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PESTEL analysis of NTUC Fair Price

Describe the PESTEL and Porter’s five force analysis of the Fair Price enterprises or organization?

This paper described the PESTEL and Porter’s five force analysis of the Fair Price enterprises or organization. Indeed, NTUC Fair Price is the social organization of Singapore National Trades Union Congress (SNTUC). It was established in 1973 and Bobby Chin is the chairman of Fair Price organization. Fair Price is the one of the biggest supermarket chain in Singapore. The main nature of the Fair Price is that it moderates the cost of living and it produces several kinds of products such as clothing, bakery, general grocery, pharmacy, alcoholic beverage, snacks and dairy. This group has 100 supermarkets all over island with 50 outlets of stores in the island. (Mukhopadhaya, Shantakumar, & Rao, 2013) Further, in the 1983, NTUC merged to a larger co-operative which called as NTUC Fair Price Co-Operative Limited. The firm began a central distribution system to alter the way goods were distributed to stores to expand efficiency. In the 2009, Fair Price organization committed that they are launching first environment friendly supermarket at City Square Mall. In the 2003, the organization started new 13000 square fresh food distribution centers. (Pradhan, 2009) This is first supermarket in Singapore which build and operates own fresh food distribution centre.

Nowadays, the communication between business environment and organization become closer. So, we would discuss pestel analysis. These are elements of pestel analysis that are described below:

Political: This factor ensures the government plan such as percent of the trouble in the economy. This indicates that which kinds of product or services government wanted to offer their public. However, Singapore is the best nation as well as open country perspective. Singapore politician provides business friendly environment not only local level, but also international business and organization. Further, Fair Price retail organization is getting full help from Singapore government as well as retail sector policy perspective. Although, you should register with Singapore Companies Registrar (ACRA) before start the retail business. ACRA is a fast and simple process which involve in business and they can complete registration process within 24 hours. Lemon law is also beneficial for consumer which bought defective goods from retail outlets. (StaffReporter, 2012)

Economic: This is a significant element of pestel analysis. The good economy environment explains viability of business operation, especially in the tax rule, exchange rate, tariffs and economic recession. It doesn’t affect only on the customer’s needs, but create the change in the concord with suppliers and other kind people in the retail sector. Moreover, retail sales in Singapore raised 6.50 percent in the November quarter at 2014. Retail annual sales reported by the Statistics Singapore. A good economic environment increased the Fair Price growth in the retail sector in the worldwide market.

Social culture: Generally, social trends can express opportunity and threat for the several variety of retail sector organization. People opinion, lifestyle, belief, attitudes and values are one of the important things to gain the customers assurance and create strong image in the retail sector market. Although, Singapore is a multi-culture country where Chinese culture, Malaysian and Indian cultures are living together with the brand image and business plans as well. Singapore is becoming central point for worldwide tourist concern due to their culture specialty. (Brooks, 2013)

Political

Technology: Technology plays significant role in the pestel perspective. The technology development will create a significant change in service quality of product and customer satisfaction. In fact, quick acceptances of specific technologies offer rights to develop competitive advantages for Fair Price. Singapore Deputy Prime Minister Tharman said that retail sector has become more productive over the last three years so retail sector leaders need to push tapping on technology to win customers and improve efficiency. (Jianyue, 2013)

Environment: Nowadays, global warming becomes a significant problem for people, industry and countries in the worldwide. Therefore, the green sector industry is the first concern which needs to their retail organization because there lot of garbage so they need to destroy the garbage without pollution. Singapore is the open nation in the worldwide as well as environment concern so it is helpful to make new policy which will be healthy for Fair Price environment perspective.

Legal: Singapore legal environment has been healthy for the abroad investment and create the good environment for the economic growth and development. (Brooks, 2013) In the regard of retail sector, Singapore has a apparent legal system to protect responsibility and benefit of both customer and the firms. Therefore, it is essential for Singapore retail sector to keep continuous change in the policy of the Fair Price organization.

Michael E Porter is the professor at Harvard Business School which created a framework for determine the organization competitiveness in the specific market. This framework is not only good for initial stages of retail sector Fair Price organization, but also evaluate the attractiveness of the whole market condition. It focuses on business competencies which provide benefit over the competition. Competition is the essential part of every sector of organization. It provides a technique for business planner to help him to refocus and strong field where organization may have express their potential weakness and exploit those field where they have strength in the competitive market. These are Porter’s analysis which depicted the competitive environment:

Intensity of rivalry among competitors: It is most significant elements in this porter’s analysis which affects on the Fair Price operation. Fair Price organization faced strong competition from other retail organization such as Giant Singapore, Sheng Siong and Cold Storage. However, it is facing competition not only Asian countries, but also all over the world retail sector organization. It is facing competition from growth rates, economics of scale and information complexity concern. Economic of scale mean reduction of per unit price by increase in production volume. Fair Price retail organization main nature is to produce low price product or service with high quality. (Lim, 2009)

Threats of new entrants: Fair Price organization is the famous outlets for not only visitors, but also the entrepreneurs in the retail sector. Therefore, it is essential for Fair Price that produces quality service because there was high competition in the retail sector, especially in the global competitive market. Their competitive organization is providing very attractive facilities such online shopping with discount and home delivery services. So, it is necessary for Fair Price organization to change their policy and connect with consumer that what is their needs or desire.  

Economic

Threats of substitute: Threats of substitutes means the availability of a product or services which consumer can buy instead of the industry’s product. A substitute product means a specific product which offers by the other firms in the future. (Hines, 2013) In the regard of future perspective of the product competition, if any other company generates same produce which already existing in the Fair Price Company. Then, how Fair Price will handle from their competitors so they need to maintain quality with low price so it will be very difficult in the future organization to produce same kinds of product with quality and low cost because any initial company have to spend many money in the advertising and promotion so it is difficult to produce quality product with low price.

Bargaining power of suppliers: Suppliers mean who supply the firm needed product such as equipment and material. Indeed, most of firms have several suppliers, especially in Fair Price firm where the bargaining power of suppliers is affected competitive position. Thus, Fair Price firm should maintain good relationship with their suppliers those provides raw material, equipment and labor power because if supplier provides raw material and labor in high cost then Fair Price cost will increase then it will be difficult for Fair Price organization to compete with their closest competitors. (Mukhopadhaya, Shantakumar, & Rao, 2013)

Bargaining power of customers or buyers: Buyers are the king of any organization. But sometimes, we can say that buyers have high bargaining power. Thus, it is difficult for supplier that gets profit from them. Moreover, the bargaining powers of the retail customers are very high in the Fair Price organization due to lot of variety available for customer in the market. So, we need to evaluate the variety of customer such as age groups, interest and social status. (Lim, 2009)

Conclusion & recommendation

From the above discussion, it can be concluded that clear policy, pestel analysis and porters five forces as well as high ability to adopt the technology in Fair Price organization supports it to maintain its competition position in the all over the world market. Further, based on external analysis (finding the trends of market, strategic doubtfulness and strategic choice, opportunity and threats) of the NTUC Fair Price organization, our recommendation would be followed below:

  • NTUC Fair Price Company needs to maintain its high quality and stay on the competitive market in the worldwide, despite of recession time in the world economy. Fair Price Company should dominant the international field which will create a foreign investment. (Lim, 2009)
  • Fair Price organization should maintain competitive market by providing good service as compared to its closest competitors such as Sheng Siong and Giant Singapore.
  • Fair Price should expand their global networks.
  • They should increase their decision making model which provides speed in their growth concern. It is essential to give a license to middle management and employee that react quick to business threats and to efforts new areas of opportunities to move the business growth. (Mukhopadhaya, Shantakumar, & Rao, 2013)
  • Fair Price must constantly improve their organization growth and development. (Lim, 2009)

References

Brooks, C., (2013). PEST Analysis: Definition, Example & Templates. Retrieved from: https://www.businessnewsdaily.com/5512-pest-analysis-definition-examples-templates.html

CPDD, (2008).  Elements Business Skills. Singapore: Pearson Education South Asia.

Gwee, J., (2013). Case Studies in Public Governance: Building Institutions in Singapore. USA: Routledge.

Hines, J., (2013). Threat Of Substitutes (One Of Porter’s Five Forces). Retrieved from: https://strategiccfo.com/wikicfo/threat-of-substitutes-one-of-porters-five-forces/

Jianyue, X., (2013). Technology The Key To Raising Productivity In Retail Industry. Retrieved from: https://www.todayonline.com/singapore/technology-key-raising-productivity-retail-industry

Lim, P., (2009). Chronicle of Singapore, 1959-2009: Fifty Years of Headline News. Singapore: Editions Didier Millet.

Mukhopadhaya, P., Shantakumar, G., & Rao, B., (2013). Economic Growth and Income Inequality in China, India and Singapore: Trends and Policy Implications. USA: Routledge.

Oon, H., (2008). Singapore. UK: New Holland Publishers.

Pradhan, (2009). Retailing Management: Text and Cases. USA: Tata McGraw-Hill Inc.

Spulber, D., F., (2007). Global Competitive Strategy. USA: Cambridge University Press.

StaffReporter, (2012). What You Need To Know About Singapore’s “Lemon Law’. Retrieved from: https://sbr.com.sg/retail/news/what-you-need-know-about-singapore%E2%80%99s-%E2%80%9Clemon-law%E2%80%9D

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