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Smrt Corp

In: Business and Management

Submitted By takeya1550
Words 1262
Pages 6
Social
The average daily ridership (‘000 passenger-trips) for MRT is 2295, LRT is 111, Bus is 3385 and taxi is 933 (Land Transport Authority 2003). Growing population, exponentially growing COE prices, growing MRT line coverage , sophisticated bus services, high reliable MRT system are some of the factors that increase ridership. Thus any increase in the ridership affects positively the SMRT. Technological
SMRT Institute which is a subsidiary of SMRT provides educational programmes to meet and grow the technological advancements in the land transportation. Nitec in Rapid Transit Technology programme jointly developed by the Institute of Technical Education and SMRT Institute provides strong foundation for students in the railway technology. This is programme is first of its kind in Southeast Asia (SMRT Corporation Ltd 2008-2012b). SMRT International Pte Ltd, a WOS (wholly-owned subsidiary) of SMRT so strong in technology offers PM (project management), O&M (operations and maintenance), engineering and consultancy services road to rail and road transport owners around the world. SMRT International Pte Ltd services clients in various parts of the world and they are China, the Middle East, India, Taiwan, the Philippines, Thailand and Vietnam (SMRT Corporation Ltd 2008-2012c). SMRT’s SMRT institute with world class programs and projects outside Singapore would help SMRT to have an edge in fast developing technology. Environmental
Singapore is one of the tiniest nation on the globe. Streets in Singapore take up 12% of the Singapore complete area in comparison to 15% filled by housing (Nugroho et al. 2010). Since already roads have occupied considerable amount space in this small country, future roads will be underground, already rails have gone underground. Government is convinced that as the roads are increased the drivers on the roads will also increase. Thus the road expansion in terms of underground is not a solution for traffic congestion. So the government is thinking of improving and extending the public transport to a great extent that more and more population will opt for public transport. Singapore’s small size and growing traffic has convinced the government to make public transport the most preferred choice for commuting. Legal
SMRT has 30 year (SMRT Corporation Ltd 2008-2012d) lease agreement with LTA so the recent faults can be rectified and lessons can be learnt from this failure. As the road to success is working hard and learning from failures. SMRT has a learnt a lot and would make use of this learning as a stepping stone for success. The image of the SMRT can be recovered. Since SMRT is a under Temasek Holdings so legal conditions are in favor of SMRT.

PORTER FIVE FORCES
Porter’s five forces analysis is done to analyze the transport industry in Singapore. Threat Of New Competition
Singapore’s trains and buses industry is probably a natural monopoly with the obligatory firm being able to reap substantial internal financial systems of range with long run average price falling throughout entire range of industry outcome. With partially performance range happening at a higher outcome, companies can enjoy huge benefits and produce at cheapest. Due to great set facilities price, the entry of more companies may result in higher costs, wastefulness and replication of resources, reducing consumer well being. Hence, great hurdle to entry in the form of great set price stops new newcomers from coming into the industry. Threat Of Substitute Products Or Services
SMRT major business is in MRT while SBS major business is in Bus. MRT is the main product, its substitutes available are bus and taxi. Both cannot increase speed and increasing speed is not encouraged in order to avoid accidents. But in the case of rail throughout the world speed is increasing at a level unheard, hence MRT still have very good future. Thus threat from substitutes of the SMRT’s main revenue generator is very low. Bargaining Power Of Customers
Bargaining power of the customers is very low because the market operates in a duopoly market structure. The firm concentration ratio is very high and SMRT gains monopolistic power over that route for a contractual period. Customer’s degree of dependency is high because the public transport is cheap and also MRT unit’s reliability is very high. Bargaining leverage of the customer is very low because SMRT is a public transport. For buyer switching cost is high as they need to buy their own car for which the COE prices are rising exponentially. Availability of existing substitute products is low as they need to get COE. COE is limited and very costly. Thus bargaining power of SMRT’s customers is very low. Bargaining Power Of Suppliers
Bargaining Power Of Suppliers is low which evident from the ranking given by the SMRT staffs.
Since it is under government the supplier can be found world wide Intensity Of Competitive Rivalry
The trains and buses market in Singapore is a duopoly market, with SBS Transportation being the only opponent in SMRT’s core services. SMRT’s functions are more targeted on the MRT section while the significant managing section of SBS is in the bus market. Therefore competition between SBS and SMRT is very less. Customers are also not able to change from one opponent to another as the MRT network and bus network of SMRT and SBS cover different places of Singapore. Moreover, there is no price war among the competitors because commuting charges for public transport is dictated by Public Transport Council. Thus the intensity of rivalry for SMRT from SBS in major revenue generating unit is very low.

RECOMMENDATIONS
SMRT’s faults has not damaged SMRT image, it has also damaged government as it is under Temasek Holdings. So SMRT has to concentrate more on core activities in MRT unit. One of the reasons for the breakdown is increasing number of trips per day. The trips per day increased mainly because of the increasing population. The increasing population is due to Singapore’s expanding economy. Singapore’s expanding economy needs very good public transport infrastructure so future concentration and investment in public transport (SMRT and SBS) would improve the infrastructure thereby retain the existing FDI and attracting more FDI in future. SMRT lost to SBS in the downtown line. So SMRT should still focus more on MRT unit. The SMRT unit not only generate more revenue it is more eco-friendly. SMRT should build confidence into the minds of public by reducing faults. Increasing confidence of public will help the government to extend the contract period for SMRT. Extension of contract periods will improve the revenue of the SMRT. Maintenance and monitoring services of SMRT should be given more importance so that faults can be reduced thereby increasing the reliability of the MRT system. According to LTA master plan the bridging of bus and MRT service is happening but the pace of bridging should be increased. SMRT is one of the cheapest sophisticated transports in developed countries in Asia but the crowding has increased so SMRT has to either increase the frequency or go additional lines which are very much costly. SMRT in recent years has improved in non-fare business like ads. Actually it was said that SMRT faults occurred due to more concentration on fare business so SMRT should reduce the focus on non-fare business and increase the focus in fare business which is its core business.
CONCLUSIONS
The critical analysis of the external environment and internal environment says that SMRT has good future amidst recent bad image due to continuous faults. By making some changes in accordance with the recommendation given SMRT can improve, dominate the duopoly market and reserve the support from the government.

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