Strategic Management Report: Analyzing Sheng Siong's Market Position

This report presents a comprehensive strategic management analysis of Sheng Siong, a prominent supermarket chain in Singapore. The analysis begins with an introduction to the company and its current situation, followed by an in-depth examination of the external environment using PESTLE analysis, defining the industry, and applying Porter's Five Forces to assess competitive dynamics. The report then delves into an internal evaluation, including a value chain analysis and a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats. Based on these analyses, the report formulates strategic issues, proposes cooperative strategies, and outlines implementation, evaluation, and control methods. It also considers the environmental impact of the company's operations. The report concludes with a summary of findings and recommendations, supported by references and appendices including detailed PESTLE and SWOT analyses. The report aims to provide a thorough understanding of Sheng Siong's market position and strategic challenges.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Table of Contents
Executive Summary.................................................................................................................3
1.0 Introduction........................................................................................................................4
2.0 Current Company Situation..............................................................................................4
3.0 External Environment Analysis........................................................................................4
3.1 PESTLE Analysis.............................................................................................................4
3.2 Define the industry...........................................................................................................7
4.0 Industry Analysis – Porter’s Five Forces.........................................................................7
4.1 SWOT Analysis – Opportunities and Threats................................................................10
5.0 Internal Evaluation..........................................................................................................11
5.1 Value Chain Analysis.....................................................................................................11
5.2 SWOT Analysis – Strengths and Weakness..................................................................14
6.0 Analysis, Argument and Strategy Formulation............................................................15
6.1 Strategic Issues and Key Problems................................................................................15
6.2 Cooperative Strategy......................................................................................................15
6.3 Selection of alternatives.................................................................................................18
6.4 Implementation..............................................................................................................18
6.5 Evaluation and Control..................................................................................................19
7.0 Environmental Impact.....................................................................................................19
8.0 Conclusion.........................................................................................................................20
References...............................................................................................................................21
Appendix.................................................................................................................................24

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1. SWOT Analysis............................................................................................................24
2. PESTLE Analysis..........................................................................................................24
3. Ratio Analysis..................................................................................................................25

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Executive Summary
The report will do an extensive external and internal industry analysis of Sheng Siong which
is a supermarket in Singapore. This report will further contain the framework for SAVED
concept along with some recommendations, issues, implementations and evaluation and
control method. Finally, a conclusion has been stated which describes the final status of the
supermarket.

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1.0 Introduction
Sheng Siong is one of the largest retailer and supermarket in Singapore which
controls a chain of grocery stores. The supermarket offers both wet and dry shopping options
to their customers. The Sheng Siong Supermarket Pte Ltd. was earlier known as Cheng Siong
Farm Company Pte. Ltd. The company was found in the year 1985 and is based in the island
of Singapore. Sheng Siong Pte. Ltd. is a subsidiary of Sheng Siong Group Ltd. The
supermarket provides a large variety of live, chilled and fresh products like meat, seafood,
and vegetables (Alex). They also provide packaged, preserved and processed food products,
toiletries and necessary household products as well. Sheng Siong supports their retail
operations with the food processing and warehousing facilities established by them. The
mission of Sheng Siong is to provide quality products at rational prices so as to create good
value for their customers. The vision of Sheng Siong is to be one of the most preferred
retailers in Singapore and in the foreign market as well.
2.0 Current Company Situation
As seen in Appendix 3C, Sheng Siong had a 6.6% year-on-year growth in the net
profit to an amount of S$18.3 million for the first three months which ended on 31st March,
2018. This growth has mainly occurred due to the increase in the gross profit of the company
which has occurred due the increase in the revenues, the improvements in the gross margin
which had been partially offset due to the high amount of operating costs. The Appendix 3A
and 3B contain the consolidated statement of the current financial position of the company.
3.0 External Environment Analysis
3.1 PESTLE Analysis
The Pestle Analysis for Sheng Siong Supermarket is as follows (Appendix 2):

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 Political – The Sheng Siong Supermarket is located in Singapore. The home country
has various great and friendly policies which are very important and valuable for the
company. These policies consisted of many low rates for interests for the company
on loans that have been taken by them for the formation of the supermarket. The
policies also enabled well-arranged agreements for taxes especially the international
taxes (Zalengera et al., 2014). Since Sheng Siong is a company which deals with the
selling and marketing of almost all types of goods, hence the company is capable of
facing changes in the tax laws, especially VAT. There are also many conflicts that
have arisen politically like with Malaysia which can create issues in the process of
customs and can also create problems in imports and exports. However, the political
situation in Singapore is comparatively stable as compared to other countries and this
could lead to a good expansion plan for the company in the future.
 Economic – The economic condition of Singapore is in a good position. The per
capita income of the citizens of Singapore is quite high in the current times. The
approximate per capita income of the Singaporeans was measured at US $77k.
Hence, it can be derived from the amount of per capita income that the disposable
income of the citizens is quite high (Aithal, Shailashree & Kumar, 2016). When the
disposable income of an individual is high, then they are able to purchase any item
that they desire. This is an advantage for the company as people will purchase from
them due to the amount of disposable income. However, the presence of their
competitors and the new entries in the local and foreign chains of supermarket means
more competition for them. They need to ward away their competitors with better
service, ambience and convenience of purchasing items, to attract new customers and
also to retain the old ones.

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 Social – The social factor is important as this is the factor which determines the
company’s strategies to give good quality services to the customers both locally and
globally. The company have been present in the market and have been operating for
the last 30 years. This means they have good knowledge about the habits and the
tastes of the local people. The company could capitalize on this and use this
knowledge for good marketing of the company (Aithal, 2016). The company could
also use its advantage of being a home-grown brand as the people would have trust
on the supermarket and depend on the quality of their services along with the
availability of a vast section of products. The people of Singapore are considered to
be hard-working, loyal and thrifty. The company could bank on these qualities of the
people to increase their sales and foothold in the Singapore market.
 Technological – Social media is a technological tool which can make or break any
topic. Sheng Siong supermarket can take the help of social media to build their brand
name and expand their brand image. However, social media is a very sensitive tool,
which if used incorrectly can be disastrous for the company. Internet can be a very
important and useful tool if it is used correctly. The company can get various insights
about the market and its competitors from the internet (Ho, 2014). The current
position and status of the retail and supermarket sector can be known with the help of
different technologies. There are also various advanced technologies which can help
the company to know about the needs and preferences of the customers and act
according to it. They could take the help of various metrics which are information
based and this could help the company to increase its revenue, and help to optimize
the production and targeting of customers.
 Environmental – Taking environmental measures are very important for a company
in today’s time. This is due to the various government policies and laws that have

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been set to sustain the environment and to make it environment-friendly for the
public. Hence, the company should avoid using plastic bags and shift to more
environment-friendly bags which are to be provided to the customers (Kolios &
Read, 2013). The packaging of the purchased items that are given to the customer
should also support the concept of go green. The company should also take proper
measures for waste management so that the proper disposal of waste is done and
there is no waste that is left to pollute the surroundings. If there are any harmful
waste which is to be disposed of by the company on any occasion, then it should be
properly done so that the environment is not harmed in any way. The company
should always adopt sustainable green practices.
 Legal – The company should conform to all the legal requirements of the country.
This would ensure that the company stays away from any legal issues and can
operate smoothly without any harassment for themselves and also for the public.
There can be various tax issues that they might face due to the volume of their
products and sales (Moro Visconti, 2016). However, they should always keep their
taxes and their compliance issues in line so that they do not have to face any trouble
in the long run. Legal issues are the most common reason for the destruction of the
reputation and the stability of a company; hence, this is an important issue that
should be the first priority for every company.
3.2 Define the industry
As mentioned above, Sheng Siong contains a chain of supermarkets in the retail
industry in Singapore.
4.0 Industry Analysis – Porter’s Five Forces
The five forces analysis for Sheng Siong supermarket is as follows:

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 Rivalry among competitors – Singapore is a small island whose population is just
about 7 million. However, the supermarket sector in Singapore is very crowded as
compared to the population. There are many rivals of Sheng Siong both local and
international who wants to gain a strong foothold in the island. The strategy of the
company to beat their rivals is to set up their stores and expand themselves in various
locations (Dobbs, 2014). These locations are the ones where the Singaporean
government have planned to build public estates. This could turn out to be beneficial
for the company as they will be able to provide their services to the customers in the
locations that they will be present and hence the customers will not have to travel
very far. This becomes a competitive advantage for Sheng Siong supermarket and
helps them to maintain their status in the Singaporean supermarket industry in the
long run.
 Bargaining power of suppliers – Sheng Siong is a supermarket which has many
branches and hence it has a long and vast reach on the island of Singapore. This has
enabled the supermarket to have a strong hold over its suppliers. The target audience
of the supermarket are the low to the middle-income families. Therefore, it has to
always keep in mind that the products which they sell in their store have to be of
affordable prices so as to match the income group of the market it has positioned
itself in (Dälken, 2014). The supermarket has good bargaining power over its
suppliers as there are many suppliers not a single one from whom they get their
products. Furthermore, due to the magnitude of the suppliers, the supermarket can
benefit from the switching costs of the many firms present in the market, the
existence of the substitutes of the products they sell and the cost of supply purchase
of those substitutes.

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 Bargaining power of customers – The supermarket provides its services to a target
audience of low to middle income and also to the wealthy market group. These
people may change their loyalty to the supermarket if they do not get the products
that they need or if they find that the same products are being sold somewhere at a
much lesser price. Therefore, the supermarket has to make sure that their stocks are
always full and that they are able to sell all the latest products that arrive into the
market, as the customers mostly desire for those products along with their necessary
items (Porter & Heppelmann, 2014). On the other hand, since the supermarket has
expanded its branches into almost all locations of Singapore, the people might
remain loyal to the supermarket because of the convenience that they get in terms of
the supermarket being near to their homes. Therefore, the bargaining power of the
customers fluctuates according to their convenience.
 Threat of substitute products or services – In recent times, online shopping have
taken over the market and tried to overthrow the supermarkets and other retail stores.
People can buy everything they need and desire from the comfort of their homes and
have them delivered to their homes as well. Moreover, customers might get various
discounts and offers from the online shopping sites. Just like every other country, the
concept and practice of online shopping have seeped into Singapore as well because
of the variety of products that are available online from gadgets to personal
belongings (Jarzabkowski & Kaplan, 2015). However, online shopping has not been
able to dissolve the manual buying of goods from supermarkets and retail stores in
Singapore. People on the island still prefer to do most of their shopping themselves
by checking out the items with their own hands and hence checking the quality of the
product. This has made the threat of substitute products and services moderate for the
Sheng Siong supermarket.

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 Threat of new entrants – The threat of new entrants in the supermarket industry is
very low in Singapore. This is because the supermarket sector mainly depends on the
capital of the entrant and the new company have to invest a lot of money in the
beginning to initially establish themselves in the market. Then the cost of managing
itself might even go higher and hence they might not be able to succeed in the long
run and face extensive loss (Rothaermel, 2015). Moreover, it can be very hard and
expensive for new entrants to find a space for themselves on such a small island. The
company would have to have high financial backing and lots of experience to
establish just one branch on the island and still might not be able to do so. The
brands which have been on the island from a long time like Sheng Siong, still
struggle to maintain their status same in the market and have to find innovative ways
to do so. This prevents the new entrants from finding its place in Singapore. Many
foreign brands have tried to enter the market but have failed.
4.1 SWOT Analysis – Opportunities and Threats
 Opportunities – The opportunities of Sheng Siong are as follows (Appendix 1):
1. Overseas expansion – Even though there are many foreign players in the
supermarket industry, Sheng Siong might have a chance to expand their reach into
the foreign market especially to their neighbours Malaysia and Indonesia. There
could be many benefits to expanding their reach overseas such as an increase in
the brand value, attracting new customers, reliance in a single market and also be
able to enjoy the vigorous economic development of the South East Asian region.
Sheng Siong might find it easier to enter the Malaysian market as they already
have an established relationship with them through the various suppliers from
Malaysia.

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2. Singapore’s untapped areas – There are many areas in Singapore with a vast
population where Sheng Siong supermarket is not yet present. This ensures that
Sheng Siong still has a lot of scopes to expand their network and market. Sheng
Siong has also started an e-commerce project in the pilot form in December of
2013, which enabled the customers in the area of Thompson to purchase their
groceries online from the convenience of their homes through the website
allforyou.sg. If the project becomes a success then the dependence on human
labour could reduce and hence decrease labour and warehouse costs and further
increase the shopping experience of the customers.
 Threats – The threats of Sheng Siong are as following:
1. Losing market share – The environment and market of Sheng Siong is a very
competitive one. There is intense competition between Sheng Siong and the other
existing supermarket chains along with the retailers and petrol kiosks. The
existing Sheng Siong stores may face competition from the new ones, or they may
face tremendous pressure and competition from the new outlets which are present
in the areas where Sheng Siong is absent. Sheng Siong has had no expansion in
the year 2013 which have made them vulnerable to losing market share due to
expansions of its competitors.
2. Disruption in supply – Sheng Siong could face many disruptions in their supply
due to harsh climatic conditions, natural disasters or even due to any unforeseen
and unavoidable incidents.
5.0 Internal Evaluation
5.1 Value Chain Analysis
The primary activities of the value chain analysis are as follows: