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SingTel Group Essay

SingTel Group is Asias leading communications group, providing a diverse range of communication services and solutions, including fixed, mobile, data, Internet, info communications technology, satellite and pay TV. They are listed as the largest company in Singapore Exchange by market capitalization. They are also listed on the Australian Securities Exchange as a result of our acquisition of Optus, the second largest communications provider in Australia on September 2001. In addition, the SingTel Group is a long-term strategic investor in six regional mobile operators in India, Indonesia, the Philippines, Thailand, Pakistan and Bangladesh. To serve the needs of multinational corporations, SingTel has a network of 36 offices in 19 countries and territories throughout Asia Pacific, in Europe and the USA. The SingTel Group serves about 383 million mobile customers in 25 countries. In Singapore, SingTel has 130 years of operating experience. SingTel has played an integral part in the development of the country as a major communications hub in the region. Today, SingTel continues to shape the digital media and ICT market in Singapore.

Despite full liberalization since 2000, SingTel remains the leading mobile, broadband and fixed line operator and in July 2007 ventured into home entertainment with the launch of mio TV. In September 2010, SingTel launched high-speed fibre services, with distinctive applications focusing on entertainment, convergence and productivity enhancement for home and business users. SingTel is a long term strategic investor. As a strategic investor, they work closely with their affiliates to grow the business, by leveraging their scale in networks, customer reach and extensive operational experience. SingTel’s affiliates benefit not only from the relationship with SingTel.

By being part of a larger group, they are able to share experiences and insights from one another. These learning help affiliates as they navigate challenges and take advantage of opportunities in their own markets. In the future, the Group continues to review new investment opportunities in Asia and emerging adjacent markets and will be financially disciplined in its evaluation of new investments. (Sustainability Report, 2010)

Purpose of the analysis

As the Asia Pacific‘s best multimedia solution group, SingTel believe that creating and delivering value to customers, employees and shareholders is fundamental to their business. They are making communication easier, faster, more economical and reliable by breaking the barriers of distance, price, time and technology. Singapore Telecommunications Limited (SingTel) has over 130 years of operating experience and has played an integral role in the development of Singapore as a major communications hub in the region. SingTel are doing well to bringing the best-in-class global communications solutions to customers. So, the purpose of this analysis to provides an overview of SingTel’s approach, priorities and performance in the area of sustainability for business operations and how they work with their regional associates.

Their policies and programs are covered under four key areas – Marketplace, People, Environment and Community. Moreover, remaining success for many years, SingTel has been competing with many players within specialty market. This paper is to analysis the different factor of Singapore environment affects on the specialty telecommunication industry and competitive environment of SingTel and its core competences in order to win in the market battle

2. Macro – environment analysis

There are many factors in the macro-environment that will affect the decisions of the managers of SingTel. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. The PESTEL model will evolve in Singapore market in order to understand the influences and demands, which will help the company to pursuit of the organization goals and sustain the business. It also provides the flexibility for the company to have effective response to adapt the external environment.

2.1. Political- legal

Recently, “the Liberalization and Privatization of Telecommunications in Singapore” supported by Telecommunication Authority of Singapore (TAS). The telecommunications industry as well as SingTel particularly entered a phase driven by fast-changing technology, which is stimulated by the demands of increasingly sophisticated end-users. To meet these demands, there has been a worldwide trend towards privatization, liberalization and deregulation in the telecommunications industry. This trend has created many opportunities, as well as challenges for SingTel. Liberalization, deregulation and competition thus offer a viable approach to ensuring the provision of better quality of services at highly competitive prices. SingTel also stimulate more innovative services aimed at satisfying the needs of different market segments with custom-made solutions. In Singapore, the liberalization policy is aimed at increasing consumer choice and stimulating greater efficiencies in the use of scarce resources.

In 2009, the Info-communications Development Authority of Singapore (IDA) has made a decision with regard to SingTel’s exemption request for the Business and Government Customer Segment and Individual Markets. This helps SingTel to seek exemption from the application of Dominant Licensee regulation to its provision of telecommunication services in six individual markets, all retail telecommunication services to customers in the business and government customer segment with an annual spend on telecommunication services of at least S$250,000. (IDA Singapore, 2009)

Singapore has one of the most advanced Information and communication technology (ICT) networks in the world with very high levels of access. This has been possible due to the small size of the country as well as rising levels in income and government commitment to telecommunications excellence. SingTel was originally a monopoly on the ICT field until the market opened up to the other companies. (NUS.edu.sg)

2.2. Economics

Economic situation is one of factor affecting to SingTel business directly. Globalization has jumped national boundaries, opened and increased trade and business has also an opportunity for the company. Thus, the using of telecommunications device and services has increased globally and the trend is expected to continue. This provided SingTel the opportunity to invest oversea, to enlarge the market and maintain profitability. Recently, the Singapore government has invested heavily in diversifying the economy. The business sector will create good environment to support and motivate the workforce as well as establishing the legal and financial business framework.

All the economic sectors will continuously grow such as tourism industry, financial service, consultant service and retail. The growth in various economic factors presents the opportunity for SingTel to increase business locally. Furthermore, the telecommunication services are closely linked to economic activities in Singapore and region. So, SingTel need to have a good preparation to take the full advantage of effects such as the change of income and consumer spending habit.

2.3. Social – culture

Singapore Culture is unique with four major ethnic groups: Chinese, Malays, Indians and Eurasians. They are still strongly believed in their traditional value although the younger generations has started to adapt with the western culture. Especially, there is a phase in the mindset of Singaporean that “kiasu” means “afraid of losing out to other”. With this mindset, many young Singaporean has worked hard to expect high income and pursue the new and modern technology. They are always changing in their lifestyle, purchase behavior and the demand the high standard of quality and services. These present an opportunity for SingTel increase their revenue by offering the new and customized the product and services A change is taking place in the mobile industry.

Customers are increasingly engaged with their smart phones and Internet devices to perform functions for work and leisure anywhere, anytime. Richer applications and services will be delivered over mobile networks. In fact, for many regional and rural customers in the developing markets, they will be accessing the Internet for the first time through their mobile phones. SingTel has seen this fact and moved to meet customer demand.

2.4. Technology

Technology has changed and developed rapidly and continuously nowadays. New services such as Internet Telephone and the increasing of telecommunication users are the reasons for company to invest developing new technologies in products and services. In the current business, SingTel covers telephone line, e-commerce, Internet and mobile services. But SingTel has indentified e-commerce and Internet-based activities, which there are significant growth with customer segments. So, the technological investments are an integral part of SingTel’s strategy for long-term growth. Also, the high investment in proven technology was the critical factors made SingTel succeed in the past.

3. Key Opportunities and Threats of SingTel

In the telecommunication industry with 4 main external environment factors that are affecting SingTel, it creates the opportunities as well as the threat for SingTel.

Singapore has highest income per capita in Asia
Singapore is the most advance information technology hardware infrastructure in the world.
Merger and acquisitions
The higher penetration rate in Singapore
Refocused its oversea in investment in Asia
Trend of deregulation and privatization.
Customer demands and expectations.
Rapid growing of technological changes
The economic crisis
StarHub and Mobile1 as new competitor
Faced competition from foreign callback service.
Government creates competition.

3.1. Opportunities

Because of high demand of the market and the operating environment of SingTel is very competitive, which means that the company can see the environment will the same or more challenger in the future. However, the company still has opportunities to maintain the status as leading telecommunication company in Singapore and the region. Firstly, Singapore has highest income per capita in Asia. This affects on the purchase behavior of customer tend to use internet and telecommunication service in daily life as well as in the workplace. Secondly, Singapore is the most advance information technology hardware infrastructure in the world. This is a good condition for the telecommunication industry development generally and for SingTel in particularly.

It was not just in Singapore market also it is the SingTel strengths to enter oversea market. Such as SingTel also offers hybrid satellite-fibre solutions to penetrate customer needs in Asia Pacific, USA, Europe and Middle East markets. Moreover, SingTel brings more than 25 years of experience in delivering industry-leading satellite communications. The innovative solutions empower to offer state-of-the-art communication solutions that will create value and optimize communications for customers. Especially, the trend of deregulation and privatization were opportunities for SingTel to take a big step in improvement quality and price of service in the highly competitive environment.

3.2. Threats

Demand is growing so it will create a more intense competition among telecommunication companies. StarHub and Mobile1 are considered as major
competitors of SingTel. Thus, the expectation of customers is increasing toward the demand of quality and service standards. Even when SingTel invest in but never found out service solution to customer, it will become very difficult to access them, especially when the company wants to penetrate markets in developing countries. During the recession of the world economy has greatly affected the SingTel development. At this time, when the effect of currencies by the inflation and the pricing storm in product and service, the people have to narrow their demand. Additionally, the merger of SingTel to Asian countries strongly influenced by the global recession.

This has greatly affected the sales of SingTel in the region. The foreign callback service was a threat affect to SingTel when the price of this service is even cheaper than SingTel service. Also, when SingTel is joining their business globally, they must follow the various regulations and laws in different countries. These provisions tend to be stricter with foreign companies in this industry because the government wants to protect their local industry. This is also a challenge for many companies included SingTel.

4. Competitive environment analysis

By application of Porter’s five forces model, it helps to find out the business strategy problem of evaluate the investment value of SingTel. An understanding of this, it suggest for SingTel to know which key success factors are necessary to cope with the competitive forces. C:\Documents and Settings\Nguyen Dung\Desktop\porterfiveforces.gif

4.1. Threat of Substitute Products (High)

The importance of fixed line is slowly decreasing as a convenience method. The threats of substitute for fixed line telecommunication is high and replacing by VoIP (Voice over Internet Protocol) and mobile phone applications, which can be a benefit for reducing communication and infrastructure costs. However, the fixed line telecommunication is still using widely in almost company included SingTel. This is proved its convenience and efficiency by coming of interim price and non-price term for fixed line telecommunications services under the new telecommunications access regime. These services are currently used as inputs by competitive communications companies to provide voice, facsimile and broadband internet products to consumers and businesses.

4.2. Power of buyers (High)

Buyer affect a company through their ability to force down price, bargain for higher quality and more services and play competitors against each other (Wheelen and Hunger, 2010). The bargaining power of supplier is high for SingTel because of the increase of various communication and low switching cost. Customers can choose to use internet telephone over fixed line service. In Singapore, there are two big competitors as StarHub and Mobile1, where SingTel have to consider to their products and services. The customer has many alternatives in the standard and undifferentiated between SingTel products and others.

4.3. Power of Suppliers (Moderate)

On one hand, there is a balance of power between suppliers and telecommunication companies in Singapore, so the power of suppliers is moderate. On the other hand, suppliers are not able to compete directly with present customers because of the geographically extensive networks and the effort to make long term contracts can be difficult for the telecommunication market.

4.4. Threat of New Entrants (Low)

Every potential entrant into telecommunication industry is required a license issued by the Telecommunications Authority of Sing Singapore (TAS). Meanwhile, as the security issues are highly sensitive in the operations of telecommunication services, the Singapore government will scan very carefully before accepted the license. Moreover, the new entrant required capital as a key factor and the new entrant can measure the sufficiency of financial resource. As the market dominated by SingTel that is equal to others companies. Given the entrance barriers are high, so the effort of a new player in telecommunication industry is low.

4.5. Intensity of Rivalry (High)

There are several factors related to intense rivalry. The number of competitors has increased while the industry’s growth has slowed down, have caused the strong industry rivalry. M1 being the main competitor that have huge resources and strong power. SingTel have to watch each other carefully to step among their competitors. Moreover, as the products and services characteristics that required the high investment as well as low mobility of fixed costs and infrastructure make it difficult for the company position in telecommunication market.

5. Core competencies

In order to be successful, SingTel human resource and brand image must be value, rare, imperfectly inimitable and non- substitutable compare with other companies in same industry (Barney, 1991). Value: SingTel’s successes are based on customer focus. By understanding their needs and anticipating to them, SingTel enhance business success by offering to customer value and quality service, meanwhile they are always looking for the creative and innovative ways of doing business and sharing a passion for making a difference. Moreover, leadership team and employees are the most important assets for the company. By working as one team with share goals, they are developing strong bonds by communicating and sharing knowledge. By contributing value to everyone, this encouraged the open discussion and commit to an agreed position. As the leadership and superior position, their performance is achieved through pursuit of personal excellence. They seek continuous improvement and take pride in what they do. Together, they celebrate the success and achievements.

Therefore, human resources are most valuable resource of SingTel. Policies to bring the training programs for staffs and managers to not only aware of their responsibility to implement and set the example in the implementation of the value of the company, also train them have a vision of the future business. – Rare: Beside the commitment to provide a healthy and safe environment for employees, SingTel created an environment to get human resources where the people were not only achieved the goals, also the people can work in the harmony and share value to take responsibility and make commitments to customers. This will become very rare if not any company can do this while the business moral is slowdown toward benefit ahead. SingTel is committed to reducing environmental footprint through concerted practices. They address and focus on managing environmental protection, resource conservation, waste reduction and the impact of operations. These internal processes will allow the company to monitor, assess and mitigate the significance of any adverse impact of business on the environment, society, customers and employees.

By addressing the social concerns that are critical to the well-being and sustainable development of the communities in which SingTel operate. SingTel supports a wide range of programs focused on two strategies: SingTel Touching Lives Fund (STLF) is our corporate philanthropy program in Singapore to support community programs and disadvantaged children and young people. Support community development to prevent disaster relief and reduce illness in the communities in which SingTel has a high potential impact. Imperfectly inimitable: Through integrating best-in-class human resource practices for talent recruitment, retention, development and employee welfare, the company nurture and groom future leaders to power SingTel’s sustainable growth. SingTel attract the top talent around the world because of the employee diversity is integral to business success as every employee bring their unique skill and work experience to enable grow the global market.

To ensure equal employment opportunities within the company based on non-discrimination and fair employment policies, all employees are selected on merit and their ability to perform the specific job functions. So, the human resource strategies were the sustainable competitive advantages that no company can imitate. Non- substitutable: Staying ahead of the competition in this dynamic telecommunications industry is an ongoing challenge for SingTel. Therefore, the element of non-substitutable is the necessary weapon to compete on the marketplace. The SingTel efforts will focus on the new market and satisfied customers. With SingTel, is not only committed to action when the things broken, but it is a long way to desire customer and make them smile to SingTel product and service.

It was also the investing for future to adapt the flexibility of the market needs. Moreover, if without the ability to commit to good governance, will not be tied with the members to go on long road full of challenges and hardships. SingTel recognize good corporate governance and transparency are critical to ensuring the long-term success and protecting shareholder interests. This also aligns with the corporate objective to strengthen market leadership and corporate reputation.

6. Conclusion

Based on the position of specialty telecommunication industry, as well as SingTel capabilities and core competences, they are doing well, but SingTel should make the strategic actions to overcome threats. Firstly, concentration is an effective strategic action to reduce cost, where SingTel need to realize the weaknesses in business strategy. Through improvement structure of operations and the scanning continuously of internal economic, SingTel can in the long run reduce production, distribution and service cost to the advantage of the consumer as well as the company. If SingTel can do this, SingTel will achieve status of the lowest cost telecommunication services provider.

This allows the company to increase the competitive advantages. Secondly, Research and Development (R&D) is an investment to company’s future because when the current product lines outdated by their competitors, they will lose sufficient. R&D will useful for engineering work that it give own wholly and safety as well as provide the lower per unit cost. This helps SingTel to pursue cost leadership position and against the potential competitors.

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