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NUS-DBS International Case Competition 2010 - Thammasat University (1st Runners Up)
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NUS-DBS International Case Competition 2010 - Thammasat University (1st Runners Up)

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    NUS-DBS International Case Competition 2010 - Thammasat University (1st Runners Up) NUS-DBS International Case Competition 2010 - Thammasat University (1st Runners Up) Presentation Transcript

    • SicharnAnyapatWorakornVeeranan
    • Strengthening     Change  in     Capitalizing     ISSUES   compe11ve  edge   consumers  lifestyle   on  the  downturn   Company profile • Best global airline • Core competency: Service excellence & Product innovation Competitive Analysis SIA Air France British Airways Emirates Qantas CEA Cathay Pacific Service Competitors are equally able to Productinnovation developing innovative products Premium Pricing and delivering service excellenceSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 3
    • ISSUES   Opera1ng  System   Brand  Establishment    3G   Company profile • Best global airline • Core competency: Service excellence & Product innovationImplication: SIA must strengthen itscompetitive edge to be number Competitive Analysisone in the market. SIA Air France British Airways Emirates Qantas CEA Cathay Pacific Service Competitors are equally able to Product innovation developing innovative products Premium Pricing and delivering service excellenceSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 4
    • Strengthening     Change  in     Capitalizing     ISSUES   compe11ve  edge   consumers  lifestyle   on  the  downturn   Customer lifestyle Customer lifestyle has changed in the new landscape of internet and mobile connectivity Technology has become more important to people’s lives • Service Excellence How can we better serve • Product innovation customers with the fast-paced change in technology?Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 5
    • ISSUES   Business  Focus   Geographic  Expansion    Growth  Funding   Customer lifestyle Customer lifestyle hasImplication: There is a need for SIA to changed in the new landscape of internetkeep up with the rapid change of and mobile connectivitytechnology in order to best satisfy thecustomers. has become more important to people’s lives Technology • Service Excellence How can we better serve • Product innovation customers with the fast pace change in technology? Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 6
    • Strengthening     Change  in     Capitalizing    ISSUES   compe11ve  edge   consumers  lifestyle   on  the  downturn   Nature of airline industry Global Economy Economic Oil climates prices • Affect no. of passengers • Affect price Disease Natural Decline in revenue outbreaks disastersSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 7
    • ISSUES   Business  Focus    Growth  Funding   Geographic  Expansion   Nature of airline industry Global EconomyImplication: SIA must find a strategic Oil Economicway to manage its revenue stream and climates pricescapitalize on the downturnffect price the • A given • Affect no. of passengersnature of the industry. Disease Natural Decline in revenue outbreaks disasters Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 8
    • Where SIA is ISSUES TO BE SOLVED Where SIA should be in 10 Years• A world-leading airline • Successfullywhich has been known Strengthening strengthen its corefor its service excellenceand product innovation. competitive edge competencies in service quality and position as the airline• Facing the rapid of choice.change in technology Change inand customers lifestyle. • Be known worldwide consumers lifestyle for its technology and• Revenue is affected by product innovationexternal factorsposing a that maximize thethreat to SIA as a long customer’s values.term player in the airline Capitalizingindustry. on the downturn • Be able to withstand the downturn of the airline industry. Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 9
    • Strengthening Change in Capitalizing on the Competitive edge consumer lifestyle downturn Strategy II. Strategy I. Strategy III. Digital WorldUniquely Singapore Balancing Strategy StrategySituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 10
    • I. Uniquely Singapore StrategySituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 11
    • To widen the gap from competitors and strengthen No.1 position as the Objective: best service airline in the world Quality Human Resource à Service Quality Core competencies of Product Innovation Singapore Airlines Being Singapore •  Variety of people & culture (Mixed Asian) How can we utilize our core competency to gain a step ahead over the competitionSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 12
    • “Singaporean  Touch”  enlightens  your  journeys   (through  the  6  senses) The  power  of  fresh  air  &   Showing  Chinese  or   relaxa1on   tradi1onal  arts   Sight Smell Most  caring  service  from  the   Feel   Mixed Asian Hear Tradi1onal  yet  modern   heart (Heart) Culture tranquil  sounds   The  most  stunning  blend  of   Taste Touch Every  surface  tells  a  story  of   Asian  cuisine  &  organic   the  history  and  heritage  of   flavors   Singapore   Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 13
    • •   Refurbish  interior  design  through   Ac1on the  concept  of  “Singaporean   Touch”  in  order  to  excite  customer   experiences       Criteria  for     •   Suite,  Business,  and  First  Class     Implementa1on • High  frequency  airplanes     •   Popular  des1na1on  (maximizing  exposure)      Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 14
    • II. Digital World StrategySituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 15
    • Objective: To capitalize on the IT trend in order to provide better value to customers PARTNER WITH A TECHNOLOGY COMPANY ü  Increase customers’ satisfaction ü  Enhance Brand Image as being more innovative ü  Ability to charge higher pricePartner SelectionSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 16
    • Value  Proposi1on Increase product exposure & trial (93 destinations in 38 countries) New product channel (airplane) No. of customers in our hands that they can tap into Enhancing brand image One of the best world’s class airlinesBest in-flight entertainment for 5 consecutive yearsSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 17
    • III. Balancing StrategySituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 18
    • To capitalize on the new IT trend in order to provide better value to Objective: customers Macro Economic factors Fluctuation in revenue 4 segments What is the best segment for SIA to penetrate into in order to mitigate the risk Business - Traveling Studying Visiting relatedSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 19
    • Customer  segment   Implementa1on  &   1    selec1on   2    value  proposi1on   Business- Objective of flying Travelling Studying Visiting related Travel frequencies Need for travelling Price insensitivity Insensitivity to macro factors Customer relationship Care for service quality Destination Market SizeSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 20
    • Customer  segment   Implementa1on  &   1    selec1on   2   Value  proposi1on   implementation Value Proposition Corporate Mileage Program • Upgrade class   • Earn priority Check-in ü World-­‐class  service  quality   • Access to business ü         Hospitality  of  flight  aXendants   lounge at the Thai airport ü   Des1na1on  Coverage   ü         Direct  Flights     Open more direct flights ü Support  facili1es  (phones,  internet)   •  Growing business centersSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 21
    • 2011   2012   2013   2014   2015   2016    Uniquely SingaporePlane refurbishment Digital WorldNegotiation Process Launch product Balancing Marketing Launch the CRM campaignSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 22
    •  35,000.0      30,000.0      25,000.0      20,000.0      15,000.0     CAGR = 10.1%  10,000.0      5,000.0      -­‐         2011F   2012F   2013F   2014F   2015F   2016F   2017F   2018F   2019F   2020F  In  Singapore  dollars  Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 23
    •  1,800.0      1,600.0      1,400.0      1,200.0      1,000.0      800.0      600.0     CAGR = 14%  400.0      200.0      -­‐         2011F   2012F   2013F   2014F   2015F   2016F   2017F   2018F   2019F   2020F  In  Singapore  dollars  Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 24
    • Internally  generated  fund   Long  Term  Debt  Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 25
    • Efficient   NegoDaDon   refurbish   Skills schedule Situation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 26
    • ISSUES STRATEGIES Uniquely Singapore •  “Singapore Touch” Strengthening Digital World Change in consumer •  Partner with Apple Inc. lifestyle Strategy Name 3 Capitalizing on the downturn •  Corporate mileageSituation Issues & Financial Recommendations Conclusion Analysis 14/8/11 Objectives Justification 27
    • THANK YOU Q&A
    • PRESENTATIO Backups   SWOT   Finance  N   CompeDDve  advantage   Pro  Forma  AssumpDon  SituaDon  1   CompeDtors   Financial  PosiDon  SituaDon  2   Risk  Analysis   RaDo  SituaDon  3   Revenue  1  Breakdown  Issues  &  ObjecDves   Other  Issues   Revenue  1  Breakdown  Cal  RecommendaDon  I     Brand  Image  –  Singapore  Girl   Revenue    2  Breakdown  RecommendaDon  II   Equity  stake  or  form  alliance  party   Revenue    2  Breakdown    Cal  RecommendaDon  III   Service  classes   Revenue    3  Breakdown  Timeline   InnovaDve  product  in  the  next  10  years   Revenue    3  Breakdown  CalculaDon  Revenue  Growth   Equity  stake  or  form  alliance  party   Revenue    3  Breakdown  CalculaDon  Net  Income  Growth   Class  Share   Direct  Flight  Expansion  Cost  &  Funding   Why  Singapore  Airlines?  Key  Success  Factors   Firms  Conclusion   Efficiency  Comparison  
    • SWOTStrength WeaknessHuman resource- recruitment and training High overhead cost (industry nature)Outstanding awardsBrand recognitionExcellent service qualityNetwork partners and coverage worldwideProduct innovationStrong management teamAdaptability to external changesConsistency in strategyGeographic diversificationOpportunity ThreatAviation industry is crucial for global economy Macroeconomic factors(7.5% of world GDP) - oil price, government, economy, naturalMiddle East and Asia market disaster, terrorism Competition -price war -catching up - Low cost carrier - Other global airlines: British Airways Over capacity problem Customer behavior changes
    • Competitive advantage•  Service quality•  Product innovation•  Strong management team and human resource•  Brand recognition - five star rating by SkyTrax - 17th most admired companies (Fortune magazine, 2007) - world’s best international airline for the last 11 years (Travel+Leisure magazine) - world’s best international route airline (Conde Nast magazine for 19 years) - world’s best airline (Business Traveler Asia Pacific for the last 15 years) - Readers’ Digest Trusted Brand Platinum Award (7th year)•  Ability to charge high price
    • CompetitorsName Coverage Product Innovation Revenue SourceBritish Airways 150 destinations (2000) – innovative seat beds in 72% sales in Europe 75 countries its business classEmirates Over 100 destinations A380s First Class Private Suites, 27.9% East Asia and Australasia 60 countries Shower spas and Onboard 27.3% Europe Lounge, In-flight entertainmentQantas First of 50 Boeing 787 $9,760million Australia Dreamliners in mid-2012 $1,102 UK and Europe Launch of new in-flight entertainment systemChina Eastern 9 domestic branches Compete with SIA in Asia 72% of total sales in 2008 – Hong 80 international and market in the area of passenger Kong, Japan and China regional routes service and cargo Over 330 domestic routesCathay Pacific Main market: Hong Kong, mainland ChinaSingapore Airline 93 destinations Own private cabin (A380 28.9% East Asia 38 countries aircrafts), First class luxury 21.8% Europe design, innovative design in 18.7% Americas economy class, wider seat, 18.3% South West Pacific meals, entertainment, toiletries 12.3% West Asia and Africa
    • Brand Image – Singapore GirlPros ConsWell-established identity Critique on Asian girl imageHas been successful Does not suit new IT eraAsian charm
    • Ground handling and catering•  Critical to success•  Enhance service quality•  Better control of what we serve to our customers
    • Efficiency Comparison Revenue  per   Revenue  per   Airlines kilometer   Load  factor employee   (Singapore  $) (Singapore  $) Cathay   2,142.87 77.8% 535,695.65 Thai 2,024.83 68.9% 219,836.49 Singapore 3,041.04 74.0% 101,723.79
    • Divesting SATS-  Divesting SATS was beneficial to company-  focus more on SIA group business
    • Innovative product in the next 10 years-  Personal IPAD for first and business class passengers-  In-flight VDO conference via laptops, I-phones
    • MNC FirmsInvestments- more than 7,000 multinational corporations from the United States, Japan, and Europe.-1,500 companies from China-1,500 from India.Foreign firms are found in almost all sectors of the economy.(source: http://www.state.gov/r/pa/ei/bgn/2798.htm)
    • Business Unit Analysis (SIA Group) SIA Engineering SIA Cargo Silk Air Tradewinds Tours and TravelsCharacteristics a major provider of World’s third largest SIA subsidiary airline Tour operating arm of SIA aircraft cargo airline focusing on regional and SilkAir maintenance, repair locations and overhaul (MRO) services in the Asia- PacificProfitability Positive net profit Net loss of S Growing net profit Information N/A $145.1million (2009/10)Contribution to SIA Yes Currently loss but Yes Revenues from toursGroup revenue should gain net Contribution to Silk Air profit in next years and SIA’s revenue as the travelers buy the tour
    • Service classesIn long term, the company should maintain the number of service classes, which are First, Business, Suite and Economy
    • Equity stake or form alliance party -  co-sharing flights -  Continuous benefitsFull members 28Pending members 2Destination airports 1,077Destination countries 181Annual passengers (M) 623.53Annual RPK (G) 990.24Fleet size 4,022
    • Risk Analysis -  Customer fails to recognize the service enhancement -  Economic condition -  Rejected by partner -  Oil price fluctuations -  Aviation regulations in different countriesHow to mitigate?-  Continuous development in service and product quality-  Focus on business travelers who are less sensitive to recession-  Find new potential partner-  Fuel price hedging-  Extensive route expansion
    • Why Singapore Airlines?•  Recognized as the world best airline industry•  Corporate mileage program•  Member of Star Alliance, with large global network coverage•  Best Business class seat (March 2010)
    • Direct Flight ExpansionCriteria•  GDP per capita•  GDP growth•  No. of passenger arrivals•  No. of business centers
    • Firms-  7000 firms from US, Europe and Japan-  1500 firms from China-  1500 firms from IndiaForeign companies are in every sector of Singapore economy. Example: Banks
    • •  Sales à see sales forecast•  Operating expense, A/R, A/P, Inventory assume to grow with sales•  Depreciation years in 15
    • •  Strong liquidity•  Healthy Leverage, ability to incur debt if needed•  Profit fluctuates due to industry nature
    • •  Use past year revenue and grows CAGR at 7.4% annually•  Assumes additional growth rate due to refurbishment to be at therate of 0.5% in the first year, 1% in the second, 1.5% in the third, and 2%for the rest of the time
    • Separate the portion of the revenue share •  Begins first launching the partner product to first class (2012),business class, and economy class one by one per year.•  With the market demanding innovation technology, sales will beable to grow at 5%, 10%, and 15% each year before leveling out.
    • Each  plane  makes  2  trips  a  day,  runs    365  flights  per  year  and  carries  400  passengers  total
    • Typically,  if  all  seats  are  sold,  the  airline   would  be  grossing  $196,000  from  first  class   Dcket  sales,  $553,000  from  business  class,   and  $198,750  from  coach  class. hdp://thetravelinsider.info/airlines/flyingfirstclass.htm