Main Issues Facing Singapore Telecom

After its privatization (from a government department to one of the largest listed firm in Singapore), the main issues facing Singapore Telecom would be trying to maintain its exceptional record of profitability and retain as much market share after the introduction of competition (e.g. M1 and StarHub). Singapore Telecom would have to achieve this in the midst of fast paced advancements in technology, maturing customer tastes and a turbulent business environment.

The Asian financial crisis created a difficult business environment for Singapore Telecom; it became a challenge to maintain its exceptional record of profitability. This can be seen from the financial performance, with the net profit growth declining by 8.1% (from 1998 to 1999) from 11.8% (1998) to 3.7% (1999).

In addition, competition in the domestic market (Singapore) was intense with the introduction of M1 (MobileOne) in 1997. This is evidenced by a drastic drop in turnover growth of 6% in 1997 from 13.7% the year before (1996). The introduction of M1 (competition) coupled with the onset of the Asian financial crisis during 1997, affected Singapore Telecom’s market share and profitability. Singapore Telecom’s market share was eroded by M1’s introduction; M1 gained 32% of the market hare within 2 years of its introduction...Read more>>

Internal Analysis of Singapore Telecom

The core competencies of Singapore Telecom are its capability in advanced (and continuing improving) innovative information technology (IT) infrastructure and systems, and value-added services. Singapore Telecom’s telecommunications infrastructure was ranked 1st in a survey out of 10 Southeast Asian countries in 1997.

Having out-of-date (older) technology would place Singapore Telecom at a disadvantage with competitors (domestically and globally) that have more effective telecommunications technology: investment in IT and value-added services has given Singapore Telecom a sustainable competitive advantage. These core competences are valuable (i.e. Singapore Telecom is able to leverage on their expertise and IT based solutions and services), and difficult to imitate (i.e. domestically in Singapore, not many telecommunications companies are able to afford their own satellite).

Additionally, due to its advanced (and continually improving) innovative IT infrastructure and systems, and value-added services, Singapore Telecom is able to renew, augment, and adapt these core competencies to give it a sustainable competitive advantage (e.g. compelling marketing position and brand differentiation). Singapore Telecom had high teledensity, high-quality fixed-lined services, higher demand for specialized features, lower vulnerability to credit risks and falling tariffs...Read more>>

External Analysis of Singapore Telecom

Amidst the rapid technological advancements (and convergence), globalization, maturing customer tastes, and periods of economic instability, the prognosis for further development and finding new growth areas for Singapore Telecom is optimistic (prosperous). However, Singapore Telecom would have to be able to continuously renew and augment its products and services to adapt to the fast-paced technological environment in periods of economic instability, and maturing customer tastes; having to look beyond its current offerings and continually improve. Below are the opportunities and threats that have been identified using the PESTL model:

1. Economic
The Asian financial crisis took its toll on Singapore Telecom’s performance as the economy was affected (e.g. large-scale retrenchments or considerable salary reduction).

Threats:
This soon led to customers turning to cheaper alternatives (i.e. Internet telephony), or cheaper substitutes offered by competitors (i.e. cheaper price plans); their tastes matured - wanting value for money services. For example, Internet telephony allowed customers customization of services – being able to choose the level of service they wanted and charged accordingly. It also enabled the provision of several value added services for customers such as real-time billing, cheaper video conferencing, and unified messaging.

From the financial performance provided in the case study, Singapore Telecom was doing fairly well in F/Y 1996, before the 1997 Asian financial crisis, with a turnover growth of 13.7%. However, during the Asian financial crisis, for the period 1998 to 1999, group revenue fell by 1.2%, and operation profits fell by 10.5%, while operating expenses increased by 6%...Read more>>

Singtel Business-level Strategy

Based on competing in the Singapore market, Singapore Telecom should focus on how to maintain its exceptional record of profitability and retain (and regain) as much market share. As Singapore Telecom serves a broad customer (market) base (i.e. residential, small and medium enterprises, and large enterprises), integrated cost leadership/differentiation strategy should be used.

By implementing a cost leadership/differentiation strategy , Singapore Telecom would efficiently produce products/services with differentiated (unique-value) attributes, while being able to maintain cost at the same time. The company would be able to provide new streams of revenue to meet maturing customer demands, and allow its products and services to be perceived differently from those of competitors (M1 and StarHub), an opportunity to gain loyalty from customers. In addition, cost leadership/differentiation strategy would permit the company to sell its products and services either at average industry prices to earn a higher profit than competitors (rivals), or below the industry prices to gain market share. M1 and Starhub do not yet have the wide range of products and services that Singtel offers to the market... Read more>>