The Development Bank of Singapore Limited (DBS) is a multinational banking corporation that provides financial services. The company has its head quarter located at Marina Bay in Singapore. The government of Singapore established DBS in 1968 and today it has acquired the position of the largest bank in South East Asia. Apart from Singapore,DBS has its branches in Dubai, China, Hong Kong, Indonesia, India, Japan, Taiwan, Philippines, Malaysia and various other parts of the world. Not only this, DBMS is dominating the market of Both Hong Kong and Singapore in treasury and market, consumer banking, securities brokerage, asset management, debt fund raising and equity.
DBS started mobile banking service on 15 th April 2010 for both the customers of DBS and Post office Saving Bank. This service allows the consumers to view their credit card and banking accounts, pay bills and transfer funds just with the help of their mobile phone. All they need to do is to download the DBS mBanking or the POSB mBanking application from Google store or iTunes app store. Besides mBanking, DBS bank also launched DBS Hotspot Pre-Accelerator that enables cultivation of entrepreneurship in Singapore with the help of experimentation, training and mentorship. Renowned for its leadership in Asia, The Company has already bagged an award as “Asia’s Best Bank” and “Asia’s Safest Bank” given by Euromoney and Global Finance respectively.
PESTEL analysis can be defined as a tool or framework used by the marketers of an organization in order to analyze the external marketing environment that imposes an impact on the organization. The Word PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal analysis (Yüksel, 2012).
Political Analysis
Political analysis is done to analyses the degree of government intervention in the economy (Pollock III, 2015). This majorly includes political stability and various government policies like tax policy, labor law, trade restrictions and environmental law. The government of Singapore has ranked second in ‘Global Competiveness Report for a year 2012-2013’ conducted by World Economic Forum. It can be understood that Singapore has a highly stable governmental policies along with rigid trade and taxation policies. Considering the fact that Singapore has an efficient and transparent government, organizations including banking industries in Singapore enjoys very low political risk. Besides that, development of various business industries in Singapore encourages the more banking industries to expand their business in the country. Hence, it can be considered as a threat for already existing banking industries like DBS since they have to face a highly competitive market. However, according to Tremewan, (2016), DBS Bank, being one of the chief banking industries have low risk from the competitive market in Singapore and hence enjoys the development of the economy.
Economic Analysis
Economic analysis includes economic growth, exchange rates, interest rates, disposable income of the businesses and customers and inflation of the country. Considering the fact that Singapore has one of the most open and competitive economic environment in the world, the country is highly vulnerable to global external shocks that can shake the economic stability of the country. Global economic issues like the financial crisis in 2008, slow economic growth of China and US recession has affected the country badly. Since Singapore dollar is slowly gaining back its strength in the current global market, DBS is facing difficulties to enhance its business in countries of Europe, South America and Africa. However, the still developing and high per capita of Singapore is expected to enhance the market for the high-end customers of DBS. Besides that, developed countries like Singapore are suffering from increased labor costs. This in turn, is imposing a negative impact on the cost advantage of the Company and is acting as a major disadvantage.
Social Analysis
Social factor evaluate the mentality of the consumers in a given market. Social factor generally includes distribution of wealth of the country, education level of the consumers, lifestyle and trend changes and population demographics. Since Singapore is a developed country, the unemployment rate is very low in the country (Aithal, 2016). Hence, a majority of the citizens in Singapore invest money on high-class luxurious products. Besides that, foreigners who reside in or visit Singapore for working purposes are usually wealthy and also invests on luxurious products. Due to increased wealth and population, citizens of Singapore depend on banks to create accounts and perform fund transfer that includes both business and personnel usage. Thus, Singapore offers a vast opportunity to banking industry including DBS Bank to prosper. Apart from this, being a developed country, High literacy rate in Singapore is a crucial reason behind the creation of skilled and efficient labor base for various business organizations including Singapore.
Technological Analysis
Technological factors includes recognition of potential technologies, rate of technological advances, new technological platforms and rate of technological obsolescence that are available in the chosen country. Singapore has highly developed communication system and a wide spread IT infrastructure (Ianchovichina & Walmsley, 2012). This serves as an opportunity for banking industries like DBS bank to expand their business through e-commerce and thus increase the connectivity with their consumers. Besides that, DBS bank has successfully implemented the Infocomm Technology to increase ATM network efficiency and consumer satisfaction.
Legal Analysis
Legal analysis includes analysis of regulations and laws of the chosen country that can impose a positive or negative impact on the business. Considering the fact that Singapore is experiencing a rapid growth in economy, Monetary Authority of Singapore, which is the financial regulatory authority, is implementing increased level of litigation in both financial and public sectors (Leechaianan & Longmire, 2013). Thus, there is a high chance for DBMS to face increased laws and regulations.
Environmental Analysis
Environmental analysis includes various environmental laws and regulations of a country that a company needs to abide by to expand its business in that particular country. However, banking industries are supposed to impose lowest negative impact on the environment of Singapore.
According to research, Singapore is currently suffering from increased pollution rates due to industrialization. The mangrove forest of the country has also been depleted by 30 percent and being a well-known organization DBMS is encouraging environmental responsibilities of both its international and Singapore consumers. Besides encouraging its consumers, the organization runs green initiative in their offices in order to encourage its workers to recycle waste materials and save energy. According to Pollock III, (2015), the bank also contributed a huge amount of cash to various charities in order to assist relief effort for earthquake that happened in China and cyclone and snowstorms that had happened in Myanmar.
Porter’s Five Forces model is another tool that analyze the competitive environment in which a company or a product work. This analysis is done with the help of five major competitive forces, namely, Threat of new entrance, bargaining power of the consumers, bargaining power of the suppliers, Revelry among existing industries and threat of the substitutes (Rothaermel, 2015).
Threat of the new entrants
This factor depends on the type of entry barriers in the market of the chosen country. The rigidity of the barrier is inversely proportional to the threat of the new entrants for the existing companies (Marshall, 2013). Considering the fact that Singapore attracts business industries from all over the world, existing banking industries in Singapore experience high threat of new entries since approximately 300 banks are established in Singapore every year. Despite high barriers to entry that includes high cost of initiating a new business and a good number of government laws and regulations, existing banking industries including DBS Bank experience major threat. To overcome this issue, DBS bank has developed new strategies that includes acquisition and merger policies. The organization acquires the newly developed banking industries in order to turn their existence from a threat to a beneficial factor.
Bargaining power of the consumers
This factor depends on the availability of the number of suppliers offering products from in an industry and is directly proportional to the strength to the number of consumers of the industry (Dälken, 2014). Bargaining power of the consumers is directly proportional to the number of suppliers in a specific industry. One of the chief factors that that influence the bargaining power of the consumer in banking industry of Singapore is the high switching cost. The fact that majority of the consumers have their bank requirement, checking, mortgage and savings in a specific bank of their choice, switching to other bank is a expensive affair for the consumers. DBS bank takes this advantage with the help of which it regulates the bargaining power of its consumers.
Bargaining power of the suppliers
This factor depends on the ratio of the dependency of the industries on the suppliers and the availability of the suppliers in the industry. In industries where there are many suppliers against a very few number of firms, the bargaining power of the suppliers is low in that industry and vice versa. Considering the fact that capital is the primary resource for banking industries, the four major suppliers of capital include loans and mortgages, mortgage-backed securities, consumer deposits and loans obtained from other financial institutions. In order to acquire necessary resources needed to carry out the business, DBS bank is utilizing all the four factors. Thus, it can be said that bargaining power of the suppliers for DBS Bank ranges from high to medium considering the fact that there are a good number of banks in Singapore.
Rivalry among existing industries
Rivalry among existing industries depends on the number of organizations present in a Market. More the number of organizations more is the competition between them. Since the banking industries of Asia are highly competitive and are always in search of opportunities to beat the competition by attracting consumers towards themselves, banks in Singapore, including DBS Bank, experience high Competitive rivalry. Besides that, a good number of banking industries from Europe, America and other parts of Asia are expanding their branches in Singapore, which in turn increases the competition for DBS. However, DBS has adopted strategies to cope up with the highly competitive market. The strategies of DBS includes offering better investment services, lower financing and higher interest rates to the consumers. Besides that, the company also implements business integration like acquisition and merger policies to enhance and expand its operation size in order to cope up with the competition.
Threat from the substitutes
This factor depends on the number of substitute products that are available from other industries for the consumers (Dobbs, 2014). More is the number of substitute products more is the threat from substitutes. For banking industries, major substitutes available to the consumers are insurance, mutual funds and fixed income securities. However according to research, for banking industries in Singapore including DBS Bank, lower threat rate is experienced for deposits and withdrawal services. Gobble, (2012) argued that, since various electronic, Car and jewelry companies offers higher purchase payment for items having higher values that needs a lower interest rate compared to bank rates, it discourages the consumers to take loans. Hence, this can be considered as a crucial threat for the company.
Internal analysis
|
Threats |
Opportunities |
|
The uncertain economic condition of Singapore is a major threat to the organization. Increasing competition in the industry can be considered as another threat for the company. Increasing interest rates is another threat for the company. |
Since a lot of business organizations are rising up in Singapore, it can be considered as the opportunity of the DBS Bank. The bank needs to explore more emerging markets and participate in various business integrations (Dbs.com.,2018). Since labor cost in Singapore is high, the bank can recruit employees from the neighboring regions in cheaper costs. |
Table 1: Opportunities and Threats of DBS Bank
(Created By Author)
The Organization should participate in more business integration
DBS Bank should get more involved in business integrations like merger and acquisition. Merging smaller companies in the competitive banking industry of Singapore is really crucial since it will help the organization to enhance its revenue and size. Not only this, integration with other institutions will help the company to discover its opportunities in other emerging markets in other countries (Sia, Soh& Weill, 2016). Thus, active participation in business integration will not only enable DBS Bank to find out appropriate markets for its business, but also will help the company to expand its business all over the world.
DBS Bank should explore more markets
Considering the fact that DBS is one of the most renowned banking industries in South East Asia and Singapore, it can be understood that it is well positioned in these regions. However the company is still to expand its branches in other countries like china and Japan which are currently appropriate for expanding baking industries. China being the country with the largest population can provide an efficient market for the company. Thus, the company should work on expanding its business beyond Asian market (Goddard, Molyneux & Zhou, 2012).
The bank should diversify its services and products
One of the best policies undertaken by DBS Bank that has helped the organization to acquire the best position in both South East Asia and Singapore is to diversify its products. However, DBS bank needs to work more on it to enhance and encourage its future growth. In order to fulfill the various requirements of consumers of different fashion, test and preferences, the company needs to offer diverse products to the consumers (Rodan, 2016). Product diversification will help the company to increase its overall sale and hence the yearly revenue of the company will also increase.
DBS Bank should recruit employees from regions where labor cost is cheaper
It has already being discussed that Singapore is experiencing labor shortage and this in turn has increased the labor cost largely. Thus, it has become difficult for DBS to employ workers with a high cost. However, several neighboring countries of Singapore like China has efficient labors who are available in a much cheaper rate. It provides the company with a great opportunity to acquire labors from those regions in order to increase its production with a much lesser production cost. This will eventually result in increase in the overall revenue of the company.
Conclusion
From the above report, it can be concluded that, since DBS Bank has acquired the position of the best organization in regions where it operates, it is well understood that the organization has proper management strategies that has results in good relationship between the company and consumers. However, due to rapid change in the banking market of Singapore the company needs to identify the threats from various aspects and hence implement new strategies to cope up with the current market situation. New strategies are also needed to expand its business to other parts of the world that have potential market for business. All these efforts will not only help the company to maintain its position in the global market, but also will increase the overall revenue of the company. Hence DBS bank should work on eliminating the threats faced by it like high labor cost and uncertain economic conditions and by implementing the above-mentioned strategies to ensure a highly prosperous future.
Reference List
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