Strategic Management Report an External Environment Analysis 1Strategic Management Report an External Environment AnalysisSubmission: 18/06/01!"or# count: $1!0 %or#s &ntro#uction 1/00 'ES(E) 80/800 'orter*s +ive 6,,/600 Recommen#ations/-onclusion ./0/.00Strategic Management Report an External Environment Analysis Strategic Management Report an External Environment Analysis(1is essay %ill provi#e t%o aspects o2 environmental assessments un#erta3en on 800 Super 4ol#ings )imite# 58006: a macro7environmental 'ES(E) analysis$ an# an in#ustry analysis using 'orter*s +ive +orces o2 1o% 800 2airs in to#ay*s competitive environment8800 Super Holdings Limited800 is a local integrate# environmental solutions7provi#er company %it1 1umble beginnings in 1,86 be2ore its &'9 listing on t1e S:;7-atalist in ect ( the &ransporting# ;eighing ( moving of ;astes 8Source: HEA8Strategic Management Report an External Environment Analysis ,Environmental(1e option o2 using lan#=lls to contain %astes is not a sustainable an# viable option 2or Singapore %it1 its lan# scarcity an# t1e amount o2 %aste generate# by a rapi#ly increasing population8As suc1 an a#vance# "M solution %as 2ormulate# to minimise lan# usage8&n 01.$ %it1 08!tonnes o2 %aste generate#$ 60? %as c1annele# into recyclable materials$ /8? %as incinerate# 7 %1ic1 provi#e# /? o2 Singapore*s electricity nee#sA an# only ? %ent to t1e Sema3au lan#=ll8(1is is part o2 Singapore*s :reen 'lan 5S:'6 01 multi72acete# approac1to minimise %aste t1roug1 t1e /RsA an# an aim to%ar#s a Mero lan#=ll 5HEA Singapore$ 00/68800 aligne# early to t1e government*s plans an# 1as capitalise# %ell on t1e %aste recycling portion to%ar#s environmental sustainability resulting in economic a#vantages8Illustration / 1art ofSingapore5s ?reen 1lan# the +!s ' !3@A$3# !3AS3 ( !3$9$L3 and 1ac:aging 4greement 8Source: HEA8 )egal(1e "M in#ustry in Singapore is 1eavily regulate#8+rom t1e =rst S:' in May 1,, to its revision in 00A la%s$ regulations$ policies an# goals %ere establis1e#by HEA to revamp an# set in#ustry stan#ar#s8By intro#ucing a Hational Recycling 'rogramme an# creating a 2rame%or3 2or sta3e1ol#ers to a#opt t1e /Rs initiative alongsi#e a%areness campaigns targete# at in#ustry$ community an# sc1ools$ Singapore 1as impressively increase# its recycling eEorts to 60?8HEA also targets t1e %astes at source in an eEort to%ar#s %aste minimiMation Strategic Management Report an External Environment Analysis 10an# 1as initiate# a Foluntary 'ac3ing Agreement %it1 in#ustries to re#uce pac3aging %astes8 16!&3!5S 7IB3 76!$3S 404L9SIS'orter*s +ive %ill be use# to analyse 800*s pro=tability by un#erstan#ing t1e competitive 2orces an# t1e current in#ustry structure in t1e "M local mar3et 5Iat1erine arline$ 01!68(1reat o2 He% Entrants 7 )9"Barriers7to7entry is strong #ue to several 2actors8:overnment regulations: t1ere are only 2our '"- license# companies in Singapore$ an# t1e exten#e# lengt1 o2 contracts a%ar#e# in bot1 t1e '"- an# &'- sectorsA ma3es it #iNcult to enter84o%ever$ t1is ma3es it 1ar#er an# more crucial 2or 800 to gain an# cement mar3et s1are as losing a contract means a %ait7out perio# o2 seven years 5HEA$ 01!684ig1 capital reDuirements: t1e business reDuires speci=c$ specialise# 1eavy assets ma3ing it #iNcult 2or ne% competitors to enter8 Economies o2 scale: in or#er to be pro=table$ companies reDuire scale 5HEA$ 01!6A t1is severely limits entry 2rom smaller players8Bran# i#entity: as compare# to t1e ot1er maKor players in t1e "M mar3et$ 800 lac3s a strong bran# presence$ buil#ing up on t1is %ill 1elp increase consumer a%areness an# 1ence mar3et s1are8(1reat o2 Substitutes 4&:4(1ere is consi#erable t1reat 2acing 800 as explaine# by t1e 2ollo%ing8Strategic Management Report an External Environment Analysis 11'ropensity 2or substitution an# inclination to c1ange: alt1oug1 t1ere is no #irect substitution 2or "M services$ t1ere is little #iEerentiation bet%een t1e maKor players8As suc1$ #ecision ma3ers are not boun# by bran# loyalty8(1ere are alsono strong opposing 2actors to c1ange provi#ers as t1e services provi#e# are basican# easily #uplicable across t1e maKor players8S%itc1ing costs an# price competition: as t1e in#ustry is 1eavily structure# an# regulate#$ t1ere is little resistance to s%itc1 provi#ers8Also as t1e t1reat is 1ig1$ 800 is limite# in its ability to set t1e prices it %ants 5HEA$ 01!68As suc1$ i2 800 cannot control labour an# #isposal costs its t%o biggest expensesA t1e bottom line %ill be aEecte# 5800 Super$ 01!68)ong term$ t1is limits its ability to lo%er pricing an# t1ere2ore #ulls its e#ge over its competitors in t1e ten#er 2or subseDuent contracts8Supplier 'o%er 7 M9GERA(E)> 4&:4Bargaining po%er o2 suppliers is to%ar#s t1e 1ig1 si#e base# on t1e 2ollo%ing 2actors8)abour supply cost: t1e business relies intensively an# 1eavily on blue7collar manpo%er %1ic1 is curtaile# because o2 t1e 2oreign labour restriction an# t1e reluctance o2 t1e local populace to be employe# in t1is in#ustry 5Bloomberg$ 01!68)an#=ll$ "(E an# MR+ suppliers: 800*s next big tic3et expense is in t1e #isposal o2 %astes c1arge# by t1e 2our "(E plants 5HEA$ 01!68As t1ere are only t%o operators 7 alt1oug1 regulate#$ suppliers are in position to set terms$ availability an# prices8Since t1ere are no current alternatives t1at 800 can s%itc1 to$ t1is aEects pro=tability8 (1is ris3 is migrate# slig1tly 1o%ever$ as 800 1as its o%n Strategic Management Report an External Environment Analysis 1MR+s$ an# is t1ere2ore able to generate maximum income 2rom t1e sorting o2 %astes into recyclable materials 5-orporate pro=le$ 10.68&able / 6nl" , Waste'to 3nerg" (W&3 1lants for Waste @isposal and Incineration in Singapore"aste7to7Energy 'lants 9perate# by Gisposal -osts per tonne1 (uas &ncineration 'lant 5(&'6 HEA @00 (uas Sout1 &ncineration 'lant 5(S&'6 HEA @00/ Seno3o "aste7to7Energy 'lant 5S"(E6 Ieppel Seg1ers @81 5only plant not in (uas6. Ieppel Seg1ers "aste7to7Energy 'lant 5IS('6Ieppel Seg1ers @00Source: -ompany$ HEA$ &E Singapore$ Ieppel Seg1ersStrategic Management Report an External Environment Analysis 1/Buyer 'o%er 7 M9GERA(EBargaining po%er o2 customer is evene# out by bot1 1ig1 an# lo% 2actors8)o%: t1e '"- an# &'- sectors an# contract a%ar#s are governe# by HEAA 1ence buyers #o not exert muc1 bargaining po%er over t1e c1oice o2 provi#er8Also$ t1ey are #ivi#e# into groups o2 1ig1 concentration in essence HEA is t1e sole #ecision7ma3er8+urt1er$ 800 as a recogniMe# 1ome7gro%n =rmA is supporte# rea#ily by t1e government84ig1: t1e commercial an# in#ustrial mar3ets on t1e ot1er 1an#$ 1ave greater po%er over t1e service provi#ers as t1ey 2all un#er t1e :eneral "aste -ollection 5:"-6 category %it1 a %i#e range o2 c1oice8(1ere is also little #iEerentiation in t1is in#ustry since t1e services oEere# are stan#ar#$ resulting in lo%7s%itc1 costs8&ntensity o2 rivalry 7 M9GERA(E-ompetitive rivalry: is lo% in t1e '"- an# &'- mar3et %it1 Singapore #ivi#e# into 6 an# 8 sectors$ an# only t1ree competitors respectively 5HEA$ 01!6A %it1 eac1 player 1ol#ing consi#erable mar3et s1are8(1e commercial an# in#ustrial mar3ets are 1o%ever 2ragmente#$ an# competition can be intense8Exit barriers: since exit barriers are signi=cant$ t1is intensi=es t1e competition8800 must 2ocus more on its mar3eting eEorts to set itsel2 apart an# give it a bigger competitive e#ge over ot1er players8Also$ 800 can ta3e a#vantage o2 its current mass volume an# asset7base$ by negotiating 2or better prices %it1 suppliers8Strategic Management Report an External Environment Analysis 1.!3$6MM30@4&I60S9HE84al2 o2 800*s expenses are a result o2 labour costs8(1ere2ore 800 s1oul# loo3 into 1o% tec1nological a#vancement an# a continual revie% o2 operational routines can improve systems an# processes to increase pro#uctivity an# eNciencyA t1ere2ore easing labour reDuirements8 800 s1oul# also pay 1ee# to 1aving a 2antastic 1uman resource management system in place$ an# place emp1asis on maintaining a goo# culture an# %or3 environment to retain eEectivepersonnel8("98800 s1oul# see3 aggressive expansion into bot1 t1e cleaning an# 1orticulture in#ustries$ so as to soli#i2y its business #iversi=cation an# create sustainable income in t1e local mar3et8Also$ alt1oug1 800 re7bran#e# its image to loo3 cleaner it nee#s a revamp to 2ocus on a stronger bran# i#entity t1at t1e #ecision7ma3ing millennial generation o2 customers can relate %it18 & also recommen# capitalising on t1e 2act t1at 800 is a 1ome7gro%n =rmA an# s1oul# increase its presence exponentially by volunteering to participate in national events %it1 %i#e coverage li3e HG'8+urt1er$ 800 can capitalise strongly on its one7stop environmental solutions to merge t1e various operations cleaning %it1 recycling eEorts$ into creating incentives 2or #ecision ma3ers to c1oose 800 over its competitors8(4REE8800 must continue to cast its sig1ts abroa# to create anot1er income stream as t1e local mar3et is limite# an# saturate#8Also$ i2 800 %ere to lose a '"- or &'- sector it %oul# be severely aEecte#8As suc1 %it1 pro=ts an# income secure# 2or t1e next 2our to =ve years$ 800 must aggressively see3 to #iversi2y itsport2olio8Strategic Management Report an External Environment Analysis 1!+9JR8S1oul# 800 be able to 2urt1er re=ne t1e process o2 sorting recyclables$ revenue 2rom t1e sale o2 recyclable pro#ucts an# expenses 2rom t1e #isposal c1arges arising 2rom incineration costs at "(E plants %oul# enable 800 to be more pro=table8+&FE8"it1 HEA*s &nnovation 2or Environmental Sustainability +un#$ 800 s1oul# con#uct 2easibility stu#ies to ma3e 2urt1er improvements in tec1nology an# ta3e a serious loo3 into t1e avenue o2 #eveloping a "(E plant8 $60$LASI60&n vie% o2 t1e above analysis$ 800 1as emerge# as one o2 t1e lea#ing %aste management companies in Singapore8(1is 1as been ac1ieve# 2rom t1e nimbleness o2 t1e lea#ers1ip in i#enti2ying an# aligning %it1 t1e external environment an# its Lui#ity in a#apting to c1anges84o%ever$ 800 must remain vigilant in or#er to maintain its strategic competitiveness8As o2 no%$ 800 is set 2or soli# returns in t1e next 2our to =ve years but it nee#s to secure anot1er mar3et to create sustainable gro%t1 2or t1e company to mitigate t1e ris3s o2 t1e '"- an# &'- mar3ets s1oul# t1ey 2ail to be re7contracte# or t1e policies s1i2t to allo% more entrants into t1e mar3et8