About Suzuki
Japanese Car Company Suzuki is a multinational corporation engaged in the automobile industry that constructs automobiles, motorcycles, four wheelers vehicles, all-terrain vehicles [ATVs] outboard marine engines, wheelchairs and various small internal combustion engines. Head office of the company is in MINAMI-KU, Hamamatsu, Suzuki was the ninth biggest automaker manufacturing company in the world in 2014 (Suzuki Singapore, 2018). Worldwide Suzuki is working with 45000 employees and 35 manufacturing facilities in 23 countries and has 133 distributors in 192 countries. It’s a world’s tenth largest company in sailing automobiles, and nationally it’s considered as a third largest company for sales. The present study is based on an evaluation of external environment of the company by making use of PESTLE and Porter’s model in order to provide recommendations so that company can improvise on their strategic position.
Suzuki in Singapore helps to purchase own vehicles at the most striking prices and finest and favourable conditions. With the 30 years of experience all over the world, Company has an aim to satisfy and delight their customers by providing products and services with extreme quality (Suzuki Singapore, 2018). Suzuki in Singapore provides higher customer satisfaction and protection with great quality products to clients.
Economic growth and development of Singapore automobile industry are astonishing for many decades. The economy is growing higher because of various factors such as investments, internal and external demand, and private consumption expenses (Thomé, Scavarda, Pires, Ceryno & Klingebiel, 2014). The pestle is the analysis tool which is use examine the internal and external factors of the company to know its position-
Factors which are considered in Pestle analysis are-
Politically Singapore is free and has a low economic risk. It is stated by the political and economic risk consultancy [PERC] that in the whole continent, Singapore bears the lowest political risk. It is a self-regulated country in which peoples are elected by the public to lead the nation. It helps in developing stable business with peace and along with ensuring a better standard of living (Rodan, 2016). Politically Suzuki is rising in protectionism measures for higher business opportunities across the world and selling prices has been increased in the markets due to which price efficiency has been reduced in comparison to locally produced vehicles.
In terms of economic factors, Singapore applies free-market policies and developing incredibly. On the basis of per capita income country is on a peak in ASEAN. Business sectors in Singapore are corruption free in comparison to all the competing countries. Work procedures are reinforced by educated and motivated workers in the company moreover to maintain the business framework financial and legal aspects.
For expanding the industrial sector, the government has invested in recent times by which many industries like tourism, pharmaceutical and automobiles have grown up (Yeung & Coe, 2015). Its planned business locations are the main reason behind company’s expansion and success. Some restrictions on Singapore economic performances are-
- Shortage of labour
- Increasing labour cost
- Turn down of production
Worldwide Growth and development of Suzuki Company makes higher export sales. Domestic market of Suzuki is economically growing it is expected that by 2020 company will reach 5 million sales or above.
Suzuki in Singapore
Singapore is still following the traditional values and morals. But today’s millennial beliefs in western culture and values (Salvado and et al., 2015). For fulfilling their basic desire and needs people work hard, and it leads to increased national productivity. Moreover, it is expected that it will increase the purchasing power of customer’s. Singapore has a highly educated people because their primary schooling is compulsory and has good command over languages like English and Chinese.
Today people want their own vehicle rather than travelling on public transport which helps Suzuki Company to develop, moreover company is moving towards fulfilling the customer’s demand. Suzuki takes care of customers comfort by providing best innovative, powerful technologies. The company is also growing in sectors of carpooling and shared mobility which is beneficial for the middle-income population.
Technologically Singapore is on a hike, and people’s lifestyle and standard is also advanced. Internet plays a major role in growing a business .its helps in easy communication and connectivity (Newman & Kenworthy, 2015). Increased technology helps to reduce the cost and time of business moreover people connect worldwide with growing technology. Extensive IT infrastructure in Singapore helps Suzuki companies to set up regional operations.
Increasing technology for safer driving and performance with green technology operation is improving the customer’s demand for the products. Semiconductor technology is also applied where the light weighted material is used for production which gives better speed and enhanced aerodynamics for better fuel efficiency and ergonomics.
The government of Singapore thinks that electric business depends on clear and constructive rules and regulations. Legal policies and business strategies give access to the industrial growth and economic development. Government is focusing on improving the environmental effects because of vehicle CO2 emission. Singapore is following 6 emission standards to reduce the CO2 effect and apply on-road emission test (Law, 2017). Suzuki works for the passenger’s safety by increasing the features like electronic stability control, automated brake assistance, ABS, and lane departure warning system.
Suzuki is required to consider environment laws to ensure their operational activities does not have an adverse impact on the society. For this aspect, they are required to consider green technology to have sustainable success by compliance with laws and ethical aspects.
Porters five forces analysis is done to determine industrial competition. Following are the five forces that impacts the Suzuki are-
- Competitive rivalry: Suzuki deals with the strong competition in the industry. Competitive rivalry defines how firms are affected by each other. In Suzuki Company some external factors mainly contribute towards industrial rivalry in environments such as constant improvement by competitors and price war (Brown, Gonder & Repac, 2014). Automobile companies are different from each other because of their innovative ideas and marketing policies. Suzuki is competitive with various firms because of their costs, fuel efficiency, electronics, brand image, and many other factors. The company should make consistency in the strong strategies to deal with the competitive forces in the industry.
- Bargaining power of Suzuki customers: Revenue and profits are main business factors which are affected by the customers. Buyers are influential to the industry. Some external factors are mainly responsible for effective bargaining power of buyers as per low switching costs by which buyers can easily switch from Suzuki to any other company at no extra cost (Rothaermel, 2015). High and accurate information about the product can help the customers to choose their best options. Moderate substitute availability affects the business all though Suzuki services are better and convenient. These factors are effects the bargaining power of customer; Suzuki should consider that its products match the demand and expectation of the target customers.
- Bargaining power of suppliers: The major aim of the Suzuki supplier is to influence the firm for improved commerce. Porters five forced analysis helps to know about the relation between firm and supplier. Worldwide, the limited or moderate population of suppliers generates reasonable forces that influence the Suzuki(Ramanathan and et al., 2017). Bargaining power will be high when supplier are fewer .further if supply is highly available used for producing Suzuki’s products will slow down the power of supply .further, the majority of the contractor in the worldwide automotive industry has a low forward addition or ownership and control of the distribution of the material that reaches to a firm like Suzuki. These factors highlight the company’s position in terms of weak force or bargaining power of suppliers
- Threats of substitutes: the threat of substitute affects the Suzuki business by competing with the firm’s products. External factors of industry are main contributors to the substitution. Many times it is easy for the customers to switch Suzuki to some other substitutes like public transportation, Bicycles, and other transportation modes that are moderately available(Sierzchula and et al., 2015). In many areas, Suzuki substitutes are not available basically, in areas where public transportation is not available therefore urban sectors. People who are already using the Suzuki products are less likely use substitute products. Therefore there is the very limited threat of substitution in Suzuki that helps to make its products more reachable, affordable and convenient.
- Threats of new entrants: newcomers are competitors that effects Suzuki’s business Suzuki has a less threat of new entrant in the market because of the high cost of establishing ,maintaining and growing the business in the industry. Suzuki is one of the leading companies in the world and the biggest brand (Porter & Heppelmann, 2014). these barriers weaken the new entrants on the company. Threats of new entrant are less for the Suzuki Company. And it is maintaining its position as a topmost automobile company.
Recommendations
The present study suggests certain recommendations in order to improve the performance of Suzuki in automotive sector of Singapore:
By considering the above findings, it is revealed that there is labour deficiency, increasing cost of labour and reduced production, so for this aspect, Suzuki must establish a learning environment by involving training programs while providing optimal resources with skilled methods. By improving training and development program, more labour engagement will be ensured. Appropriate wage structure and timely pay must be conducted by the company to keep the worker satisfied. The company could also hire skilled workforce from rest of the world, and offer them opportunities to develop their career. Further, improvement in labour can thereby expand production process.
Economic Factors
The Suzuki must improve its procedures and should be effective enough to adopt the strategies more rapidly as compared to their competitors when there is the emergence of economic crises
As Singaporeans have traditional values, by taking the same into account, Suzuki must deliver their products and services with the maximum of added value and must create a culture where customers can provide a suggestion for improvement areas with their feedback. This will help in more customer engagement,
At present era, technology is the aspect which is ever evolving and advancing, so the company is required to do technological advancement at every step. Customer demand for innovative, fuel-efficient, cost-effective and technology driving products, so the company must come out with the same products in order to achieve a higher competitive advantage in the market.
By considering the fierce competition, the company must conduct word-of-mouth promotion which will help the company in improving its products and brand image while fostering marketing and sales. As there are various competitors present in the market, and also customers are demanding high quality and cost effective cars which are affecting the entire automotive sectors. For the same problem, it can be recommended that company is required to adapt potential strategies to cope up with these issues to ensure consistency, higher growth and performance. It is significant for the Suzuki Company to nurture its position and adapt strategies accordingly to neglect the negative impacts and spot the positive impacts of the internal and external environment.
Coming to the political factors of Singapore, the study reveals that government requires the company to provide as minimum as possible damage to the environment. Suzuki is required to make optimum use of available resources, and conduct production in an environmentally friendly manner, that means preventing wastage and natural resource management. Moreover, for attaining compliance with government rules and regulation in the concerned industry, Suzuki must establish appropriate structures, policies, systems and procedures in which environmental adaption becomes easy. Furthermore, the company must implement tools and techniques which are for the betterment of overall market and customer value.
Conclusion
The report is designed to assess the external environment of Suzuki; wherein conclusion can make that automotive industry of Singapore is highly competitive. However, Suzuki has managed to be a leader in the Singapore automotive sector by integrating quality and top-notch products and services. The PESTLE analysis has assisted in assessing the business environment of Singapore automotive sector of Suzuki as a large. In addition to this, PORTER FIVE FORCES has provided meaningful insights of the external environment that can affect the company. By complying with the above-described recommendations company can improvise their strategic position in order to attain competitive advantages.
References
Brown, A., Gonder, J., & Repac, B. (2014). An analysis of possible energy impacts of the automated vehicle. In Road vehicle automation (pp. 137-153). Springer, Cham.
Law, C. M. (2017). Restructuring the global automobile industry (Vol. 4). Taylor & Francis.
Newman, P., & Kenworthy, J. (2015). The end of automobile dependence. In The End of Automobile Dependence (pp. 201-226). Island Press, Washington, DC.
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(11), 64-88.
Ramanathan, R., He, Q., Black, A., Ghobadian, A., & Gallear, D. (2017). Environmental regulations, innovation and firm performance: A revisit of the Porter hypothesis. Journal of Cleaner Production, 155, 79-92.
Rodan, G. (2016). The political economy of Singapore’s industrialization: national state and international capital. Springer.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Salvado, M. F., Azevedo, S. G., Matias, J. C., & Ferreira, L. M. (2015). Proposal of a sustainability index for the automotive industry. Sustainability, 7(2), 2113-2144.
Sierzchula, W., Bakker, S., Maat, K., & Wee, B. (2015). Alliance formation in the automobile sector during an era of ferment. Creativity and Innovation Management, 24(1), 109-122.
Suzuki Singapore. (2018) Retrieved on 30th May 2018 from < https://www.suzukicar.com.sg/>.
Thomé, A. M. T., Scavarda, L. F., Pires, S. R., Ceryno, P., & Klingebiel, K. (2014). A multi-tier study on supply chain flexibility in the automotive industry. International Journal of Production Economics, 158, 91-105.
Yeung, H. W. C., & Coe, N. (2015). Toward a dynamic theory of global production networks. Economic Geography, 91(1), 29-58.
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