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Overview of ComfortDelGro

Question:

Discuss about the Analysis Of ComfortDelGro Company

ComfortDelGro was formed in 2003 by a merger of two businesses the Comfort Group and the DelGro Corporation. The two companies had been in operation since the 1970s at the time they merged. ComfortDelGro is one of the leading land transporter dealers in Singapore, and even in the entire world. The company has gained a global presence through its provision of services to many different countries of the world, and now has many workforces distributed across the globe. When Comfort Group and DelGrop Corporation came together, they formed a robust country that gave the organization a significant local and global market. Therefore, the company operates at an international level.

ComfortDelGro deals in the land transport industry and has offered a variety of services in this sector. The organization runs the business in taxi services, car rental and leasing service and bus services. Further, the company offers automotive engineering services, insurance broking, vehicle inspection and testing and outdoor services. The company provides these services in its seven countries that have branches in many other nations. Currently, it has over 44000 vehicles in its business network.  The company competes for other international organizations in the industry (ComfortDelGro Corporation Limited, n.d.). Some of the competitors of ComfortDelGro include AZ Logistic, The Prestige Company and DB Schenker Croatia among many others.

PESTEL is an abbreviation of Political, Environmental, Social, Technological, Environmental and Legal factors. PESTEL is a tool used to analyze the environmental factors for business. The tool is essential in unveiling relevant information to determine the state of the organization thus helping in management decision-making.

The political factors affect ComfortDelGro Grow in many different ways. Firstly, the government of Singapore encourages its people to use public transport to reduce congestion on roads, thus helping ComfortDelGro to its customer base. The monopolization of the transport sector in Singapore has also had an impact on the operation of this company. Besides, the fact the government of Singapore does not monopolize the transport sector gives ComfortDelGro an advantage (OECD, 2010). Also, the government has made the industry to be open for competition. There are no restrictions on what can be done by the players for their competitive advantage (Adam, Wim & Micheline, 2011), thus, influencing the operation of ComfortDelGro in both positive and negative ways. Therefore, these factors are important and have impacts on the functioning of this organization.

Services Offered by ComfortDelGro

The economy of Singapore has grown fast for the past two years. It experienced a 1.9 per cent growth in the economy, and 2.0 per cent in 2016. This has effects on the operation and state of ComfortDelGro and the general service industry (Channel News Asia, 2009). The growing economy of Singapore has increased the human traffic thus, affecting the transport industry, there is increased people's trips per day and thus, increased ridership (Gilsoo, 2010). The prevailing peace and stable government of Singapore have attracted many tourists and other foreigners who increase the need for transport in the country. Therefore, the growth in economies of various countries has greatly boosted the transport industry thus, affecting the operation of ComfortDelGro.

The social factors of the market areas of operation have impacts on ComfortDelGro.  Singapore and many countries have experienced a growth in their population. The increase in the population brings an impact on the operation of ComfortDelGro (Land Transport Authority, 2014). Currently, the society is making attempts to embrace green environment which has made people to adopt lifestyle practices that have little impact on the environment.

Ethnic

Population

Chineese

74.2%

Malay

13.3%

Indian

9.2%

Others

3.3%

The lifestyle practices that contribute to a green environment include reduction of carbon in the air among others (Osterwalder & Pigneur, 2010). This has made many people choose public transport as a way to reduce emissions to the environment, thus affecting ComfortDelGro.

There are various aspects of technological presence and availability that ComfortDelGro should consider to gain a competitive edge. The company should embrace the social media technology which is one key aspects in attaining a competitive advantage. The company should effectively integrate social media in its business to reach many customers (Grant, Hackney, Edgar, 2010). The company should also adopt different types of technology platforms in its business for the convenience of clients interacting with the company. Additionally, there are also new trending technologies that ComfortDelGro should embrace, such as the use of GPRS among others. Therefore, these technologies affects ComfortDelGro in many ways and their adoption will help the organization gain a competitive advantage over others in the industry.

The dominant environmental factors with the business market of ComfortDelGro has effects on its success. Singapore has a considerably large area occupied by the roads. Additionally, Singapore is among the smallest countries in the world. These factors have caused an increase in the need for transport. Again, the roads are still expanding (Parmar, 2014). This affects the transport sector thus, also impacting on the operation of ComfortDelGro. Besides, the climatic conditions in the areas of operation of ComfortDelGro have affected its business.

Impact of PESTEL factors on ComfortDelGro

The legal factors are the rules and laws of the market environment. Most the legal factors within the countries of operation ComfortDelGro has hit it different ways, thus, the company needs to embrace the right legal factors for its effectiveness. Some of these aspects include it’s compliance to the county’s regulation to manpower, safety, transport operator requirements among many others. (UNESCO-UIS, 2010). The organization needs to identify all the key legal factors in the country and ensure that it works within them. Therefore, the success of ComfortDelGro is influenced by the legal factors.

The Porter's Five Forces are important is establishing the market environment of ComfortDelGro. The forces are the bargaining power of the suppliers, the possibility of the new entrants in the market, the bargaining power of the customers, the possibility of new substitute products or services and the competition in the market industry (Friday, 2007).

The threat level of the bargaining power of suppliers to ComfortDelGro is low. Some of the suppliers of ComfortDelGro include the capture the vehicle manufacturers, the fuel oil providers and many others. Regarding the vehicle suppliers, ComfortDelGro has a lot of bargaining power of them. As buyers, many vehicle sellers will always seek them to buy their cars. ComfortDelGro has the freedom to switch from one supplier to the other, thus, more bargaining power (Sapuan, 2007). On the other hand, ComfortDelGro has little bargaining power over other vendors such as those for fuel. This is an essential commodity that denies ComfortDelGro a competitive power. Therefore, different suppliers have different effects on the business of ComfortDelGro.

The bargaining power of customers of ComfortDelGro offers a low threat level to ComfortDelGro. The transport sector depicts different unique characteristics, unlike other industries. In this sector, the customers have little bargaining power on the services offered. This is because the industry does not give the customers the freedom to a choice from a variety (Blythe, 2009). People have little freedom on the transport options to use because they are mostly dictated by the various factors such as speed, time, convenience and many others. Thus, it is clear that the customers of ComfortDelGro have little bargaining power due to the nature of the industry.

There is medium threat level from the possible business entrants. An analysis of the market area of operation for ComfortDelGro reveals that there are few chances of new entrants coming into the market. The fact is true because of the nature of the industry in Singapore and other countries. The infrastructure and the demographic size does not promote many players in the sector.  These scenarios in the transport sector make ComfortDelGro enjoy a bigger market share and also have an influence on the happenings in the industry.

Porter's Five Forces Analysis of ComfortDelGro's Market Position

The intensity of the competitive rivalry in the market offers a medium threat level to ComfortDelGro. The general transport sector in Singapore faces competition just like other areas. However, competition in the industry is different. The competition model allows different players to bid for certain routes of operation in the country. Some of the market competitors to ComfortDelGro who deal in general public transport include The AZ Logistic, The Prestige Company and DB Schenker Croatia among many others. Given the nature of the transport industry, where it operates in a duopoly line, these competitors have little competitive power forces on the operation of ComfortDelGro.

There are few substitutes for the services offered by ComfortDelGro. Many customers do not have the freedom to access the replacement services due to factors such as cost and convenience, thus, the threat is low. For example, some of the substitutes of ComfortDelGro's services is acquiring one's car. This is not easy for most people due to its price (Perkmann & Spicer, 2010). Another substitute can be riding a bike, which is not convenient for many people. Therefore, these factors have significantly reduced the threat level of substitutes in the market. 

Creativity, Innovation and Entrepreneurial Culture

Currently, the business environment in the transport industry is changing. This means that the ways that have been used will reduce their effectiveness over time. This necessitates the coming up of new ways of doing things (Booker, Bontis & Serenko, 2008). Creativity entails coming up with new ways to do things in the organization. It presents a chance for business to adopt innovative ideas which are critical for the better functioning of business enterprises (Boumans & Davis, 2010).

It is recommended that ComfortDelGro takes creativity and innovation in its activities. The company should always seek for creative and innovative ways and design a good implementation strategy of these innovative ways. Creativity and innovation are important and is likely to give the company a competitive advantage over other players in the industry (Cameron, 2014). The best .way for the organization to adopt creativity and innovation is through integration into the organizational culture. Therefore, ComfortDelGro should integrate the innovative culture into the corporate culture.

It is recommended that ComfortDelGro adopts sustainable ways in business. Currently, one of the world's concern is global warming. This is one of the sustainable ways that ComfortDelGro should give attention to these issues. People are now making efforts to adopt a lifestyle that has little effect on the environment (Mankiw & Taylor, 2011). Thus, it is essential for ComfortDelGro to consider adoption of eco-friendly in business.

The Importance of Creativity and Innovation for ComfortDelGro

Some of the environment-friendly approaches for ComfortDelGro as a player in the transport industry include the approval of vehicles which are eco-friendly and causes little pollution. This will increase the sustainability of the business. Therefore, when ComfortDelGro concentrates on the use of to friendly approaches, the company will increase its profit and business longevity.

Managing risk is important for the success of every business organization. Companies must come up with strategies to reduce risks in business. Implementing the innovative ideas into ComfortDelGro will call for a robust risk management system that will reduce chances of failure. Therefore, it is important that ComfortDelGro comes up with robust ways to manage risks in this business organization.

The success of business organizations lies in the effectiveness of their marketing strategies. ComfortDelGro should embrace STP marketing strategies for its success. The embrace market segmentation, Targeting and positioning of its transport services (John, Katherine & Jocz, 2012). This is a critical aspect that will increase the customer satisfaction because it will help the organization to deliver as per the client requirements. Thus, it is recommended that ComfortDelGro adopts these best marketing strategies in its operation. These ways are ways will help the company increase its customer base, make more profit and also increase its business sustainability.

Conclusion

In conclusion, various factors within the operating environment affects the running of ComfortDelGro. PESTEL analysis revealed that the organization is affected by some political, economic, social, technological, environmental and legal factors. Some of these factors affect the business positively while others negatively. However, ComfortDelGro seems to be favored by most of these factors in its operation. Also, Porter's Five Forces analysis of ComfortDelGro unveiled important information. It made it clear that ComfortDelGro has a higher bargaining power over its suppliers, there are little possibilities for the new entrants to enter the market and that the customers of ComfortDelGro have little bargaining power. Besides, the analysis revealed that the competition of ComfortDelGro in the industry is moderate and also that there is little possibility of entrance of a substitute product in the market due to its nature.

The understanding of the business environment is critical to the success of the ComfortDelGro. It provides vital information which can be used by the management to take the important direction that will help the business to grow. ComfortDelGro has potential to grow to another level with efficient administration and decision-making system. Additionally, it recommended that the organization incorporates creativity and innovation in its business, or gain competitive advantage. Besides, the company should employ sustainable approaches in business, manage the risks and adopt robust marketing strategies. These factors are critical for the success of ComfortDelGro.

References

Adam S., Wim, N. & Micheline, G. (2011). Entrepreneurship, Innovations and Economic Development. Oxford University Press, ISBN No. 978- 92-808-3093-4

Blythe, J. (2009). Key Concepts in Marketing. London: Sage Publications. ISBN 978-1-84787-498-6.

Booker L., Bontis N., & Serenko A. (2008). "The Relevance of the Knowledge Management and Intellectual Capital Research." Knowledge and Process Management. 15 (4): 235-246

Boumans, M. & Davis, B. (2010). Economic Methodology: Understanding Economics as a science, Palgrave Macmillan, pp. 129-133

Cameron, B. (2014). Management. Strategic Leadership Review, pp. 22-27.

Channel News Asia (2009). Drop in the public transport share in Singapore: transport survey. https://www.channelnewsasia.com/stories/singaporelocalnews/view/1013808/1/.html (accessed on Sept 20, 2017)

ComfortDelGro Corporation Limited. (n.d.). Retrieved from https://www.comfortdelgro.com.sg/

Friday, O. (September 2007). The Value of the Creativity and Innovation in Entrepreneurship. Journal of Asia Entrepreneurship and Sustainability, Volume III, Issue 2.

Gilsoo, C. (2010). "Smart Clothing Technology and the Applications: Human Factors and Ergonomics," CRC Pres, United States of America

Grant, K., Hackney, R., Edgar, D. (2010). Strategic Information Systems Management. Thomas Rennie

John A., Katherine E. & Jocz (2012). All Business is Local: Why Place Matters More than Ever in a Global, Virtual World. Penguin.

Land Transport Authority (2014).What We Do. https://www.lta.gov.sg/content/ltaweb/en/about-lta/what-we-do.html (accessed Sept 19, 2017)

Mankiw, N. & Taylor, M. (2011). Economics (2nd ed., revised ed.). Andover: Cengage Learning.

OECD (2010). Total unemployment rates as a percentage of total labour force. OECD Fact book 2010, OECD Publishing.

Osterwalder, A. & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, the game changers, and challenges. New Jersey: John Wiley.

Parmar, K. (2014). The IOU Project. In MA Gardetti & ME Girón (Eds.), the Sustainable luxury and social entrepreneurship - stories from the pioneers. Sheffield: Greenleaf Publishing.

 Perkmann, M. & Spicer, A. (2010). What are business, models? Developing a theory of the performative representations. In: Nelson Phillips, Graham Sewell, Dorothy Griffiths (eds.) Technology and Organization: Essays in Honour of Joan Woodward. Research in the Sociology of Organizations, 29, 265–275.

Sapuan, M. (2007). Managing Singapore’s Land Needs. Ethos.

UNESCO-UIS (2010). UIS Statistics in Brief: Singapore.

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