Bernard Onyango

INTRODUCTION : The primary function of management is to get the people to work together to attain the organization’s goals and objectives. The process of management include; planning, organizing, directing and controlling. In this work the writer is focusing on Keppel Cooperation company of Singapore by giving a description of the company, give the pestel analysis of the company undertake the porters 5forces analysis , discuss some management recommendations for the company and lastly provide a general of the current state of the company based on the pestel and porters analysis. DESCRIPTION OF KEPPEL COOPERATION Temasek Holdings founded Keppel shipyard in 1968 when Keppel harbor was taken by the British Royal navy after it withdrew from the island. In the 1970s and the 1980s the company focused on the diversification and regionalization with the first venture in 1975. Keppel Phillipines shipyard was set up in partnership with Fillipino investors with its headquarters in Cebu and Manilla. Later in in 1978 the company then ventured in financial services to Marine contractors under Shin Loong credit.(Kep corp.com) Keppel then ventured into property market in 1983 after acquisition of Straits Steamship company. The straits company was later renamed to Straits steamship land to focus on the property market. Having acquired the Asian commercial bank in 1990, Keppel cooperation established banking and financial services as a pillar of growth for the company and in 1997, Keppel bank acquired Keppel Tat Lee bank.(Journal of Asian business 20002) In 2001, privatized its offshore and marine business which led to the integration of Keppel shipyard together with Keppel FELS and Keppel SingMarine to form Keppel Offshore and Marine group in 2002.(Straits times 2017). The company have about 20,000 employees with six divisions under the leadership of doctor Lee Boon Yang as chairman and Loh Chin Hua (CEO) and the headquarter at Keppel bay. PESTEL ANALYSIS OF THE COMPANY: Pestel analysis is an acronym for a tool used to identify the external forces facing the organization. The letters stand for Political, Economic, Social, Technological, Environmental and Legal. This study is to establish how this factors are affecting the business in Keppel cooperation of Singapore. 1. Political factors. These determine the extent to which the government and the government policy may impact on the organization which can be political stability, trade as well as fiscal and taxation policies. In the case of Keppel cooperation, the company has shown growth due to political stability in Singapore and there is a likelihood of favorable tax policies to facilitate its growth and development having seen how it started from its inception in 1968. The business can only thrive if the taxation policy is conducive to necessitate its survival. 2. Economic factor The economic factors impact directly on the organization either negatively or in directly. Some of the factors are; interest rates, employment and unemployment rates, raw materials and foreign exchange rates. Keppel company is likely to have flourished based on these factors considering the number of branches it operates in the country and by creating employment opportunity for about 20,000 people. (John 1999) says ‘Today what was once a single shipyard has become a broad-based with assets of US dollar 16billion and 10 listed subsidiaries in diverse fields of banking, property, stockbroking mobile phones, engineering and insurance’. Borrowing from this information its evident that the economic environment in Singapore and other countries where Keppel corporation is doing business have greatly favored this giant cooperation to perform and develop. 3. Social factors An organization tend to benefit from the social factor by understanding the customer needs and for this reason Keppel cooperation have been able to change from shipyard ,to financial institutions and land and property market. This shows that the marketing team in this organization understands the social dynamics of their customers in the region as well as in the country through the cultural trends and the changes in the people’s lifestyle. The company has very efficient talent management structure that enables young professionals to come up with and produce fresh ideas before the senior management which shall prove to be profitable to the organization (Keppel corp.SwotandPestle.com). The company can with its vast subsidiaries both within the country and the region have changed the lifestyle of the in terms of education since it is in common knowledge that for the personnel to work and achieve the desired objectives of an organization, they must undergo some form of training besides the basic education attained before joining the company. 4. Technological factors These factors consider the rate of technological innovation and development that could affect the marketer and industry. This factor have impacted the company positively thereby enabling it to establish own telecommunication and transport division as one of their branch of companies. The company is then using the new methods of distribution and logistics to reach out to the customer and to beat the market demands. 5. Environmental factors The environmental factors include ; climate ,recycling procedure, waste disposal and sustainability. This best applies to kappel company in the areas of infrastructure division by studying the climatic changes that can hinder the construction of roads and housing property. 6. Legal factors An organization must understand the legal requirements within the territories they operate in. Some of the factors are; customer laws, employment legislation ,health and safety. Considering the numerous branches Keppel cooperation is operating in the country and beyond, is shows the company understands this factor and therefore is able to employ the big number of people. The government has zero tolerance towards corruption but allows the companies to operate in all kinds of environment by complying to the laws of the country. The government does not interfere in, nor influence the business decision of Temasek which owns20% of stake in Keppel which owns 100% of Keppel offshore &Marine Limited.(www.agc.gov.sg.). This is evident when Keppel cooperation was involved in the bribery case with an international company and was forced by the government to pay. PORTER’S 5 ANALYSIS OF THE COMPANY: Porters five forces looks at the factors that determine whether a business can be profitable or not in a given environment. Using the Porters analysis together with SWOT analysis can help an entrepreneur whether his or her business is best placed in that particular set up. Porter wrote in a Harvard Business Review article. ‘A healthy industry structure should be as much a competitive concern to strategists as their own company’s position’(businessdaily.com ). The following are the five forces model developed by Porters that shape the industry in terms of competition. a) Competitive Rivalry These are the forces that examine how intense the completion is the market place. Here the number of existing competitors is considered and what each one can do because when rivalry completion is high, factors like advertising war ensue which can sometimes affect the business in the long run. Singapore Marine faces strong competition and challenges in the global arena , especially from the first emerging countries such as China and Vietnam where the cost of labor is cheaper. Marine companies are facing pressure in the changing environment to make their operations cheap and profitable. ( Keong 2003). In his study,( Keong 2003) quoting ( Porter 1980) says that the cost of leadership is simply to be able to sell the goods or provide the services at a price lower than that of the competitor. b) The Bargaining Power of Supplies This force analyses how much power a business’s supplier has and how much control it has over the potential to raise its prices ,which in turn lowers a business profitability. It also assesses the number of suppliers of raw materials and other resources available. The fewer supplier there are, the more power they have, Businesses are in better position when there are multiple suppliers. (Porter 1979). Considering this argument and considering the multiple subsidiaries that Keppel Cooperation is operating both in Singapore and the region, is shows that the leadership and the marketing team are utilizing this force amicably to penetrate the market and to remain relevant. c) The Bargaining Power of Customers In the business world, the customer plays a very vital role. This force examines the power of the customers, and their effect on pricing and quality. Customers have power when they are fewer and there are plentiful of sellers and its easy to switch. The use information technology enabled by E-Commerce, is another approach to facilitate a level of service to keep the customer loyal. Value added services such as stock control and accountancy are also features that can lock the customer in. (Keong 2003). The company like Keppel which have since invested so much on telecommunication services is using this force to reach out to the customer and to keep them intact. d) The Threat of new Entrants This force considers how easy or difficult it is for a competitor to join the marketplace. The easier it is for a new competitor to gain entry , the greater the risk is of an existing business that is already established being depleted. In his study, (Keong 2003) says that the uncertain economic climate, keener competition from original shipyards and the constraints on manpower are some of the old issues that have to be addressed. It is on this basis that the shipyards of Singapore is seeking improvements and their responsiveness to market changes posed by new entrants such as China, Indonesia, Vietnam, Thailand and India which compete directly with established yards like Keppel Marines. e) The Threat of Substitute products or services. This force deals with how easy it is for customers to switch from own business product or service to that of a competitor. It examines the number of competitors , how their prices and quality compare to the business being examined and how much profit these competitors are earning which would determine if they can lower their costs (Porter 1979) .This force have a direct impact on Keppel company given that countries such China and Vietnam have cheap labor and are likely to lower their prices to capture the market. MANAGEMENT RECOMMENATIONS i)Talk to the clients For the company to improve , there is need for the management to develop a positive rapport with the client and to keep in touch every day. ii) Leverage your Expertise There is need to improve on the expertise for a business to grow. Most of the enterpreneurs run the risk of giving away too much for free for example by under pricing their services. iii) Define your Brand The business should align with core values which involve the messaging and virtual presence . This can be done by reviewing the site so that every page reflects your brand. iv) Give People what they want Market research , tracking behavior and surveys are common resources. They are designed to identify the needs and wants of the client. When the business offers the client services they want, they are likely to come back and also tell others about your business. CONCLUSION : Findings from this study based on the Pestel and Porters analysis , it is clear that Keppel Cooperation is public enterprise which has evolved and developed over a period of time and continues to grow to date. This growth is largely pegged on Porters’ five forces analysis that help shape company’s competitiveness in the world of trade. This study looked in depth on how Keppel company utilized the Porters model deal with intense completion from the emerging businesses in the region as well as the of substitute of products and services. It is also evident that the company borrowed so much on the Pestel analysis to organize its operations to create about six divisions and subsidiaries. Some two notable areas as found by this study is the social and technological factors where the company have helped in improving the peoples lifestyle through education and employment. The company also invested on technology to reach out to their customers as opening a telecommunication as one of its branches of business. REFERENCE: John Frain. (1999). Introduction to Marketing, International Business Press- London. Michael E. Porter (1979). How Competitive Forces Shape Strategy. Harvard business school publishing corporation- UK. Pock Keong, Ong (2003). Achieving Competitive Advantage in Singapore Marine through E-Commerce.pdf doc, Illinois University- USA. The Asian Venture Capital Journal, vol,10. Asian Venture Journal Ltd,1997. University of Califonia,22 May 2008. Website : https//www.straitstimes.com/lifestyles/keppels-journey-in-book