Singapore economic system is one of most comfortable in the universe. Singapore air hose industry accounted for 5 % of GDP and the industry value-added rate is 15 % . As an of import function in Singapore economic system, Singapore air hose industry has turning fast. In this paper will utilize the Porter ‘s “ Diamond Model ” ( Factor gifts ; Demand conditions ; Related and back uping industries ; Firm scheme, construction and competition ; Chance Government ) to analysis the competitory advantage of Singapore air hose industry and explicate how the Singapore air hose industry developed its competitory advantages.
Singapore economic system environment
Singapore economic system is one of most comfortable in the universe. Singapore economic system is a capitalist assorted economic system, with minimum authorities intercession in the market. It has an unfastened concern environment, comparatively corruption-free and crystalline, stable monetary values and one of the highest per capita gross domestic merchandises ( GDP ) in the universe.
Airlines industry in Singapore
Air travel is a big and turning industry. It facilitates economic growing, universe trade, international investing and touristry and is hence cardinal to the globalisation taking topographic point in many other industries.
In Singapore economic environment, the Singapore air hoses industry had entire gross of $ 5.8 billion in 2009, stand foring a compound one-year growing rate ( CAGR ) of 1.7 % for the period crossing 2005-2009. Industry volumes increased with a CAGR of 4.1 % between 2005 and 2009, to make a sum of 18.1 million riders in 2009. The public presentation of the industry is forecast to speed up, with an awaited CAGR of 11 % for the five twelvemonth period 2009-2014, which is expected to drive the industry to a value of $ 9.8 billion by the terminal of 2014 ( Airlines Industry Profile: Singapore, 2010 ) .
Porter ‘s “ Diamond Model ” of Competitive Advantage
The diamond theoretical account is an economical theoretical account developed by Michael Porter in his book The Competitive Advantage of Nations ( Porter, 1990 ) , where he published his theory of why peculiar industries become competitory in peculiar locations. Porter ‘s diamond theoretical account suggests that there are built-in grounds why some states, and industries within states, are more competitory than others on a planetary graduated table. The statement is that the national place base of an organisation provides organisations with specific factors, which will potentially make competitory advantages on a planetary graduated table.
The analysis is classified into six wide factors incorporated into the Porter diamond, which has become a cardinal tool for the analysis of fight:
Factor gifts – a state ‘s place in factors of production such as skilled labour or the substructure necessary to vie in given industry.
Demand conditions – the nature of place demand for the industry ‘s merchandise or service.
Related and back uping industries – the presence or absence of provider industries and related industries that are internationally competitory.
Firm scheme, construction and competition – the conditions regulating how companies are created, organized, and managed and the nature of domestic competition.
Opportunity events are happenings that are outside of control of a house. They are of import because they create discontinuities in which some gain competitory places and some lose.
Government can act upon each of the above four determiners of fight. Clearly authorities can act upon the supply conditions of cardinal production factors, demand conditions in the place market, and competition between houses. Government intercessions can happen at local, regional, national or supranational degree.
Figure 1: Porter ‘s “ Diamond Model ”
Beginning: The Competitive Advantage of Nations
By utilizing Porter ‘s diamond, concern leaders may analyse the competitory factors which may shack in their place state company, and what factors may be used to accomplish planetary competitory advantage. Business leaders can besides utilize the Porter ‘s diamond theoretical account during a stage of internationalisation, the leaders can utilize the theoretical account to analyse whether the factors in the domestic market to back up the internationalisation procedure, and whether in the state eligible to make a planetary graduated table competitory advantage.
Analysis of Airline Industry in Singapore
The factor gifts of air hoses industry include human resources, capital, equipment and installations, air infinite resources, etc.
In human resources, due to the features of technology-intensive in air hoses industry, the organisation requires a batch of professional and proficient forces. Meanwhile, the air power industry besides needs administrative, fiscal investing and gross revenues staffs. The multi-cultural Singaporean work force is extremely educated, extremely motivated and extremely productive. It is besides adept in English – the linguistic communication of international concern. Singapore has a big base of technology endowment, with the figure of applied scientists in universities and engineering schools spread outing steadily each twelvemonth, in add-on to the ample pool of skilled technicians. In add-on, Singapore authorities through the unfastened in-migration policy enhances Singapore ‘s talent pool. This gives companies the chance to beginning for the best forces from anyplace in the universe ( hypertext transfer protocol: //www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/knowledge.html ) . For these grounds, the Singapore air hoses industries have good work force.
In capital, air hoses industry needs a big finance support, the aircrafts and airdrome cost 1000000s of money. In Singapore, the universe ‘s major Bankss have opened subdivisions or offices. Therefore, the Singapore air hose industries do non hold job in capital. For illustration, Commerzbank Singapore subdivision has 30 old ages ‘ experience in funding aircraft to set up and pull off the full trade, and a complete suite of funding merchandises ( hypertext transfer protocol: //www.commerzbank.com.sg/en/financing/aircraft/aircraft_financing.htm ) .
Although the Singapore ‘s skies are limited, nevertheless the air hose industry non far from making impregnation point. Harmonizing to Lee Kuan Yew ( former Prime Minister of Singapore ) , due to the assistance of advanced pilotage engineering, Singapore can shorten the distance of the aircraft flight and to increase flights denseness, hence Singapore in footings of the unfastened skies, still have a batch of infinite.
Airlines by and large have a big figure of purchasers. Many of these are single consumers buying flights straight from the air hose, although there are concern to concern gross revenues to rent companies, discount houses, and similar purchasers.
With the increasing living criterion, the clients are demand on convenient, comfy and fast transit. Travel by air is one of the best picks for Singapore clients. First, Singapore has a strong international trade nexus, there are 1000s of business communities which from different states making concern in Singapore. The business communities through the air travel to do certain they can make the right topographic point on clip. Second, Singapore is one of the most popular tourer metropoliss in Asia. There are 10.8 million tourers visit Singapore in 2008. Furthermore, due to the population growing, Singapore has a great possible demand for air travel.
Table 1: Singapore Population Statisticss
Entire Population ( ‘000 )
Singapore Residents ( ‘000 )
Birth Rate ( Per 1000 Population )
Death Rate ( Per 1000 Population )
Infant Mortality Rate ( Per 1000 Live Births )
( Beginning: www.singstat.gov.sg )
( Beginning: Airlines Industry Profile: Singapore, 2010 )
Harmonizing to the tabular arraies, it evidently shows that the riders of Singapore air hoses industry have increasing by twelvemonth.
Related and back uping industries
The related and back uping industries including airdromes, air traffic control, pilotage information, air power fuel, air stuff and other support services, and aircraft fabrication and care of related industries.
From the supply-side position, the airdrome provide the basic conditions for air hoses industry, it contains safety and quality service. Changi Airport is the chief airdrome in Singapore which low beginnings in 1981. Changi Airport besides is a major air power hub in Southeast Asia. Presently managed by Changi Airport Group, Changi Airport was corporatized on 1 July 2009 to convey Changi to the following degree and present an even better Changi Experience. ( http: //www.changiairport.com/our-business/about-changi-airport ) Serving more than 90 international air hoses winging to some 200 metropoliss in 60 states, Changi Airport handles about 5,000 reachings and goings every hebdomad and over 37 million riders a twelvemonth. With over 40,000 square metres of commercial infinite, Changi Airport is besides one of Singapore ‘s largest shopping locations.
As the air traffic accountant, Civil Aviation Authority of Singapore ( CAAS ) promotes a strong safety civilization and embeds a robust safety model, with a modern and progressive regulative government based on international best patterns.
Aircraft fabrication and care are the most of import supporting industries for air hoses industry. For Singapore air hose industries, Boeing Company and Airbus is the chief provider for aircraft. Fortunately, Singapore besides has its local trade name. SIA Engineering Company is taking aircraft care, fix and inspection and repair ( MRO ) company supplying entire care solutions to an spread outing client base of international air hoses ( hypertext transfer protocol: //www.siaec.com.sg/ ) .
Firm scheme, construction, and competition
Local conditions affect house scheme. For illustration, German companies tend to be hierarchal. Italian companies tend to be smaller and are run more like drawn-out households. Such scheme and construction helps to find in which types of industries a state ‘s houses will stand out. Singapore is a hierarchal paternalistic autocratic intolerant province. Cause of Confucianism is strong ; Singapore society is based on a hierarchal order of things.
Competition in the Singapore air hose industry is strong. Local competition forces houses to travel beyond basic advantages that the place state may bask, such as low factor costs. The competitory landscape has several big companies, such as Singapore Airlines, aboard smaller rivals. Rivalry is increased by the presence of low-priced bearers in the market, as these companies can vie more intensely on monetary value. Switch overing costs for purchasers are low, which means that it is easy for them to alter to a rival. Cause of the globalisation, there are many international rivals join in the Singapore market, such as China, Japan and India, etc.
The demand for air travel to the Asia Pacific is lifting which is driven by increased economic activity in emerging Asiatic states such as China and India. Traffic is projected to turn at 7 % in China and India combined, above the universe norm of 5 % in the financial twelvemonth ended December 2007. Further, the portion of Asia Pacific part in universe rider traffic is forecast to lift from 25 % in 2003 to 31 % in 2023.
Harmonizing to the update of the United Nations World Tourism Organization, the planetary touristry will bounce strongly in 2010. With the awaited growing, concern and consumer assurance has picked up. This growing in universe touristry industry will heighten air hose concern. Singapore air hoses industry can capitalise on this addition in universe travel and touristry to heighten its concern and bring forth extra grosss.
Government is the of import variable of impacting the fight of the air hose industry. In the yesteryear, the air hose industry was at least partially authorities owned. The air hose industry has been strongly controlled by understandings and policies. Airlines could n’t merely wing to any finish or state without appropriate mandate. The deregulating of the Airline industry opens doors for more entrants to the market and increased competition. Singapore Airlines is still owned by the Singapore authorities and is still affected by such controls. Therefore, the authorities has great impact on the air hose industry. In Singapore, the authorities is back uping the air hose industry. The Singapore authorities has signed an understanding with the United States called “ Open Skies ” that gives both states unrestricted flight entree to each other states. The unfastened skies phenomenon is garnering impulse and more and more states are subscribing up. Recently, the Civil Aviation Authority of Singapore ( CAAS ) will be puting up an S $ 100-million Aviation Development Fund to further develop the local air power industry.
Airline industry in Singapore has turning fast. It ‘s due to hold a good economic environment and stable political relations. Harmonizing to the analysis of Porter ‘s “ Diamond Model ” of Competitive Advantage, it evidently shows what competitory advantages of the Singapore air hose industry have. First, Singapore air hose industries have the good human resources, finance support and other factor gifts. Second, the strong demand of market and the related and back uping industries. Additionally, the good chances and the authorities support. My recommendation for Singapore air hose industry:
Keep strong accent on the trade name name and quality of service.
Stay with the competitory advantage what the industries have, utilizing the distinction scheme.
Keep the invention and complimentary merchandises.