertainment channels or
not. So all other facilities that SIA is offering is not getting that much value to
the customers like before. Definitely they are loosing their business to the low
cost airlines. If SIA can’t bring any solution then rest of the customers will
blindly select these low-cost airlines for the coming days.

Individual Airlines Under Alliances Are


Making Side Dealing With Other
Competitors:
There are some potential risks on getting attached with any airline alliance
though it is beneficial for some cases. First of all, any individual airline may
have poor standard on safety record, sometimes they might have poor level
on service delivery or employees’ performances standard are not up to the
mark. So the poor performance of one member of the alliance may effect on
the reputation on overall alliance. Secondly, some of the alliance member may
run their business in parallel with other airliners that might be rival group. It
would be very vulnerable for the alliance, as it would directly impact on the
business.

SIA has a very fresh and prolonged reputation on airline industry where very
few airlines of the world can dare to reach. But due to turbulent nature of the
airline industry SIA is getting forced to tie up with other airlines. If they do this
and get a partner with poor performance then certainly who are the regular
passengers of SIA will not show interest to board any of the aircraft of the
alliance. These will seriously damage the reputation of SIA. Due to the fault of
one airline the whole alliance including the SIA will suffer. Side business of its
partner with rivalry group also may jeopardize the business position of SIA as
well. A large chunk of passengers may migrate to different alliance or other
member of the SIA’s alliance who are getting benefited in a different way by
depriving SIA. So, both ways there are threats for Singapore airlines if they go
under alliance.

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HR Related Issues

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HR Related Issues
Human resource is a vital element of an organization. It is like a nucleus of an
organization. Without it, an organization is like helpless in a sea because
every part of an organization is interrelated with HR. To gain competitive edge
in the industry, human resources plays a key role in helping companies
dealing with a fast-changing competitive environment and efficient and
potential employees. Due to the effect of SARS and Iraq war in order to
cutting down cost Singapore Airliner has went on with some serious done
about in term with the company employees. There are also problem and rising
issues with the low cost airliners competition as it becoming more and more
intense SIA have to take some drastic measure for their company in order to
keep the competitive advantages and keep their name shine. Some their
measures are directly related to the Human Resource issue to the company
and it make a more of a factor on understanding where it will headed next, on
the basis of their precise decision. The followings are some of the issue that is
being recognized as the Human Resource related issues that are being
subjected to the Singapore International Airlines:

Being a leading Airliner in the world recently SIA had laid off
employees, gave wage cut in the senior management and
came to negotiated with cabin and ground stuff employee on
their salary. This is a major Human Resource related Issue
which should better be dealt with grave importance as it
might create a huge amount of negative impact if not properly
managed among the employees of SIA.

Singapore Airline had laid off about 400 employees in order to bring down the
operational cost then almost about hundred and fifty more additional
employees were also being laid off so that the operational cost will be more
cut down to minimum. Senior management salary cuts averaging 22%
announced, and negotiations were on with cabin and ground stuff for further
wage cuts. This issue makes a more regrettable position for this airliner as
this airline once were the world’s foremost luxurious and leading airliner of
them all and these are the employees that made this airliner a success. To
Salary Cuts and laying of definitely will make them unrest and become a
situation with the job security issue, where employee’s will left wondering what
it will bring for them if they just keep on working for a company like that.
Appropriate human resources assure an organization that the right number
and kind of people are available at the right time and place so that
organizational needs can be met.

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This is one of the major HR related issue, as because in these employee
hands the SIA what it is now became in these employees hands. It is be these
people who were played major role to make SIA to make them a leading
airliner in the international market. Employees needed to be acknowledged in
a international airliner like SIA this for the first time such incident are
occurring, so it will be rational explanatory checking if there is a way to keep
check on all of those thing and make a proper justification on all of those
things. To cutting jobs of such large number of people for the first time is a
huge aspects for HR .So cutting these employees from SIA is a major HR
related factors.

The unrest that are being seen in the company due to the
weak human resource management in the company and also
for the SARS and Iraq incident left a negative impact in SIA
which should be dealt with capable HRM so that the issue
would be minimized.

There is a weak Human resource management is deployed that company is


made the employee come to believe that the company is using SARS and
Iraq war as a convenient excuses to downsizing in Human resource capital.
This also became the realized issue that a presence of unfriendly union is
where about in the company. In the job cuts in 2002-2003 left a bad taste in
SIA employee during the economic crisis. The normally friendly unions had
publicly expressed concern over the layoffs and salary reductions that
followed in the wake of SARS and the Iraq war. Many among the rank and file
viewed these actions as self-serving and suspect since the company had
achieved close to normal passenger loads after the specter of SARS had
faded. This distrust was indeed disturbing and seemed to spread across all
ranks of employees from pilots to ground crew. This disturbing issue shouldn’t
be going unrecognized or unnoticed as might not be creating a problem for
now, but it can became a problem in a later on progression with time as the
situation for the company became more critical . The company is facing more
decisive than it’s previous and if this misunderstanding is not properly dealt
with it will backfire on the company as a vital wave in a bad situation.

This is a grave HR related problem as this became a unfriendly situation in


the company with the widespread skepticism will put a negative impact on the
morale of the employee in the further role of time. And consequently this will
also put down more negative impact on the airliners passenger service and
differentiation strategy. The negative impact upon the employees never were
a better thing for the company it brings more harm than that of good even it a
company like Singapore international Airlines. And to be exact this kind of

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situation is first in time to be handled by SIA. They never faced this kind of
situation or a problem before so handling all this measurement can become a
major problem for them as they do not understand enough of the problem for
not knowing how to deal with these before. Because people are the core of
this business as this is a more of the service related industry where the
humane are side taken on very importantly than that of others.

The Female cabin crews are being deprived by giving them


limited time renewal contract which relies on giving them only
being less priorities of other cabin crew in the airliner. This
violated the equality of emplacement opportunity among the
female cabin crew in the company.

There is a violation of Equal Employment Opportunity (EEO) in Singapore


International Airline as there are sixty percent of the cabin crew is female and
the crew had to work through a five years of renewal contract and there only
five such renewable contract are permitted only five times. This may be
proper for SIA job category but for understanding how only five years only be
appropriate for the female crew is major differentiation to be attractive in this
line. So in order to do that such contract exists. This shows that SIA clearly
not providing similar opportunity to the female exists in the company. Not
providing equal amount of salary among both male and female crew though
both are being on same position but are not being giving accessed to the
same amount of advantages .This arouses the problem of giving dissimilar
advantages to the other significant making them a one way to pursue to the
fact they are being undermined. The majority here are the female crew and if
they being only went through 5 renewable contract where otherwise there
counterpart are getting more it is violation of the fact that there should be a
proper justification in these entire differential contract which should be clarified
among both the parties.

This is a Human resource related issue as this explores that all the employees
in the company are not treated equally in a great airliner such as Singapore
International airlines. This is violated issue that give rises to many problem
that are still yet to be seen This issue deals with the employees morality
towards the company and focuses with female getting discriminated in such
company is a big deal of human resource factor. Understandings also the
factor if the women in the company are being considered to be the minorities
or really in where they are being prioritize the factor of limited amount of
renewable contract. The opportunity should be equal for all but if that not the
case giving understanding and providing with adaptable justification would be

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righteous way of indication that human resource issues are properly
recognized.

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The generous expatriate pilots’ compensation package


should be clarified among the other local pilots. So that the
differentiation won’t be there and understanding that
comparison compensation is properly justified among both
the parties and no discrimination is doing on mutually base
pay and benefits.

The training and recruitment policy in the SIA intensive, it indeed is global in
terms of recruiting pilot from the both the local Singapore pilot who server the
country for defense purpose and became the pilots for SIA and the expatriate
pilots who are served with more generous salary with pother benefits such as
housing, schooling for children and other facilities. These should be balanced
and ought to be in a way that local based pilots won’t be downgraded on to
the point of factor that their compensation is justified to the others. This should
be done fairly and with extensive care so that the compensation package that
expatriate pilots are getting won’t be rigorously high as pilots get graduated
from Singapore. Unbalanced salary may become an issue in case from both
the parties. SIA should make a proper adjustment among the both parties
salary into a range so that their will not going to be an any dissimilarities
among expatriate and local pilots.

The compensation package for pilots with the differentiated issue played a
large part in the Human resource management as it is the core issue related
in terms of retaining the most important employees in the job. This might
create a differential impact on the mind of local pilots that they are being
underpaid than the pilots who are being foreigner working among them from
different place. Though in a case the benefits remain close to similar in a
package of compensation and benefits given to them both but the
differentiation needed to be clear among the pilots as it might make a proper
problem among them .So keeping them in the job by providing the right terms
of salary is also the very jobs of Human resource management.

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Recommendations

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Recommendations
After analyzing the case and identifying the Human Resource issues
effectively in the previous part, it is now time for recommendation to
Singapore International Airlines (SIA) to focus on some specific areas to retain
their existing employees and diversified customers, to capture new market in
new or innovative ways and also to make profit by increasing their operational
efficiency for financial viability. We already knew from the case that SIA has
already established itself as one of the world’s most admired airlines. It has a
superior strategy of differentiation but recently it’s trimming its operating cost
by downsizing its employees. They already started to have problem with their
operational management system otherwise downsizing won’t took place. So
there must be some areas that should be focused by them to sustain in the
airlines market for longer period.

By focusing on Human Resource related issues we have identified in the


previous part, now we are going to recommend some solutions that will
support the efforts of quality enhancement of customer service at Singapore
International Airlines. By adopting our suggested plans we believe that it can
overcome from its operational problem and by taking the full advantage of its
facilities to earn a higher profit to operate their business successfully and also
to expand its operation throughout the world. In the following one by one, at
first we will mention ‘what’ are the specific problems we have identified, ‘what’
is our recommendation to solve these current problems, and ‘why’ those are
essential to the company.

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Problem no. 1
Singapore International Airlines (SIA) is minimizing their
operating cost by downsizing their employees, and
unjustified salary cuts in all management levels by using
SARS and Iraq War issue.

SIA had lain off over 400 employees and 156 cabin-crews in order to trim
down its operational cost during the time of SARS and Iraq War. Senior
management’s salary cuts also averaged 22% as announced, and they were
planning to implement further wage cuts. This is one of the crucial issues, as
the combined affect of this action could have a serious negative impact on
employee morale and passenger service. Employees are the heart of an
organization, so, downsizing only weakens a company. There are surely other
good ways to avoid this destructive method, and here in the following
recommendation we will talk about those ways.

Recommendation 1
Singapore International Airlines (SIA) needs a specific and
proper compensation plan, by forming a new compensation
committee which will help to design a perfect and motivated
compensation policy rather than the existed demoralizing
one.

To sustain in the market with the same leading position HR department of SIA
Need to change their current compensation policy of the employees which
has already started to demoralize the employees. So HR department need to
form a compensation committee to develop a successful and bold,
imaginative yet practical compensation strategy to motivate all the employees
and increase the efficiency of SIA’s passenger service.

Restructure the compensation philosophy:

SIA should develop or restructure a new compensation policy which will


motivate the employees more than now. They also have to survey the whole
SARS and Iraq war situation about how much it actually harmed the
performance of the company. Even if it harmed the performance, then closing
several flights in the affected area, and replacing those flights with some new
locations could be a good solution.

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Form a compensation committee:

HR needs to form a compensation committee to determine the existing


difference of compensation level between the employees and the existing
market policy about compensation in same position. After that they need to
decide the salary level whether it will offer how much above and at than
industry average to motivate the employees. They also have to restructure the
benefit programs.

Why it is the best solution?


For the employer perspective relationship between the compensation and
employee satisfaction is a vital element. Everyone wants to be successful by
increasing the efficiency and productivity of employees. To motivate
employee’s perfect compensation policy is the right tool, only monetary
rewards are not sufficient. Motivation can make impossible to possible that
results through non-monetary tools. So restructuring of the compensation
level of employees is the only way to sustain in long run and keep on
expanding the business beyond the border of home country.

Moreover, sacrificing human resource for minimizing operating cost is really a


destructive philosophy for any company. SIA needs to get rid of this.
Downsize or lay-of will only bring anarchy in the management, and will
demotivate the entire human resource of the company. They can always use
other methods like rationing, pay-freeze, pay-cut in their very desperate
situation.

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Problem no. 2
Women employees are not treated equally with male
employees in Singapore International Airlines (SIA). So, they
are violating the Equal Employment Opportunity (EEO).

The term Equal Employment Opportunity (EEO) was created by the 36th
President of the United States Lyndon B. Johnson when he signed Executive
Order 11246 on September 24, 1965, created to prohibit federal contractors
from discriminating against employees on the basis of race, sex, creed,
religion, color, or national origin. The Executive Order also required
contractors to implement affirmative action plans to increase the participation
of minorities and women in the workplace. Pursuant to federal regulations,
affirmative action plans must consist of an equal opportunity policy statement,
an analysis of the current work force, identification of problem areas, the
establishment of goals and timetables for increasing employment
opportunities, specific action-oriented programs to address problem areas,
support for community action programs, and the establishment of an internal
audit and reporting system.

Singapore International Airlines (SIA) is violating the Equal Employment


Opportunity (EEO) in many ways. Sixty percent of their cabin crews are
female and they had to work through a five years of renewal contract and
there only five such renewable contracts are permitted. On the other hand,
male cabin crews are employed as regular employees in SIA. This clearly
shows that SIA is not providing similar opportunities to the female employees
in the company thus violating the Equal Employment Opportunity (EEO).

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Recommendation no. 2
SIA can start recruiting their male cabin crews exactly the
same way they are recruiting their female cabin crews. Then
there will be no question of discrimination or violation of
Equal Employment Opportunity (EEO). Also if all jobs are on
contract, then it becomes easier for SIA to replace or shift
positions easily.

In my points of view it is always best to recruit employees on contract basis


just like hiring Cricket or Soccer Coach. Then employees will be more
enthusiastic to boost their performance up, so that the contract is renewed in
future. Here in the case of SIA, our recommendation is, all cabin staffs
(regardless of their demographic characteristics) should be hired for five years
renewable contract, after that depending on their performance it should be
decided that, their contract will be renewed or not. This will greatly improve
the performance and motivation level of SIA employees, so the overall
performance of SIA will be also improved.

Also they can practice shifting or replacing their employees from one
department from another. By doing this they will conduct a job rotation, which
helps employees greatly to learn new things, and adopt with new
environment.

Why it is the best solution?


This is the best solution because of two reasons. First reason confirms that
there is absolutely no discrimination in the employee base. The second
reason is the boosted up performance factor by pressure and job rotation. So,
definitely the combine effect of this decision will help SIA to get success
quickly.

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Problem no. 3
SIA is struggling with its union as the union deemed
unfriendly. Without a cooperative union it’s not possible for
any company to achieve success in the long run.

The union of SIA is not helping its top decision makers to decide about a
particular matter. The union is confused about many things; as a result they
can’t trust the higher authority properly. So, they became very unsupportive
and unfriendly. If SIA fails to recover the whole situation it will become worst
day by the, and at one point the entire company will be collapsed.

Recommendation no. 3
Establishing a friendly union can always help and guide about
important aspects of an organization. So SIA should
immediately fix confusions with its union, and cooperate with
them 100%.

Establishing a happy and cooperative union might be a tricky one for SIA. But
the top management of SIA should always think about the best interest of SIA,
and should be ready to sacrifice many things for the betterment of the
organization. The first thing to create a strong but friendly union is the
transparency. If both parties remains enough transparent, then no one will
have any confusions in his/her mind, so no disputes will take place. The
management of SIA has to remember that, the most crucial resource of their
company is not the billion dollar aero planes; they are the employees and
workers who work day and night to uphold Singapore International Airlines as
a brand. Only then the union will trust the higher authority, and will cooperate
with them for a common goal.

Why it is the best solution?


This is the best solution because an organization gets success easily, if it’s
union and top management works together by judging each-others decision
and evaluating it. Moreover, if the top management keeps a friendly
relationship with the union, then more and more employees will be motivated
to work for the company. The working environment gets better than ever, and
everyone start enjoying their work.

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Problem no. 4
Singapore International Airlines (SIA) uses a lengthy, difficult,
and costly method of recruitment, training, and development
program. Which we think, is not feasible at this moment.

Though SIA has a finely tuned recruitment program, they are not using that
facility properly. Singapore has a shortage of population so they are highly
dependent on other countries for their required talents. To fulfill their
requirements they recruit around 50% of their employees from outside world.
Especially in the pilot sector expatriates costs a lot. Moreover, SIA is spending
14 times more per employee as the average Singaporean company. So, they
should be very careful about recruiting and selecting their employees
otherwise, they will be definitely fall under financial crisis during tough
economical condition.

Recommendation no. 4
More structured but less costly recruitment system, and
training programs for new comers. Also introducing
competency management and fast track will create an added
advantage on employee performance.

We are suggesting SIA to restructure their existing processes, like-


recruitment, selection, training and development, compensation strategy,
organizational structure etc. There will be several big changes I the
organizational strategies to make this plan possible. They need to change
specifically following processes at first:

Recruitment & Selection process:

The SIA has to think and plan about their recruitment process very carefully.
They should try to recruit people from inside Singapore, because that will
save a lot of money. They do can depend on expatriates but those should be
preferred who lives in adjacent countries like Malaysia, Indonesia, Thailand,
or Philippines. That will save a lot of money. Selecting and recruiting
employees from Bangladesh, India or China can also be a good option as
their expected salary is comparatively lower than other job seekers.
Recruitment process should be designed in such a way that it covers the
whole country first, and also the neighboring countries. They should avoid
gender discrimination at all cost during recruitments; otherwise they will never

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get good employees for their organization.

Training & Development process:

SIA’s Training and Development process of employees is also not designed


properly. It’s scattered all around the globe and is very difficult to coordinate.
In the given case we have found that in Australia they are providing training to
their pilots. But there is no specific plan for training them. So they would do
proper planning for train them effectively. They can always use their training
facilities to train up some Singaporean potential people who will become an
asset for their company in near future. Though Singapore is very little country,
it doesn’t have much population. Then again, if SIA can successfully train-up
their cadets, those cadets will become powerful managers within a very short
period of time. So in this way employees will be trained effectively in a
systematic way under an effective plant.

Competency management & Fast tracking:

For a giant like SIA a more concrete system is needed to evaluate their
candidates and employees properly. So, we recommend the competency
management system, by using this system they can evaluate their each
employee’s/candidate’s characteristics and can profile them. By this way, they
will easily evaluate who is better for which type of job, and how much time it
can take to get promoted to next level. Also by using competency
management they can fast track most potential employees, who are
inexperienced but with a small guidance they can even challenge their seniors
in terms of performance. These people are the future leader of any company,
so they are needed to track down at early stage, so that the company can get
enough time to prepare them for future leadership positions.

Why it is the best solution?


It is the best solution because it lies in the very core of a company’s system.
So, by changing or upgrading these factors, an organization can get pretty
good success within a very short period of time. The only thing required here
to make these plans work is, proper planning and implementations of
company strategy.

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Problem no. 5
SIA is facing great competitions from some low-cost carriers
in Asia. These low cost carriers can take away a big amount
of market share from SIA.

SIA is currently facing competitions from some low cost airlines like Air Asia,
and Virgin Blue. They are planning to use Singapore as a base to conduct
their operations in Asia. Though they have a very small fleet, due to their
attractive fares almost all of their flights become full. They are offering very
low price to their customers, only USD$10 for a flight from Kuala Lumpur to
Penang. Where as same flight may cost 10 times more for airlines like SIA.
So, people started to rush on those low cost airlines, and the market
positioning of SIA starts to decline.

Recommendation no. 5
SIA should introduce some new low-cost flights under a new
sub-brand to overtake the threat of low-cost airlines. By doing
this SIA will be able to uplift their image as a more superior
airlines than that of their new sub-brand, and will be able to
remove the low cost carriers’ threat completely from the
region.

Since low-cost carriers are targeting some top airlines like SIA, now it’s time
for SIA to take a sweet revenge against them. SIA shall not lower its cost to
fight back these low cost carriers. Instead under a new sub-brand SIA it will
introduce some new flights to those destinations where the low cost carriers
are targeting. As a result SIA will be completely out of the competition, and
their new sub brand will compete with those low cost carriers. Since SIA has a
vast experience in the region their new sub brand will be also doing because
of this experience. Where as, new comer low cost carriers will struggle a lot to
cope-up with the new sub brand of SIA.

Why it is the best solution?


This is the best solution, because it removes the threat completely. SIA is
known for its superiority in passenger servicing. If it lowers the price then it will
become almost impossible for them to sustain in the airlines market. So, we
have suggested not to lowering the ticket cost for SIA, instead introducing
some low cost flights under a different name to tackle those unwanted
competitors.

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Implementation

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Implementation
In the previous section we have identified some problems that are Singapore
International Airline currently having and also
recommended some suitable solutions aligned
with organizational goals respectively for each
of them. And now in this part we are going to
implement whatever plans we have discussed
in the previous part. Our planning and
recommendation are of no use unless they are
properly implemented and utilized to the full
extent. Without implementation planning is only
wastage of time, money and labor. Therefore,
effective and timely implementation of suitable plans is essential to make
them successful.

Now in this subsequent implementation section of the case solution, we have


to answer some subsequent questions regarding the implementation process
following our identified problems along with their solutions. We will discuss
elaborately in this section ‘How’ we would implement our recommended plans,
‘Who’ is going to implement them, ‘Where’ we would implement them and at
last but not the least ‘By when’ we would implement them. After answering all
these questions following the problems one by one hopefully we will be able
to implement our plan timely and effectively.

Without a sound framework and without a healthy work environment, even the
best ever plans will fail. Therefore, an appropriate organizational environment
must be in place that will foster the effectiveness of our proposed
implementation plan. We have come up with some realistic implementation
plan that will foster the company to the highest extent to achieve the highest
market share not only in the local market but also globally. All those plans are
described below one by one along with their problems and proposed
solutions: Therefore, effective and timely implementation of suitable plans is
essential to make them successful.

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Problem no. 1
Singapore International Airlines (SIA) is minimizing their
operating cost by downsizing their employees, and
unjustified salary cuts in all management levels by using
SARS and Iraq War issue.

Recommendation 1
Singapore International Airlines (SIA) needs a specific and
proper compensation plan, by forming a new compensation
committee which will help to design a perfect and motivated
compensation policy rather than the existed demoralizing
one.

• How it would be implemented?

Communicate the decision: Redundancy is not the only


answer

The first step to the implementation of


such a sensitive and important decision
requires the consent and knowledge of
the employees concerned. Employees all
ranks and class absolutely detest anything
related to a decrease in their pay. What the
management needs to do is to
communicate their problems and justify the
cause reason for such an action. If the
employees can be convinced that in the long run these steps are going to be
beneficial to them then they will co-operate with the authority more readily.

It is better to implement the plan first on the top management


and then after a few months on the low paid staffs to avoid
any discriminatory conflicts

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The junior level staffs are always more or less defensive towards pay cut or
freeze or any such measures. They suspect the company of trying to take
advantage of an economic situation to make even larger profits at the
cost of their well deserved salary. What the company can do is, introduce
this plan first on the higher level management and then gradually move down
the hierarchy. In that way the lower level managers won’t feel exploited as
they can well perceive it as a company emergency situation.

Issuance of a formal letter from the HR to the union and


employees

A formal letter from HR signed by the chairman and CEO should be issued
which laid out the process. Clearly mention in this letter that the Staff can earn
back the salary they've sacrificed – plus a bonus – should the company
achieve a 50% or better income to cost ratio taken on a month-by-month
basis. Possibility of bonus for taking a cut: People taking a 15% salary cut
could get back their salary plus 7%. 20% salary sacrifice earns a salary return
plus a 17% bonus, while a 25% cut would repay salary plus a 25% bonus and
so on.

Assure the employees going through pay freeze & pay cut
that their money will not be lost forever

Assure the employees whenever and however possible that these are
temporary steps to ensure the survival of the company in hard times. As soon
as the company sees the light of success their pay and salaries will go
back to the original level. These are alternative action plan to layoff. So in a
way employees are benefiting form these measures more than anybody else.

Legal issues should be carefully studied to ensure lawful


execution of the plan

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There might be attempt to sabotage the company the law suits and other
legal actions when such sensitive decisions are implemented. The
employees become resentful and thus may wan tot attack the company.
Therefore it is absolutely necessary the at all the legal angles relating to such
steps are properly explored and studied so that these actions are lawfully
executed.

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Continuous review of the plan is necessary for proper and


time updates

The HR department must be always on the toes to ensure that the plan is
executed with peace and harmony through out the organization and it does
not be come a source of resentment towards the company. Also what is
necessary is to assess that if the company is truly benefiting form all these.
There are certain cost associated with pay cuts and freeze related to
employee dissatisfaction and demotivation. If the company is main more
benefits over cost is something the organization must review form time
to time.

Who would implement it?


Every plan should be implemented by the right person, because no plan can
be successful if it is not implemented in proper manner by the right person.
Minimizing operating costs without harming human resources through
rationing, pay freeze, pay cu is a big issue which cannot be implemented
easily. Before starting the process the SIA must choose the right person for
the implementation. The CEO along with the help of the top management and
the HR department must implement this plan.

Where it would be implemented?


The place where the plan would be implemented is also an important issue for
the SIA. They operate all over the world. However, uniformity is a very
important consideration when it comes to such a decision. Thus it should be
implemented through out the organization so that nobody feels that other was
treated more favorably.

When it would be implemented?


Time is another crucial factor in the implementation process. Implementing
any plan without proper timing has no value. So the SIA must implement the
plan within a specific time. They must target a date within which they will
operate. We suggest that it is done as soon as possible. They need it for their
survival in the economic crisis the world is facing today. If it is too late the plan
might not be effective anyway.

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Problem no. 2
Women employees are not treated equally with male
employees in Singapore International Airlines (SIA). So, they
are violating the Equal Employment Opportunity (EEO).

Recommendation no. 2
SIA can start recruiting their male cabin crews exactly the
same way they are recruiting their female cabin crews. Then
there will be no question of discrimination or violation of
Equal Employment Opportunity (EEO). Also if all jobs are on
contract, then it becomes easier for SIA to replace or shift
positions easily.

How it would be implemented?

Removing gender discrimination from the company

SIA hires the male employees as regular


employees whereas the female employees are
hired on the basis o five years contract. This is
an act of sexual discrimination. On the basis of
your sex the term of your employment is
made. This is an unethical practice. SIA can
argue that the fitness and outlook of the Air
hostesses are important criteria on the basis of
which they should be retained. However, it can
be counter argued that if any individual is
indeed not fit to provide service on the flights after say five years than she can
be provided a position on the ground or on the training arena or anywhere
else. It is not only to suit the company from EEO violation but can actually
help the company in many ways. These employees of five years experience
are well known with the norms of the organization and thus can use their
experience in various other positions of work for SIA. Moreover the
motivational aspect of such a step is also incredible.

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A specific unit must be established within the HR to oversee


EEO issues

HR and EEO have a long bitter history with one another. The HR department
has been on more than one occasion been harassed by the EEOC. Thus it is
mandatory on today’s world to dedicate an active unit within HR which is
going to oversee and handle the EEO issues arising in the company. Gender
equality is a fundamental human right and an essential condition for achieving
effective democracy. The Constitution of the International Labor Organization
(ILO) affirms that "all human beings, irrespective of race, creed or sex, have
the right to pursue both their material well-being and their spiritual
development in conditions of freedom and dignity, of economic security and
equal opportunity". Countries are increasingly committed to the promotion of
equality of opportunity and treatment for women and men in the world of work.
But governments and the social partners face difficulties in making the
principles and provisions of international instruments effective in national law
and practice. They often seek information and advice from the ILO on the
different approaches taken in different parts of the world to give practical
effect to gender equality principles.

Prepare a formal guideline that includes all the rules that must
be complied with and the action that would be taken on non-
compliance

Every one of personnel-related actions is affected by EEO law. To prevent


such violations, it's not enough to simply know that the law forbids
discrimination. You should know the specific kinds of discrimination to avoid in
your day-to-day activities with job applicants and staff. Job involves many
different personnel functions, including hiring, training, promotion, termination,
and others. Below are examples of actions taken to fulfill EEO responsibilities:

• Ensure bias-free selection processes by forming diverse selection


committees, evaluating candidates on job-related criteria, and
completing and maintaining necessary records such as the Interview
Data Form.

• Promote accountability for EEO by ensuring that responsibilities in


this area are clearly indicated in the applicable job descriptions of
managers and supervisors who report to you.

• Evaluate the performance of supervisory staff in implementing


established EEO responsibilities.

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• Educate employees by participating in relevant training and
education programs on campus and encouraging subordinate staff
with EEO responsibilities to do the same.

• Provide reasonable accommodations such as assistive devices, job


restructuring, and site modification for disabled staff members.

• Maintain a hospitable work environment; ethnic jokes and


harassment of any kind should not be tolerated.

• Review all personnel activities for potential differential impacts on


different groups and unintentional bias in such personnel actions as
selection, salary increases, promotion, reclassification, layoff,
corrective action, training, and termination.

• Encourage and invest in staff development, ensuring that all staff


have access to opportunities.

• Make sure all staff are informed of the organization's non-


discrimination policy and the procedures for resolving discrimination
complaints.

Complaint Procedures must be strongly established and


promoted

Complaint Procedures

To protect all employees and prospective employees from discriminatory


situations both informal and formal complaint procedures are available. Either
or both may be used.

Informal Complaint

Most complaints, grievances and misunderstandings can be resolved


satisfactorily in an informal conference between the employee and his or her
immediate supervisor.

If, however, the employee does not wish to discuss the concern with the
immediate supervisor, the employee may talk with an EEO counselor.
The role of the EEO counselor is to serve as a bridge between employees
and management and to resolve EEO problems on an informal basis.

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If a matter is not resolved through consultation with an EEO counselor, an
employee may request a conference with the supervisor of the employee’s
immediate supervisor.

Formal Complaint

If a matter is not resolved through the informal procedure, or if the


complainant does not wish to use the informal procedure, a formal complaint
may be filed.

A formal complaint must be made in writing and must give the name and
address of the complainant, state the basis of the complaint and indicate
whether the alleged discrimination was based on race, color, national origin,
religion, gender, age, disability, marital or veteran status or any other legally
protected status. The complaint must be submitted within 180 days of the
conduct giving rise to the complaint. A complainant will at all times be free
from reprisal.

A complaint may be filed by an employee or by an applicant for employment


who believes that discrimination in employment has been practiced against
him or her or that an employment practice has resulted or will result in
discrimination in employment against him or her. An employee, a former
employee or an applicant for employment may file a complaint of general
discrimination practices, provided that the complainant shall furnish the
names of individuals who are adversely affected by those practices.

Who would implement it?


Every plan should be implemented by the right person, because no plan can
be successful if it is not implemented in proper manner by the right person.
Removing discriminatory practices is a big issue which cannot be
implemented easily. Before starting the process the SIA must choose the right
person for the implementation. The CEO along with the help of the HR
department must implement this plan.

Where it would be implemented?


The place where the plan would be implemented is also an important issue for
the SIA. They operate all over the world. However, uniformity is a very
important consideration when it comes to such a decision. Thus it should be

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implemented through out the organization so that nobody feels that other was
treated more favorably.

When it would be implemented?


Time is another crucial factor in the implementation process. Implementing
any plan without proper timing has no value. So the SIA must implement the
plan within a specific time. They must target a date within which they will
operate. We suggest that it is done as soon as possible. They need it for their
survival and good image.

Problem no. 3
SIA is struggling with its union as the union deemed
unfriendly. Without a cooperative union it’s not possible for
any company to achieve success in the long run.

Recommendation no. 3
Establishing a friendly union can always help and guide about
important aspects of an organization. So SIA should
immediately fix confusions with its union, and cooperate with
them 100%.

How it would be implemented?


There should be better communication as both sides have put in more efforts
to strengthen the relationship. It is lucky to have capable union leaders in
place who can represent the ground well and represent the ground issues. On
the management side, with better understanding and more even keel
relationship, they are in a better position to discuss the more difficult issues.

Singapore's top leaders should be arranged to meet with the


representatives from the management and unions of SIA to
help iron out differences between them.

Relations between the labor unions and the group management has been
testy at times, particularly after wage cuts, retrenchments, and early

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retirement affected staff morale during and after difficult economic conditions
such as the SARS outbreak in 2003. Disputes have grown so severe that they
have attracted the intervention of the government. SIA should arrange for the
top government leaders to meet with both their management and the union
leaders to settle their conflict. When a powerful mediator comes to settle a
dispute both the sides feel necessary to listen to one another, a situation that
is absolutely necessary for SIA right now.

Ensuring co-operation of both parties is necessary

Both the parties must take a step forward to ensure that the co-operation is
established. Grievances lie on both sides. However, both parties must hear
each other out and try to think being in each other’s shoes. The management
must be accountable and answerable to the employees for all the actions
taken regarding their work and compensation. And the union must also be
ready to take some steps to try to understand that some actions by the
management may seem unfavorable to them now but it is better for them in
the long run. For all these to take place, open discussions, friendly attitude
and free flow of information from the management to the labor union is
necessary. There should be better communication as both sides have put in
more efforts to strengthen the relationship. It is lucky to have capable union
leaders in place who can represent the ground well and represent the ground
issues. On the management side, with better understanding and more even
keel relationship, they are in a better position to discuss the more difficult
issues.

Regular and Proper meetings must be conducted between the


management and the labor union

Peaceful negotiations are pre requisite for a successful employee-employer


relationship. There should be better communication as both sides have put in
more efforts to strengthen the relationship. It is lucky to have capable union
leaders in place who can represent the ground well and represent the ground
issues. On the management side, with better understanding and more keel
relationship, they are in a better position to discuss the more difficult issues.

Election of able union leaders must be conducted

Election of the union leaders must be conducted with utter seriousness and
fairness. This is necessary because the employees must feel that they have
chosen the best representative and the person who can best reflect their
demands to the management. If the process of election is highly politicized
and employees don’t favor their leader with the whole heart then with time

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their grievances will rise as their demands will not be pressed to the
management and the authority. Peaceful negotiations are pre requisite for a
successful employee-employer relationship. There should be better
communication as both sides have put in more efforts to strengthen the
relationship. It is lucky to have capable union leaders in place who can
represent the ground well and represent the ground issues. On the
management side, with better understanding and more keel relationship, they
are in a better position to discuss the more difficult issues.
It is lucky to have capable union leaders in place who can represent the
ground well and represent the ground issues. On the management side, with
better understanding and more keel relationship, they are in a better position
to discuss the more difficult issues.

Representatives from both parties should be invited to the


meetings of any major decision making

It is imperative that if the management makes any major decisions regarding


the job or the compensation of the employees, the decision making [process
should include a representative form the labor union. The decision making
process form the very root should reflect the needs and the demands of all the
stakeholders to ensure the most correct decision is made. Also in the case of
the labor union, instead of moving to strikes or attacking the management with
a sudden demand and abrupt pressure, it is better to move in a systematic
discussion process. Whenever they encounter a problem form the very initial
stage of their discussion a representative form the management should be
involved so that both the parties can come to a common conclusion. Peaceful
negotiations are pre requisite for a successful employee-employer
relationship. There should be better communication as both sides have put in
more efforts to strengthen the relationship. It is lucky to have capable union
leaders in place who can represent the ground well and represent the ground
issues. On the management side, with better understanding and more keel
relationship, they are in a better position to discuss the more difficult issues.

Who would implement it?


Labor union relationship & policy is a part of the HR issues, thus would be
implemented by the HR department itself. For solving one of the preceding
problems we have already suggested to open a HR department where every
single policy under it would be reformed so that all the activities occur in a
systematic way. We all know that for implementing any plan into the reality the
person plays the vital role for its success. No plan can be successful if it is not
implemented in proper manner by the right person. Here the HR managers
must change their approach towards the labor union and also designate
supervisors for keeping eyes on the issue to figure out whether they are

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proceeding well or not. So finally we can say that HR department would
implement this plan with great effectiveness.

Where it would be implemented?


Place is particularly very important factor for the SIA as they operate beyond
its own country border. We strongly recommend the company to develop this
strategy in Singapore at their company main office at first as soon as possible.

When it would be implemented?


Time is another crucial factor in the implementation process. Implementing
any plan without proper timing has no value. So the SIA must implement the
plan within a specific time. They must target a date within which they will
operate. We suggest that it is done as soon as possible. They need it for their
survival and good image.

Problem no. 4
Singapore International Airlines (SIA) uses a lengthy, difficult,
and costly method of recruitment, training, and development
program. Which we think, is not feasible at this moment.

Recommendation no. 4
More structured but less costly recruitment system, and
training programs for new comers. Also introducing
competency management and fast track will create an added
advantage on employee performance.

How it would be implemented?


The competencies are developed by workers
in industry to reflect the work they do within
their facility. Because it is experienced
workers who develop the competencies, it
ensures they are relevant and acceptable to
the workplace.

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Evaluation of employee competency is based on self assessment, prior


learning assessment and a subject matter expert validation of work. Training
needs identified by the competency assessment process can be fulfilled with
remedial training available at all times using the CD-ROM based training
materials, available online training, or other instructor lead seminars and
training. It addresses industry-related training as well as other workplace
skills, such as communication, computer literacy and interpersonal relations.

A good starting point is a survey

It's not surprising that some organizations have no idea what "makes the job"
in their business. Surveying successful, competent employees is usually the
best way to analyze such situations. Communicating those results, and
comparing them with the department head's own ideas, may give you a great
starting point.

What job roles do people possess? How are these roles defined? What is
common among the roles? What skills or competencies support each role?
What learning events (courses, meetings, demonstrations, on-the-job training,
etc.) support and build these competencies? How does a new hire begin their
training? This may seem daunting, but defining existing job roles is
worthwhile, and brings many insights into the company's needs for competent
performance. The data from such surveys also helps to build measurable
ways to determine when employees attain needed skills, and conversely, may
identify training needs that are not yet met.

Usually, a common set of competencies runs throughout most organizations,


which comes from the human resources department. Most HR organizations
require an orientation, which may include courses and handouts about time
clocks, harassment, benefits, and other important company-wide topics. On
top of these, most organizations have sales personnel that require both
technical and sales training. And specific application roles, be they cooks,
cleaners, or airplane mechanics, will need to attain both HR-required
competencies and their own job-specific competencies. Food-service
organizations, for example, may define food-related competencies for every
job role, as well as non-food competencies for hosts, servers and
maintenance/repair personnel.

Link learning events to certification requirements

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Learning events allow employees to gain competencies, and need to be
defined, along with related recertification dates. It would be useless to have
job roles that did not periodically require updating, as the business needs for
these roles change. You may not want to specify recertification dates at first,
but you will later need to identify and inform employees, who possess certain
job roles, that they must meet new needs and requirements. Thinking through
these tasks requires determination of business needs, so the training
department must work with all other departments that require competent
personnel, to gain insights into their important job roles, competencies, and
learning events.

A strong tool of evaluation for the trainees is required to


determine the more talented ones from the bunch

The training programmes must include series of evaluation and tests for the
participants to ensure they are learning well and are becoming thorough. The
tests are not only to evaluate the effectiveness of the training but also
determine which participants are better then average, average or below
average. In this way the fast learners can be directly sent to important
positions and can be invested more on. These hardcore training programmes
make the company less vulnerable to the demand of skilled employees. The
company will not have to be always dependent on the expatriates for key
organizational positions. Moreover, the skill level of the new and current
employees will shoot up.

The better performers can be posted to lucrative positions

Evaluation of employee competency is based on self assessment, prior


learning assessment and a subject matter expert validation of work. Training
needs identified by the competency assessment process can be fulfilled with
remedial training available at all times using the CD-ROM based training
materials, available online training, or other instructor lead seminars and
training. It addresses industry-related training as well as other workplace
skills, such as communication, computer literacy and interpersonal relations.
The top performers can be offered lucrative positions in the company which
makes the company less volatile to any unfortunate shortage of skilled
domestic workers.

More applicants being called from the home country and


neighboring country to soothe the cost pressure of the
expatriates

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If more and more applicants for these training programs are called from the
home country and neighboring countries then the cost pressure exerted due
to the expatriates will soothe down significantly. SIA is highly depended on the
expatriate due to shortage of labor I the home country and also not all the
employees available have the required level of skill. This is where the training
can come into use. The potential candidates form home and neighboring
countries can be trained and molded as per the needs of the company so that
SIA can reduce its dependency on foreign employees.

Who would implement it?


Introducing fast-track and competency management system for their
employees is a part of the HR issues, thus would be implemented by the HR
department itself. For solving one of the preceding problems we have already
suggested to open a HR department where every single policy under it would
be reformed so that all the activities occur in a systematic way. We all know
that for implementing any plan into the reality the person plays the vital role
for its success. No plan can be successful if it is not implemented in proper
manner by the right person. Here the HR managers must change their
approach towards the labor union and also designate supervisors for keeping
eyes on the issue to figure out whether they are proceeding well or not. So
finally we can say that HR department would implement this plan with great
effectiveness.

Where it would be implemented?


Place is particularly very important factor for the SIA as they operate beyond
its own country border. We strongly recommend the company to develop this
strategy in Singapore at their company main office at first as soon as possible.

When it would be implemented?


Time is another crucial factor in the implementation process. Implementing
any plan without proper timing has no value. So the SIA must implement the
plan within a specific time. They must target a date within which they will
operate. We suggest that it is done as soon as possible. They need it for their
survival and good image.

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Problem no. 5
SIA is facing great competitions from some low-cost carriers
in Asia. These low cost carriers can take away a big amount
of market share from SIA.

Recommendation no. 5
SIA should introduce some new low-cost flights under a new
sub-brand to overtake the threat of low-cost airlines. By doing
this SIA will be able to uplift their image as a more superior
airlines than that of their new sub-brand, and will be able to
remove the low cost carriers’ threat completely from the
region.

How it would be implemented?


Typical low-cost carrier should include:

• a single passenger class


• a single type of aero plane (commonly the Airbus A319 or Boeing
737), reducing training and servicing costs
• a minimum set of optional equipment on the aeroplane, often
excluding conveniences such as ACARS, further reducing costs of
acquisition and maintenance
• a simple fare scheme, such as charging one-way tickets half that of
round-trips,typically fares increase as the plane fills up, which
rewards early reservations.
• unreserved seating (encouraging passengers to board early and
quickly)
• flying to cheaper, less congested secondary airports and flying
early in the morning or late in the evening to avoid air traffic delays
and take advantage of lower landing fees
• fast turnaround times (allowing maximum use of aircraft)
• simplified routes, emphasizing point-to-point transit instead of
transfers at hubs (again enhancing aircraft use and eliminating
disruption due to delayed passengers or luggage missing
connecting flights)
• Encourage the use of direct flights. Luggage is not automatically
transferred from one flight to another, even if both flights are with
the same company.
• generation of ancillary revenue from a variety of activities, such as
a la carte features and commission-based products

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• emphasis on direct sales of tickets, especially over the Internet
(avoiding fees and commissions paid to travel agents and
computer reservations systems)
• employees working in multiple roles, for instance flight attendants
also cleaning the aircraft or working as gate agents (limiting
personnel costs)
• a disinclination to handle Special Service passengers, for instance
by placing a higher age limit on unaccompanied minors than full
service carriers
• Aggressive fuel hedging programs
• Not every low-cost carrier implements all of the above points. For
example, some try to differentiate themselves with allocated
seating, while others operate more than one aircraft type, still
others will have relatively high operating costs but lower fares.
• The price policy of the low cost carriers is usually very dynamic,
with discounts and tickets in promotion. Even if the advertised price
may be very low, sometimes it does not include charges & taxes.

Who would implement it?


Cost reduction is a part of the operations issues, thus would be implemented
by the operations department itself. We all know that for implementing any
plan into the reality the person plays the vital role for its success. No plan can
be successful if it is not implemented in proper manner by the right person. It
will be best implemented by the CEO as per the authorization of the directors.

Where it would be implemented?


Place is particularly very important factor for the SIA as they operate beyond
its own country border. We strongly recommend the company to develop this
strategy in Singapore at their company main office at first as soon as possible.

When it would be implemented?


Time is another crucial factor in the implementation process. Implementing
any plan without proper timing has no value. So the SIA must implement the
plan within a specific time. They must target a date within which they will
operate. We suggest that it is done as soon as possible. They need it for their
survival and good image.

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A ppe
ndix

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No Appendix is available for this case analysis.

Page no. 77

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