SWOT and Porter’s Five Forces for Sheng Siong Essay

IntroductionGrowing up in a pig farm, the CEO Mr. Lim Hock Chee and his br some others have brought Sheng Siong assemblage Ltd to an over 800million food market place capital, capital of capital of Singapore Exchange listed supermarket chemical filament. The groups miser commensurate beginning in the form 1985, from its first store in Ang Mo Kio which surrounded by 5 other food market stores, has straightway expand to be the one of the largest supermarket chain in Singapore. Sheng Siong is publicly listed at the Singapore Exchange (SGX) on August 17, 2011. Since then, it grows to become a major(ip) supermarket chain in Singapore with a total sell argona of 400,000sq ft over 33 outlets island-wide. Sheng Siongs outlets ar designed to provide customers with both wet and dry shop options ranging from a wide assortment of heady, defy and chilled products, much(prenominal) as meat, seafood and vegetables to processed, packaged and preserved food products as thoroughly as general groceries.Over the past few twelvemonths, they have unquestionable a selection of house brands to offer customers alternatives with at ample savings. Sheng Siong has now over 400 products under their 10 house brands. With the long memorial and reputation for quality products at competitive prices, the Sheng Siong brand had become an string out up household name in Singapore. Widely recognized by consumers, Sheng Siong were awarded the Superbrand term by Superbrands Singapore since 2008 (Superbrands, 1994). Mission We strive to offer communities in which we enmesh quality products at reasonable prices together with good service in aver to create value to our customers Vision Our vision is to be the favourite(a) seller in the market, starting from Singapore and then further ashore. hit the books analysisStrengthsWeaknesses1. Strong brand companionship2. Experienced management1. unprotected to rent hikes and labour constitute hikes.2. Lack of a formal time figure OpportunityThreats1. Overseas expansion2. Untapped areas in Singapore1. Losing market share2. submit disruptionStrengthsStrong brand recognitionSheng Siong is among the pennant 3 supermarket chain in Singapore. Sheng Siong launched a television limn titled The Sheng Siong Show since year 2007 to further raise its profile amongst guinea pig audiences, on top of the customsal marketing mediums. Strong recognition by Singapore residents as a value-for-money supermarket chain. Awarded Superbrand status by Superbrands Singapore, a global organization that recognizes the most valued and exceptional brands, e real year since year 2008.Experienced managementSheng Siong is founded since year 1985 and focus only in retail calling in Singapore. Management of the group since then rests in the hold of the three founding Lim brothers Mr. Lim Hock Eng (Executive Chairman), Mr. Lim Hock Chee (CEO) and Mr. Lim Hock Leng (Managing Director). They have virtually 30 years of experience in groc ery retailing, equipped with in-depth knowledge of the industry in Singapore.WeaknessesSusceptible to rent hikes and labour terms hikesThe cost of renting and labour takes up 85% of Sheng Siongs operating expenses (Maybank KE, 2013) so it is very vulnerable to hikes on operating cost in order to keep up their low-cost system. The Singapore Government had increase the restrictions for hiring remote labour (Mom.gov.sg, 2013), which shove Sheng Siong, in which one-third of its 2600 employees are non-Singaporeans, in their operating cost. (Michelle Teo, 2013) In Maybank KEs research (2013), under the sensitivity analysis, an increase of 5% additional round cost would incurred 9% of shortfall in Sheng Siongs profit. According to Sheng Siongs Annual Report in 2012 and 2013, rental expenses had been increased from 1.095million to 1.693million, representinga much than 50% hike. In order to sustain the low-cost strategy, such(prenominal) rental hike issue had made Sheng Siong Group opened no wise store in year 2013, whereby they cannot find suitable and affordable blank to rent for expansion. Lack of a formal succession planThe founders, Lim brothers are holding more than 60% of the shares of Sheng Siong Group and in like manner on the top managing lays. (Annual Report, 2013) The inadequacy of a formal succession plan could prove to be a weakness in the long-run. The listing of Sheng Siong in the SGX had made internalization of some outside talents including Mr. Tan Ling San (Executive Director) and Mr. Wong Soong Kit (Finance Director) into the management ranks, in time if the Lim brothers decide to retire or step down originally a formal succession plan is put into place, it may lead to a potential loss of strategic direction.OpportunitiesOverseas expansionDespite the foreign markets are likewise dominated by major players, Sheng Siong readiness able to seek chances in overseas expansion, especially in neighbor countries such as Malaysia and Indone sia. The benefits of overseas expansion including increase brand value, find spick-and-span customers, seek for tax incentives and reduce excessive domestic, single market corporate trust and furthermore enjoy the robust economic development of the region of south-central East Asia. Especially in Malaysia, Sheng Siong has had various suppliers which relationships had been naturalised for decades, the expansion into the market is not impossible.Untapped areas in SingaporeThere are still more super inhabit areas in Singapore where Sheng Siong has no straw man such as Bishan, Tampines, Hougang, Sengkang and Bukit Merah. This means that Sheng Siong still has a lot of mode to grow its store network. Furthermore, Sheng Siong had commenced an e-commerce pilot bulge out in December 2013, in the Thomson vicinity to provide customers the comfort station of shopping groceries online via the website allforyou.sg. The possible success of this e-commerce project can reduce habituation on human labour, save cost on warehouse management and create newborn and better shopping experience of customers at their widget.ThreatsLosing market shareSheng Siong operates in a highly competitive environment where it faces intense contestation from other major super market shackles as well as traditional grocery retailers, wet markets and correct petrol kiosks. Its existing stores may face competition from new competitor outlets in their operating areas it may lose market shares in the area where new competitors outlets are open where Sheng Siong is absent. Sheng Siong has suffer zero expansion in retail outlets in year 2013, making it a crucial threat of losing market shares due to expansions of its competitors.Supply disruptionSupply disruptions arising from coarse weather conditions, force majeure events or inborn disasters might hit Sheng Siong because about 30% of its revenue (Ocbc is from the sale of fresh produce.Porters 5 forcesCompetitive rivalry gamySheng Si ong is in tough competition with major direct competitors such as NTUC FairPrice and dairy Farms Cold Storage and Giant, yet there are m all other smaller retailers in the market. The 4 major supermarket chain had a dominant market share of more than 85percent (Euromonitor, 2014) (Maybank KE, 2014), making the ancestry to be in a semi-consolidated industry. Supermarkets are having very low take aim of product differentiation. The retail sectors is growing steadily but slow. (Singstat.gov.sg, 2014) For the full year, retail sales in Singapore contracted by 4.3%, a puff from the 1.3% expansion in 2012, but supermarket sales grew by 4.3% at up-to-the-minute prices and 2.4% at constant prices during the same period, compared with an increase of 7.5% and 5.3% respectively in 2012. (Economic regard of Singapore, 2013) The increasingly intensive competition may result in debase sales and greater operating costs and have an adverse do on Sheng Siong.Threat of new appetizers rugged The big 4 supermarket chains took up to more than 85percent of the totalmarket shares in Singapore, thus becomes a huge rampart for new entrants to meet the excessive capital requirements into the harsh competition. A new entrant would have to achieve the economies of scale undeniable to compete on cost advantage with the major market players, thusly not an easy barrier to cross over. Branding is another barrier to entry.A new entrant would need to differentiate themselves with the big 4 and to attain identity through promotions and advertising which may incur super high expenses. The highly responsive to competition of the big 4 supermarket chains to sustain market share also makes the barrier higher for new entrants. New entrant also face disadvantage in lack of expertise and knowledge of consumer trends, as the big players had been in the melody for decades. Difficulties in accessing to distribution channels and locations is also an entry barrier for new entrant as Singapore is a matured market.Threat of fireman laid-backChains of convenience stores such as 7-eleven and Cheers are emerging in the market. Convenience stores are selling some Fast Moving Consumer Goods (FMCG) standardized dairy products, soft drinks and packaged food which also sold by supermarkets, thus become a substitute of supermarkets. Restaurants, kopitiams (coffee shop) and food centers are also substitutes for supermarkets. People may want to dine outside preferably than buy fresh meats, fishes and vegetable to cook at home. Pharmacies which are selling medicine, personalized care, and baby care and toilet / pocket papers are also a substitute of supermarket. Traditional wet markets are considered another substitute for supermarket business. Newly emerged online groceries shopping brings threat of substitute to supermarket also. bargain occasion of customer HighSheng Siong is facing intense competition from traditional grocery retailers such as wet markets, supermarkets an d hypermarkets, and from non-traditional competitors such as, petrol kiosk convenience stores, convenience stores and restaurants. Customers have various options when comes to buying groceries. While pricing is one of the keys, convenience also plays a significant role in groceries shopping. People might choose to buy daily groceries from neighborhood grocery store equitable on their doorstep or buy drinks from thenearest convenience stores, rather than purposely go to supermarket.Bargaining power of supplier Low receivable to the nature of grocery retailing business, Sheng Siong purchase goods from a large do of suppliers and contract manufacturers. A large network of over 1,000 suppliers and contract manufacturers had been established for Sheng Siongs business. Some of the supplying relationships had established since the commencing year of 1985. The large and persistent supplying relationships have enabled Sheng Siong to have a continuous supply of products without major dis ruptions and allow them to wield greater bargaining power in terms of the purchase prices of their products. No single supplier or contract manufacturer contributed more than 5.0% of Sheng Siongs total purchases. (Prospectus, 2011)SummaryCompetitive rivalry HighThreat of new entrants LowThreat of substitute HighBargaining power of customerHighBargaining power of supplier LowThe analysis above shows Sheng Siong is in a really intensive business environment. Therefore, the management team should act really cautious on their strategy planning for business trading operations as well expansions in order to stay competitive.Strategic planningAs Sheng Siong is implementing low-cost strategy, it is very authorized for the management to plan their business tightly watch on their functional costs, as they are vulnerable to rental and labour hikes. On the other Hand, not having a succession plan may negatively impacts the operations of company in long run. Thus Sheng Siong should have plans with the goal to educate and sustain the dynamic key management team for the companys future appendage.GoalsPlansControl operating costs,Sustaining low-cost strategyReduce dependence of foreign labours.Computerized operations to reduce labour costs.Seek new keeping rental or purchases opportunity in new high populated resident areas such as Punggol and Hougang. Make optimum hire of the concentrate warehouse cum distribution center in Mandai Link, to achieve economies of scale. manoeuver and sustain the upcoming management teamSet up a management training for potential employees from internal or external. Succession plan as well as a contingency plan should be well established as soon as possible to kindle the stability of the long term operations of the company.OrganizingSheng Siong is applying the functional organization where by it divides into different divisions such as Finance, Human Resources, Information Technology, Purchasing and sell Operations. It is also a centra lized organization since it was originally a family business. just about decisions are made by high-level executives and pass down for implementation. In my opinion, a transition should be made in the organizing system in Sheng Siong if the company wants to sustain in a longer run. Talents from internal or external should be brought up to managerial level through positive trainings and being delegated in decisions making to cultivate fresh thoughts and ideas for the operations and harvest-tide of the company. The company should gradually decentralized in their organization to promote creativeness and innovations, as well as act as a pass for establishing succession plans.LeadershipDespite using power of authority, power of rewards has been utilize in Sheng Siongs leadership over their employees. 20% of the groups profit before tax was distributed in the form of various bonuses to its employees in the past 2 years.Relationship-motivated leadershipHaving policy such as provides one free meal per workday for every full-timeworker that has become a tradition of the company for 25 years. (Sheng Siong, 2013) The CEO Lim Hock Chee is an authentic and transformational leader.Although featuring at position 35 in Forbes Singapores 50 Richest list, Lim Hock Chee the Great Compromiser a humble man. He is know as the towkay (meaning boss in Chinese) who drives a lorry due to that being his mode of transport for many years. He undertook a two-year car mechanic course and thus stood him in good stead as until recently he was known as Mr Fix it at Sheng Siong, regularly welding trolleys and fixing power outages. (Hunt, 2014)These good traits of leadership styles should be kept on in Sheng Siong to depict themselves from major trends in capitalized world that applies less relationships concerned leadership. However, a family business cannot sustain and grow if it stays only at family style, standardization and formalization should progressively apply and leaders shou ld apply a balanced distribute of task performance behaviors in their lead.ControlIn spite of bureaucratic go out, market control is always being well-utilized in Sheng Siong. The plans and strategies in marketing, place renting and purchasing, and invests and divests are set according to close studies of the market. Sheng Siong emerged as second best in the Retail & Household Goods category of the 14th Securities Investors Association (Singapore) (SIAS) Investors prime(prenominal) Award Most Transparent Company Award (MTCA) 2013. (Annual Report, 2013) This indicates Sheng Siong is having good control of their accounts and audits with optimum information stated in their fiscal reports. Despite the financial parts, management audits are closely monitored. The evaluations of the the companys planning, organizing, leading and controlling is always printed in their annual report. It reviews what have been done and what the upcoming plans are, bad a clear picture to investors and business partners.RecommendationsSheng Siong should always prudent in its expansion and execution under theharsh economic environment. Setting up a clear succession plan of short, medium, and long term to suss out the future operations of the company. Overseas expansion exposes to risks and opportunities, the company should well utilize the connections that it has to expand the business to another level, locally and regionally.ConclusionSheng Siong had gradually emerged as one of the biggest groceries retailer in Singapore. Nevertheless, there are huge growth opportunity for the company. The company should stay dynamic and improve the weaknesses to keep research the chances of growth in this competitive environment. Changing is not always a bad idea. From a family business to a listed company, from a small instauration to a corporate, Sheng Siong has gone this far, but be it just the beginning of the future great arms in supermarket operators in the region or even in the globe. M odern management studies will help Sheng Siong to embrace any possible threats in the future. The transition of Sheng Siong should not be stopped at this point but should keep improving, strive to achieve its mission and vision.