Singapore's Mass Transit System: Challenges and Solutions

This assignment delves into the complexities of Singapore's Mass Rapid Transit (MRT) system. It requires an in-depth analysis of both the achievements and shortcomings of this vital transportation network. Students need to explore factors contributing to service disruptions, assess the efficiency and user experience, and evaluate proposed solutions for enhancing the MRT system's performance and sustainability.

Running head: FUNDAMENTALS OF MANAGEMENT
External Environment Analysis

FUNDAMENTALS OF MANAGEMENT 2
Table of Contents
Introduction................................................................................................................................................3
Analysis of SMRT’s external environment.............................................................................................3
Political factors:.......................................................................................................................................4
Economical factors:..............................................................................................................................4
Social factors:........................................................................................................................................5
Technological factors:..........................................................................................................................5
Environmental factors:.........................................................................................................................6
Legal factors:.........................................................................................................................................6
Porter’s forces.......................................................................................................................................6
Threat created by new competition....................................................................................................7
Threat from the products which substitute the main product:.........................................................7
Power of bargaining amongst the Customers...................................................................................7
Power of bargaining from suppliers:...................................................................................................8
Intensity of rivalry amongst the competitors......................................................................................8
Issue analysis............................................................................................................................................9
Conclusion and Recommendation..........................................................................................................9
References..............................................................................................................................................10

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Introduction
The performance of an organization is affected by the environment it operates in. The
environment surrounding a company could be both external and internal. Analysis of the
factors in the environment comprise of factors like opportunities and threats influencing
the functioning of the company. These impact the formulation of strategies so that the
firm can face all challenges effectively. This can be supported with the help of tools
known as PESTEL analysis. In this report, the emphasis is laid upon the corporation,
SMRT who is a transport provider in Singapore. This company was established in
Singapore in the year 1987 and it ensures its commitment to various other businesses
apart from providing transport (Plant, 2007).
These businesses are in marketing, media, retail management and properties. It is the
company’s customer centric mission, which helps the people of Singapore to
experience a reliable and a safe lifestyle through providing an outstanding transport
service (Memon, Meng, Wong & Lam, 2016). Being a leader, in providing a promising
public transport this company is dedicated to sustain in the external environment to the
best ability. The organization provides a mode of transport in the form of taxi services,
subway, bus and train to millions of people who commute on daily basis (Guides, 2016).
The company earns a major portion of its revenue from its provision of transport service
constituting stations which are approximately 50 in number. These stations and
transport service is operational in a distance of 90 kilometers. To analyze the
sustainability of the company more deeply analysis is done through Porter’s 5 forces
too.
Analysis of SMRT’s external environment
The products and operations of SMRT corporation ltd. include various activities which
contribute to the company’s revenue. For e.g. renting spaces on its stations for carrying
out activities commercially and providing services outside the country Singapore for
various ongoing engineering projects. Majorly, the key contributor to its revenue is the
transport it provides throughout the country with the help of taxi and bus services, light

FUNDAMENTALS OF MANAGEMENT 4
rail and subway services and also, placing advertisements in buses and taxis for
providing its additional commercial services. The current sustenance of the company
comprise of the activities such as providing a transport system which is multi modal and
giving space on lease on its bus interchanges as well as stations for carrying out
commercial tasks (Fwa, 2016). This needs to be analyzed to identify the negative and
positive effects of the environmental conditions. This study of external factors is easily
categorized through PESTEL analysis.
Political factors:
In order to overcome congestion in the traffic of the country, the government
encourages in using public transport to the public. SMRT Corporation Ltd is a leader in
providing transport services whose major shareholding is in the hands of Temasek
holdings. This share is around 54.3% and the above shareholder is owned by the
government of Singapore. To cope up with the challenge to reduce traffic congestion
and use public transport, there are strategies formed to incorporate the MRT stations
which stands for Mass Rapid Transit and bus stations in the shopping complexes and
malls (Yew, 2015). This will give the public an experience to combine the shopping and
purchasing needs with their travelling requirements. They will get a convenience in
reaching their destinations directly from the malls. Temasek being a government owned
company, who is a major shareholder of SMRT provides an immense favor and political
support in encouraging the above requirement.
Economical factors:
The country Singapore has a stable government and its economy is expanding which
has resulted to rank the country a very suitable place for foreign direct investment.
Since the economy expansion has provided vast employment opportunities for the
population of the country, the citizens are not able to meet the demand of the economy.
This in turn has led to attract employees from other countries to Singapore in order to
work. The total population of Singapore has increased as there are 36.4% of foreigners
who have added due to expansion in the economy. This has helped the country to gain
a good rank in terms of an increased FDI. Public transport being the cheapest mode to
commute, has gained popularity and advancement due to expansion in the economy

FUNDAMENTALS OF MANAGEMENT 5
(Leong, 2016). In addition, the increase in the total population has led to increase in the
need to use the transport services which has made it possible for the company to gain a
competitive advantage and specialization.
Social factors:
Since, the Singapore’s economy has experienced a great change in the population
statistics which is a result of more work opportunities attracting foreign population there
is a rise in ridership (Tan, 2016). The passengers will increase resulting into a boost in
the daily average ridership. An effective and reliable system in the development of MRT
structure in order to develop its services will provide people to gain dependability.
Providing superiority with sophisticated innovations in their bus service and growing
coverage of MRT lines will attract more public leading to an increase in ridership. This
will positively impact the spending and travelling behaviors of the population benefitting
SMRT Corporation Ltd (Brand, 2013).
Technological factors:
There are programs imparted for educational purposes introduced by Institute of SMRT.
These programs are developed by the company’s subsidiary known as Institute of
SMRT in order to advance technologically and grow with the dynamic development in
the transport services. These programs run by the subsidiary aim to innovate new
features in the transportation technology. The technology in the development of its
railway services has been provided, with a strong base of technical knowhow with the
help of programs names as Nitec. There is another subsidiary completely in ownership
of SMRT named as SMRT international private limited. This company is responsible for
offering a strong technological knowledge base regarding services like maintenance &
operations, consultancy and engineering services, project administration to the owners
of road and rail transport across the globe (Abdullah, 2017). The programs offered by
the subsidiary company support SMRT to develop itself vastly in terms of technological
advancement.

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Environmental factors:
The country Singapore is amongst those countries which are small in geographical
area. Being a tiny nation, a major area is covered for residential and housing purpose
and 12% of complete Singapore’s area is occupied by streets. As the population has
increased due to expansion in the economy, the government of the country feels the
need to get future roads to be constructed underground. This is decided by the
government to avoid congestion in the traffic. The existent streets need to increase and
since the nation is small, decision is taken to develop underground streets. To find a
corrective action plan for overcoming this is to develop the public transport considerably
(Tan, 2015). Therefore, Singapore’s government has made plans to increase the
number of roads and make public transport a preferable choice in order to cope up with
more traffic due to small size of area available within the country (Cohen, 2014).
Legal factors:
It is the prime responsibility of SMRT to maintain health and safety for its customers.
There is monitoring done in short intervals of time on regular basis to assess the risks
involved in the travelling network of the company. There are campaigns and programs
held for educating the participants about the features included by them in their
commuting network in terms of safety (Min, 2016). Many measures are taken by the
company for bringing continuous improvement in commuting network like making
important announcements in order to remind and educate the travelers on escalators
(Pang, 2013). These measures have helped SMRT to reduce the number of accidents
while commuting. The other legal factors are too in support of the company as its major
share holding is in the hands of a company named Temasek holdings which is owned
by the government of Singapore.
Porter’s forces
Singapore’s transport industry needs to be analyzed to determine various external
environment factors which impact their way of working. With the help of Porter’s forces
the SMRT’s competitive conditions would be examined in detail.

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Threat created by new competition
The mode of transport provided by SMRT with the help of buses and trains has
contributed a major portion to its revenue. This is one of the reasons why the company
has attained monopoly and competitive edge over the other new companies providing
transport in Singapore. Since the transport industry is performing well and is successful
in producing high array of outcomes, it can reap good benefits along with keeping its
average pricing cheap. On the other hand, the other new companies entering the
market for providing transport services are facing a challenge to compete in terms of
providing sophistication in facilities. This is reason why they are not able to reduce their
average prices as high cost is incurred by them in making the technology and facilities
available to public in order to reap benefits (Abdullah, 2017). The facilities like avoiding
wastage of resources and reducing the health and safety risks in the commuting
network need good amount of investment by the companies. This creates hurdles for
new entrants to make the services available in competitive prices which in turn reduce
the well being of consumers (Lim, 2015). All these factors stop the upcoming new
entrants to gain a competitive edge in the market.
Threat from the products which substitute the main product:
There are various products which serve as substitute products of the mass rapid transit.
MRT being, the main service offered by SMRT has attained an image of providing a
major business for revenue generation. The substitute modes like cycling, walking and
hiring a chauffeured transport have made a mark which is not very convenient and
popular among the people of Singapore in comparison to the public transport through
rail services. If the distance and speed both need to be covered in a short duration of
time, then MRT has gained the trust of people in Singapore. This has led to bring the
threat caused from substitute products or services low.
Power of bargaining amongst the Customers
SMRT enjoys a low bargaining power of customers in Singapore due to a major reason,
that the population there is completely dependent upon the public transportation. They
do not find it feasible to spend on other mediums to commute within the country as
mass rapid transit has gained reliability and trust of other people. SMRT being able to

FUNDAMENTALS OF MANAGEMENT 8
achieve monopoly in making the public transport available in reasonable prices has
increased the cost of switching high for the people. The reason for switching cost being
high is huge cost incurred in getting a certificate of entitlement which is required for
owning a car in Singapore (Benner, 2016). Due to this, the company faces a low power
of bargaining from the customers.
Power of bargaining from suppliers:
There is a huge availability of suppliers for various means of transports like trains, taxies
and buses. The company enjoys a second position in being a leader in making taxis
available to the public for travelling. The first position in being a leader in market is due
to its strong network of MRT (Sim, 2014). SMRT can easily switch its suppliers if they
seem to get offered a reasonable package from one particular taxi supplier as
compared to another. The reason of the vast availability of suppliers is the strong image
the company has gained by investing a massive amount in development of public
transport in the form of taxis, buses, and light rail and subway services. The company
has earned a word wide popularity which is why; the power of bargaining amongst the
suppliers is low.
Intensity of rivalry amongst the competitors
In terms of competing with other transportation companies, SMRT has to face rivalry
only from just one opponent named as SBS transportation. The company focuses upon
the MRT network while the competitor SBS targets its market by making a convenient
and inexpensive bus service available to the people in Singapore. Therefore, the
competition between the two is not very fierce. As there is a difference in the targeted
travelling needs the customers do not find a need to switch one opponent to another.
The places which are supposed to be covered by the bus service and MRT network
offered by the company SMRT are different from the places covered by SBS in
Singapore. The price component is not decided by the two companies and is dictated by
the government body council of providing the public transportation service. The above
factors do not impact the competitive rivalry between the two companies.

FUNDAMENTALS OF MANAGEMENT 9
Issue analysis
There are various issues encountered by SMRT in terms of cost incurred in
maintenance and repair of existent modes of transport available for the public of
Singapore. Providing a good sophisticated technology in the MRT network needs the
company to invest on maintenance and engineering services. Apart from this, the
council of providing public transportation in Singapore has set standards for providing
good service in terms of quality which needs to be strictly followed by SMRT. Any
standards not met leads to incur penalty and fine. This leads the company to bear huge
expenses.
Conclusion and Recommendation
The turbulence caused by the in depth analysis of the external factors affecting the
company needs a focus so that all the shortcomings and faults are rectified and
improvements are made. The strategy which needs to be formulated requires targeting
the factors such as recovering any failure in the MRT network due to an increase in the
trips which take place per day. The reason for this is, there is an increase in the number
of people using the public transport due to an increase in the population. If more
emphasis is upon progressing in developing the company’s infrastructure to improve the
transportation services, then this will help the company to attract more travelers leading
to retain the existing FDI. In order to overcome the risks involved in commuting in terms
of health and safety of the customers, SMRT needs regular monitoring and
maintenance strategies to bring confidence amongst the people (Teo, 2017). The future
plans of SMRT Corporation limited. should be such that they bring improvements in its
train systems. This must be supported by the company through investing a huge
amount in the overall train system. More construction of train lines will make the
company more competitive over other companies in the transport industry.

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References
Abdullah, Z. (2017, September 22). More rail engineering talent needed as MRT
network grows: SMRT advisory panel. The Straits Times, Retrieved from
http://www.straitstimes.com/singapore/transport/more-rail-engineering-talent-
needed-as-mrt-network-grows-smrt-advisory-panel
Benner, T. (2016). Living in Singapore - Motoring & Transportation: Fourteenth Edition
Reference Guide. Singapore: American Association of Singapore.
Brand, R. (2013). Facilitating sustainable behavior through urban infrastructures:
learning from Singapore?. International Journal of Urban Sustainable
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Cohen, S. (2014). Understanding Environmental Policy. US: Columbia University Press.
Dimitriou, H. T. (2013). Transport Planning for Third World Cities (Routledge Revivals).
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Fwa, T. F. (2016). 50 Years of Transportation in Singapore: Achievements and
Challenges. Singapore: World Scientific Publishing.
Guides, R. (2016). The Rough Guide to Singapore. UK: Rough Guides.
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line-and-north-south-line-due-to-traction-power

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