Analysis of Singapore

Airlines Annual Report

2016/2017
Outline
STEP 1 : INTRODUCTION STEP 2 : MISSION & VISION STEP 3 : INTERNAL ASSESSMENT STEP 4 : EXTERNAL ASSESSMENT

• Group introduction • Mission statement

• Company profile • Vision statement • Competition of The

Industry
• Product • Competitor mission • Financial Ratio
• Competitive Profile
• Strategic plan
and vision
• IFAS Matrix
• Mission analysis
• Outline • EFAS
• Vision analysis

STEP 5 : STRATEGY FORMULATION STEP 6 : STRATEGY IMPLEMENTATION STEP 7 : STRATEGY EVALUATION STEP 8 : CONCLUSION

• SQ EBIT
• SWOT Analysis
• PROJECTED CONSOLIDATED
• Space Matrix PROFIT
• Boston Consultating Group AND LOSS STATEMENT • 4 PHASES OF
Matrix • BALANCE SHEET GRAPH • Balanced Scorecard
STRATEGIC
MANAGEMENT
• Internal External Matrix • PROJECTED BALANCE SHEET
31 MARCH 2019

• PROJECTED FINANCIAL RATIO

GROUP INTRODUCTION
MUHAMMAD ADRIAN RIZKY (1503650)
SYAVA PRADINA F.A (1505716)
SURIA NATALIA BINTI ABDULLAH (1708459)
Company Profile
 PRODUCTS/SERVICES
Cabins

Singapore Airlines Suites

First Class
Business Class
Premium Economy Class
Economy Class
Catering
Krisworld
STRATEGIC PLAN
VISION & MISSION
STATEMENT
Vision statement

Singapore Airlines is a global company dedicated to providing air transportation services of the
highest quality and to maximizing returns for the benefit of its shareholders and employees

Mission statement

• To deliver the highest quality customer service that was safe, reliable, and economical.

• To generate earnings that provided sufficient resources for investment and satisfactory returns
to shareholders.

• To adopt human resource management practices company-wide that attract, developed,

motivated and retained employees who contributed to the company’s objectives

• To maximize productivity and utilization of all resources

COMPETITOR’S VISION
& MISSION STATEMENT
1. Malaysia Airlines

Vision statement

To be the Preferred Premier Carrier

Mission statement

• Put our People first and be the Employer of Choice

• Anticipate, consistently deliver and exceed customer expectations

• Build on our recognized personalized and sincere 'Malaysian Hospitality'

service

• Innovate to make travel and doing business with us hassle-free

• Sustainable value creation for our shareholders

2. Thai Airways Mission statement

• Focus on customer satisfaction with prompt, accurate

Vision statement and efficient services

Thai Airways International Public Company Limited (THAI) is • Continue develop business unit that meets and
the national carrier of the Kingdom of Thailand. THAI is also exceeds customer expectations while strengthening
known as one of the world’s leading ground handling and expanding the customer base
service agents.
THAI's positioning in ground handling service is to be the • Providing world class ground support and service levels
first choice supplier for all airlines operating into Thailand.
THAI's service concept is to provide a simple, functional, • Motivate employees to perform with transparency and
cost effective and user friendly solution that allows airlines with good governance
to undertake efficient and profitable operations.
THAI Ground Services units are located at major
international and domestic airports throughout Thailand.
THAI's goal is to excel in anticipating and responding to
customer needs in terms of quality and reliability. THAI has
qualified human resources and well maintained ground
service equipment to serve airlines allowing them to meet
their own service standards at a reasonable cost.
3. Garuda Indonesia
Mission statement
Vision statement
To maximize shareholder return through
To be a sustainable airline company strong revenue growth, cost leadership in
through customer-oriented services and full service operations, and group
growth in profit synergy while providing the highest value
to customers through excellent
Indonesian hospitality
VISION ANALYSIS
Vision Indicators SQ MH TG GA
Describing what we want √ √ √ √
to be
No conflicting √ √ √
interpretation (clear)

Easy to remember √
Contain ability and √ √ √
empowerment
Would be better if it √ √
could be visualized
Pay attention to √ √
customer
MISSION ANALYSIS
Mission Indicators SQ MH TG GA
Customers √ √
Product and Services √ √ √
Markets √ √
Technology √ √ √
Concern for Survival, √ √ √
Growth, and
Profitability
Philosophy √ √ √ √
Self Concept
Concern for Public √ √ √
Image
Concern for
Employees
Internal Assessment
Financial Ratio
• Current Ratio= current assets / current liability

=5700/6288.6

= 0.9 : 1

For every RP 1,000 current Liability SIA have RP 900 current

assets to repay its debt

• Quick Ratio= (current assets – inventories) / current liability

= (5700-178.4)/6288.8

= O.88:1

For every RP 1,000 current Liability SIA have RP 880 Liquid

assets to repay its debt
• Account receivable turnover= Credit sales/ Average Account
Receivable
= 14868.5/1183.2
= 13 times
SIA is able to permit 13 credit sales during the given period

• Average collecting period= 365/ Account Receivable turnover

= 365/ 13
= 28 Days
SIA collects its debt every 28 days during the given period

• Inventory turnover ratio= COGS/ Average inventory

=(2616.2+3747.5+1552.1+3.9+39.8+898.3+387.1+
809.3+1197.1+895.9+63.8+543.7+115.4+176.3)/
[178.4+181.9)/2]
=13028.4/180.15
=72 Times
SIA purchase its inventory 72 times during the given period
• Equity Ratio= Stockholders Equity/ Total assets X 100%
= 13470.2/24720 X100%
=54.49%

• Return on equity= Net Income/ Equity X 100%

= 441.9/13470.2 x 100%
= 3.29%

• Net Income to Net Sales = Net Income/ Net Sales X 100%

= 441.9/ 14868.5 X 100%
= 2.97%

• Earnings per share to common share ratio

= market price per share/ earning per share

= 11.14/0.35

= 31.82:1
IFAS
WEIGHTED
STRENGTH
WEIGHT RATING SCORE COMMENT
Premium product Known
and brand 0.1 9 0.9 internationally
Multi-brand Model 0.1 8 0.8 Various range
product offered
Europe-Asia SIA is one of the
Pacific Market 0.1 8 0.8 preferred airline
Strength in Europe and
Asia pacific
SIA is profitable SIA is making
every year 0.1 8 0.8 profit yearly
Effective Frequent FFQ program is
flier program 0.1 8 0.8 essential to keep
loyal customer
0.5 4.1
IFAS
WEIGHTED
WEAKNESS
WEIGHT RATING SCORE COMMENT
Poor margins 0.1 2 0.2 Lead to no new investor due to margin
is the factor that attract investor to
invest
Perception of being an Lead customer to choose other
expensive airline 0.1 3 0.3 company due to the perceptions of
being an expensive airline
Capacity issues 0.1 3 0.3 Resulted to airline not being able to
provide more seats for customer due to
limited seats in aircraft

Global economic to dent Economic condition result to traveller to

premium traffic 0.1 2 0.2 change their preferable airline such as
from premium to low cost
Increase in competition It is due to more choices available and
result to decrease in 0.1 2 0.2 customer tend to choose airline with
market share growth better fares and service

0.5 1.2
Total 1.0 5.3
External Assessment
Competition of The Industry
COMPETITIVE PROFILE MATRIX

Singapore Airlines Malaysia Airlines Garuda Indonesia

Critical success Weight Score Weight score Score Weight Score Weight score
factor score
Marketing 0.08 3 0.24 3 0.24 3 0.24
Brand Reputation 0.12 4 0.48 4 0.48 4 0.48

Advertising 0.07 3 0.21 4 0.28 4 0.28

Product Quality 0.1 4 0.3 3 0.3 4 0.4

Customer service 0.08 4 0.32 4 0.32 4 0.32

Customer loyalty 0.08 4 0.32 4 0.32 4 0.32

Product range 0.06 4 0.24 3 0.18 3 0.18

Low Cost Structure 0.06 2 0.12 3 0.18 3 0.18

Market Share 0.08 4 0.32 3 0.24 3 0.24

Variety of Distribution 0.09 4 0.36 4 0.36 3 0.27
Channel

Successful Promotion 0.1 3 0.3 4 0.4 4 0.4

Management 0.08 4 0.32 4 0.32 4 0.32

Total 1.0 3.53 3.62 3.31
EFAS
WEIGHTED
OPPORTUNITIES
WEIGHT RATING SCORE COMMENT
Alliance with other airline to Alliances with other airlines
increase business 0.1 8 0.8 increase business and
minimize loss

More international destinations Result to more route open

to leverage its high value brand and new markets
image 0.15 9 1.35

Offer more inclusive training for Training leads towards

staff 0.05 7 0.35 better service provided for
customer

Brand new-fleet to boost Customer confidence lead

customer confidence 0.1 8 0.8 towards brand loyalty

Preference for comfortable air Leads towards brand

travel 0.1 8 0.8 loyalty

0.5 4.1
EFAS
WEIGHTED
THREATS
WEIGHT RATING SCORE COMMENT
Increase in competition Create price
0.1 3 0.3 competition
Increase in fuel cost 0.1 3 0.3 Leads towards
increase in air ticket
Government regulations Leads to decrease in
0.15 1 0.15 travel due to rules
imposed
Overcapacity in regional Resulted to decrease
market 0.05 2 0.1 in sales due to too
many provider

Increase price in ticket Price increment leads

due to increase in price of 0.1 2 0.2 towards decrease in
fuel sales

0.5 1.05
Total 1.0 5.15
Strategy Formulation
SWOT ANALYSIS
SWOT ANALYSIS STRENGTHS WEAKNESSES

SO WO
1. Develop the market volume by providing more 1. Innovative promotion tools for hiring the staff or
discount inviting the customers even members
2. Provide soft bundling tour package 2. Be more attractive by not offering expensive
OPPORTUNITIES 3. Get more customers by giving member promo price to the newest customers
3. Provide better capacity and their facilities for the
small capacity

ST WT
1. Focus on the main product to spread the wings 1. Decrease the number of the price, but still in the
2. Be more worth on offering the product or service to safety zone to not being loss
the customers by giving well knowledges 2. Change the type of the product, to get cheaper
3. Keep updating the government regulation to be supply price
THREATS
more suitable to the company and staffs 3. Make the government trust to the airlines more,
and use the poduct of the airlines
SPACE MATRIX
BOSTON CONSULTATING GROUP MATRIX

STARS
QUESTION MARKS
Cabin Services
Airlines Products 1. Poor Margin
SIA Products

CASH COWS DOGS

Carrying capacities 1. Premium Products

Europe Market 2. Asia Market
INTERNAL EXTERNAL MATRIX
INTERNAL SCORE
SO WO
1. Develop the market volume by 1. Innovative promotion tools for
providing more discount hiring the staff or inviting the
2. Provide soft bundling tour customers even members
package 2. Be more attractive by not
3.40
3. Get more customers by giving offering expensive price to the
member promo newest customers
3. Provide better capacity and
their facilities for the small
capacity
ST WT
1. Focus on the main product to 1. Decrease the number of the
spread the wings price, but still in the safety zone
2. Be more worth on offering the to not being loss
product or service to the 2. Change the type of the
customers by giving well product, to get cheaper supply 2.50
knowledges price
3. Keep updating the government 3. Make the government trust to
regulation to be more suitable the airlines more, and use the
to the company and staffs poduct of the airlines

EXTERNAL
Strategy Implementation
Singapore Airline EBIT
• 2015/16 shows an increment of
219.55% of EBIT as of 2014/15.
• 2016/17 shows a decrease of
53.33% as compared to the
year before.
• 2017/18 shows a huge
increment of 212.3% of EBIT as
compared to the year before
• Projected that EBIT in 2019/18
will increased by 137.79% as
compared to previous year
Projected Consolidated Profit
and Loss statement
Balance Sheet Graph

Based on previous
performance, Singapore
Airline’s revenue is
expected to increase
gradually in year 2019
Projected Balance Sheet
31 March 2019
Projected Financial Ratio
• Current Ratio= Current assets/current liability

= 7506.9/12485.6

= 0.6:1

For every S$1 current Liability SIA have S$ 0.60 current assets to repay
its debt

• Quick Ratio= (current assets – inventories) / current liability

= (7506.9-179.3)/12485.6

= 0.59:1

For every RS$ 1current Liability SIA have S$0.59 Liquid assets to repay
its debt
• Account receivable turnover= Credit sales/ Average
Account Receivable
= 15410.9/1273.9
= 12 times
SIA is predicted to be able to permit 12 credit sales during the
given period

• Average collecting period= 365/ Account Receivable

turnover
= 365/ 12
= 30 Days
SIA collects its debt every 30 days during the given period

• Inventory turnover ratio= COGS/ Average inventory

=(2776.7+3801.8+1680.6+27.7+45.5+941.5+448.4
+874.7+1331.4+784.7+58.7+519.2+54.5+89.7
+167.8)/ [(179.3+179.3)/2]
=13602.9/179.3
=76 Times
SIA purchase its inventory 76 times during the given period
• Equity Ratio= Stockholders Equity/ Total assets X 100%

= 17851.0/36244.1 X100%

=49.25%

Return on equity= Net Income/ Equity X 100%

= 1304.7/17851.0 x 100%

= 7.31%

Net Income to Net Sales = Net Income/ Net Sales X 100%

= 1304.7 /15410.9 X 100%

= 8.47%

Earnings per share to common share ratio

= market price per share/ earning per share

= 11.14/0.154

=72:1
Strategy
Evaluation
Balanced Scorecard • Revenue • Customer
• Expanses Satisfaction
• Net Income • Customer Retention
• Cash Flow • Market Share
• Asset Value • Brand Strength

Financial Customer
perspective Perspective

Internal Process Learning/Growth

Perspective Perspective

• Inventory • Employee
• Orders Satisfaction
• Resources Allocation • Employee Turnover
• Cycle Time • Employee Skills
• Quality Control • Employee Education
Step 8 ( Conclusion )

4 Phases of Strategic Management

1. Basic Financial Planning : emphasizes on preparation and annual budget,

financial goals set, revenue and costs are carefully monitored, short-term and
focus on the functional aspects of the organization.
2. Forecast-Based Planning : more effective resource allocation and more timely
decisions relating to the organization’s long-term competitive position
3. Externally-Oriented Planning : effort to understand basic market phenomenon
where are expected to produce a number of alternative actions for top
management, begins to evaluate alternative stratgies formally with planning
and action.
4. Strategic Management : widespread strategic thinking, comprehensive
planning processes and a supportive value system