Will diversification be a good strategy for Singapore International
Airline?
Singapore International Airline (SIA) was founded in the year 1972 and
has evolved over the years. From being a regional airline, it has become a
travel brand across the globe. SIA has not only been limited to its air
services, it spreads its wings on the ground as well.
SIA has built wholly owned subsidiaries and joint ventures to provide
services like catering, aircraft maintenance and terminal management. Moreover,
SIA has its own school for training pilots and crew members. By diversifying
into these related business activities , SIA is making itself self-reliant and
will be able to provide better services than its competitors in the long run.
Diversification is not just for one time survival rather helps in enhancing the
ability of a firm to grow faster.
Diversification in the related activities enables SIA to achieve cost
efficiencies and maintain high standard of services. It also helps in the
transfer to knowledge across the verticals and provides a source of extra cash
flow generation. This extra cash flow generation is very important for SIA to
maintain its standards and retain the customers who are now growing price
sensitive.
The Changi International Airport is an infrastructure marvel. It has
extra ordinary facilities and depicts its superior quality management
skills. It is one of the best airports in the world and is
maintained by the SIA .This speaks volumes about the company. SIA is
strategically diversified only in related areas. It is a good idea indeed
because it creates an image of SIA as a true leader in providing a variety of
services in the Aviation Industry. Diversifying in unrelated business
activities would lead to dilution of SIA’s Brand.
Contributed by:-
Ridhi Mundra
Section C
Strategic Management
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