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The purpose of this analysis is for an e-commerce to track the environment they are operating in or are planning to launch a new project, product or service. In this analysis, we will be analyzing Hermo Singapore’s environmental factors that will affect the business operations.
Economic factors deal with the concern of the nature and direction of a company in which a firm operates. The economy of Singapore is a vibrant free-market economy where the government does not interfere in business activity.
It is one of the fastest developing countries and the per-capita income is the highest in ASEAN with an amount of 85,050 purchasing power parity (PPP) dollars and the average salary of Singaporean per month is out to be S$5,596 per month.
Furthermore, Singapore’s e-commerce market is growing fast. According to Statista Portal, Singapore’s e-commerce revenue will amount to $3.97 billion by the end 2018, and is expected to show annual growth rate of 9.5% resulting in a market volume of $5.71 billion by 2022. The beauty and cosmetic industry is also growing, revenue in the Cosmetics & Personal Care market amounts to US$937m in 2018 and is expected to grow annually by 2.3%.
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This allows foreign businesses to take advantage on its high competencies by starting a business in Singapore.
This shows that Hermo Singapore will have an advantage in theses industry as there is a growth for customer’s demand. Customers are willing to spend even if they are price sensitive as products are consider a necessity in the everyday life. They will also not feel a big pinch as according the income earn as the average price of a beauty product in Hermo Singapore is approximately S$50 which is less than 1% of the salary per month.
Therefore, Hermo Singapore will need to provide for the needs and wants of the demand by customers to grow their business further.
Social factors can affect a firm involve the beliefs, values, attitudes, opinions, and life styles of person in the firm’s external environment, as developed from cultural, ecological, demographic, religious, educational, and ethnic conditioning. The e-commerce industry in Singapore has been on a rise lately as 50% of shopper purchased online with its ranking of the highest in Southeast Asia region to shop online. The fast pace and on the go culture cause shopper to shop online while on transit when on their way to work or a certain destination.
The e-commerce industry is suitable for the workaholic lifestyle in Singapore. In a research done about consumer behavior in Southeast Asia, most Singaporean shop after working hours compare to Malaysian that tend to shop online during working hour. A study also showed that the large segment of Singaporean who shop online are in the age range of 25 to 54 years old. This shows most of them are Generation X and Y in the working class and it is natural that they shop only after working, as they valued and respect their work time without mixing any leisure by browsing the internet.
Therefore, since the market segmentation for Hermo Singapore are mostly working Generation Y women. According to the article in The Straits Time Singapore, it stated the (LFPR) for women was 60.4 per cent in 2016 and will increase gradually in years to come. This shows that more women are focusing to be more monetary and independently driven and Hermo Singapore will need to accommodate with the lifestyle of these working women. It can leverage on the after working hours by updating new products or sales and promotion on the website for consumer to shop.
Political factors can be defined as the legal and regulatory parameters within which firms must operate as laws and regulations are most commonly restrictive, they tend to reduce the potential profits of firms. Singapore’s government spends huge sums of money to upgrade its defense competences to anticipate any internal threats in spite of the relative peaceful environment since its independence. It does not permit racial tension to erupt and enforce strict laws to ensure the stability of political in its country.
This can be shown by the Political Stability Index is a proprietary index measuring a country's level of stability and the threats that can compromise and undermine stability. Singapore has a score of 9.5 with one of the highest score in the world, this shows that Singapore is a political stable country. Hence, the e-commerce industry will not have major threats that may interfere in the operation of business and Hermo Singapore will have a stable and peaceful business operation among the customers and suppliers.
Besides, Singapore is consistently rated as one of the best countries to do business as it encourages investment and international business activity since it is highly dependent on imports and exports. There are a few trade barriers and is one of the most liberal trading regimes in the. It employs low trade tariffs, efficient customs services, efficient import/export procedures, transparent border administration, top quality transport infrastructure, and efficient regulatory environment
Singapore is also a country with one of the lowest tax rates in Asia and imported good are subjected to goods and services tax at the rate of 7% of the taxable value of the imported goods, which is below the global VAT/GST rate of 16.4% and the Asian-Pacific average of 10.5%. Thus, there will not be many taxable amount for an e-commerce industry as the goods and services of imported products are at a taxable rate of 7%.
This allow Hermo Singapore to conduct its business smoothly without worrying much of interruption by the external forces in the government. Business operation will be less restricted and more freedom in the The stability in politics will encourage it to build harmonious relationships between the suppliers and customers while abiding the government’s policies.
Technological factors talk about avoid obsolescence and promote innovation as well as creative technological adaptations for new products or for improvements in existing products or in manufacturing and marketing techniques. In Singapore, the government is dedicated to embrace the digital economy and reaching its goal to become a Smart Nation by providing leading economic power through digital innovation and can be a reason behind the change of lifestyle and quality of life by citizens. This implementation will help the ecommerce industry to increase its confidence as it encourages citizens to adapt and embrace the industry with the support by government.
Besides, the advancement of technology will help in the IT infrastructure in Singapore. E-commerce will be able to flourish as the penetration rate of the usage of internet service is at a widespread. The internet penetration is at 79% and could reach 84.8% by the year 2021. Smartphone penetration is at a lower percentage of 74.9% but it will be expected to grow to 79.3% in the years to come. Furthermore, 74 % of online buyers in Singapore still prefer to purchase through the desktop website as lesser online buyers are purchasing through smartphone and tablets with 18% and 5% respectively. The e-commerce industry will need to focuses on the web interface that can sustain the web traffic through the website.
Therefore, the advancement of technologies helps Hermo Singapore to expand its network communication and reduce time and cost in conducting business. They will be more efficient and effective in the daily business operations with the support of technologies. Hermo Singapore also needs make sure they are updated with the latest web interface by enhancing their website alongside with their mobile application to make it easier for shopper. Customers are able to make transaction and process of shopping easier and smoother as they to navigate on Hermo website.
Ecological factors describe the relationships between human beings and other living things with the ecosystem such as the air, soil, and water that supports them. The e-commerce industry supports the lesser used of paper resources as it uses digital communication for placing orders, sending bill and invoice or paying bill. Although, this might not seem to have a huge change in the ecological systems but moving towards the paperless society would be beneficial for deforestation which contributes to global warming in the long run. Hence, this society encourages less waste and pollution as everything can be obtained and conducted online.
Besides as the e-commerce industry is booming, it is assumed to improves the energy efficiency of the environment. However with the wireless electronic devices such as a smartphone, people are able to shop and buy more online due to convenient of accessibility. This can contribute towards pollution and energy consumption as people used the electronic device to purchase online and opting for faster delivery requirements as they want to consume it now. The exponential fuel consumption of transportations tends to create a situation where trucks are delivery half empty and not fully maximizing its capacity or space. This will cause more delivery trips per day for e-commerce which can result in the air pollution by the emission of carbon monoxide.
Hence, Hermo Singapore can adopt the paperless society by online advertising through their various social media platform, and sending receipt through e-mails or download through customer’s personal account. It will also will need to strategize its delivering and transportation system to reduce the cause of pollution and energy consumption. It can plan out the delivery strategically following the order size. For example, Hermo can use a truck when there is a large number of inventories to be delivered and use a bigger vehicle such as a van or car for lesser number of inventories to be delivered.
In summary, the e-commerce industry has advantages in the environmental factors and Hermo Singapore is able to deal with in the business operation. The stability of politic can lead to growth in economy as business operators are not threatening and internally harm with the factors. This allows more business to operate and encourage consumer to spend more as the purchasing power has increase. Consumers are able to not only purchase offline but online with the advancement of technology as they can buy and shop online through the palms of their hands. They will be able to shop without leaving their space and products purchased will be delivered to them at their door steps. Hence, the environment factors in Singapore are highly competence with the operation of e-commerce by Hermo Singapore.
Analysis Of Hermo Singapore’s Environmental Factors That Affect The Business Operations. (2024, Feb 25). Retrieved from https://studymoose.com/analysis-of-hermo-singapore-s-environmental-factors-that-affect-the-business-operations-essay
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