John B.

Tamargo
MBA1
Production and Operation Management

Singapore Airlines (SIA)

Singapore Airlines has consistently outperformed its competitors throughout
its history, in the context of an unforgiving industry environment. Singapore Airlines
has achieved its outstanding performance and sustained its competitive advantage,
through effectively implementing a dual strategy: differentiation through service
excellence and innovation, together with simultaneous cost leadership in its peer
group. The organizational elements that have allowed the company to do so,
illustrate its strategic alignment using a vertical alignment framework, and conclude
by highlighting the significant challenges ahead.
Executing dual strategies is difficult thats what makes the approach so
valuable. By being different in ways that customers like, companies that do so rise
from the pits of commoditization and make profits even in highly competitive
industries.
SIA's sustained superior performance relative its peers show that it has
achieved this, but what is it that makes it so difficult to imitate SIA? As discussed
below, it is easier to imitate fragments of a business system rather than the whole
system; if such system is internally consistent and self-reinforcing, held together by
robust, customer-focused processes and the glue of cultural values, it becomes
almost impossible to imitate.
The stakes are raised for SIA, not only by its competitors but also by its customers.
A company with a sky-high reputation attracts customers with sky-high
expectations. SIA's research team has found that SIA attracts a disproportionately
large number of very demanding customers who expect the best: "Customers adjust
their expectations according to the brand image. When you fly on a good brand, like
SIA, your expectations are already sky-high. And if SIA gives anything that is just
OK, it is just OK, it is just not good enough."
Combined with its extensive customer feedback mechanisms, SIA treats its
customers' high expectations as a fundamental resource for innovation ideas. Weak
signals are implied. Written comments, and even verbal comments to the flight
crew, are taken seriously and reported back to the relevant sections of the airline.
According to Ms. Lim Suet Kwee, senior rank trainer, " all feedback that is being
given by customers, it is all taken very seriously because we have to look into why
there was such a particular feedback and also are there ways where we can improve
on that?" An additional source of intelligence is SIA's "spy flight," in which individual

travel with competitors and report back giving detailed intelligence on competitive
offerings.
Lastly, SIA recognizes that its competition does not just come from within the
industry, as a rule, SIA sets its sights high, and instead of aiming to be the best
airline, its intention is to be the best service organization. To achieve that, SIA
employs broad benchmarking, not just against its main competitors, but against the
best-in-class service companies:
It is important to realize that [our customers] are not just comparing SIA with other
airlines. They are comparing us against many industries, and on many factors. So
when they pick up a phone and call up our reservation, for example, they are
actually making a mental comparison, maybe subconsciously, to the last best
experience they had. It could be a hotel; it could be to a car rental company. If they
had a very good experience with the hotel or car rental company and if the next call
they make is to SIA, they will subconsciously make the comparison and say how
come youre not as good as them? They do not say you have the best telephone
service system out of all the other airlines Ive called. Being excellent, our
customers, albeit subconsciously, will benchmark us against the best in almost
everything. The new ball game for SIA is not just to be the best of the best in the
airline industry but to work at being the best service company.