Company Description, Nature of Business and Other Relevant Facts
The company chosen here is Hiap Seng Engineering Works established in 1950 by Mr. Tan Kuay Hoe in Singapore. The company mainly provides services that cover fabrication of steelwork. However, the first milestone project of the company has been the construction of storage tanks and pipe work (Hiap Seng, 2017). Further, the company expanded its operation and undertook strategic alliances and acquisition after which it changed its name to Hiap Seng Engineering and Construction Pte. Ltd. The company has been a service provider majorly and has found a role in the maintenance services not only in process industries but also in oil and gas industries. The company listed in the stock exchange of Singapore in the year 1999 where it found its rename as Hiap Seng Engineering Limited. The company has an ISO 9001 accreditation and their facilities were certified. The company has 1000 employees and 6 fabrication facilities that covered more than 2 million sq ft. The company has a commendable record of accomplishment because of its quality, safety and delivery on time. The company has also found a place in the Forbes Asia Magazine among the 200 best public listed corporations and more so noted for its modest indebtedness growth, profitability and modest approach of indebtedness. The company however believes in the mission of delivering reliable, efficient and quality products and services not only in a timely but safely manner. Further, the company also believes in the mission of becoming a preferred service provider in constructing, designing, fabricating and maintaining process industries of Singapore (Hiap Seng, 2017).
The last decade have seen Singapore experience a massive growth economically and is now considered as an economy with high income. Several factors drive its growth that includes external and local demand, investments and private consumption expenditure. This has also had a direct impact on the industries of Singapore. Therefore, a PESTEL analysis will enable a better understanding of the the present scenario in Singapore and its related industries. This is as follows:
Political
Singapore is a country where the political risk is low. In fact it is the least stated by the political and economic risk consultancy. The country is not only a democratic one but can also cherish its political stability (Tremewan, 2016). This stability has transformed into a peace and thus resulted in a better living standard. This has also resulted in enhanced business opportunities for the country. Therefore, the political stability has have rendered a conducive ambience to the Hiap Seng Engineering Works to spread its wings globally and thereby carry on with its mission, vision and core value (Tan, 2012). This is not only helping the company to enhance its profitability but also earn a name of its own.
PESTEL Analysis of the Company
Economic
The Singaporean economy is a vibrant economy with free market that is growing at an increasingly faster pace. Moreover, the environment being corruption free highly supports its business sectors and considered as one of the most competitive countries in the world with a motivated and educated class of workers that is responsible for strengthening it (Ianchovichina. & Walmsley, 2012).The government also plays an important role in diversification of the economy that is resulting on the flourishing of many industries in the country (Nagarajan et al., 2013). The strategic geographic location of the country is also an added advantage. Singapore also has labor supply available from the neighboring countries as at a cheaper cost. This not only saves cost for companies operating in Singapore but also help them have substantial labor supply (Seenprachawong, 2016). In this regard, one can say that Hiap Seng Engineering Works have more than 1000 employees working under it who contributes to its potential growth and profitability.
Social
The social structure of Singapore is quite traditional though the younger generation has a tendency to undertake western values and culture (Green, 2013). The residents work hard to make a comfortable living that in a way helps in enhancing the productivity of the nation. The country also have a higher literacy rate as primary schooling is remains a compulsory factor. Moreover, the Singaporeans also have a good command over Chinese and English language that gives them an edge over others. The social structure of the country also helps it in attracting foreign investment and hence international trade. These social factors are giving Hiap Seng Engineering Works a better ambience to work upon and generate revenue than what is expected.
Technological
The technological advancement has been one of the reasons for a better life and lifestyle change. The advancement of Singapore contributed to the role of the internet that has not only eased the communication process but also enhanced connectivity. Moreover, the time and cost of conducting business has also reduced (Tan & Lin, 2012). Moreover, the emergence of the internet connectivity also leads to the provided a platform for social networking. Singapore also has support from its government in moving towards an era that depends on internet. This technological advancement is also providing Construction Company as Hiap Seng Engineering Works make their presence felt to a wide number of industries with just a click of a button. Therefore, this is a flourishing phase for the any company that is trying to establish their base in Singapore.
Porter Five Forces Analysis of the Company’s Competitive Environment
Environmental
The pollution from the transportation is the main problematic aspect in the urban areas of Singapore. Therefore, the ministry of environment and anti-pollution unit is working in a relentless manner for improving the quality of air and other environmental factors (Swayne, Duncan, & Ginter, 2012). Singapore has recorded the highest emissions of carbon dioxide. The country faces the problem of enough water supplies required for their needs. The country also faces pollution from industrial by products that are mainly oil. Hiap Seng Engineering Works is having overcome all the challenges and has maintained its core competencies in contributing towards petrochemical and pharmaceutical plant, gas compressors, tank farms and process equipments.
Legal
The government of Singapore however thinks that electronic commerce growth has been the result of favorable and transparent regulations and legislations. However, there is the requirement of some business, regulatory and legal settings required for supporting the economic growth and development occurring industrially (Hyde, 2015). Therefore, there are certain laws for supporting the growth of electronic commerce that includes intellectual property rights, amendments to evidence act, content regulation, and electronic transaction act. The company Hiap Seng Engineering Works has undertaken and successfully completed all the legal procedures to remain in business.
Porter’s Five Forces has been named after Michael E. Porter for identification and analysis of the five competitive forces that are not only responsible for the shaping all industry but also in determining the strengths and weakness of the industry (Rothaermel, 2015). However, the forces include:
Competition that the Company faces in the Industry
The Potential that New Entrants have in the Industry
The Power that the Supplies Have
The Power Possessed by Customers
The Threat of the Substitute Products
Porter’s Five Forces is therefore an analysis that helps in explaining why various industries are capable of sustaining profitability of varied levels. The model published originally in Porter’s book in the year 1980. This model is widely used for analysis of the company’s industrial structure as well as its corporate strategy (Srivastava, Franklin & Martinette, 2013). In this model, Porter has mentioned five undeniable forces that play a key role in molding all the industry and market of the world. Moreover, the forces mentioned in the model used in a frequent manner for measuring the intensity of competitiveness, profitability and attractiveness of a market or industry.
This force of the Porter’s model refers to the number of competitors that the company has and the ability they possess in threatening the company. The higher the number of competition that the company faces in terms of competitors and the number of equivalent products that are on offer however dictates the position of the present company (Kotabe et al ., 2012). A common trend among suppliers and buyers is that they look out for a company’s competitive position if they are not in a position to strike a suitable deal. In this context, Hiap Seng Engineering Works also faced huge competition in the petrochemical, oil-and-gas industries that led to an increase in its labor cost and fall in revenue. The company remained committed to its principles of quality, safety and timely delivery that enabled it to have a competitive edge.
The Potential That New Entrants Have In the Industry
The power of the company is affected by the force implemented by the new entrants into the market (E. Dobbs, 2014). The lesser the amount of time and money incurred by a competitor in entering the market of a company and prove itself to be effective, the more the position of the company is weakened.
Power of Suppliers
The presence of suppliers also helps in driving up the price of goods and services. The presence of the number of available suppliers for key aspects of services and goods, the uniqueness of the aspects and the cost that the company has to bear while switching between suppliers is a matter of concern (Laudon & Traver, 2013). The fewer the number of suppliers and the increasing dependency of a company on its suppliers gives more power to them. Hiap Seng Engineering Works is not dependent on the power of suppliers.
Power of Customers
This particular force of the Porter’s model refers to the ability of the consumers to bring prices down. This depends on the presence of the customers or buyers that the company has and the significance of each of these customers. There is another thing that needs to be taken into account is the cost that the customers will have to incur in switching from one particular company to another. The power of the company determined by the size of the client base that the company holds. The smaller the client base the higher the power of the company (Ghosh & Ledwich, 2012). The service provided by Hiap Seng Engineering Works is quality driven and committed by timely delivery so the customer’s dependent on this particular company does not have to move elsewhere.
Threat of Substitutes
The availability of the Competitor substitutions used in place of the company’s services and products can be a potential threat to the company (Huang & Lee, 2012). For instance, if the customer is dependent on the company for a particular service or tool and they realize that this service or product replaced by another service or tool that is at a low cost then it can weaken the company’s power. In this regard, Hiap Seng Engineering Works is providing services that are one of its kinds and so it does not have threat of substitutes. This has also enabled the company to earn substantial revenue overtime and maintain its profitability.
The recommendations for the management of Hiap Seng Engineering Works that will ensure that the company has a successful future are as follows:
Proper Planning:
The chief role of the management is to create a plan that will ensure meeting the company objectives and goals (Cullen & Adams, 2012). This involves not only knowledge about the allocation of the employee resources and delegation of the responsibilities but at the same time setting timelines that are realistic and maintaining standards that will ensure completion. The planning should be done by the people in the management in a manner so that there is a constant check on the needs of the team and necessary changes implemented wherever required keeping in mind the larger goals and aims of the company. The planning function mainly deals with working independently in determining the responsibilities of the employees, assigning priority levels of tasks and determining timelines.
Organization Skills
The organizational skills of the management also play a very essential role in ensuring that the various departments of the company running smoothly. The work of the management does not end with the establishment of the internal structures and processes but also ensuring the task best suited for specific teams and employees (Rodriguez, 2012). Moreover, the management is also responsible for ensuring that everyone and everything remains organized throughout a day’s operation. The management should also have the capability to reorganize in the face of challenges that the company might face. This could be done either through the adjustment of timeline of the particular project or through the reallocation of the task between the teams or through change of the alteration of the internal structure of the team .
Effective Leading
The management must not only be confident but also comfortable in commanding the task to their team members not only on a daily basis but also during periods of challenge. This involves projection of a leadership and direction while communicating new processes, setting goals, deciding internal policies and products and services (Hrebiniak, 2013). However, leadership can be manifested through recognition of the needs of the employees for additional boost and praises while handling conflicts between team members. The managers can act as leaders in small interactions through their exceptional encouraging, supportive and motivational qualities.
However, for ensuring the above functions in working towards the success of the company, the management should be responsible for consistent monitoring of the performance of the employee, their work quality, reliability of the projects completed and efficiency (Kerzner, 2017). Thus, control in the management implies the assurance that the actual goals of the business are met adequately and at the same time get to know the processes of making the required necessary changes when they apparently look impossible.
5. Conclusion
The company has faced a fierce competition from the oil-and-gas and petrochemical industries our cost thereby leading to a tough financial year. However, the company remained stuck to its vision, mission and core values which have finally led to its success. The company Hiap Seng Engineering works is a specialist engineering group that has robust safety, health and environment management system. The company also believes in stringent safe practices that have enabled them earn the certification for safety group of Singaporean companies. Further, the company has also garnered recognition of several health and safety award for the various projects undertaken. However, the PESTEL analysis enables a better understanding of the present scenario in Singapore and thus the company. PESTEL refers to the various political, economic, social, technological, environmental and legal responsible for a countries present state and its influence on its various industries. From the PESTEL analysis it is has worked in the favor of the company and has led to its success therefore in a way increasing its revenue and profitability. The report also discusses about the five forces of the porter’s model in doing a competitive analysis of the company. However, in the context of the Porter’s model also the forces discussed have helped the company in gaining substantial visibility on a global scale thereby leading to its growth and increased sales.
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