Financial Analysis
SMRT – Industry Analysis (Michael Porter’s 5-Forces Model)
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Rivalry Among Existing Firms

* Trains * Duopoly system in Singapore, train services (Mass Rapid Transit) dominated by SBS Transit and SMRT Trains. * Currently 4 major ‘lines’ in Singapore, namely Circle Line, North-East Line, East-West Line and North-South Line. * Though the train services were owned by Land Transport Authority of Singapore, the trains are operated by two operators, SMRT Corporation (SMRT Train) and ComfortDelGro (SBS Transit) * Dominated by SMRT Corporation, they operate the Circle Line, North-South Line and East-West Line. The remaining North-East Line is operated by SBS Transit. * * Taxis * Initially with only 3 major operators for taxi, this had since increased to 7 taxi operators. * Major operators in Singapore are ComfortDelGro (includes CityCab, Comfort, Yellow Top), TransCab and Taxi by SMRT Corporation (known as SMRT Taxi). * The other operators with less than a fleet of 2,000 taxi are UnionCab, PrimeCab, Premier Taxi and SMART Cab. * With the increasing number of companies into the Taxi Industry since 2004, possibilities are there might be an increase in Taxi Operators in Singapore. * * Buses * Numerous of operators in Singapore whom offer public and private bus services. * Focusing into the public bus sectors, dominated by SMRT and SBS Transit. * SMRT covers a limited of the public bus service sector, offering less than 100 routes (bus services) and with a limited fleet of 991 buses * As compared to SBS Transit, the latter offers more than 4000 fleet of buses and serving more than 300 routes.

* Among all services provided, there are no industry growth as the market share for the following sectors are fixed, no improvement could be done. * The market is concentrated to only 2 companies, for the case of trains. However, the two companies could not manipulate the pricing as they are controlled by a governmental body, Public Transport Council. * In fact, there is no product differentiation as an alternative to public transport would be private transport or a slightly expensive method of public transport, the Taxies. * Such business carries high fixed cost, the tracks, roads were maintained by the Land Transport Authority (Government), however assets such as the car, trains, buses were sourced and purchased by the company itself.

Bargaining Power of Suppliers

* Trains * With the current fleet of trains, SBS Transit got their train from a Japanese company, Kawasaki, only with the recent fleet for circle line, going driverless, from a London-based company, Alstom. * Similar to SBS Transit, SMRT obtain their fleet of trains from Alstom as well, going driverless for efficiency. * Though non-operating assets are owned by the Land Transport Authority of Singapore, operating assets such as the trains and signaling systems are owned by the respective train operators. * Hence, these individual train operators do obtain an individual quote from the supplier, for this case from Alstom, whom actually hold the power to increase the price of the trains as they negotiate with this two company. * The reason is because Alstom is the only supplier that offers driverless train and there are no other vendor that offer such product. * Taxis * Though there are several operators in Singapore, Most of them obtain their fleet of normal taxi from the following brands, such as Honda, Kia, Toyota, Hyundai. * Taxi car were purchased from the vendors and rented out to individual drivers. * As the taxies were bought in bulks by the respective taxi operators, they should enjoy bulk and corporate discount for these purchases. * Suppliers in this case do not hold the power to increase the pricing when selling taxi to these company. * For instance, should Toyota jerk up their pricing, individual operators have the option to switch supplier to others, such as Honda, Suzuki, Hyundai and etc. * Buses * Focusing on the two major public bus transport operators in Singapore, SBS Transit and SMRT. * Majority of the SBS Transit buses were obtained from Volvo and SMRT, from Mercedes-Benz. * SMRT explored into other options by obtaining other suppliers, from China, branded ZhongTong, for a 1 year trial. * In this case, the two operators obtain their assets from different company, with many other supplier, there are no bargaining power of suppliers.

Bargaining Power of Buyers

* With all the public transportation prices being regulated, the respective companies do not have the capability to impose their own price. * Such prices are being regulated by the Public Transport Council of Singapore. * First, passengers are limited by the options as, capped within the price range, are only buses and train. * The alternative for passengers to travel is to take taxi, however the price difference are great. * Hence, the buyers or passengers do not have the bargaining power.

Pressure from Substitute Products * In short, for transportation, substitute products depends on the amount of money consumer wish to spend. * Substitute of public transportation are privately owned vehicles. * However one would have to consider about the price of such vehicles and individual preferences. * Public transport is the cheapest form of transport. * For public transportation such as bus and trains, only one substitution is to hire a taxi. * After all, it depends on where the person intends to go to determine the price to pay * Time is also a factor to be considered when public transport is concern. * Hence, for public transportation, there aren’t any substitution.

References

http://www.sgwiki.com/wiki/Singapore_Bus_Specification