Challenges Faced By Riverwood Integrated Logistics Solutions In The Singapore Market

Problem Definition

Riverwood Integrated Logistics Solutions is a logistics company whose mission is to provide a compact and extensive solution for logistics that is good for the business organizations. The vision of Riverwood Integrated Logistics Solutions is to become the most preferred partner who provides logistics services all over the world. The values of Riverwood Logistics are reliability, responsibility, personality and responsiveness (RIVERWOOD 2018). They aspire to deliver good quality service to their clients so that they are able to rely on the company for their future services. They have global partners all over the world and they offer delivery services to their clients globally. However, Singapore is their home country and they have been operating in the country since their inception. Their main motive is to make the clients’ delivery on time and also maintain a proper relation with them.        

The logistics market in Singapore has seen a vast growth in the demand in operational support. This has led to emergence of several new logistics companies with the innovation of new concepts for operations. This increase in the number of companies have led to the increase in challenges that are being faced by the Riverwood Logistics Company. The main challenges that are faced by the logistics organization are cost competitiveness, maintaining their standard of service quality, productivity and gaining visibility for their organization across the border globally and understanding the complex situation of the region. Firstly, cost competitiveness means that the company has to set the cost in such a way that they are able to exist in the market. Riverwood has to set the prices of their services cheaper than that of the other logistics company in the region to attract more customers. However, a very cheap price would also lower the profit margin of the company and finally would suffer loss or no profit at all (Christopher 2016). On the other hand, a high pricing would drive away the customers towards another logistics company and this would lower their position in the market no matter how good their services are. Hence, this is a major challenge that is faced by Riverwood logistics as they have to set their service cost just right to incur profit as well as attract customers. Secondly, the company has to maintain the quality of their services if they want to retain their old customers and bring in new ones. This would only be possible if the company is able to meet the demands of their customers and act accordingly. The company has to conduct an intensive research to understand the growing demands of the market and enhance the quality of their services. This would ensure their foothold in the market (Fernie and Spark 2014). However, this is another challenge that is being faced by the company to keep themselves updated with the continuously changing market and cater to the demands of the customers. Moreover, the low price of the services of the company should not have any effect on their services. This would create a negative impact on the customers as a low price mixed with bad service quality would downgrade the brand of the company. Thirdly, productivity is a very big issue or challenge in the logistics sector. This challenge is being faced by Riverwood Logistics as well as it is necessary to maintain the productivity of the company to provide the best services. The company has to recruit skilled and professional workforce as this workforce would ensure that the services are being provided at the right time in the right way. The lack of proper skilled labour for the industry becomes an issue for the company to find the right individuals for the job (Waller and Fawcett 2013). This gives the company a huge setback in terms of skilled labours. Lastly, the company has to find ways so that they can gain visibility for their company across the borders of other countries. This would ensure that the name and brand of the company spreads to other regions. The visibility of the company would help in the increase in the customer base and also increase in the company’s profits. However, this is not always possible as the company would have to have a thorough understanding of the region that they are about to penetrate. If the company is not able to gain full knowledge of the new market then the venture would fail drastically. Hence, the management of the company should have all the required information about the region that they have planned to enter (Gutierrez et al. 2015). The above mentioned problems are the ones that have a huge impact on the performance and brand equity of the company. However, there are other small challenges that the company might face during the tenure of its operation. These challenges have to be solved by the company on a regular basis so that they do not eventually turn into big challenges.               

External Analysis of Partner Organization

PESTEL Analysis

1. Political – Singapore has a very low political risk. The PERC which is the Political and Economic Risk Consultancy have stated that the country truly has one of the lowest political risks as compared to others. The country has a good standard of living and enjoys a very democratic political stability. This has enabled the country to be open to many business opportunities. The government supports the establishment and growth of all kinds of businesses which will have a benefit on the country (Düerkop and Huth). This is beneficial for Riverwood Logistics as they will be able to operate in a very stable and politically supportive environment. They would be able to successfully expand their business and cater to the needs of the people in the country as they will get the full support of the government. They should contribute to the betterment of the society and the country through their logistics services.
2. Economic – Singapore has a free market economy which develops at a very fast pace. The country has one of the highest per capita income in the Association of Southeast Asian Nations (ASEAN). Due to the lack of corruption in the environment, companies are able to operate freely. There is a good availability of knowledgeable and motivated professionals who can contribute to the business environment and help to develop the economy of the country. The government supports the businesses to contribute to the growth of the economy (Zalengera et al. 2014). This is the reason that companies are able to flourish and grow in the country and contribute majorly to its economic development. The logistics industry is at a growth and this has enabled Riverwood Logistics to develop their skill base by hiring people who have the right knowledge and skills to contribute to the logistics company and help in their development. The company would then be able to give their contribution to the economic benefit of the country.    
3. Socio-cultural – Singapore is a traditional country which till date have been following their traditional values and ideals. Even though the younger generation of the country have adopted to the western culture and values, however, the country still gives major importance to their old values. The country always strives to fulfil their desires and works hard for the same agenda so that they are able to achieve what goal they have set for themselves. The businesses in the country therefore are able to get customers who possesses a high purchasing power (Saleem 2007). Riverwood Logistics sees this a good opportunity to generate more revenue from their customers who will be able to spend more money to get their desired services from the company. The literacy rate of the country is also very high which means that the company would be able to acquire good and educated employees who will be able to help the company grow with their knowledge base in the field.  
4. Technological – Singapore is a country which is very technologically advanced along which has also contributed to the advancement and the development in the lifestyle of the people of the country and their standard of living. The country have always given importance to technology and all of its innovations so that they are able to upgrade themselves like the other advanced countries. Internet plays a major role in the development of the country. It has made communication and connectivity an easy aspect which has helped to enhance the social networking scenario of the country (Shatskaya, Komaristaya and Kafian 2017). This had decreased the time and cost that a business spends in its operation and connection with other companies and customers. The technological advancement has helped Riverwood Logistics to gain a good stand in the country as it highly depends on technology in its operations. Technology has helped to reduce the operational costs and enabled a fast working environment in the company.  
5. Environmental – Singapore’s environmental condition is not favourable to businesses as well as for individuals. The Ministry of the Environment and Anti-Pollution Unit have strived to keep a good air quality and also maintain the other factors of environment. Singapore have also been declared as the country which emits the highest level of carbon dioxide. The main challenge in the urban areas of the country is its high level of pollution whose main contributor is transportation. Along with the air quality, the water quality of Singapore is not also very good (Ifezue 2015). There is a lack in the water resources in the country and they are dependent on Malaysia for their supply of water. Riverwood Logistics contributes more to this environmental pollution as transportation is its main work. This makes it somewhat a threat for the benefit of the country as they are not able to reduce the harm that their services are doing to the environment, rather they are increasing it with the fulfilment of their services.
6. Legal – The country depends majorly on the rules and regulations that have been set by the government. The regulatory, legal and business settings are mandatory to support the economic growth and the development in the businesses in the country. The country have always developed rules and regulations that support the necessary industries that should be made more prominent in the country. The government have always been supportive of any businesses that works for the benefit of the country and also for its development (Cureau 2016). Hence these rules and regulations are kept in place to ensure that no business would able to harm the country or take the help of any negative means to get benefit of their own. The company should also benefit but not at the expense of the country. Riverwood Logistics have to keep in mind that they follow all the rules and regulations that are being set for the companies related to the logistics industry.

VUCA is primarily used for analysing the external environment of a country along with mentioning the management issue faced by a business organization. As per the market scenario of Riverwood Logistics, it is observed that the company while delivering their customized logistic solution is facing several challenges. VUCA framework is evaluated for analysing the volatile, uncertain, complex and ambiguous situations that the company has to face while delivering the products to proper destination.

1. Volatile – Volatile is the quality of rendering change being rapid and significant. In a volatile market situation, the price of the commodities can rise and fall as per the situation of market. Riverwood Logistics delivers their services in Singapore and other geographic regions as well (Bennett and Lemoine 2014). Based on the market demand the business experts tend to change their pricing strategy. When the market craze of this company is high due to high demand of the service users, the organization intends to raise their product price for gaining sufficient profitability.           
2. Uncertain – Uncertainty is the situation which causes due to volatile situation. Due to the high price of products and services customers tend to show their reluctant attitude to purchase from Riverwood Logistics. This kind of uncertainty is unpredictable that ultimately hampers profitability in business (Nandram and Bindlish 2017). Riverwood Logistics in order to ignore this kind of unpredictable situations tends to make effective risk analysis so that the business experts can implement alternative strategy atone for overcoming the unpredictable situation.
3. Complex – Complexity is the phase of identifying the issues that the organization is facing in current market scenario due to which the business experts have to face complex situation in running the business smoothly in logistic market. The primary issues that is identified within logistic sector of Riverwood Logistics includes fluctuating product cost, transportation issue, and inefficiency in productivity (Lawrence 2013). Due to fluctuating product cost the organization is facing challenges in getting an effective response from the customers. However, transportation is a major issue that this organization has to face while shipping the products. They are not technologically advanced based on which the customers can get a track of placed order. As a result, customers intend to make telephonic call to the service providers of Riverwood Logistics. Customer service system is not effective enough in providing necessary feedback to the customers regarding their placing order. Eventually, Riverwood Logistics is facing immense challenges in delivering the services within stipulated time.
4. Ambiguous – Ambiguous situations rise when the business experts are unable to understand the situation with which they are going through. As per Riverwood Logistics’ business scenario, it is observed that existing employees are not compatible enough in handling advanced technology (Szpitter and Sadkowska 2016). As a result, the customers do not get necessary response regarding product shipping procedure. They are unable to track the product after placing an order. As a result, they have to face immense challenges after using the services from Riverwood Logistics. This kind of ambiguous situation hampers business image and reputation immensely.

Figure: VUCA analysis for making situational analysis of Riverwood Logistics

(Source: Lawrence 2013)

RBV Analysis

Research based view is the approach of achieving competitive advantage by finding out the sources of company instead of looking for external competitive environment. RBV approach is endowed with four major factors that include tangible, intangible heterogeneous and immobile. Tangible assets are considered as physical resources that the company has for proving effective services. The tangible assets with which Riverwood Logistics is surrounded with include building, lands, machinery, transport vehicles, physical equipment and capitals of the company (Szpitter and Sadkowska 2016). Intangible assets include brand reputation, trademark, intellectual property and organizational image. As per intangible assets, Riverwood Logistics is constituted with good effective brand reputation. The customers from different geographical boundaries tend to show their interest in receiving the services of Riverwood Logistics. Therefore, the business experts are not very restricted within specific geographical region of Singapore. The service has been spread out in multinational countries. As per intellectual resources, the organization has to improve their assets. For an example, the employees associated with Riverwood Logistics are not very much advanced in technology (Lin and Wu 2014). As a result, they have to face immense challenges in dealing with those customers who are technologically immensely advanced.

The structure of heterogeneous believes that skills, capabilities and resources that a particular organization possesses differ from one organization to another. For an example, Riverwood Logistics follows transformational leadership style at the workplace. As a result, the organization has to face immense challenges in hiring those people who are habituated with participative leadership style (Kim, Song and Triche 2015). Immobility is the approach which does not move from one company to another with the switching process of organization. Employees tend to switch their places from one organization to another but the reputation and brand loyalty of the company remains immobile. Reputation, image or any remark cannot be moved from one place to another.

Figure: Research Based View Analysis

(Source: Matsuno et al. 2016)

VRIO is one of the most significant frameworks of RBV model that intends to achieve on how an organization can gain competitive advantage based on the heterogeneous and immobile resources. Organizational resource or capability is constituted four major components including valuable, rare, costly to imitate and organized to capture value. 

1. Valuable – Resource becomes valuable if it can easily draw the attention of stakeholders, be it internal or external (Chae, Olson and Sheu 2014). By increasing brand image and reducing the product cost organization like Riverwood Logistics can increase their value of resources.
2. Rare – Some of the valuable resources are there within organization which considers as rare. When some of the companies have the same resource it becomes in the category of competitive parity (Kim, Song and Triche 2015). However, Riverwood Logistics is possessed with innovative inventory method based on which products are maintained very systematically.
3. Costly to imitate – For Riverwood Logistics the inventory method that organization tends to follow is very much difficult to imitate for its rivals.
4. Organized to capture value – The resources used within the organization of Riverwood Logistics are very much organized to capture its value in the logistic sector. That is the most important reason on how the company has expanded its entire business process in the global market.

Figure: VRIO Framework

(Source: Lin and Wu 2014)

Porter’s Five Forces Analysis

1. Competitive Rivalry – Rivalry among the competitors in the logistics industry comes in many forms. The competitors can bring about various cost structures and new services which can create difficulty for Riverwood Logistics. Since in the logistics industry there are various competitors, it is mandatory for Riverwood to bring changes into its business and integrate them into their operations (Grigore 2014). This would ensure that they are able to maintain their foothold in the market and are not downgraded by their competitors. The competitive rivalry in the logistics industry is high as there are various companies who offer the same logistics services. This is why Riverwood have to maintain their operations in such a way that they are able to deliver their services better than the other logistics companies in the country.
2. Threat of new entrants – The threat of new entrants in Singapore in the logistics industry is moderate as there are numerous logistics companies who are already existing in the country. This becomes hard for the new logistics companies to enter the market. Even if the companies are bale to enter the market they might fail to create their dominance in the market due to the presence of various logistics companies in the region (Bondarenko et al. 2017). Riverwood Logistics might be threatened by this threat that the new companies possess, hence they would have to maintain a strong foothold in the country and maintain their brand value as well.     
3. Threat of substitutes – The threat of substitutes in the country in the logistics industry is quite high because of the presence of numerous logistics company in the region. The logistics companies present give a tough competition to each other. Therefore, it is evident that if a customer is dissatisfied with one company then they might shift their preference to another company (Utami and Lantu 2014). Riverwood Logistics have to keep in mind that they should be able to maintain their quality of services so that they do not lose their customers to other logistics companies. They would also have to develop their quality of services to retain their old customers and gain new ones as well to increase their customer base and keep them involved in the operations of the company.
4. Bargaining power of customers – The bargaining power of the customers in the logistics industry is quite high as there is an abundance in the number of logistics companies in the country. Hence, it becomes easier for the customers to shift their company if they are not satisfied with their services or their demands are not being fulfilled (Sandberg 2013). Since the bargaining power of the customer is high, the customers can bargain according to their preferred price. The main responsibility of the company is to satisfy the demands of the customers and also maintain their profitability.  
5. Bargaining power of suppliers – The bargaining power of the suppliers in the logistics industry is moderate. Even though the number of companies are many, the suppliers of the company are very faithful to the company that they provide their services to (Soh, Wong and Chong 2015). The main suppliers of Riverwood are the ones who provide cars for the transportation that they have to do for their customers.  

Conclusion

It can be concluded from the above analysis that Riverwood Logistics has a very strong foothold in Singapore. Moreover, the logistics industry is in a stage of development which makes Riverwood Logistics a profitable and developing company at this stage. They would be able to cater to the needs of the clients and deliver special services to retain them. The different analysis that have been done in the above study would help them to overcome the challenges that have been  faced by the country and establish themselves to be a successful organization who operates according to the needs and desires of their clients. If the company is able to satisfy the demands of their clients then they will be able to have a good growth in the near future.

Internal Analysis of Partner Organization

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