Introduction to Management

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Porter’s Five Forces

Competitive rivalry with an industry: High

The competitive rivalry within the industry is high as there are many large supermarket chains in Singapore. NTUC FairPrice, giant supermarket and mega store and cold storage are the few direct competition to Sheng Siong supermarket. NTUC FairPrice has established itself as a household brand serving over 500,000 people daily. Cold Storage supermarket is known for its wide variety of products imported from all around the world catering to the foreign communities in Singapore. Giant supermarket set up a mega store selling products in large quantity for a cheaper price which sometime are hard to match by its competitors.

Threat of new entrant: Low

Threat of new entrant is relatively low at this scale as it requires a very high capital. However, Singapore being the financial hub of Asia, many investors have relocated here and are investing in business by the millions of dollars. Sheng Siong has worked tirelessly throughout the years to have established itself as one of the top 3 supermarkets in Singapore, thus it is difficult for new entrants to be a threat to the Sheng Siong supermarket chain. Adding to that, government policies and high capital requirements would also pose as hurdles for new entrants. Thus, the threat is relatively low.

Threat of substitute products or services: High

Singapore being the financial hub of Asia, many millionaire investors have relocated here for the safety and security. Investment in new services especially technologically advanced ones are becoming popular. Founded in 2011, Redmart offers online shopping for groceries and household products with fast delivery straight to your doorstep at a very competitive price. (redmart, n.d.). Online platforms are becoming popular in substituting services and this new trend is growing with new entrants like honestbee. Online trend has been growing and affecting many businesses in different sectors with high impact. Consumers are now seeking convenience, this would pose a threat if Sheng Siong do not diversify their business.

Bargaining power of suppliers: High

Singapore is a city with no natural resources. Most of our land space is being used for housing and commercial use like offices, recreation, and malls. Agriculture have almost totally become obsolete. With no natural resources, companies like Sheng Siong solely depends on suppliers from overseas for most of their products. These same suppliers might also be supplying to Sheng Siong’s direct competitions like NTUC fair price and Giant. Problems faced by suppliers in their own country like rising manpower cost and other natural disasters for example a typhoons or floods, would directly be reflected on the pricing of their products. Suppliers would have an upper hand because with Sheng Siong having a large operation, changing suppliers would be a lengthy and a costly decision, it would also affect their operations as product flow would be affected.

Bargaining power of customers: High

In an industry with high competition, Sheng Siong would have to continuously work to retain and keep their customers. Customers now have the availability of many different grocers and supermarket. NTUC FairPrice for example has over 130 outlets and 160 FairPrice Xpress and Cheers convenience stores which is substantially more than Sheng Siong supermarket 43 outlets. (NTUC FairPrice, n.d.) Many customers would then choose convenience over loyalty to the brand. Pricing would be a key component in decision making for customers. Wet markets are one of the for customers as groceries can me more affordable there compared to supermarkets. Johor Bahru being just a drive across the causeway and Malaysia having a weak ringgit compared to Singapore dollar, many people are driving over despite the heavy traffic to get groceries for an even lower price. (Lin, 2015). The bargaining power of customers is very high with many options offering the same products and services.

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4 Management Recommendations

Recommendation one: Introducing loyalty program

Sheng Siong should introduce a loyalty program for its customers through its e-commerce and its retail sales. In addition to that, a mobile application should also be developed for consumers to easily track their purchases and receipts. A free membership can be introduced with minimum purchase of $200 in a single purchase. The loyalty program can offer special birthday privileges, notification to special offers during a season. This way Sheng siong will be able to boost its sales also retain its consumers with this value-added service and a well-maintained relationship.

Recommendation two: Strengthen organizational culture and awareness

Company culture is a very important factor in retaining staff in the company. A strong corporate culture provides stability in times of change and competition. Singapore being a multi-racial society, culture awareness is also an important factor for staff. Management should implement cultural days where the company observes different cultures from around the world. Organizing events having everyone involve would create a strong bond between employees of different race and religion. This would strengthen relationship within the company and create awareness to the various cultures. A company with a cohesive and strong team will be able to move forward together in times of rapid changes.

Recommendation three: Corporate social responsibility

Partnering with media events such as the presidents star charity, Sheng Siong can be a sponsor for this event to give back to the society and use this opportunity to connect with customers. Adopting these practices pushes the company to be proactive. Organizing charity drives and events will also create more awareness to the society. Events like beach clean-up, donating groceries to the needy will help create a strong core company culture and build good relations with consumers. Above that, Sheng should pledge to donate 5% of their annual pre-tax profit to different charity organizations.

Recommendation four: Diversify business with changing trends

The internet and