Strategic Management SIA 
Singapore Airlines Group
1. If one were to undertake Porter’s Five Forces analysis for the traditional airlines segment, what would be the conclusion one would arrive at?
Bargaining power of suppliers.
Countries and government: air routes (it may not be a traditional supplier. But it is needed for airlines to operate)
High bargaining power-fuel costs. Fuel expenses were also a significant percentage of costs. Since oil was a commodity, its price fluctuated significantly. Airlines have very little control over fuel costs. Low power for Boeing. SIA was operating 72 Boeing 777-300 ER planes, making it one of the worlds largest operator of Boeing 777 family. SIA is one of leading Boeing’s customers for large commercial aircraft.
Maintenance. Backward integration. A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it will result in improved efficiency and cost savings. For example, backward integration might cut transportation costs, improve profit margins and make the firm more competitive. Supplier not strong.
Staff. Intensity and rivalry between boeing and airbus results in the lowering of the bargaining power of the 2 companies. There is also little differentiation between the 2 companies. Planes are just planes afterall. There is not much differences that can differentiate between them.
Threats of new entrants
High threats of new entrants from the low cost carriers like Air Asia and Tiger Airways. Although SIA had stake in one of these carriers, the advent of competition was expected to significantly reduce SIA’s profits.
Not worries about new entrants because they have different segment.
Threat of substitutes
High speed railway. Car travel. Low cost carriers. High threats of substitutes.
Bargaining power of buyers
At broad level, travellers could be divided into business and leisure travellers. Leisure travellers were more price sensitive, and would switch to alternative modes
1. If one were to undertake Porter’s Five Forces analysis for the traditional airlines segment, what would be the conclusion one would arrive at?
Bargaining power of suppliers.
Countries and government: air routes (it may not be a traditional supplier. But it is needed for airlines to operate)
High bargaining power-fuel costs. Fuel expenses were also a significant percentage of costs. Since oil was a commodity, its price fluctuated significantly. Airlines have very little control over fuel costs. Low power for Boeing. SIA was operating 72 Boeing 777-300 ER planes, making it one of the worlds largest operator of Boeing 777 family. SIA is one of leading Boeing’s customers for large commercial aircraft.
Maintenance. Backward integration. A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it will result in improved efficiency and cost savings. For example, backward integration might cut transportation costs, improve profit margins and make the firm more competitive. Supplier not strong.
Staff. Intensity and rivalry between boeing and airbus results in the lowering of the bargaining power of the 2 companies. There is also little differentiation between the 2 companies. Planes are just planes afterall. There is not much differences that can differentiate between them.
Threats of new entrants
High threats of new entrants from the low cost carriers like Air Asia and Tiger Airways. Although SIA had stake in one of these carriers, the advent of competition was expected to significantly reduce SIA’s profits.
Not worries about new entrants because they have different segment.
Threat of substitutes
High speed railway. Car travel. Low cost carriers. High threats of substitutes.
Bargaining power of buyers
At broad level, travellers could be divided into business and leisure travellers. Leisure travellers were more price sensitive, and would switch to alternative modes