CASE ANALYSIS HRM 380 (TuA) - Singapore International Airlines: Preparing For Turbulence Ahead

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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Case no. 1 HRM 380 Group “D”

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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Case no. 1 HRM 380 Group “D” 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

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05

Theme

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23

Main Issue

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25

SWOT Analysis

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27

HR Issues

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41

Recommendation

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46

Implementation

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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 wagecut 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 lowcost 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 priceconscious 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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, doubledecker 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 firstclass 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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Case no. 1 HRM 380 Group “D” 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 topof-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 Page no. 15

Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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. Page no. 31

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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 longhaul 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.

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Case no. 1 HRM 380 Group “D” 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 Page no. 35

Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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 Page no. 43

Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” righteous way of indication that human resource issues are properly recognized.

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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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, likerecruitment, 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 Page no. 54

Case no. 1 HRM 380 Group “D” 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. Page no. 56

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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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Case no. 1 HRM 380 Group “D” 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.

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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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 noncompliance 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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Case no. 1 HRM 380 Group “D” •

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 nondiscrimination 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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 Page no. 67

Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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 Page no. 69

Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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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Case no. 1 HRM 380 Group “D” 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: • • •

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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 Page no. 74

Case no. 1 HRM 380 Group “D” •

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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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ppe ndix

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Case no. 1 HRM 380 Group “D” No Appendix is available for this case analysis.

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