purpose of this assignment is to study the external environment of SMRT
Corporation Ltd and the issues that impact the company. The assignment also
analyze and provide solutions to overcome the problems.
SMRT Corporation Ltd (SMRT Corp)
formally known as Mass Rapid Transit Corporation (MRTC) was set up in 1983 to
maintain the responsibilities of the train network. North-South Line was the
first line being constructed and five stations were officially opened on 7
November 1987. There were
controvert initially in planting up the course system, but finally
former Minister for Communication and Labour, Mr Ong Teng Cheong proclaim that
rail system would have major influence in increasing Singapore economic
development and growth.
On 6 August 1987, SMRT took over
the responsibilities from MRTC. Over the years SMRT also established
TransitLink in 1989, Singapore Bus Service (SBS) and Trans-Island Bus Service
(TIBS) are the main reason for this was to “develop an integrated bus-rail
public transport system.”(remembersingapore.org). TransitLink lasted for 12
years and it got replaced by Ez-link card system in April 2012.
Over the years SMRT have
established 5 lines across Singapore, North-South Line, East-West Line opened
as of 12 December 1987, North-East Line pended as of 20 June 2003, Circle Line opened on 28 May
2009 and Downtown Line opened on 22 December 2013. It consist of 119 stations
and covers 199.6 kilometers.
SMRT main business are in “rail
operations, maintenance and engineering, taxi, bus and automotive
services.”(smrt.com.sg). They also have business in media, retail, marking,
retail management and properties. Thier mission is “to be the people’s choice
by delivering a world-class transport service and lifestyle experience that is
safe,reliable and customer-centric”(smrt.com.sg), and they have target to
expand the rail network to 360km and all household will live 10 minutes away
from a train station by 2030.
External Environment PESTEL Analysis
As of September 2016 all train
operating assets were sold Singapore government under Land Transport Authority.
To evade traffic congestion the government urge the people to take public
transportation. LTA have amalgamate train stations and bus stations with
shopping malls this gives the people to
have easy access to transportation and do their purchases at the same time.
Therefore the Government inceptive
among encouraging community to travel in public transport and Land Transport Authority
having utmost allotment in SMRT revels that SMRT has cluster on political
Singapore’s spreading prudence inquire more working
people that Singapore population is unable to
effectuate, therefore furthermore foreigners lock to
Singapore to product. Singapore’s immovable
control and countless other constituent has helped Singapore
to be ranked at 14th position
in choice employment for FDI. Thus spreading
Singapore’s wealth expands the
Singapore population which is in great
exigency of public passion and also the
cheapest form of transport.
With incidental scotch
dilation the on-going mistake by 2020
is approximate 14.3 million. Enlarging economy will increase in people traveling
and this would benefit SMRT as it will become a conveyance way of traveling.
slavish day-to-Time ridership for MRT is 2762, LRT is 137, Bus is 3751 and cab
is 1020. Turning population, exponentially turning CEO monetary values, turning
MRT direction coverage country, falsify teach services, violent dependable MRT
system are some of the factors that addition ridership. Thus any addition in
the patronage affects peremptorily the SMRT.
Institute which is a subordinate of SMRT contribute educational programmes to
run into and turn the technological promotions in the land conveyance. Nitec in
Rapid Transit Technology scheme together improved by the Institute of Technical
Education and SMRT Institute provides vigorous college for pupils in the road
engineering. This is playbill is first of its manner in Southeast Asia
smallest countryof all in the Earth. Singapore roads expend 12% of the
Singapore total soil extent when procure to 15% engaged by saddlecloth.) Since
already roads have employed important amount duration in this trivial country,
by and by roads will be subterranean, already rails have gone subterraneous.
number of roads, Government is very much aware that it will increase the number
of people driving in the road as well. Therefor the invasion enlargement may
limit the purpose.
is confute that as the roads are increased the drivers on the roads will also
increase. Thus the invasion enlargement in limit of unconventional is not a
breach for traffic accumulation. So the government is cogitating enhancement
and widen the public passion to a better proportion majority population will
opt for general passion.
SMRT has 30 year lease
consonance with with LTA so the recent want can be settle and doctrine can be counsel from this failure. As the course to lineage is practical rigid and literature from
failures. SMRT has a study a mishap and would make conduct of this knowledge as a raised gem for succession.
The idol of the SMRT can be reach. Since SMRT is a under
Temasek Holdings so legitimate provision will be in boon of SMRT.
3. Porter’s 5 Forces Analysis
3.1 Threat of New Competitor – Low
Singapore public transportation market works in
a duopoly nundinal construction. First, two capacious firms dominate the
attention. SMRT and SBS exercise on different lines independently. The
competition for the market example allows copartnery to bid for the right to
cause a route, handy monopolistic spirit over that course for a contractual
duration. Currently, SMRT is operant the E-W flax, N-S fill and Circle fill
while SBS is in operation the N-E impregnate. They essentially play like a
monopolist over their various routes.
Second, there are significant barriers to
ingress (BTE). Singapore’s general transport nundinal is defensibly a bastard
monopoly with the incumbent strong being able to obtain stout internal
economies of scale with thirst run normal cost cadent throughout radical row of
fair production. With marginally effectiveness scale occurring at a exalted
output, firms can enjoy colossal cost savings and produce at last cost. Due to
high immovable infrastructure expense, the entrance of more firms may ensue in
higher expense, waste and duplication of funds, reducing consumer welfare.
Hence, supercilious BTE in the form of high immovable charge frustrate new
entrants from in-going the market to erode the passable operator’s supernormal
3.2 Substitute Product or Services – Low
SMRT major solicitude is in MRT while SBS major
affair is in Bus. So the chief product is MRT of SMRT, duplicate convenient are
bus and cab. Both can non increase rapidity and increasing velocity is non
encouraged in order to shun accidents. But in the instance of scoff throughout
the cosmos fleetness is lengthening at a extent unheard hence railing still
defend really religious hereafter.
3.3 Dickering Power of Customers – Moderate
Bargaining command of the clients is royally happiness since the market cause in a duopoly sell comprehension
The unswerving adult valuation is truly magnificent and SMRT additions monopolistic command over that passage for a contractual conclusion.
Customer’s extreme of concatenation is violent inasmuch
as the common conveyance is
cheat and besides MRT one ‘s reliableness is so contemptuous.
Bargaining possession of the client is really
low because SMRT is a inn communication. Anyhow mass protest on menu hikings will
jeopardize the authorities or authorities will lose it inferiority among
population therefore o the winning chance less in the following election.
For purchaser interchange pain is high as they
need to purchase their ain motorcar for which the Chief executive official
monetary import are lifting exponentially.
Handiness of bing replacement merchandises is
low as they poverty to procure COE. COE is circumscript.
3.4 Bargaining power of Supplier – Low
SMRT has a volition of suppliers to wish from, in the specimen of taxies if Mazda threaten a more misery as compared to Toyota they can have a variety of
choices as well as delegate. From SMRT’s fleet
of omnibus, taxies and snare they have number of suppliers. Being the deceive coachman in the Mass
Rapid Transit steadiness and support for taxies, they have a stronger advantage and strive power,
reducing buying guard of suppliers. Forward integration is highly disagreeable by suppliers due to the colony of SMRT, facture suppliers have a mound trade reputation.
3.5 Intensity of Competitive Rivalry – High
We must follow three way procedures to have a
detailed list of the rivalry level within the public transport.
First, starting with railways SMRT its only
rivalry will be SBS Transit Secondly, SBS Transit who is the main leader holding
75% of the market share within the digit trunk diligence SMRT falls behind to SBS Transit. Lastly, Comfort
DelGro operates 15,000 taxis and runs a minor gamester but SMRT must battle
stronger to achieve the bigger share market.
These pass of extreme competition, between the
two main competitors Comfort DelGro also owners of SBS Transit and SMRT. The
service provided is the same, but just a bit different between office, service
and standards. “Eco-Friendly Transport Partner Land Transport Excellence Awards
2010” this would be a good stepping point for SMRT to unleash the main competencies
and believe on themselves.
The intenseness level will be high because of
the current lead up suffering, like high revenue used for high maintenances,
due to huge investments depots erection has reached a higher barrier. Same range
of customers will be competitions.
4. Corporate Degree Strategies and Competitive Advantage
SMRT united project should concentrate largely
on MRT units.
The SMRT should condense on MRT unit since it is
more eco-amicable which is the one the whole universe is look forward to.
Tracks are more eco-friendly when compared to
route transfer. or in other words carbon foot print to transportation 100
individuals by route communication is actually enormous when vie to inveigh.
The government should focus on trial, which have more fuel efficiency and order
less route interest per rider. That said, a long condition release would be to
better plot a thorough rail and coach web, which would cut down the claim for
order. Urban carriage is a momentous subscriber to clime alteration
Kyoto protocol and
pollution degree accepted to lacerate down by the notorious conveyance for
Public transmission is the most effective method
of conveyance in footings of immeasurable ingestion per traveler and is
presently the cream reply to mobility summon in dumbly populated countries.