The 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
SMRT Corporation Ltd (SMRT Corp)
formally know 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 disputes
initially in setting up the rail 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) and 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
on 12 December 1987, North-East Line pended on 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 automative
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 avoid 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
initiative among encouraging community to take public transport and Land
Transport Authority having major share in SMRT revels that SMRT has cluster on
Singapore’s spreading economy inquire more workforce that
Singapore population is unable to
effectuate, so more and more foreigners lock to Singapore to product. Singapore’s stable
control and many other constituent has helped Singapore to
be ranked at 14th position in choice employment for FDI. Thus spreading
Singapore’s economy expands the
Singapore population which is in great
exigency of public passion as it is the
cheapest form of transport.
scotch dilation the daily mistake by 2020 is estimated to be 14.3 million. The explanation to this the huge numeral of trips per
day for a small country
preference Singapore is public
coveyance. Thus any increase in
ridership due to expanding economy will
also beneficence SMRT.
The 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.
Singapore Land Transport Statistics In Brief 2015)
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
Singapore is one of the
smallest country in the Earth. Roads in Singapore 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 underground, already rails have gone subterraneous.
Government 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 of improving and widen
the public passion to a great proportion that more and more population will opt
for general passion.
SMRT has 30 year lease consonance with LTA so the
recent want can be regulate and lessons can be teach from this failure. As the
course to succession is working hard and erudition from failures. SMRT has a
learnt a accident and would make usage of this science as a erect stone for
The idol of the SMRT
can be reach. Since SMRT is a under Temasek Holdings so legal conditions will
be in gift of SMRT.
3. Porter’s 5 Forces Analysis
3.1 Threat of New Competitor – Low
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
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 power of the
clients is royally light because the market operates in a duopoly market
The steadfast major rate is really noble and SMRT additions
monopolistic power over that passage for a contractual period.
Customer ‘s rank of dependence is high because the public
conveyance is cheat and besides MRT unit ‘s reliability is really supercilious.
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 choose from, in
the specimen of taxies if Mazda offers a more bale as compared to Toyota they
can have a variety of choices as well as surrogate. From SMRT’s fleet of buses,
taxies and trains they have number of suppliers. Being the sell driver in the
Mass Rapid Transit perseverance and aid for taxies, they have a stronger
purchase and purchasing power, reducing purchase command of suppliers. Forward
integration is highly unlikely by suppliers due to the settlement of SMRT,
workmanship suppliers have a low trade influence.
3.5 Intensity of Competitive Rivalry – High
To have a clearer
delineate of the rivalry levels within the public transport attention faced by
SMRT we have to take a three-rot approach looking at each indivisibly.
Firstly, starting with
railways SMRT has certainly any rivalry with the only one coming from SBS
Transit. Secondly, within the digit trunk diligence once again SMRT falls
behind to SBS Transit who is the mart leader, vanquish 75% of the market shares
Lastly, for the cab industry is not SMRT the worth conductor
and trailing behind to Comfort DelGro who owns 15,000 taxies and a handbreadth
of smaller gamester. SMRT has to battle intensely for a bigger share of the mart
These pass to intense
levels of competition, especially among the two bazaar leaders SMRT and Comfort
DelGro who are owners of SBS Transit as well. With the type of services being
almost equal on all grounds it induce to narrow differentiation among products
and office. SMRT would have to trust on its core competencies to conquered
stronger threats such as being vow Most Eco-Friendly Transport Partner Land
Transport Excellence Awards 2010
The level of
intenseness is full due to such proud lead up suffering, remainder revenue for
maintenances and erection of depots, begotten a high barrier to egress due to
big investments. It annex even more intenseness from as competitors are all
fighting for the same pool of customers.
4. Corporate Degree Strategies and Competitive
SMRT united project
should concentrate more 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 – Use the
undermentioned points to reply this point.
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
concentrate on trial, which have higher 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.