Comfort Delgro – Porter’s 5 force analysis
Threat of new entrants/competitors
LOW- In the transport industry, especially in Singapore, the infrastructure is complicated and takes a long time to build. It is a costly investment to enter into the transportation industry in Singapore because of the high prices of vehicles and licenses to obtain these vehicles (certifcate of entitlement). Comfor Delgro is also the industry leader in Singapore in terms of taxis. This industry also requires government backing and approval. ComfortDelgro also owns 75% of SBS Transit, the largest bus operator in Singapore.
Threat of substitute services
LOW - The common modes of transportation are cars, motorcycles, buses, taxis and trains(MRT). The need of transportation is to get from one place to another. ComfortDelgro has businesses is all of these forms of transportation. There cannot be another form of substitute for these modes of transportation unless a new mode is invented. People change between these same few modes of transportation. E.g. a car owner would take the bus, mrt or taxi if his car breaks down or sells his car to use public transportation. Consumers could also substitute between these various modes of transportation. E.g taxis are more expensive than buses. Also consumers switch to buses when MRTs start breaking down and consumers lose confidence in the service.
Threat of Bargaining power of customers (buyers)
LOW - Customers have little or no bargaining power in the transportation industry in Singapore. Demand for these services are almost always constant and therefore making them price takers. Customers cannot possibly give up taking any of these modes of transport. Buyers are also relatively insensitive to price changes. They may switch from one mode to another but not give up the service entirely.
Threat of Bargaining power of suppliers
MEDIUM - Suppliers in this industry would be manufacturers of taxis, buses, trains , cars and motorcycles. The governing body of certificates of entitlement to operate these vehicles can also be considered suppliers. The firm might also encounter problems with labour. Drivers, engineers and service staff are required and these employees must be equipped with relevant skills to operate these vehicles. SBS Transit has recently extended it’s hiring reach to China to recruit more bus drivers. This could be due to the increase in the number of buses in Singapore and a lack of bus drivers locally. Switching suppliers/brands of vehicles in this case might or might not be a favourable option. (Engineers/maintenance have to learn the mechanics of new vehicles and may be time consuming and costly to train staff).
Threat of Intensity of competitive rivalry
LOW - Rather than intense competition from rivals, the firms in this industry operate more like an oligopoly. There are about 5 firms in the similar industry in Singapore. There was a recent price increase in taxi fares across all firms in the industry and this could be due to them operating in an oligopolistic nature. Advertising expenses need not necessarily be high in this industry, except that advertising could be used to restore buyers’ confidence in the service. (MRT).