Backed by the expertness and experience of SMRT Corporation, our subordinates – SMRT International Pte Ltd and SMRT Engineering Pte Ltd – offer operations and care ( O & A ; M ) , technology, consultancy and undertaking direction services to inveigh and route conveyance proprietors around the universe. Our scope of solutions includes in-house proprietary merchandises, such as automatic faregates and on-board information system shows.
SMRT International Pte Ltd
For any metropolis to turn and thrive, an effectual and dependable public conveyance web is indispensable. SMRT International Pte Ltd, a wholly-owned subordinate of SMRT Corporation, was established to spearhead SMRT ‘s enlargement of abroad concern operations. Pulling on our wealth of experience, we portion our expertness with abroad conveyance operators, functioning clients in assorted parts of the universe, including India, China, Taiwan, the Middle East, the Philippines, Vietnam, and Thailand.
SMRT Engineering Pte Ltd
As SMRT ‘s concern development arm, SMRT Engineering Pte Ltd delivers technology solutions for the planetary rail industry. We are besides licensed by the Infocomm Development Authority of Singapore ( IDA ) to supply public telecommunications services, including the leasing of fibre optics overseas telegram. Our fibre optics concern has grown exponentially in line with the Singapore authorities ‘s attempts to develop the state as an international infocommunications hub.
About SMRT Institute
A subordinate of SMRT Corporation, SMRT Institute draws on 25 old ages ofexperience and expertness as a first multi-modal public conveyance operator, to supply robust preparation and accredited educational classs and programmes that are specifically designed to run into the current and future larning demands of the land transit sector.
SMRT Institute formalised its coaction with the Institute of Technical Education, and with this coaction, created the industry ‘s first-ever National ITE Certificate in Rapid Transit Technology.
Click here to download SMRT Institute ‘s booklet
Nitec in Rapid Transit Technology
Beryllium at the head of Rapid Transit Technology and work within the mass rapid theodolite system that serves more than 2 million commuters daily!
Jointly developed by SMRT Institute and the Institute of Technical Education ( ITE ) , Nitec in Rapid Transit Technology provides you with a robust foundation in railroad technology. You willlearn the cardinal accomplishments and cognition in countries such as Rapid Transit Systems and Operations, Automation and Control Systems, every bit good as Electronics Systems and Equipment. This class is the first certified preparation programme of its sort in Singapore, every bit good as Southeast Asia, that is jointly developed by a public conveyance service supplier ( SMRT ) and educational establishment ( ITE ) .
Enrol in the class to ship on an exciting calling in the dynamic conveyance industry!
On completion of the class, pupils would be able to:
Perform basic review of railroad subsystems and installations
Maintain railroad electrical and electronics equipment and systems
Maintain railroad mechanical and pneumatic equipment and systems
Maintain high electromotive force and grip power equipment
Maintain turn overing stock systems and equipment
Maintain lasting manner and paths
Nitec in Rapid Transit Technology alumnuss can see a calling with mass rapid theodolite operators, authorities conveyance planning bureaus, every bit good as companies in the rail equipment industry. Some of the places graduates hold include include Rapid Transit Technical Officer, Trains and Rolling Stock Technician and Permanent Way Field Services Technician.
For more inside informations:
Visit ITE College West between 8.30am and 5.00pm ( Monday to Friday )
Name ITE at 1800 225 3482
Singapore ‘s public conveyance market maps in a duopoly market model. Two immense organisations control the market. SMRT and SBS map on different paths, thereby acquiring monopolistic power over that way for the contract period. Currently, SMRT is pull offing the East-West MRT line, North-South MRT line and SBS is pull offing the North-East line. They fundamentally act like a monopoly over their assorted paths.
1. Company BACKGROUND
SMRT Corporation Ltd ( “ SMRT ” ) is incorporated on 6 March 2000 and listed on the Singapore Exchange since 26 July 2000. It is the 2nd largest multi-modal public conveyance service supplier in Singapore, offering a scope of incorporate conveyance services, every bit good as the leasing of commercial and advertising infinites, technology consultancy and undertaking direction services.
SMRT operates two out of the three MRT lines in Singapore ( 81.7 % of the whole web ) every bit good as the Bukit Panjang LRT system ( 27.1 % of the rail length ) . The company ‘s coach and taxi operations form a fringy portion of the conveyance systems at an estimation of 26.5 % and 12.3 % severally, based on fleet size.
In October 2008, public conveyance menu was increased by a net 0.7 % . Transfer discounts were increased by 10 cents while all grownup and senior citizen menus were increased by 4.0 cents per drive. However, with the recent shrinkage of the Singapore economic system, SMRT decided to turn over out a menu decrease bundle from April 2009. The bundle will include a 4.6 % decrease in coach and train menus and higher transportation discounts.
2. Analysis OF INDUSTRY
2.1 Intensity of Rivalry among bing Rivals
The public conveyance industry in Singapore is a duopoly industry, with SBS Transit being the lone rival in SMRT ‘s nucleus operations, which is MRT and coachs. Even so, SMRT ‘s operations are more focussed on the MRT section ( 53.96 % of entire gross ) while the major runing section of SBS is in the coach industry ( 79.77 % of entire turnover ) . Therefore, there is really small competition between SMRT and SBS. Consumers are besides non able to exchange from one rival to another as the train and coach web of SMRT and SBS cover different geographical countries of Singapore. In add-on, there is no monetary value war among the challengers because menu monetary values for coachs and trains are being regulated by the Public Transport Council ( “ PTC ” ) .
2.2 Threat of New Entrants
The menace of new entrants in the coach and train industry is really low. This is mostly due to the barriers to entry present in the two industries. A possible entrant will hold to see the immense start-up capital required for the purchase of fixed assets such as MRT trains and fleets of coachs. Furthermore, licences approved by the Land Transport Authority ( LTA ) must be obtained to run a conveyance system in Singapore.
2.3 Bargaining Power of Consumers
The bargaining power of consumers is really weak as the industry is dominated by merely two public conveyance operators – SMRT and SBS. Consumers do non hold a say in the pricing of the coach or train menus. Alternatively, menu monetary values are being regulated by PTC in conformity to a
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expression. Menu monetary values accommodation will be affected by the Consumer Price Index and the alteration in Average Monthly Net incomes, subjected to the blessing of PTC. Furthermore, public conveyance is a necessity. Consumers can non avoid taking public conveyance even if there is a hiking in the menu monetary values.
3. ANALYSIS OF ECONOMY
Harmonizing to authorities statistics, Singapore economic system grew by 1.1 % with an rising prices rate of around 6.5 % and unemployment rate of 3.1 % . The entire population has been invariably increasing due to higher birth rates and the inflow of foreign employees. As the economic system is expected to better in 2010, coupled with the farther growing in population, SMRT will profit from increased ridership and taxi demand.
In add-on, major events such as the hosting of the one-year F1 Grand Prix in Singapore will pull commuters to go utilizing public conveyance to forestall traffic congestion. The gap of the Integrated Resorts is besides likely to pull more tourers and foreign employees, ensuing in an overall betterment in ridership tendency.
Furthermore, the lifting monetary values of the Certificate of Entitlement ( COE ) premiums and Electronic Road Pricing ( ERP ) charges has led to a autumn in the purchase of private vehicles, doing public conveyance more economically attractive in comparing.
The Singapore authorities has besides introduced a impermanent Jobs Credit ( JC ) Scheme in its Singapore Budget 2009 which encourages concerns to continue occupations in the economic downswing. Corporate revenue enhancement rate will besides be reduced from 18 % to 17 % for the Year of Assessment 2010. Additionally, SMRT will stand to derive from the Land Transport Authority ( LTA ) ‘s Land Transport Master Plan, which is the authorities ‘s attempt to develop Singapore ‘s public conveyance to do it a pick manner of transit.
4. Qualitative Analysis OF COMPANY
4.1 Nature of Servicess Provided
Transport services provided by SMRT are extremely diversified with its coachs, taxis, MRT and LRT trains covering every manner of public conveyance. The other concern sections are rental, advertisement and the proviso of technology and other services, etc. The company besides expanded their services by establishing 9 premium coach services that offer commuters a faster and more direct drive to their finish.
Having established a planetary repute as an first-class conveyance service supplier, SMRT has diversified its concerns into other parts. A recent illustration would be SMRT procuring a 10-years media contract with the new Dubai Metro, which is set to be one of the universe ‘s most advanced urban rail system. Furthermore, SMRT clinched a six-year contract for the Operations and Maintenance with Palm Jumeirah Monorail.
4.2 Quality of Management
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The direction of SMRT is farsighted as it diversifies its abroad operations in order to spread out beyond the little domestic market. Meanwhile, it keeps its local concern competitory, by supplying better services through the upgrading of its MRT, coachs and taxis. The launch of its premium coach services is besides a go oning attempt of the direction to run into the turning demand for this niche market section.
Recently, SMRT offered a wagess run for 4 large victors to win 3 old ages of free drive on coachs and MRT, and over 140 people to win attractive awards over seven
4.3 Net incomes Quality
aˆ? Choice of accounting policies and estimations
SMRT uses the consecutive line method to deprecate its assets in equal episodes over their estimated utile lives runing from 3 to 30 old ages. However, it is stated in the one-year study that there may be a demand to revise future depreciation charges as the assets are subjected extremely to technological alterations which may impact their economic utile lives. This shows prudence in its accounting policies and it is apparent that monthly draws get downing December 2009. This run signifies the company ‘s scheme in promoting people to exchange to public transport.there is no purpose of exaggerating net incomes by take downing depreciation disbursals.
aˆ? Discretionary disbursals
Management can pull strings net incomes by increasing or take downing discretional disbursals. An illustration is the Repairs and Maintenance ( R & A ; M ) costs, which is discretional to a certain extent as it needs to stay to the Lease and Maintenance Agreement. Inadequate proviso for R & A ; M costs may do SMRT ‘s trains or coachs to breakdown, impacting its repute and future net incomes. The sum of R & A ; M costs incurred is on an increasing tendency. In FY09, it is 6.24 % of the net PPE and for FY08 and FY07, it is 6.12 % and 5.78 % severally. This shows that there is equal R & A ; M costs to keep its net incomes quality.
SMRT besides has an attractive dividend policy, which promises to keep or increase the dividend payout each twelvemonth with a minimal payout ratio of 60 % of its Net income After Tax and Minority Interest. This signifies that SMRT has strong runing hard currency flows and the ability to bring forth consistent net incomes.
aˆ? Timing of gross and outgo
Recognition of gross is when services are rendered to the full to commuters – at the terminal of the trips or upon the completion of short-run workshop and other services. For work and undertaking contracts, the per centum of completion method is being employed. This shows that SMRT exercises conservativism in the acknowledgment of gross. There appears to be no mark of income shifting, which indicates a good quality of net incomes.
aˆ? Effect of cyclical and economic forces
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The grade of volatility of a company ‘s net incomes is affected by how cyclical the industry is. With the chief operations of SMRT in the conveyance industry, which has a defensive nature, its income is by and large stable and the quality of net incomes is high.
5. Quantitative Analysis OF COMPANY
5.1 Liquidity Ratios
Liquidity ratios depict the company ‘s handiness of hard currency to pay short term liabilities. Current ratio declined from 1.59 in FY07 to 0.94 in FY09. The speedy ratio besides dropped from
1.36 in FY07 to 0.85 in FY09 over the old ages.
A chief ground for the diminution in current and speedy ratios is that the payment for S $ 50 million 5-year unbarred natation rate notes and S $ 100 million 3- twelvemonth float unbarred fixed rate notes are due in 2010 and 2009 severally. This increases the current liabilities of SMRT and raised the base of the liquidness ratios, doing the ratios to worsen. This may do SMRT appears to be less liquid. However, it may non be a failing if SMRT has the ability to refund the loan.
Cash ratio has deteriorated from 0.96 in FY07 to 0.59 in FY09. This is despite the addition in hard currency & A ; hard currency equivalents ( hard currency at Bankss and in manus + fixed sedimentations ) by $ 75.97 million from 12.3 % of the entire assets in FY07 to 16.36 % in FY09. This is because the transportation of $ 150 million from non-current liabilities to current liabilities is larger than the addition in hard currency, doing the hard currency ratio to worsen.
Cash-flow liquidness ratio besides fell by 0.74 point from FY07 to FY09 due to the abovementioned ground. However, cashflows from runing activities did increase by $ 15m from $ 148m in FY08 to $ 163m in FY09. The strong operating hard currency flows in FY09 is because of higher net incomes and more hard currency being received from trade and other receivables ( “ AR ” ) . This addition is being offset by the higher dividends and income revenue enhancement paid.
5.2 Activity Ratios
Activity ratios indicate the effectivity of the houses ‘ usage of resources. Average Collection Period ( “ ACP ” ) has increased from 23.82 yearss in FY07 to 29.71 yearss in FY09. This is much higher than SBS ‘ ACP of 3.86 yearss. It means that more hard currency are tied up in the AR with an addition of 1.25 % points for AR relation to entire gross from FY07 to FY09. It will ensue in chance costs as the hard currency could be used for investing intents to bring forth returns. Hazard of bad debts besides went up significantly with the addition in AR.
Average Payment Period has escalated from 70.34 yearss in FY07 to 92.42 yearss in FY09, higher than 86.67 yearss for SBS. This may signal that SMRT has strengthened its ability to obtain supplier recognition. It may be advantageous as provider recognition is deemed as a free beginning of funding.
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Fixed plus turnover besides rises from 0.71x in FY07 to 0.83x in FY09 due to the betterment in its entire gross. This shows that SMRT is more efficient in its direction of fixed assets. However, in comparing with SBS ‘s fixed plus turnover of 1.99x, SMRT appears much less efficient than SBS. SBS ‘s PPE is significantly lower while their gross generated is comparable. This is because costs of coachs and the planning of coach paths are comparatively cheaper than the costs of MRT trains and the building of railroad. As a consequence of the lifting gross, the entire plus turnover of SMRT besides improved from 0.54x in FY07 to 0.59x in FY09.
Cashflows from puting activities are negative throughout the 3 old ages, they further diminution by $ 36m from a negative $ 115m in FY07 to veto $ 151m in FY09. This is chiefly due to a immense outgo on PPE for the building of the Circle Line.
5.3 Leverage Ratios
Debt ratio, debt to equity ratio and long-run debt to entire capitalization ratio all decreased from FY07 to FY09, connoting a somewhat less hazardous capital construction.
Debt ratio improved from 53.58 % to 51.91 % throughout the three old ages. One of the chief grounds is that SMRT has much more fixed sedimentations with Bankss and fiscal establishments from $ 132m in FY07 to S $ 224m in FY09. Thus, the entire assets of SMRT rose significantly.
The big bead in Long-run debt to entire capitalisation ratio from 28.08 % to 12.16 % is chiefly due to switching of the $ 150m notes ( as mentioned antecedently ) from non-current liabilities to current liabilities. This should be contrasted with SBS ‘ ratio of 0 % , with the absence of any long term debt. The ground might be due to the fact that SBS has a immense sum of accrued net incomes to fund any capital outgo.
Debt to equity has besides improved marginally from 1.15x in FY07 to 1.08x in FY09. The rise in accrued net incomes plays a large function as it consequences in the addition of entire equity being higher than the addition in entire liabilities.
SMRT ‘s ability to service involvement disbursal is better as Times Interest Earned increased significantly from 14.63x in FY07 to 25.58x in FY09. The betterment is chiefly due to higher operating net income from $ 145m in FY07 to S $ 188m in FY09. In FY09, the ratio of 25.58x is a positive consequence as it means that every $ 1 of its involvement disbursal is covered by $ 25.58 of its net incomes.
Cashflows from funding activities decrease from $ 1.8m in FY08 to $ 0.3m in FY09 because there is lesser hard currency influx with fewer portions being issued under the portion option program in FY09 as compared to FY08.
5.4 Profitability Ratios
There was an addition in gross by 9.6 % from $ 878m in FY08 to $ 802m in FY09 and 7.9 % from FY07 to FY08. The section study shows that SMRT derives its gross from two
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major beginnings, its MRT operations ( 53.96 % ) every bit good as its coach operations ( 23.58 % ) . The MRT and LRT operations showed an addition of 8.6 % and 7.1 % severally in its gross due to higher ridership growing despite the higher staff costs and energy ingestion for the new Circle Line. SMRT used the JC Scheme to pull off the increased staff costs. Therefore, it was able to gain an operating net income of $ 133.8m for its MRT operations and understate its LRT operating losingss at $ 0.2m.
The coach sector besides revealed an addition in its gross of 5.8 % , ensuing from an addition in 4.1 % of its ridership. However, due to the higher Diesel cost in the twelvemonth, the coach sector suffered an operating loss of $ 4.5m compared to its old twelvemonth operating net income of $ 1.5m.Meanwhile, cab operations suffered a autumn of 4.9 % in gross at $ 71.1m due to lower norm hired out fleet. SMRT incurred an operating loss of $ 6.3m compared to an operating net income of $ 0.6m in the FY2008.
Depreciation disbursals increased 4.0 % at $ 110.4m compared to the anterior twelvemonth of $ 106.1m chiefly due to increased capitalization following the mid-life ascent of trains. More fix and care were besides done for trains and coachs, taking to a rise of 3.1 % in its cost. However, both the depreciation disbursals and R & A ; M costs relative to gross decreased by 3.09 % points and 0.6 % points from FY07 to FY09. This comparative lessening can be attributed to the relatively higher addition in gross for each twelvemonth. Thus, the operating border improves from 16.53 % in FY07 to 21.47 % in FY09, signalling its ability to command costs while bring forthing higher gross.
Net net income border showed a little increase from 18.27 % in FY07 to 18.51 % in FY09. The little betterment is due to the flow-through consequence of better operating net income border, every bit good as lower finance cost due to take down involvement rates. In add-on, a 1 % decrease in corporate revenue enhancement rate has resulted in the revenue enhancement disbursals to be lower at $ 23.0m.
Meanwhile, the Return on Equity addition from 21.21 % in FY07 to 23.42 % in FY08 and diminish somewhat to 22.54 % in FY09. The little diminution is due to the much lower purchase and little lessening in net net income border, which offsets the higher plus turnover. SMRT appears to hold lower debt funding and is more efficient in the managing of entire assets.
Interim Update of Profit Performance
There is an addition in gross from $ 878m to $ 890m due to the higher ridership from the operation of Circle Line phase 3 and future gross is expected to increase farther due to higher lease from the gap of 3 Xchanges at Jurong East, Orchard and Esplanade. However, it will be offset by higher staff costs and other runing costs from increased train operations. These costs counterbalance the bead in Diesel monetary values. Finance costs will besides increase because of the notes ( deserving $ 150 million ) issued in October 2009. Overall, net incomes will most probably be maintained even though it is subjected to the volatility of the Diesel monetary values and the menu decrease bundle.
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Major participant of Singapore ‘s public conveyance industry.
Duopoly industry with small competition.
Low menace of new entrants because of the barriers of entry.
Operates in a defensive industry which will non be severely affected during economic downswings as transit is a basic demand for the bulk.
Diversification of concern with different manners of conveyance ( i.e. MRT, LRT, coachs and taxis ) and other runing sections include rental, advertisement, proviso of technology and other services.
Stable income and high quality of net incomes.
Generated healthy hard currency flows from operations.
The debut of 67 Southeast Asia ‘s first Euro V coachs ( environmentally friendly coachs ) and establishing of 9 premium coach services can heighten their fight.
aˆ? Opening of Circle Line phase 1 and 2 by mid-2010 will hike ridership and gross.
Refurbishing of Xchanges at Orchard, Esplanade and Jurong East Stationss will give higher rental gross.
aˆ? Need to incur high care cost in keeping and mending their existing trains, coachs and other substructures as stipulated in the Lease and Maintenance understanding.
Huge capital spending on trains, coachs and taxis.
No controls over the menus as menus are regulated by PTC.
Face mulcts imposed by PTC for non-compliance of rigorous Quality of Services criterions.
Clinched Dubai Metro ‘s 10 twelvemonth media contract under pool which will be one of the universe ‘s most advanced urban rail system and awarded 6 old ages contract to run and keep the Palm Jumeirah Monorail system.
Ability to capitalize on their strong trade name name to ship on abroad undertakings in states such as Asia and Middle East.
Benefit from the future growing of Singapore ‘s land conveyance web under the LTA ‘s Land Transport Master Plan.
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aˆ? Outbreak of H1N1 virus or other epidemics in Singapore will ensue in a steep diminution in ridership as fewer commuters will desire to take public conveyance due to the fright of undertaking the virus.
Safety and security menaces due to terrorist act.
Vulnerable to fluctuations in oil and Diesel monetary values.
7. VALUABLE MISSING Information
First, it may be utile to garner information on SMRT ‘s recognition history before allowing the loan. Credit history refers to a record of a company ‘s past adoption and repaying, including information about late payments and its bankruptcy, if applicable. From its recognition history, we can so find SMRT ‘s creditworthiness and its willingness to refund debts. We will be able to look into if SMRT had default or detain its payments on debts from other Bankss or past creditors. This will assist us in doing our recognition determination.
Second, it is noted that the group has used some of its assets under the operating rental. These leased assets are recognised as disbursals under the FRS 17 and are non reflected in the balance sheets. This “ off-balance sheet ” point may falsify some of the cardinal ratios ( e.g. leverage ratios ) used in the fiscal analysis if the operating leases forms a significant portion of the company ‘s funding. Hence, information on the leased plus and its liability will be utile as it will cast visible radiation on the company ‘s existent adoption capacity, costs of borrowing and any possible misdemeanors of its adoption compacts.
8. Decision AND RECOMMENDATIONS
It is important for a company to bring forth hard currency from its operations as it shows the company ‘s ability to interpret net income into hard currency. SMRT is able to bring forth strong hard currency flows from its operating activities. It shows that SMRT has the fiscal capableness to do chief and involvements payments, supported by its ability to pay dividends annually. Its purchase ratios are besides bettering in recent old ages.
Furthermore, SMRT is in a defensive conveyance industry. Its gross and extremely diversified operations will non be greatly affected by the economic system as transit is a basic necessity. Lead by a competent direction board, coupled with many local and abroad growing chances and aid from the Singapore authorities, SMRT will be able to keep its net incomes growing.
Therefore, the $ 30million loan to SMRT should be granted. The chief intent of the loan
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is for expansionary intents. This enlargement program may in bend addition ridership and increase gross excessively.
SMRT Annual Report for FY2007 to FY2009
SMRT Interim Report for Q1 and Q2 of FY2010
SBS Annual Report for FY2008
OCBC Investment Report on SMRT
hypertext transfer protocol: //www.ptc.gov.sg/
hypertext transfer protocol: //www.lta.gov.sg/
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FACULTY OF BUSINESS ADMINISTRATION
Masterss IN BUSINESS ADMINISTARTION –
STRATEGY REVIEW OF SMRT CORPORATION LTD
STUDENT NAME & A ; CU ID
MANI PRADEEP KUMAR 3939891
KAMARASAR KARTHIKA ( G1091736R )
ANANDAN ANUSHEELA PRADEEPA ( G1010812N )
SHERIN BANU BATCHA
DECLARATION OF ORIGINALITY
This is to attest that the work is wholly my ain and non of any other individual, unless explicitly acknowledged ( including commendation of published and unpublished beginnings ) . The work has non antecedently been submitted in any signifier to the Coventry University or to any other establishment for appraisal for any other intent.
This coursework reappraisal ‘s the concern scheme of SMRT Corp. Ltd. The critical analysis of the external environment faced by SMRT Corp Ltd reveals that the political, economical and societal factors are strongly in favor of SMRT Corp Ltd when compared to engineering and legal factors. The SWOT analysis besides reveals the same consequence that SMRT has bright hereafter. The concern scheme of SMRT Corp Ltd was reviewed. Finally recommendations were given based on external environment analysis, internal environment analysis and concern scheme reappraisal.
All analysis and reviews done in the coursework prognosis that SMRT Corp. Ltd has a bright hereafter. The chief factor which is assisting the SMRT Corp. Ltd is the duopoly market construction in the public conveyance.
Number of Pages:
Entire Number of Wordss:
Excluding the followingaˆ¦aˆ¦
Declaration of Originality
Table of Contentss
List of Figures
List of Tables
Heading & A ; Sub Heading and
Reference List & A ; In-Text Citation
Table OF CONTENTS
List OF FIGURES
List OF TABLES
Table 1: SMRT Products / Operation Gross saless ( Hoover ‘s Inc. , 2012b )
SMRT – SMRT Corp. Ltd
LTA – Land Transport Authority
SMRT established in 1987 provides light rail, subway, coach and cab services to about 1.3 million commuters a twenty-four hours. Mass rapid theodolite ( MRT ) unit is the major gross subscriber for SMRT. It ‘s MRT unit operates on 90 kilometers distance which constitutes 50 Stationss. MRT unit besides rents some of the infinite in the MRT Stationss for commercial activities and besides earns money through ads placed on taxis, coachs and MRT ‘s ( Hoover ‘s Inc. , 2012a ) . SMRT provides technology services and has undertakings outside Singapore. SMRT ‘s lone rival is ComfortDelGro Corporation Limited ( Hoover ‘s Inc. , 2012c ) .
Table 1: SMRT Products / Operation Gross saless ( Hoover ‘s Inc. , 2012b )
PRODUCTS / OPERATIONS
Engineering & A ; Other services
The public conveyance market operates in a duopoly market construction dominated by SMRT and SBS and both runing on different independent lines. SMRT and SBS have monopolistic powers over the paths during the contract period. Thus public conveyance means SBS and SMRT. Any positive consequence or negative consequence on public conveyance will impact both ( SBS & A ; SMRT ) . So in this coursework if something is mentioned as “ public conveyance ” , literally it can be taken as SMRT.
EXTERNAL ENVIRONMENT CONDITIONS
To analyse the external environment conditions faced by SMRT, PESTEL analysis and Poter ‘s Fiver Forces analysis are performed.
In PESTEL analysis political, economic, societal, technological, environmental and legal factors impacting the SMRT are analyzed.
SMRT ‘s major stockholder ( 54.3 % portion ) is Temasek Holdings ( SMRT Corporation Ltd 2008-2012a ) . Temasek Holdings is owned by the Singapore authorities ( REACH 2012 ) .
The authorities encourages public to take public conveyance in order cut down traffic congestion. In order to promote public to take public transport the LTA is now incorporating Bus Stationss and MRT Stationss with shopping promenades thereby giving the populace the opportunity to sit and at the same clip make their purchase instead than individually going to country from the coach Stationss or MRT Stationss to make the purchase ( Singapore Budget 2012 2011 ) .
Therefore the Government ‘s enterprise in promoting public to take public conveyance and Temasek Holdings holding major portion in SMRT shows that SMRT has batch of political favor and support.
Singapore ‘s spread outing economic system demands more work force that Singapore population is unable to carry through, so more and more aliens flock to Singapore to work. Singapore ‘s stable authorities and many other factors has helped Singapore to be ranked at 14th topographic point in best topographic point for FDI. Expanding economic system due assorted factors like FDI has increased the alien population to about 36.4 % ( Yeoh & A ; Lin 2012 ) of the entire population. Therefore spread outing Singapore ‘s economic system expands the Singapore population which is in great demand of public conveyance as it is the cheapest signifier of conveyance.
With current economic enlargement the day-to-day trips by 2020 is estimated to be 14.3 million. The solution to this the immense figure of trips per twenty-four hours for a little state like Singapore is public conveyance. Thus any addition in ridership due to spread outing economic system will besides profit SMRT.
The mean day-to-day ridership ( ‘000 passenger-trips ) for MRT is 2295, LRT is 111, Bus is 3385 and cab is 933 ( Land Transport Authority 2003 ) . Turning population, exponentially turning COE monetary values, turning MRT line coverage, sophisticated coach services, high dependable MRT system are some of the factors that addition ridership. Thus any addition in the ridership affects positively the SMRT.
SMRT Institute which is a subordinate of SMRT provides educational programmes to run into and turn the technological promotions in the land transit. Nitec in Rapid Transit Technology programme jointly developed by the Institute of Technical Education and SMRT Institute provides strong foundation for pupils in the railroad engineering. This is programme is foremost of its sort in Southeast Asia ( SMRT Corporation Ltd 2008-2012b ) .
SMRT International Pte Ltd, a WOS ( wholly-owned subordinate ) of SMRT so strong in engineering offers PM ( project direction ) , O & A ; M ( operations and care ) , technology and consultancy services route to inveigh and route conveyance proprietors around the universe. SMRT International Pte Ltd services clients in assorted parts of the universe and they are China, the Middle East, India, Taiwan, the Philippines, Thailand and Vietnam ( SMRT Corporation Ltd 2008-2012c ) .
SMRT ‘s SMRT institute with universe category plans and undertakings outside Singapore would assist SMRT to hold an border in fast developing engineering.
Singapore is one of the tiniest state on the Earth. Streets in Singapore take up 12 % of the Singapore complete country in comparing to 15 % filled by lodging ( Nugroho et al. 2010 ) . Since already roads have occupied considerable sum infinite in this little state, future roads will be belowground, already tracks have gone belowground.
Government is convinced that as the roads are increased the drivers on the roads will besides increase. Thus the route enlargement in footings of resistance is non a solution for traffic congestion. So the authorities is believing of bettering and widening the public conveyance to a great extent that more and more population will choose for public conveyance.
Singapore ‘s little size and turning traffic has convinced the authorities to do public transport the most preferable pick for commutation.
SMRT has 30 twelvemonth ( SMRT Corporation Ltd 2008-2012d ) rental understanding with LTA so the recent mistakes can be rectified and lessons can be learnt from this failure. As the route to success is working hard and larning from failures. SMRT has a learnt a batch and would do usage of this acquisition as a stepping rock for success. The image of the SMRT can be recovered. Since SMRT is a under Temasek Holdings so legal conditions are in favour of SMRT.
PORTER FIVE FORCES
Porter ‘s five forces analysis is done to analyse the conveyance industry in Singapore.
Menace Of New Competition
Singapore ‘s trains and coachs industry is likely a natural monopoly with the obligatory house being able to harvest significant internal fiscal systems of scope with long tally mean monetary value falling throughout full scope of industry result. With partly public presentation scope go oning at a higher result, companies can bask immense benefits and produce at cheapest.
Due to great set installations monetary value, the entry of more companies may ensue in higher costs, thriftlessness and reproduction of resources, cut downing consumer good being. Hence, great hurdle to entry in the signifier of great set monetary value Michigans new fledglings from coming into the industry.
Menace Of Substitute Products Or Services
SMRT major concern is in MRT while SBS major concern is in Bus. MRT is the chief merchandise, its replacements available are bus and cab. Both can non increase velocity and increasing velocity is non encouraged in order to avoid accidents. But in the instance of rail throughout the universe velocity is increasing at a degree unheard, hence MRT still have really good hereafter. Therefore menace from replacements of the SMRT ‘s chief gross generator is really low.
Dickering Power Of Customers
Dickering power of the clients is really low because the market operates in a duopoly market construction. The steadfast concentration ratio is really high and SMRT additions monopolistic power over that path for a contractual period. Customer ‘s grade of dependence is high because the public conveyance is inexpensive and besides MRT unit ‘s dependability is really high.
Bargaining purchase of the client is really low because SMRT is a public conveyance. For purchaser exchanging cost is high as they need to purchase their ain auto for which the COE monetary values are lifting exponentially. Availability of bing replacement merchandises is low as they need to acquire COE. COE is limited and really dearly-won. Therefore dickering power of SMRT ‘s clients is really low.
Dickering Power Of Suppliers
Dickering Power Of Suppliers is low which evident from the ranking given by the SMRT staffs.
Since it is under authorities the provider can be found universe broad
Intensity Of Competitive Rivalry
The trains and coachs market in Singapore is a duopoly market, with SBS Transportation being the lone opposition in SMRT ‘s nucleus services. SMRT ‘s maps are more targeted on the MRT subdivision while the important pull offing subdivision of SBS is in the coach market. Therefore competition between SBS and SMRT is really less. Customers are besides non able to alter from one opposition to another as the MRT web and coach web of SMRT and SBS cover different topographic points of Singapore. Furthermore, there is no monetary value war among the rivals because commutation charges for public conveyance is dictated by Public Transport Council. Thus the strength of competition for SMRT from SBS in major gross bring forthing unit is really low.
In order to analyse the internal environment faced by SMRT, SWOT analysis is performed.
A Singapore ‘s conveyance system is a duopoly system with a small competition between two major companies which operates and maintains the Singapore transit industry ( SMRT Corporation and SBS Transit ) . SMRT is the major key participant in Singapore ‘s public conveyance industry ( SMRT Annual study, 2007 ) . SMRT classified its variegation of concern with different manners of conveyance ( i.e. MRT, LRT, coachs and taxis ) and other runing sections include rental, advertisement, proviso of technology advisers, undertaking direction and operation and care ( O & A ; M ) services both locally and overseas. It besides provides fix and care services for SMRT coachs and taxis every bit good as to the external local clients. As SBS Transit is the lone rival for SMRT, the menace of new entrants is really low because of the barrier of entry. SMRT operates in a defensive industry which will non be affected during economic crisis or business district as the transit is a basic demand for the populace. Thus it gets a stable income and high quality of net incomes which generates a healthy hard currency flow from its operations. The debut of 67 Southeast Asia ‘s first Euro V coachs ( environmentally friendly coachs ) and establishing of 9 premium coach services can heighten their fight with SBS theodolite ( SMRT Annual study, 2012 ) . The Opening of Circle Line from Dhoby ghuat to harbor forepart and harbour forepart to marina bay through bay forepart by mid-2012 will hike ridership and gross. Refurbishing of Exchanges at Orchard, Esplanade and Jurong East Stationss and the new construct of store and dine with SMRT at each circle line interchange and other chief Stationss will besides give higher lease and gross ( OCBC Investment research, 2009 ) .
A SMRT is the taking cab operator in Singapore which manages and leases a fleet of more than 3000 taxis including saloons, limousines, MPVs and CNG vehicles. It besides leases the commercial infinite within train web about 34, 4000 Sq m and besides leases the fibre ocular overseas telegrams for its operations. As it provides rail and route conveyance related technology consultancy, undertaking direction, operations and care services every bit good as the fix and care services for SMRT coachs and taxis to local clients, it needs to incur high care cost in keeping and mending their existing trains, coachs and other substructures as stipulated in the Lease and Maintenance understanding ( SMRT Summary Report, 2012 ) . SMRT has a immense capital spending on trains, coachs and taxis. Its major failing is that there is no control over the menus for the trains, coachs and taxis as the menus are regulated by PTC and besides it faces mulcts imposed by PTC for non-compliance of rigorous Quality of Services criterions.
SMRT has acquired considerable cognition and experience of design, operation and keeping both drivers and Clinched Dubai Metro ‘s 10 twelvemonth media contract under pool which will be one of the universes ‘s most advanced urban rail system and awarded 6 old ages contract to run and keep the Palm Jumeirah Monorail system. By this manner SMRT gets the chance to capitalize on their strong trade name name to ship on abroad undertakings in states such as Asia and Middle East and its concern enlargement ( SMRT Interim Report, 2010 ) . Finally, it has the benefits from the future growing of Singapore ‘s land conveyance web under the LTA ‘s Land Transport Master Plan. This will besides assist in the touristry industry in Singapore.
The major menaces of SMRT are the authorities regulations and ordinances, the Safety and security menace due to terrorist act and fluctuations in oil and Diesel monetary values. Another periodical menace of SMRT is the eruption of H1N1 virus or other epidemic disease in Singapore which might do a steep diminution in ridership as fewer commuters would non prefer public conveyance like trains or coachs due to the fright that they may acquire the virus onslaught. And eventually, the high menus for the public conveyance will besides ensue as a menace to SMRT.
Corporate Degree STRATEGIES AND COMPETITIVE ADVANTAGE
3.1 COMPETITITVE ADVANTAGE
SMRT Competitive advantages beyond political stableness under a authorities to houses. Singapore is a vivacious universe centre for transit industry with the ability of all companies selling, fabrication and distribution, the central office of R & A ; D and concern. Transport industry will stay of import in the development of the Singapore economic system ( Manufacturing sub-committee 2002 ) .
SMRT is non hard – in fact, one of Singapore ‘s most modern systems.
There are three chief grounds:
Traveling through SMRT is low when comparing to other manners of conveyance. For illustration the cost for going from Singapore West End to east terminal through cab would be about S $ 25 for the trip. At the same clip if the individual travel through MRT it would be less than S $ 10.
The SMRT Stationss are across the island. There are four lines at nowadays called as North-South, East-West, North-East and circle line, that all points on the map of Singapore. Each MRT Stationss are closely linked to each and other with really clear instructions and maps. In close hereafter SMRT will be coming out with the business district line which adds now convenience to the riders.
SMRT system is faster in action in both traveling every bit good as waiting. It would hardly take 3-5mins to wait in the station for the train to get and particular continuances during peak clip. On the other manus, the travel clip from western to the eastern terminal of the island wo n’t get more than 45 proceedingss ( SMRT Corporation Ltd 2012 ) .
SMRT employed preposition value characterized by three elements ; our concern scheme alliance, strong leading committedness and in the organisational civilization. SMRT is a chief conveyance in Singapore. New rivals have high opposition to come in the train service, railroads, tunnels and Stationss are expensive to reproduce.
Figure 1: concern scheme ( SMRT 2012 ) .
Last twelvemonth, the SMRT Group achieved outstanding growing in all facets of our concern operations in a hard environment, increased costs and competition. For the twelvemonth ended 31 March 2005, the Group achieved a strong set of fiscal consequences, with a 41.8 per centum addition in net net incomes during the predating twelvemonth ( SMRT Corporation Ltd drumhead study 2012 ) .
Figure 2: Menu Revenue ( SMRT Corporation Ltd drumhead study 2012 ) .
Particularly strong growing of SMRT cab, while the non-payment of SMRT train systems. SMRT strives to increase their place as a socially responsible and committed to effectual corporate administration. With this in head, we have developed a comprehensive policy and moralss communicated to staff during the twelvemonth. The kernel of this policy is contained in a written Code of Ethics and Professional Conduct, which serves as a moral compass for employees and direction in concern determinations and behaviour ( SMRT Corporation Ltd drumhead study 2012 ) .
40 kilometers to the full belowground Downtown Line is presently in assorted phases of planning and building, and passes through 33 Stationss with a capacity of 500,000 riders per twenty-four hours. It connects the north-western and eastern parts of Singapore to the new downtown Marina Bay in southern and cardinal concern territory. It will be implemented in three phases: phase 1, 2 and 3 gap by 2013, 2015 and 2016 ( SMRT 2008 ) .
SMRT besides launched a more originative and advanced ways of advertisement media to increase advertisement gross and abroad looking for work in countries where the capacity of the base.
SMRT maintain dividend policy, despite the hard operating environment. The Commission has proposed a concluding dividend of 5.70 cents per ordinary portion, capable to stockholder blessing at its 13th Meeting on 12 July 2012. If approved, the dividend on August 3, 2012. Together with the interim dividend of 1.75 cents, this will do a entire dividend for the fiscal twelvemonth 2012 to 7.45 cents per portion, a entire value of $ 113 million ( SMRT Corporation Ltd & A ; TIBS Holding Ltd 2001 ) .
SMRT concerns enjoy steady income throughout the twelvemonth. In the Medium term, the Boon Lay and Circle Line extension will promote growing while abroad undertakings expected to drive growing in the long term.
SMRT operation creates an operating hard currency flow more stable. At S $ 1.07 SMRT is possible inflationary force per unit areas on capital of 11 % net dividend output of at least 5.2 % , giving a entire return of about 16 % ( SMRT Corporation Ltd & A ; TIBS Holding Ltd 2001 ) .
3.4 NON FARE BUSINESS
Operational challenges remain for the squad, although gross growing is expected to go on in the 2nd one-fourth of FY2013. Fare gross is expected to be higher than the last few old ages because of part of round line and lifting ridership degrees. Whereas, there would a drawn-out benefit from non menu concern like high cab gross, rental and advertisement gross revenues ( SMRT 2012 ) .
The group ‘s profitableness is expected to go on to impact higher staff costs, depreciation and care. In peculiar, staff costs for coach and rail conveyance is expected to be higher due to increased forces and accommodations in salary. Bus concern still face challenges, such as duty accommodations are non consistent with the addition in operating disbursals. Government has recognized the jobs with running the concern and sustainable coach operators. Several authorities enterprises and the current pricing expression should be completed BY early 2013, will concentrate on turn toing these challenges ( SMRT 2012 ) .
SMRT corporate scheme should concentrate more on MRT units.
The SMRT should concentrate on MRT unit because it is more eco-friendly which is the one the whole universe is anticipating – Use the undermentioned points to reply this point.
Tracks are more eco friendly when compared to route conveyance. or in other words carbon foot print to transport 100 individuals by route conveyance is really immense when compared to inveigh. The authorities should concentrate on trains, which have higher fuel efficiency and require less route use per rider. That said, a long term solution would be to better plan a comprehensive rail and coach web, which would cut down the demand for taxis.
Urban conveyance is a important subscriber to climate alteration
( Better Public Transport for Europe through Competitive Tendering – 2003 )
( Pollution degree in Singapore that to due to public conveyance like auto Vs. coach and coach Vs. MRT )
Kyoto protocol and pollution degree accepted to cut down by the public conveyance for Singapore
Public conveyance is the most efficient manner of transit in footings of infinite ingestion per traveler and is presently the best reply to mobility demands in dumbly populated countries.
( Better Public Transport for Europe through Competitive Tendering – 2003 )