Environmental Analysis of NTUC FairPrice

This report provides an environmental analysis of NTUC FairPrice, one of the largest players in the supermarket industry of Singapore. It includes a PESTEL analysis and Porter's analysis, along with recommendations for the company's long-term sustainability and growth.

Running head: ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
Environmental Analysis of NTUC Fair-price
Name of the Student
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Author Note

1ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
Table of Contents
Introduction................................................................................................................................2
NTUC FairPrice: Company Overview.......................................................................................2
NTUC FairPrice: PESTEL Analysis..........................................................................................3
NTUC FairPrice: Porter’s Analysis...........................................................................................6
Recommendations......................................................................................................................8
Conclusion..................................................................................................................................8
References................................................................................................................................10

2ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
Introduction
In the contemporary global business scenario, with more integrated, inclusive and
inter-connected business relations of the different countries and with more companies
expanding their business in different markets and geographical domains, the level of
competitions and fight for sustainability have been continuously increasing for all types of
industries across the globe (Wetherly, 2014).
In such a scenario, it thus becomes extremely important for different business
organizations, to maintain their productive and cost efficiencies as well as relevance and
popularity in the market, in order to gain competitive edge over their rivals and to earn long-
term profitability, prosperity as well as sustainability (Voegtlin, Patzer & Scherer, 2012). For
this it becomes immensely significant for the companies to analyse their internal and external
characteristics as well as the business and overall environment in which they operate.
Keeping this into consideration, the concerned report tries to discuss about the
company, NTUC FairPrice operating in Singapore, thereby analysing the current conditions
of the company and the environment in which they operate as well as the aspects of
competition which the same face in the contemporary economy of Singapore.
NTUC FairPrice: Company Overview
The NTUC FairPrice is one of the largest players in the supermarket industry of that
of Singapore. The chain is a co-operative of the NTUC (National Trades Union Congress)
and currently has in operation, nearly 100 supermarkets all over the country. Founded in
1973, the company mainly targets to provide basic amenities and necessity commodities to
the population of the country at affordable prices. It moderates the living costs of the
population of the country and mainly supplies products like grocery, bakery, clothing, snacks,
dairy, pharmacy, beverages (alcoholic as well as non-alcoholic) and other daily consumables

3ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
at affordable ranges. In 1983, the company merged to form a larger cooperative, the NTUC
FairPrice Co-operative Ltd. and gradually gained efficiencies and economies of scale in terms
of distribution of goods to stores (Fairprice.com.sg, 2018). In 2009, the organization
announced the launch of the first environment-friendly store at the City Square Mall. NTUC
FairPrice is known for being the first ever supermarket in the country, building and operating
their own distribution centres for fresh foods.
Much of the operations of the concerned company depends on the dynamics which
the same faces in the macro-environment of the region where the company operates. Taking
this into account, the following section shows an extensive PESTLE Analysis for the
concerned company to capture the environmental aspects and their implications on the
operations of the NTUC FairPrice.
NTUC FairPrice: PESTEL Analysis
The PESTEL analysis helps in analysing how the different factors- political, social,
technological, economic, environmental and legal, present in the operational domain of the
business organizations, contribute in their business frameworks and outcomes. For NTUC
FairPrice, the same can be seen to be as follows:

4ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
Figure 1: Components of PESTEL Analysis
(Source: Business-to-you.com, 2018)
Political Factors- The political instabilities present in the countries affect businesses as a
whole, negatively. However, NTUC FairPrice, in this aspect, operates in one of the most
politically stable countries across the globe, Singapore, whose government is known to be
one of the most pro-business ones and also the most trade-open and liberal government.
Being a FairPrice initiative in the retail sector, the concerned company receives much support
and help from the government of the country (Tremewan, 2016). However, the government
of Singapore is strictly vigilant when it comes to overall welfare of the residents and laws like
that of Lemon law and others exist, for which the company needs to be cautious about the
quality of commodities and services which it provides.
Economic Factors- Much of the profit and sales of different companies depend considerably
on the economic conditions of the regions where they operate. In case of NTUC FairPrice,
this aspect can be seen to have remained positive over the years. Singapore, being generally

5ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
among the most impressively developing and emergingly dominant economies in the
contemporary global framework, experiences high levels of GDP, which percolates as higher
economic abundance and aggregate demand of the populations. The fruits of the same can be
seen in the recent 6.5% growth in the retail sector (2014), which also includes the NTUC
FairPrice, which has been expanding their operations over the years (Metcalfe, 2018).
Social Factors- Singapore is one of the most globally inclusive societies, with people from
all attitudes, cultures, beliefs and from all countries residing in the country, thereby giving it
aa multi-cultural outlook. However, the Chinese, Malaysian and Indian cultures are the
dominant traits in the country and thus the company. Singapore also attracts tourists from all
parts of the world. To cater to the socially diverse population, the concerned company needs
to maintain its global and diversified product supply and brand image.
Technological Factors- With the development of the technological and infrastructural
frameworks, the way of living of people and their buying habits have also been changing. In
this context, Singapore is one of the most technologically progressive countries, with the
customers fast adapting to online methods of shopping and home delivery system, which the
concerned company needs to take into consideration.
Environmental Factors- In the recent periods, with high environmental degradation, the
countries across the globe have started emphasizing on environmental protection and usage of
green methods in every aspects. Singapore is no exception and the government of the country
puts considerable emphasis on these aspects. NTUC has also been incorporating these aspects
in their operations and they are the first environment-friendly supermarket in the country
(Goh, 2014).
Legal Factors- The country in which NTUC operates has a productive and highly efficient
legal framework, with robust customer as well as producer welfare increasing legal

6ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
frameworks. The policies regarding the Fair Price Organizations specifically aims to increase
the prospects of the same along with aids for them to achieve their goals, which can be
expected to benefit the NTUC FairPrice also.
NTUC FairPrice: Porter’s Analysis
The competitiveness of the concerned company and its comparative advantages and
disadvantages can be analysed with the help of the Porter’s Analytical Framework, which
takes into account the components to analyse the overall competitiveness of the business
organizations, which are as follows:
Figure 2: Components of Porters Five Forces Analysis
(Source: Strategicmanagementinsight.com, 2018)
For NTUC FairPrice the same can be seen to be as follows:
Industry Rivalry- In spite of being one of the largest players in the supermarket industry of
Singapore, the NTUC FairPrice faces considerable competition from the companies like that
of Sheng Siong, Giant Singapore as well as that of the Clod Storage. The company also faces

7ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
from the international players who targets the market of Singapore, with huge cost
efficiencies and economies of scale, for which NTUC needs to keep on increasing its cost and
productive efficiencies.
Threats of new entries- One of the primary competition which the company faces in
Singapore is in terms of technological efficiencies. The competitors of NTUC, in spite of
being small in size, have been upgrading their technological aspects and many new firms
have also been entering in this sector, with facilities like that of online shopping, home
delivery services. Apart from that the increased usage of internet has also increased the
access of the population of the country to buy from various international organizations,
thereby intensifying the level of competition (McNeill, 2013).
Threats of substitutes- The company, being in operations for many years, enjoy a huge and
loyal customer base in the country itself. Being reputed for providing good quality products
at affordable prices and also enjoying economies of scale, the threat of substitutes of same
quality in same price levels is less.
Suppliers’ bargaining power- The NTUC FairPrice has a huge supply chain framework with
many suppliers enjoying long-term relationships with the companies. In the recent period,
although there exist many other supermarkets and some may give higher economic benefits
to these suppliers, however most of them choose to stick to the concerned company due to the
long-term sustainability and existence of the same in the market (Dwivedi et al., 2012).
Customers’ bargaining power- Although there exist many players in the supermarket
industry of Singapore, however, NTUC FairPrice enjoys strong consumer loyalty due to their
affordable ranges, high quality and varieties of products provided. However, given the entry
of technologically advanced and credibly competing ones in the recent period, the company

8ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
can experience higher competition in terms of increased bargaining power of the consumers
in the coming years.
Recommendations
Keeping the above aspects of the NTUC FairPrice into consideration, the following
recommendations can be potentially benefiting for the same for increasing their profitability,
prospects and long-term sustainability:
 The company needs to maintain its competitiveness in terms of high quality of the
products and services in affordable prices, irrespective of the temporary economic
fluctuations (like recessions or high inflations) in order to increase their long-term
sustainability.
 There are many new competitors entering the country like those of Gian Singapore
and Sheng Siong as well as small sized ones who have a higher technological
framework. For this the company needs to upgrade its technological framework.
 The company is overtly dependent on the market of Singapore, which makes its profit
extremely subjected to the economic turmoil of the country. To increase their
prospects and ensure steady flow of revenue the company need to expand its
operations in other geographical domains.
 NTUC FairPrice can also increase their area of service and types of products from the
existing ones in order to attract more customers, especially the new age ones.
Conclusion
As can be seen from the above discussion, the NTUC FairPrice Company, being one
of the largest supermarkets, in the economy of Singapore, has been experiencing considerable
growth and increase in its sales. The company operates in an overall stable and highly
commercial environment of Singapore, which in turn has facilitated its growth with time.

9ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
However, in the recent period, due to increase in the number of competitors in the
supermarket industry in the country as well as with the population adapting fast to the new
age technologies, the concerned company needs to upgrade its technological framework in
terms of incorporation of new service delivery processes and also needs to expand their
businesses to other countries along with maintaining their product quality and reputation in
order to achieve greater economic benefits and growth.

10ENVIRONMENTAL ANALYSIS OF NTUC FAIRPRICE
References
Business-to-you.com. (2018). PESTEL Analysis: Explanation & Examples | B2U | Business-
to-you.com. Retrieved from https://www.business-to-you.com/scanning-the-
environment-pestel-analysis/
Dwivedi, A., Merrilees, B., Miller, D., & Herington, C. (2012). Brand, value and relationship
equities and loyalty-intentions in the Australian supermarket industry. Journal of
Retailing and Consumer Services, 19(5), 526-536.
Fairprice.com.sg. (2018). FairPrice: Online Grocery Shopping & Delivery in Singapore.
Retrieved from https://www.fairprice.com.sg/
Goh, S. F. (2014). The learning environment in Singapore primary science classrooms: The
ideal and the real (Doctoral dissertation, Curtin University).
McNeill, L. (2013). Sales promotion in Asia: successful strategies for Singapore and
Malaysia. Asia Pacific Journal of Marketing and Logistics, 25(1), 48-69.
Metcalfe, S. (Ed.). (2018). Evolutionary theories of economic and technological change:
present status and future prospects(Vol. 44). Routledge.
Strategicmanagementinsight.com. (2018). The 5 Powerful Forces that Impact your Profit.
Retrieved from https://www.strategicmanagementinsight.com/tools/porters-five-
forces.html
Tremewan, C. (2016). The political economy of social control in Singapore. Springer.
Voegtlin, C., Patzer, M., & Scherer, A. G. (2012). Responsible leadership in global business:
A new approach to leadership and its multi-level outcomes. Journal of Business
Ethics, 105(1), 1-16.

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Wetherly, P. (2014). The business environment: themes and issues in a globalizing world.
Oxford University Press.