Developing up in a pig farmville farm, the CEO Mr. Lim Hock Chee and his siblings have helped bring Sheng Siong Group Limited to an over 800million market capital, Singapore Exchange detailed supermarket chain. The group’s humble beginning in the year 1985, from its initially store in Ang Mo Kio which surrounded by a few other food markets, has now expanded to be the one of many largest superstore chain in Singapore. Sheng Siong is publicly outlined at the Singapore Exchange (SGX) on August 17, 2011.
Since then, it grows to turn into a major superstore chain in Singapore having a total retail area of 500, 000sq ft over 33 outlets island-wide. Sheng Siong’s outlets are created to provide buyers with both “wet and dry” shopping choices ranging from an extensive assortment of clean, live and chilled goods, such as beef, seafood and vegetables to processed, packaged and stored food products and general food stores.
Over the past few years, they have developed a selection of house brands to supply customers alternatives with in ample savings.
Sheng Siong has now over 400 products underneath their 15 house brands. With the extended history and reputation for top quality products at competitive prices, the “Sheng Siong” company had become a well established household name in Singapore. More popular by customers, Sheng Siong were granted the “Superbrand” status by simply Superbrands Singapore since 08 (Superbrands, 1994). Mission: We strive to provide communities through which we function quality goods at reasonable prices together with great service to be able to create benefit to our buyers Vision: The vision is to be the preferred merchant in the market, beginning from Singapore after which further ashore.
1 . Strong company recognition
2 . Knowledgeable management
1 ) Susceptible to lease hikes and labour price hikes.
2 . Not enough a formal sequence plan
1 . Overseas expansion
2 . Untapped areas in Singapore
1 . Losing market share
2 . Supply disruption
Good brand identification
Sheng Siong is among the top rated 3 superstore chain in Singapore. Sheng Siong created a television show named “The Sheng Siong Show” since yr 2007 to increase raise it is profile between national viewers, on top of the traditional marketing mediums. Strong reputation by Singapore residents like a value-for-money supermarket chain. Awarded “Superbrand” status by Superbrands Singapore, a worldwide organization that recognizes one of the most valued and exceptional brands, every year since year 2008.
Sheng Siong is founded since 12 months 1985 and focus simply in retail business in Singapore. Administration of the group since that time rests in the hands in the three beginning Lim friends: Mr. Lim Hock Eng (Executive Chairman), Mr. Lim Hock Chee (CEO) and Mr. Lim Hock Leng (Managing Director). They have nearly 30 years of experience in grocery retailing, equipped with complex knowledge of the industry in Singapore.
Vunerable to rent outdoor hikes and work cost outdoor hikes
The cost of local rental and labour takes up 85% of Sheng Siongs’ working expenses (Maybank KE, 2013) thus it is extremely vulnerable to hikes on operating cost to be able to sustain their particular low-cost approach. The Singapore Government had increase the restrictions for employing foreign work (Mom. gov. sg, 2013), which pressure Sheng Siong, in which a third of its 2600 workers are non-Singaporeans, in their working cost. (Michelle Teo, 2013) In Maybank KE’s exploration (2013), under the sensitivity research, an increase of 5% further staff expense would sustained 9% of shortfall in Sheng Siong’s profit. According to Sheng Siong’s Gross annual Report in 2012 and 2013, rental bills had been increased from 1 ) 095million to 1. 693million, representing a more than 50 percent hike. In order to sustain the low-cost approach, such local rental hike issue had manufactured Sheng Siong Group exposed no fresh store in year 2013, whereby they can not find suited and inexpensive space to rent intended for expansion. Not enough a formal succession plan
The founders, Lim brothers are holding a lot more than 60% of the shares of Sheng Siong Group and also on the top taking care of positions. (Annual Report, 2013) The lack of a formal succession program could prove to be a weakness inside the long-run. The listing of Sheng Siong in the SGX had produced incorporation of some outdoors talents including Mr. Suntan Ling San (Executive Director) and Mister. Wong Soong Kit (Finance Director) in the management rates high, however if the Lim brothers decide to retire or step down prior to a formal succession plan is definitely put into place, it might lead to any loss of tactical direction.
Regardless of the foreign markets are also focused by main players, Sheng Siong may possibly able to seek chances in overseas expansion, especially in neighbor countries just like Malaysia and Indonesia. The key benefits of overseas development including enhance brand value, find new clients, seek for tax incentives and minimize excessive home-based, single marketplace reliance and in addition enjoy the solid economic development of the region of South East Asia. Particularly in Malaysia, Sheng Siong has already established various suppliers which associations had been founded for decades, the expansion in to the market is not really impossible.
Untapped areas in Singapore
There are still many very populated areas in Singapore where Sheng Siong is without presence just like Bishan, Tampines, Hougang, Sengkang and Bukit Merah. Which means that Sheng Siong still has a whole lot of place to grow its retail outlet network. Furthermore, Sheng Siong had commenced an web commerce pilot task in December 2013, inside the Thomson vicinity to provide consumers the convenience of shopping groceries online via the website “allforyou. sg”. The possible accomplishment of this e-commerce project can easily reduce dependence on human time, save cost on warehouse management and create fresh and better shopping connection with customers for their convenience.
Sheng Siong operates in a highly competitive environment where it faces extreme competition from the other major super market chains along with traditional food retailers, damp markets and even petrol kiosks. Its existing stores might face competition from fresh competitor retailers in their functioning areas; it could lose industry shares inside the area where new competitor’s outlets happen to be open wherever Sheng Siong is missing. Sheng Siong has go through zero development in stores in yr 2013, which makes it a crucial menace of dropping market shares due to growth of their competitors.
Supply disruptions arising from harsh climate conditions, force majeure events or natural disasters might hit Sheng Siong because about 30% of its revenue (Ocbc is definitely from the sale for fresh create.
Porter’s your five forces
Competitive competition – High
Sheng Siong is in lots of competition with significant direct opponents such as NTUC FairPrice and Dairy Farm’s Cold Storage area and Giant, yet there are plenty of other smaller sized retailers in the market. The 4 major supermarket chain a new dominant market share of more than 85percent (Euromonitor, 2014) (Maybank KE, 2014), producing the business to get in a semi-consolidated industry. Supermarkets are having suprisingly low level of item differentiation. The retail areas is growing progressively but slower. (Singstat. gov. sg, 2014) For the complete year, selling sales in Singapore caught by some. 3%, a reversal in the 1 . 3% expansion this year, but superstore sales grew by four. 3% for current prices and 2 . 4% in constant rates during the same period, compared with an increase of seven. 5% and 5. 3% respectively news. (Economic Survey of Singapore, 2013) The increasingly intense competition may result in lower sales and greater operating costs and possess an adverse influence on Sheng Siong.
Threat of new entrants – Low
The top 4 supermarket chains used to more than 85percent in the total market stocks in Singapore, thus becomes a huge hurdle for new entrants to meet the excessive capital requirements in the harsh competition. A new competitor would have to attain the financial systems of level needed to contend on expense advantage with all the major marketplace players, as a result not an convenient barrier to cross over. Marketing is another buffer to admittance.
A new entrant would need to separate themselves while using big some and to attain identity through promotions and advertising which can incur extremely high expenditures. The extremely responsive to competition of the big 4 superstore chains to sustain market share also makes the barrier larger for new traders. New competitor also encounter disadvantage in lack of experience and knowledge of consumer trends, as the top players have been in the business for many years. Difficulties in accessing to distribution stations and locations is also an entry buffer for new entrant as Singapore is a full grown market.
Threat of replacement – Substantial
Chains of convenience stores including 7-eleven and Cheers will be emerging available in the market. Convenience stores can sell some Fast Moving Consumer Merchandise (FMCG) like dairy products, carbonated drinks and packed food which usually also sold by grocery stores, thus be a substitute of supermarkets. Eating places, kopitiams (coffee shop) and food centers are also substitutes for grocery stores. People may wish to dine outdoors rather than getting fresh meat, fishes and vegetable to cook at home. Pharmacies which can be selling treatments, personal care, and baby care and toilet / pocket papers are also a substitute of superstore. Traditional rainy markets are considered another replacement for supermarket organization. Newly emerged online food shopping brings threat of substitute to supermarket likewise.
Bargaining power of customer – High
Sheng Siong can be facing strong competition from traditional grocery retailers such as wet marketplaces, supermarkets and hypermarkets, and from nontraditional competitors just like, petrol for the convenience stores, convenience stores and eating places. Customers possess various options once comes to shopping. While pricing is one of the tips, convenience also plays a tremendous role in groceries buying. People might choose to get daily food from neighborhood grocery store only on their front doorstep or buy drinks from the nearest convenience stores, rather than purposely go to supermarket.
Bargaining power of supplier – Low
Due to the nature of grocery retailing business, Sheng Siong obtain goods from a large number of suppliers and agreement manufacturers. A large network of over you, 000 suppliers and agreement manufacturers was established to get Sheng Siong’s business. Some of the supplying associations had set up since the starting year of 1985. The best and stable supplying interactions have empowered Sheng Siong to have a ongoing supply of products without significant disruptions and permit them to master greater bargaining power when it comes to the order prices of their products. No single supplier or contract company contributed a lot more than 5. 0% of Sheng Siong’s total purchases. (Prospectus, 2011)
Competitive rivalry: High
Threat of recent entrants: Low
Danger of alternative: High
Bargaining power of customer: High
Bargaining power of dealer: Low
The research above shows Sheng Siong is in an incredibly intensive business environment. Consequently , the management team will need to act really cautious on the strategy planning business businesses as well growth in order to stay competitive.
While Sheng Siong is employing low-cost strategy, it is very important for the administration to plan their business tightly view on their functional costs, as they are vulnerable to rental and labour hikes. However, not having a succession program may negatively impacts the operations of company in long run. Thus Sheng Siong should have strategies with the target to train and sustain the dynamic crucial management team for you�re able to send future development.
Control operating costs
Preserving low-cost approach
Lessen dependence of foreign labours.
Digital operations to minimize labour costs.
Seek out new home rental or perhaps purchases option in new high booming resident areas such as Punggol and Hougang. Make ideal utilize from the centralized factory cum division center in Mandai Website link, to achieve economies of scale.
Train and sustain the upcoming managing team
Set up a management training for potential employees coming from internal or external. Succession plan as well as a contingency program should be well established as soon as possible to improve the stability with the long term businesses of the organization.
Sheng Siong is definitely applying the functional business where by that divides in different categories such as Fund, Human Resources, Technology, Purchasing and Retail Functions. It is also a centralized business since it was originally a family group business. The majority of decisions are produced by high-level executives and pass down for setup. In my opinion, a transition should be made in the organizing program in Sheng Siong in the event the company desires to sustain in a longer run. Talents via internal or external must be brought up to managerial level through systematic trainings and being delegated in decisions making to cultivate new thoughts and ideas for the operations and growth of the company. The company ought to gradually decentralized in their business to promote imagination and improvements, as well as work as a path for building succession strategies.
Irrespective of using power of authority, benefits of rewards have been used in Sheng Siong’s leadership over their employees. twenty percent of the groups’ profit prior to tax was distributed as various bonus deals to it is employees in the past 2 years.
Having policy including provides 1 free meal per day for every full-time worker that has become a tradition of the firm for quarter of a century. (Sheng Siong, 2013) The CEO Lim Hock Chee is a geniune and life changing leader.
Although featuring in position thirty-five in Forbes’ Singapore’s 55 Richest list, Lim Hock Chee remains to be a simple man. He is known as the “towkay (meaning ‘boss’ in Chinese) who drives a lorry” due to that being his mode of transport for quite some time. He undertook a two-year car mechanic course and thus stood him in good stead since until lately he was called “Mr Correct it” for Sheng Siong, regularly welding trolleys and fixing electrical power outages. (Hunt, 2014)
These types of good qualities of leadership styles must be kept on in Sheng Siong to distinguish themselves from key trends in capitalized globe that does apply less interactions concerned command. However , a family business are not able to sustain and grow whether it stays simply at family style, standardization and formalization should steadily apply and leaders should apply a well-balanced portion of job performance manners in their business lead.
In spite of bureaucratic control, market control is always getting well-utilized in Sheng Siong. The ideas and strategies in advertising, property letting and purchasing, and invests and divests happen to be set in respect to close studies of the market. Sheng Siong emerged since Runner-up inside the Retail & Household Goods category of the 14th Investments Investors Association (Singapore) (SIAS) Investors’ Decision Award – Most Clear Company Prize (MTCA) 2013. (Annual Record, 2013) This means that Sheng Siong is having good control of all their accounts and audits with optimum information stated in their particular financial reports. Despite the economical parts, administration audits are closely watched. The critiques of the you�re able to send planning, organizing, leading and controlling is often printed within their annual record. It evaluations what have been done and what the forthcoming plans are, giving a clear picture to investors and business lovers.
Sheng Siong should always prudent in the expansion and execution under the harsh economic environment. Setting up a obvious succession strategy of brief, medium, and long term to ensure the future functions of the business. Overseas development exposes to risks and opportunities, the corporation should well utilize the links that it has to expand the business to another level, locally and regionally.
Sheng Siong had gradually emerged among the biggest groceries retailer in Singapore. On the other hand, there are large growth opportunity for the company. The company should stay dynamic and improve the disadvantages to keep explore the chances of growth in this competitive environment. Changing is never a bad idea. From a family organization to a detailed company, from being a mere establishment into a corporate, Sheng Siong went this far, but be it just the beginning of the future great arms in supermarket operators in the area or even inside the globe. Modern day management studies will help Sheng Siong to embrace any possible risks in the future. The transition of Sheng Siong should not be ended at this point but should maintain improving, try to achieve the mission and vision.