PEST Analysis of Singapore
Omni channel retailing has become one of the major factors for maintaining sustainability in the retail industry. Globalization has changed the face of the world and there is a huge availability of data on the online platform. Therefore, the connectivity among the consumers have increased significantly, therefore, Omni channel retailing is used by many retailers. Omni channel marketing is the presence of brick and mortar outlets as well as having online websites and applications so that every customer is able to access the organizational products from anywhere (Beck and Rygl 2015). This report will analyze the real life scenario of the UFashion which is one of the fastest growing fast fashion retailers in Singapore. The founder of the organization has implemented Omni channel retailing for competing with other companies in the market. However, it’s still in its nascent stage and requires improvements at many folds. The use of big data is very crucial in this context for the business to flourish so the report will conduct a situation analysis to develop strategy that should be implemented to improve the Omni channel marketing of UFashion.
The external environment of any organization is evaluated using the PEST analysis. The different macro environment factors are analyzed using these factors to infer the condition of the operating market.
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PEST ANALYSIS OF Singapore |
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Political |
The political risk of the country is lowest in the continent. The country follows democracy and gained relative political stability after the independence (Rodan 2016). Therefore, due to this stability there are improvements in the standard of living and peace. Moreover, there has been increment in the number of opportunities in the field of business. |
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Economic |
Singapore has developed a free market economy that is vivacious. There is rapid growth in the economy of the country and corruption free environment in the country helps the business sector to flourish more easily. Therefore, the fast paced economy has increased the level of competition among different companies in the market. The financial and legal frameworks set by the officials has also facilitated in growth of the economy. The government has also invested in diversifying the economy of the country (Rodan 2016). This has led to the growth of the industries such as pharmaceutical and tourism. However, the main issues faced the economy of the country is shortage in the availability of labors. These have increased the labor cost and Singapore is dependent on the neighboring countries to provide them with cheap labors. However, there has been steady increase in the labor cost which has decreased the productivity of the nation. |
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Social |
Singapore follows all the traditional values passed down to them from the ancestors. However, westernization has emerged among the younger generation that follow western values and culture. The society believes in hard work and this has increased the productivity of the country (Tremewan 2016). Therefore, the disposable income of the general population is high and the business organizations expect higher purchasing power from the consumers in the market. Due to their high rate of literacy in the industry there has been increase in foreign direct investment and international trade. |
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Technological |
There has been vast improvement in the quality of life of the individuals in the country due to the advancement n the field of technology. The online media has impacted the growth of Singapore as it reduced the communication barrier by increasing connectivity among the general population. This has decreased the time and cost of the conducting business (Chatterji 2016). The advent of social networking has connected Singapore to the rest of the world. The infrastructure in information technology is highly developed and large numbers of companies have set up their regional operation centers. The growth in Ecommerce is high and Singapore is developing their era of electronic government. |
Table 1: PEST
Porter’s five forces
Porter’s five forces have been developed in order to examine the competitiveness of the market. Therefore the internal environment of the organization is measured using the porter’s five forces. The different factors in porter’s five forces are bargaining power of the supplier, bargaining power of the buyer, competitive rivalry, threat of substitution and threat of new entrants.
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Porter’s Five Forces of UFashion |
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Bargaining power of the buyer |
The buyer power is high in the fashion industry in Singapore especially in the high end segment. The organization caters to high end customers in the fast fashion industry where there is huge competition and the consumers have the opportunity of choosing different rival brands. |
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Bargaining power of the suppliers |
The bargaining power of the suppliers in the industry is low as there are dispensable. Therefore, powers of the suppliers are almost insignificant in the fashion industry. The company has been outsourcing the manufacturing of their products to other countries with cheap labor and manufacturing cost. The input cost of the companies will remain low till there is a gap in global development all over the world. |
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Competitive rivalry |
The competitive rivalry in the industry is high and the companies will be face stiff competition from the market. There are fashion companies selling similar products to the consumers in the industry. As the market is becoming saturated , it is difficult for the industry to sustain and gain competitive advantage |
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Threat of substitution |
The threat of substitution is low as there no products outside the industry that can substitute clothing products. There is only competition in the industry so the organization is facing threats from the within the industry. |
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Threat of new entrant |
The barriers in the fashion retail industry are very low due to lack of uniqueness that a new organization can bring to the market. Its takes large amount of marketing in the social media platform to grab attention of the consumers. It is tough for the new market entrants to develop their brand and increase awareness. |
Table 2: PORTER’S FIVE FORCES
(Source: Yeung and Ang 2016)
SWOT analysis
SWOT analysis is to identify the strength, weakness, opportunities and threats of any organization. It is the internal analysis of the organizations capabilities and facilitates in developing strategies for increasing the market share.
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SWOT Analysis of UFashion |
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Strengths |
The basic strength of the company is they have developed fast fashion products for their high end consumers. They have been able to develop a strong presence in the Singapore market. The cost of production is low which has increased the profit margin of the organization. The organization has implemented Omni channel marketing which has facilitated them to reach more consumers and provide them with better experience. |
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Weaknesses |
The brand is still relatively new when compared to the global brands in the market. The infrastructure of the organization is not that good and requires improvements in order to compete at the same level with the big brands in the industry. The operations department needs improvement for better improvement in the inventory and supply chain management. |
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Opportunities |
The organization has the opportunity of entering new foreign markets. However, in order to do so they will have to make improvements to their information technology department. The organization can improve their supply chain and inventory management. The organization has the opportunity of expanding their online business through effective digital marketing strategy. |
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Threat |
The other competitors in the market pose a threat for the organization as they have better infrastructure and operations management than UFashion. The market is becoming saturated which may affect the overall growth of the organization. |
Table 3: SWOT
(Source : As created by Author)
As stated by Marchet et al. (2017), Omni channel retailing is one of the modernized approaches that emphasizes on developing consistent user experience for all the consumers at all the touch points. Omni channel retailing takes the overall experience of the customers into account so it is quite different from the traditional methods. UFashion has recently implemented Omni channel retailing into their business model which means that it is still at its nascent stage. Therefore, the organization will have to take into consideration few factors which will increase their operational efficiency and succeed in developing Omni channel retailing.
Porter’s Five Forces of UFashion
According to Jaipuria and Mahapatra (2014), demand forecasting the act of making estimations form historical data about the future consumers demand. As the competition in the market is intense the managers of the organization will have apply demand forecasting to take decisions in case of market potential, business growth and prices. UFashion will be using causal model for forecasting the future demand. This will consist of identify the factors that will impact the demand. Therefore, causal model will examine factors such as market competitors, socio economic factors and economic forces. This will also consist of conducting time series analysis which means historical data is also important component of the forecast. These will enable to forecast trends and seasonality so they will be able to customize their product type and strategy based on it.
Order management
According to Hugos (2018), order management is the administration of the different processes in business that are related to the services and goods orders. Therefore, UFashion will have to develop an effective order management system which will streamline all the business processes. OMS system updates the inventory, databases of vendors, customers, refunds, returns, payments, billing, general ledger and processing records. This will improve the sales visibility along with improvement in relationship with the customers. Moreover, the OMS system will improve the efficiency of the order processing by minimizing the back orders and the number of delays. Ufashion will be using different modules of ERP system such as Cloud Commerce Pro which is a cloud based system and will facilitate in streamlin9ing all the processes.
Inventory management
As stated by Chaiyawantakee et al. (2015), inventory management is the process of storing, monitoring and controlling of raw materials, finished products and other products. In is essential for the organization to identify the right amount inventory they need to stock. Therefore, by using the data for previous months and inventory forecasting software the company will be able to identify the stock needed every month. The organization will have to use economic order quantity which will enable to identify exact unit of inventory required. Moreover, fast fashion industry needs changes frequently so the organization should not waste their resources on outdated products. There are other factors such as reorder point and safety stock which has to be evaluated. The reorder point will evaluate the correct time for reordering by calculating the time taken for item pickup, packed and shipped.
SWOT Analysis of UFashion
Order fulfillment
Order fulfillment is the act of delivering the finished product to the consumers and it is generally outsourced to the companies that deliver products for other companies. They act as a third party and very important in online service (Turban et al. 2018). Therefore, the organization will have to customize the order fulfillment according to the needs of the consumers. The organization should analyze their order metric to identify the efficiency of the products.
Last- mile distribution
According to Emhemed and Burt (2014), the last mile logistic is one of methods of reducing the shipment cost to a maximum of 28%. Last mile distribution is the phase of distributing the product from the facility to the consumers. Therefore, the organization will have to deliver effective last mile delivery where they can receive the products within a very short notice. As the consumers are willing to pay prices for the delivery, it is essential for fulfill their needs to retain the existing customers. Therefore, the organization should develop delivery lockers which will be set at specific locations such as the Amazon Storefront pickup locations. Ufashion can also use drones for delivering the products more effectively and route optimization in urban cities is another way of improving last mile.
Return management
Return management deals with reverse logistics, returns, avoidance and gate keeping. These things should be highly avoided by the organization in order to increase the efficiency of the supply chain process (Zailani et al. 2017). Ufashion will have to increase the management quality by introducing technological prowess. The effective management of the processes increase reverse flow efficiency and reduces the number of returns. This also facilitates in indentifying the materials that are reusable to the organization. The organization will have to focus on three factors speed, visibility and control of the processes for increasing the efficiency.
Ufashion will have to develop necessary infrastructure, human resources and information technology to support the move to Omni channel retailing. As the organization is aiming to provide the consumers with the best possible experience at every touch point, the organization requires adequate infrastructure to support the plan of action. Therefore, the organization will have to use advanced ERP systems to manage the data and gather effective information for improving the operational efficiency. Infrastructure will consist of all the facilities that is necessary for the organization to run smoothly and fulfill their desired goals in the organization. Therefore, with the increase in the number of stores and touch points digitally and physically, there will be steady increase in the number of resources within the organization (von Briel 2018). This also includes the increase in the number of employees in the operations department. The use of advanced and effective information technology tool facilitates in better decision making and operational efficiency. The retail fashion industry has a low profit of margin and increasing the operational efficiency is the only way of gaining more profits. In case of Ufashion, they have opened up their own Omni channel retailing unit but they do not have enough infrastructural prowess to support it. Therefore, the organization will hire more IT executives that will be able to improve the supply chain process and provide the customers with better quality of service.
Demand Forecasting and Order Management
The advent of new technology and Ecommerce has changed the buying experience for the retailers. There has been a drastic change in the buying behavior of the consumers as the use of traditional stores has been minimized. The change in the buying behavior can only be identified using proper implementation of big data analytics and information technology infrastructure. The consumers in the market are now more focused on reaching personalized service at all platforms. Therefore, by leveraging the touch points at all channels will increase the number of sales within the organization. Ufashion will have to implement big data analysis where the large chunk of data will be analyzed to identify the future market trends and the potential consumers. This will consist of market analysis using software like R, SAS and Hadoop for problem solving and data analysis of huge chunk of data (Gandomi and Haider 2015). However, in order to do this the information technology infrastructure should at its highest level. The organization has already implemented RFID (radio frequency identification) tag and global positioning system to facilities the monitoring of their products. However, the organization will have to increase the efficiency of the data in order to get faster results using real time analytics.
The use of big data and information technology is in all the aspects of operations. Therefore, by using big data tools the organization will be able to track data at real time which will consist of inventory data, road network data, traffic sensor data and delivery schedules. The online websites will have to made more user friendly and allows saving of saved products into the cart form any of the platforms. The organization should also provide the physical store employees with iPads so that they can check for availability of the items and reorder them if they are out of stock. They will be able to develop better relationship with the consumers as they will be able to solve all the queries of the consumers. Therefore, big data analytics and information technology is used in all the aspects of the operational process and effective inclusion will increase the operational efficiency.
The organization will be able to gain competitive advantage in the market by increasing the sourcing of the informational technology services. Change management in the organizational setting can be brought about by using automation and computerization. Moreover, the use of third party service providers is also improvement in increasing the cost efficiency of the company. Ufashion should initially source arrangement with it companies and form partnerships to realize their goals (Subramanian, Rahman and Abdulrahman 2015). However, it is essential to identify the benefits of sourcing arrangement for the company and whether organization can do better without outside help. The organization should also implement agile management to reduce the cost of production and supply chain.
The organization should go with competitive pricing structure as it belongs to the fast fashion industry. The organization should analyze the price structure of the major big players in the market and develop their own pricing strategy. However, the organization will have to take tow key factors into consideration such as cost of goods and operating expenses. The organization will have to set the pricing depending upon these factors. However, the effective use of sourcing, human resource management and information technology will reduce the overall cost of production. However, if the organization is unable to increase their operational efficiency at a fast pace, the organization should apply other pricing strategies as they have to keep their bare minimum prices (Beer and Loeprick 2015). Therefore, methods such as Markup pricing and Vendor pricing will be a safe option for the company as they do not want to take the risk until there is complete integration of the business analytics and information technology within the organization supply chain management. However, the use of backward integration is one of the effective ways of reducing the cost structure of the organization but in order to do so the organization should be able to acquire more shares in the market.
Conclusion
Thus, it can be concluded from the study that Ufashion has a very good operating environment in Singapore and they can have plenty of opportunities of increasing their share in the market. The use of information technology and big data analysis is essential for developing effective Omni channel retailing. As the organization is relatively new when compared to the industry giants, they should initially focus on sourcing of their requirements in order to reduce and collaborate with other companies to increase their operational efficiency.
References
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Chaiyawantakee, S., Srimongkol, P., Bunsiri, P., Lanak, K. and Wilkison, P.B., Western Digital Technologies Inc, 2015. Inventory management system using incremental capacity formats. U.S. Patent Application 14/338,498.
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Tremewan, C., 2016. The political economy of social control in Singapore. Springer.
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