PESTLE Analysis And Porter’s Analytical Framework For NTUC FairPrice In Singapore

NTUC FairPrice: Company Overview

Discuss about the Learning Environment In Singapore Primary Science.

In the contemporary global business scenario, with more integrated, inclusive and inter-connected business relations of the different countries and with more companies expanding their business in different markets and geographical domains, the level of competitions and fight for sustainability have been continuously increasing for all types of industries across the globe (Wetherly, 2014).

In such a scenario, it thus becomes extremely important for different business organizations, to maintain their productive and cost efficiencies as well as relevance and popularity in the market, in order to gain competitive edge over their rivals and to earn long-term profitability, prosperity as well as sustainability (Voegtlin, Patzer & Scherer, 2012). For this it becomes immensely significant for the companies to analyse their internal and external characteristics as well as the business and overall environment in which they operate.

Keeping this into consideration, the concerned report tries to discuss about the company, NTUC FairPrice operating in Singapore, thereby analysing the current conditions of the company and the environment in which they operate as well as the aspects of competition which the same face in the contemporary economy of Singapore.

The NTUC FairPrice is one of the largest players in the supermarket industry of that of Singapore. The chain is a co-operative of the NTUC (National Trades Union Congress) and currently has in operation, nearly 100 supermarkets all over the country. Founded in 1973, the company mainly targets to provide basic amenities and necessity commodities to the population of the country at affordable prices. It moderates the living costs of the population of the country and mainly supplies products like grocery, bakery, clothing, snacks, dairy, pharmacy, beverages (alcoholic as well as non-alcoholic) and other daily consumables at affordable ranges. In 1983, the company merged to form a larger cooperative, the NTUC FairPrice Co-operative Ltd. and gradually gained efficiencies and economies of scale in terms of distribution of goods to stores (Fairprice.com.sg, 2018). In 2009, the organization announced the launch of the first environment-friendly store at the City Square Mall. NTUC FairPrice is known for being the first ever supermarket in the country, building and operating their own distribution centres for fresh foods.

Much of the operations of the concerned company depends on the dynamics which the same faces in the macro-environment of the region where the company operates. Taking this into account, the following section shows an extensive PESTLE Analysis for the concerned company to capture the environmental aspects and their implications on the operations of the NTUC FairPrice.

PESTLE Analysis for NTUC FairPrice

The PESTEL analysis helps in analysing how the different factors- political, social, technological, economics, environmental and legal, present in the operational domain of the business organizations, contribute in their business frameworks and outcomes. For NTUC FairPrice, the same can be seen to be as follows:

Political Factors- The political instabilities present in the countries affect businesses as a whole, negatively. However, NTUC FairPrice, in this aspect, operates in one of the most politically stable countries across the globe, Singapore, whose government is known to be one of the most pro-business ones and also the most trade-open and liberal government. Being a FairPrice initiative in the retail sector, the concerned company receives much support and help from the government of the country (Tremewan, 2016). However, the government of Singapore is strictly vigilant when it comes to overall welfare of the residents and laws like that of Lemon law and others exist, for which the company needs to be cautious about the quality of commodities and services which it provides.

economics Factors- Much of the profit and sales of different companies depend considerably on the economicsconditions of the regions where they operate. In case of NTUC FairPrice, this aspect can be seen to have remained positive over the years. Singapore, being generally among the most impressively developing and emergingly dominant economies in the contemporary global framework, experiences high levels of GDP, which percolates as higher economic abundance and aggregate demand of the populations. The fruits of the same can be seen in the recent 6.5% growth in the retail sector (2014), which also includes the NTUC FairPrice, which has been expanding their operations over the years (Metcalfe, 2018).

Social Factors- Singapore is one of the most globally inclusive societies, with people from all attitudes, cultures, beliefs and from all countries residing in the country, thereby giving it aa multi-cultural outlook. However, the Chinese, Malaysian and Indian cultures are the dominant traits in the country and thus the company. Singapore also attracts tourists from all parts of the world. To cater to the socially diverse population, the concerned company needs to maintain its global and diversified product supply and brand image.

Technological Factors- With the development of the technological and infrastructural frameworks, the way of living of people and their buying habits have also been changing. In this context, Singapore is one of the most technologically progressive countries, with the customers fast adapting to online methods of shopping and home delivery system, which the concerned company needs to take into consideration.

Political Factors

Environmental Factors- In the recent periods, with high environmental degradation, the countries across the globe have started emphasizing on environmental protection and usage of green methods in every aspects. Singapore is no exception and the government of the country puts considerable emphasis on these aspects. NTUC has also been incorporating these aspects in their operations and they are the first environment-friendly supermarket in the country (Goh, 2014).

Legal Factors- The country in which NTUC operates has a productive and highly efficient legal framework, with robust customer as well as producer welfare increasing legal frameworks. The policies regarding the Fair Price Organizations specifically aims to increase the prospects of the same along with aids for them to achieve their goals, which can be expected to benefit the NTUC FairPrice also.

The competitiveness of the concerned company and its comparative advantages and disadvantages can be analysed with the help of the Porter’s Analytical Framework, which takes into account the components to analyse the overall competitiveness of the business organizations, which are as follows:

For NTUC FairPrice the same can be seen to be as follows:

Industry Rivalry- In spite of being one of the largest players in the supermarket industry of Singapore, the NTUC FairPrice faces considerable competition from the companies like that of Sheng Siong, Giant Singapore as well as that of the Clod Storage. The company also faces from the international players who targets the market of Singapore, with huge cost efficiencies and economies of scale, for which NTUC needs to keep on increasing its cost and productive efficiencies.

Threats of new entries- One of the primary competition which the company faces in Singapore is in terms of technological efficiencies. The competitors of NTUC, in spite of being small in size, have been upgrading their technological aspects and many new firms have also been entering in this sector, with facilities like that of online shopping, home delivery services. Apart from that the increased usage of internet has also increased the access of the population of the country to buy from various international organizations, thereby intensifying the level of competition (McNeill, 2013).

Threats of substitutes- The company, being in operations for many years, enjoy a huge and loyal customer base in the country itself. Being reputed for providing good quality products at affordable prices and also enjoying economies of scale, the threat of substitutes of same quality in same price levels is less.

Economic Factors

Suppliers’ bargaining power- The NTUC FairPrice has a huge supply chain framework with many suppliers enjoying long-term relationships with the companies. In the recent period, although there exist many other supermarkets and some may give higher economic benefits to these suppliers, however most of them choose to stick to the concerned company due to the long-term sustainability and existence of the same in the market (Dwivedi et al., 2012).

Customers’ bargaining power-  Although there exist many players in the supermarket industry of Singapore, however, NTUC FairPrice enjoys strong consumer loyalty due to their affordable ranges, high quality and varieties of products provided. However, given the entry of technologically advanced and credibly competing ones in the recent period, the company can experience higher competition in terms of increased bargaining power of the consumers in the coming years.

Keeping the above aspects of the NTUC FairPrice into consideration, the following recommendations can be potentially benefiting for the same for increasing their profitability, prospects and long-term sustainability:

• The company needs to maintain its competitiveness in terms of high quality of the products and services in affordable prices, irrespective of the temporary economic fluctuations (like recessions or high inflations) in order to increase their long-term sustainability.
• There are many new competitors entering the country like those of Gian Singapore and Sheng Siong as well as small sized ones who have a higher technological framework. For this the company needs to upgrade its technological framework.
• The company is overtly dependent on the market of Singapore, which makes its profit extremely subjected to the economic turmoil of the country. To increase their prospects and ensure steady flow of revenue the company need to expand its operations in other geographical domains.
• NTUC FairPrice can also increase their area of service and types of products from the existing ones in order to attract more customers, especially the new age ones.

Conclusion

As can be seen from the above discussion, the NTUC FairPrice Company, being one of the largest supermarkets, in the economy of Singapore, has been experiencing considerable growth and increase in its sales. The company operates in an overall stable and highly commercial environment of Singapore, which in turn has facilitated its growth with time. However, in the recent period, due to increase in the number of competitors in the supermarket industry in the country as well as with the population adapting fast to the new age technologies, the concerned company needs to upgrade its technological framework in terms of incorporation of new service delivery processes and also needs to expand their businesses to other countries along with maintaining their product quality and reputation in order to achieve greater economic benefits and growth.

References

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Dwivedi, A., Merrilees, B., Miller, D., & Herington, C. (2012). Brand, value and relationship equities and loyalty-intentions in the Australian supermarket industry. Journal of Retailing and Consumer Services, 19(5), 526-536.

Fairprice.com.sg. (2018). FairPrice: Online Grocery Shopping & Delivery in Singapore. Retrieved from https://www.fairprice.com.sg/

Goh, S. F. (2014). The learning environment in Singapore primary science classrooms: The ideal and the real (Doctoral dissertation, Curtin University).

McNeill, L. (2013). Sales promotion in Asia: successful strategies for Singapore and Malaysia. Asia Pacific Journal of Marketing and Logistics, 25(1), 48-69.

Metcalfe, S. (Ed.). (2018). Evolutionary theories of economic and technological change: present status and future prospects(Vol. 44). Routledge.

Strategicmanagementinsight.com. (2018). The 5 Powerful Forces that Impact your Profit. Retrieved from https://www.strategicmanagementinsight.com/tools/porters-five-forces.html

Tremewan, C. (2016). The political economy of social control in Singapore. Springer.

Voegtlin, C., Patzer, M., & Scherer, A. G. (2012). Responsible leadership in global business: A new approach to leadership and its multi-level outcomes. Journal of Business Ethics, 105(1), 1-16.

Wetherly, P. (2014). The business environment: themes and issues in a globalizing world. Oxford University Press.