For now, TAG tea company is establishing their online tea store. (TAG tea book, p. 29) Singapore as the flourishing free port was strategically located in the heart of Asia; Singapore is pivotal role in the tea trade. (TAG Tea Salon, 2009) The TAG EAI company cited as the “first and only upscale tea Salon” in Raffles Place’s Republic Plaza. According to the research, Singapore is the core of the Asia economy, the Singapore tea culture is influenced by China and other Asian country.
Singapore as the highly developed country, which has the third highest per-capita GAP in the world, (Your Singapore, 2014) is the best place for TAG tea company to build the luxury concept here. Luxury items are accessible to the Singapore citizens. Singapore located in the crossroad along the Eastern sea routes, enter the Singapore market is the most efficient and effective way to introduce the TAG tea to all over the world. The definition of PESTLE analysis is the framework used to show the general environment about the country, PESTLE analysis is used by companies to track the environment they’re operating in. PESTLE analysis, 2000) PESTLE analysis including P for political, E stand for economy, S stand for social-culture, T stand for technological, L stand for the legal, E stand for CEO-environment. (Kaplan ITEM study guide, p. 75). In this report, PESTLE analysis aims to show the reason why TAG tea company chose Singapore as headquarter. There is 2 reasons to show inducting PESTLE analysis is important, first of all, PESTLE analysis provide a better understanding of the country, secondly, it can allow the organization to develop strategies which are suitable for the country.
Therefore, the PESTLE analysis table showing below is going to explain what is the characteristics in Singapore, and how is the Singapore suitable for the TAG company in 5 factors, finally will followed by what TAG tea company should do in Singapore (PESTLE analysis, 2000). Here is the table which is using the PESTLE analysis to analyze the Singapore as the country that TAG tea company chose to invest. PESTLE Analysis of Singapore Political Singapore political more focus on international business Transparency International is high.
Corruption Perceptions Index 2010, ranked joint 1st (Corruption Perceptions Index, 2010) Freedom country in the world, ranked 7th for civil liberal. Singapore is a conservative socially, but will becoming more liberalizing. Singapore government support the private business Economy Human Development Index (HID) is 0. 901, is very high Index of Globalization 2010, ranked 1 7 out of 181 countries(Economy of Singapore, 2010) One of the highest income country Achieved GAP of $ 257,499 million ,2. % increment from the previous year. Exchange rate is higher than the neighbor country US $1. 0 = SO $ 1. 5, which means easier attract skillful overseas workers Social-culture Singapore work time is short, normally end at in the afternoon 75% of population is Chinese There are 4 main races mix in Singapore, also have 4 main languages in Singapore. Official language is English Social influenced by the Asian country, already have the tea-drinking culture Online network is becoming normal Technology Internet usage is high, Singapore ranked 20th in Internet connection speed. 2nd highest Internet penetration. Zamia Technologies,n. ) Smart phone and private laptop usage is high Transportation in Singapore is very advanced and convenient Wi-If coverage is high, easily to link the Internet Credit card usage is high Singapore government is developing the e-services Legal Singapore is a sovereign republic, with a legal system based on the English common law. (government of Singapore, 2014) Singapore legal is strict, the crime rate is low, and government corruption is low. Singapore highly regarded for foreign workers, immigration laws are liberal for talent workforces. The legal for business production is complete
Singapore has the 1st position for order and security in the world CEO-environment Singapore is tropical rain forest climate, daytime is long, follows the GTRM +8 time zone Nearby several Asia country, Crossroad along sea routes High urbanize country Beautiful natural landscape, known as a hanging garden 23% country space covered by the mountains and rainforest’s (World Resources Institute,2009) The population of Singapore is 5,399,200, and keep incensing The transparency International is important for a country, because it can sends powerful information to reflect a country’s government.
According to the irruption perceptions index, the daily reality for people be showing clearly, it provide the score of the country, and the relationship between the government and citizens. The business will be easier in a country that people happy with their government. In Singapore, the government corruption index is low, therefore, the social society is more stability, it’s a good signal for TAG company chose Singapore.
Singapore is one of the highest income countries in the world, it’s important for TAG company, because TAG as the most expensive tea, be known as the luxury brand which is offering in the five star hotels. The world “Luxury” is fined as something can bring pleasure and happiness, not considered about a necessity. (Dictionary, 2010). High income level stands for the people already take care about their daily life. According to Mascots Hierarchy of needs, at the time people get more money, the needs for them life also change.
Singapore as a high income level country, the customers not only have the ability to pay the luxury, but also need luxury to rich their life. The company can be more successful if they can adapt products and services to prevalent coloratura conditions. (Kaplan ITEM study guide, p. 75) Singapore as a country which has 75% of Chinese, he cultural influenced by Chinese deeply. China is the country known as the town of tea, the tea-culture is already in their daily life. TAG company as a company selling the tea as the key product, needs the customer prefer drink tea in their daily life.
Further more, Singapore as a country have the fast life styles, people normally finish their work efficiently, and having a cup of tea in the afternoon is becoming a habit for the white collars. Therefore, Singapore is undoubtedly the best choice for TAG to invest. Technology is also important for an organization to consider about the country. In Singapore, the Internet usage s high, which means TAG should develop their advertising by using Internet, and selling their tea through on-line store.
As the development of the technology and society, the people are used to pay their bill by credit card on-line or use the card machine. So the next strategic step for TAG tea company should be offer credit promotion. Immigration laws are liberal for talent foreigners is an important factor to a developing company. In Singapore, it is not difficult to get work licenses . Therefore, a company no need to worry about the lack of workers. The currency in Singapore is higher than its neighbor countries, the foreigners ark in Singapore can earn the higher salaries than they work in their own country.
It will help an organization looking for the overseas staffs easily. TAG as an international company, needs lots of foreigners work for them, because Singapore is an attractive country, TAG have more chance to choose their staffs from all over the world. In CEO-environment factor, Singapore beautiful landscape was been mentioned in the table above. The natural landscape is important because it is the reason to attract tourism. TAG offering over 1,000 single estate fine harvest teas, can easily satisfy travelers from around the oral.
After the tourism come back to their own country, they become the free advertisement for TAG tea, the popularity can be improved at the same time. Porter’s 5 forces can be defined as the model to identify and analyze 5 competitive forces that shape every industry, and it will help determine an industry’s weaknesses and strengths. (Dictionary, 2010) Porter’s 5 forces including threat of new entrants, threat of substitute products, bargaining power of suppliers, bargaining power of buyers, and competitive rivalry.
Porter’s 5 forces analysis is the way to collect the information, but not the test of industry. In this report, Porters 5 forces is going to analyze the tea industry in Singapore, and find out the tea industry’s weakness and strengths. Here is another table showing the Porter’s 5 forces analysis, below the table, there are several details to explain the figure, and followed by the overall opinion about whether the tea industry is attractive in Singapore, and where is the weakness part of tea industry in Singapore.
Porter’s 5 forces analysis of tea industry The threat of new entrants is low; tea industry is attractive in this factor. There is no organization like competition, threat of new entrants is low means the intention is low. Threat of new entrants is low because of 3 reasons; first of all, the cost of entry is high. Although Singapore government supports private business, but the license will costs a lot and the process is complicated; secondly, TAG as the local brand, almost make up the whole tea market in Singapore, is difficult for other company to join.
Thirdly, the government regulation is strict. The ledge in Singapore have a high standard for food and drink, its not easy to looking for the tea source, but TAG has a long history in Singapore, not only experience, and also have lots of place to get the tea leaves. The threat of bustiest products is high, tea industry is not attractive in this factor. Because there are lots of options for people to choose a drink. Such as water, soft drinks, wines, beers, and juices. Compared with other substitutes products, tea is the only one need time to prepare, it’s not convenient enough.
Other drinks can served by bottle, keep in the fridge. Tea needs tea pot and tea cups to prepare, after tea become cold, the taste will not be as good as before. But TAG company come up with a good idea to solve this problem. The team creative the cold tea, which prepared in a special way, not only keep the tea’s special smell, and also eatable in tropical weather. (TAG tea history, 2013) The only deficiency is cold tea still need time to prepare. The bargaining power of suppliers is low, tea industry is attractive in this factor.
Singapore is near by China, and there is lots of tea garden in China, TAG can enjoy the cheap tea source and also the cheap workforce. China also famous for the tea, they have special The bargaining power of buyers is low, tea industry is attractive in this factor. TAG is the only one that selling tea as the luxury brand, Singapore is the country have a high income level. Lots of people need a place to consume, TAG offering their tea n five star hotels, offering a comfortable environment at the same time. The number of the buyers is big, and the number of competitors is small.
The competitive rivalry is weak, tea industry is attractive in this factor. There are 2 reasons, firstly, the competitors are weak. TAG tea company is the local brand in Singapore, the TAG brand build for celebrating the island’s great history as a trading post for teas. (TAG tea history, 2013) TAG have a strong history on Singapore, in other words, TAG tea brand is growing with Singapore. Secondly, tea industry growth is slow. Overall, the tea industry is attractive in Singapore, only need to improve the way to prepare the tea, make tea become a convenient drink.
There are 4 strategic recommendations will be described in order to solve the problems that be mentioned from PELT EL and Porter’s 5 forces analysis. The first two strategic recommendations focus on adapt the Singapore developed technology, first of all, for on-line shopping, as the development of technology, TAG tea company should start building the official on-line shops, the on-line shops not only selling the tea for the costumers, but also introduce the history of TAG tea company to the overseas customer. The purpose to build the on-line tore is to offer more convenient services.
The second step should focus on the credit card users, according to the research, Singapore credit card usage is high, each person have at least 1 credit card in their daily life, they also used to use credit card to pay the bill. Therefore, a relevant promotion is necessary for now. TAG tea company can offer special price for the credit card Users, or do some charity social actions when the customers use credit card pay the bill. The third recommendation is develop process of tea making, including the tea growing and tea preparing. Make sure the customers can enjoy the TAG tea in a convenient ay.
Finally, TAG tea brand as a luxury brand, should improve the price for their product in a balance way, in order to improve the value for the brand. In sum, TAG tea company is the luxury tea brand that selling tea and other related tea product, Singapore is their headquarters to sell “world’s finest luxury tea”. According to the PESTLE and Porters 5 forces analysis, it’s clearly that, Singapore is suitable for TAG tea company to develop, and the tea is an attractive industry of Singapore. The next step for TAG company is to open the on-line shop, develop their product process, and improve their brand value.