Our reputation for service excellence has helped us to secure twelve strategic joint ventures in ground handling and inflight catering services at fourteen international airports in Asia-Pacific.
d) What are the company’s resource strengths and weaknesses and its external opportunities and threats?
i) Strengths
The company draws its competitive strength from its ability to differentiate its services relative to its competitors. Differentiation exists in the characteristics of the services that the company offers. First is the company offering of full-range aviation security services from security personnel to hardware installations and even to software monitoring so that the company is able to cover all possible sources of threats to the aviation industry. Second is the strong internal structure of the company translated into motivated employees catalyzing customer satisfaction that in turn leads to firm growth. This is achieved through the implementation of the company of the principle of customer satisfaction with its staff as the initial customers of the company. Motivation comes from the training provided by the company to its staff and the value accorded by the company to skills and experience in security. Third is the global capability of the company’s security services. The company’s updated information on new security innovations in logistics and technology means that the company is always on top or at par with its competitors in terms of security service modernization. Its experiences from operating in other countries means that the company can draw information and techniques from the international aviation security market that it can integrate into its skills development and training exercises. This allows the company to gain mastery not only of the changes in security environment in Singapore but also in developments in aviation security environment in international markets. This implies that the company holds an edge over other domestic firms and gains qualities to compete with international security firms.
ii) Weaknesses
The company has some weaknesses in the current state of its operations. One is its legal constraints and obligations because of the characteristics of the organization. SATS, the parent company of SSS originally held monopoly of airport services in Changi airport but due to the policy of the government encouraging competition the airport authority created an alternative company. Due to this change, SSS was left with 48 airline companies as its clients representing control of 80 percent of the market with its other clients consisting of embassies. However, since the company’s staff is comprised of auxiliary police, it came under the regulation of the national police force making the organization subject to accountability rules and constraints in its operations such as meeting a level of performance in firearms handling. Although this benefits the company through the achievement of high levels of training for its security staff, the company also has to meet other restrictive regulations that may hamper its competitive strategies. This becomes a weakness because its competitors in the local and international market do not experience a similar degree of restriction. In instances when the security industry imposes minimal requirements to competitors, the company may have to achieve a higher level of competency. Second is the higher cost that the company incurs because of its status. This is linked to the first weakness. Since the company has to meet regulations and limitations, it also has to incur higher compliance cost. In the case of higher degrees of training, this means that the company has to incur greater cost in training and retraining its staff when other companies do not need to incur this cost to provide the same service.
iii) Opportunities
As a growing company, a number of opportunities are open to the firm such as expansion into other segments of the security market, expansion into other international markets, and engagement in the new technology of biometrics.
Currently, the company offers its services to aviation companies and embassies. However, there are other segments of the market demanding security services such as utilities, shipyards, financial instiutions and commercial buildings. Although these market segments may demand lesser security personnel, the number of these potential clients could increase the client base of the company and contribute to its profit level. Moreover, the engagement of the company in different sectors would allow the firm to minimize the impact of economic downturns due to the difference in impact on the different industries.
Since the company has already proven its ability to operate simultaneously in the domestic market and in other international markets, it can also expand to other international markets and take-over security operations in national airports in other countries such as China and Thailand with large volumes of passenger and cargo passing through their international airports. The company can offer its global capability in aviation security to compete with international security firms vying control over these markets.
Although the company has integrated advanced technology in its security services, biometrics has emerged as an innovation in security services. There are a number of biometric technologies already existing or being developed. These include fingerprint and hand scanning, iris and retina scanning, facial recognition, voice recognition, thermo scanning, signature and keystroke dynamic recognition as well as DNA comparison. The Singaporean government has commenced the integration of biometric technology in its systems. Since the market has not yet been saturated with the technology, SSS can engage into this technology as part of its overall security service or as a manufacturer and supplier through its international contacts.
iv) Threats
The company faces two major threats, which are 1) new or greater regulations and 2) change in the competitive environment allowing the entry of other players in aviation security.
Changes in regulations may either benefit or threaten the company. Regulations that increase the restrictions to the company comprise a threat to the firm because this would mean greater compliance cost for the firm that its competitors do not incur. Additional cost means that a particular amount is diverted from allocations to investment endeavors and potential profit generation.
A change in the competition in the Changi airport would also threaten the company. Currently the company’s operation is concentrated in its handling of majority of the security units in the airport. However, if the airport authority agrees to open operations to new entrants then the company may have to shift the bulk of its operations in other security markets or spread its operations in the international market but the loss of its control over majority of security in Changi airport would adversely affect the company.
e) Are the company’s prices and costs competitive?
Although the SSS website does not offer information on the cost of its service offerings and the price to consumers, its status indicates data relative to its competitors. SSS is a large company based in Singapore, with operations in four international markets. This means that it is in competition with international security firms based mostly in North America and Europe.
There are only a limited number of domestic security services firms with international operations. In terms of cost, the company incurs greater cost relative to most of its domestic competitors because of its engagement in advanced technology, regulation compliance costs, and its international operations. Its operating cost is almost at par with its closest domestic competitors with international operations. Its operating cost is also less or at par with international security companies operating in more markets around the world and engaged in research and development. Its level of operating cost relative to its competitors indicates that SSS is still a growing company with huge potentials for growth and expansion.
Singapore has created a vibrant environment for companies because of its business-friendly tax regulations that apply to both domestic and multinational companies. This allows companies room to establish their edge in terms of price competitiveness. SSS, similar with other firms, has taken advantage of tax cuts to establish an edge by offering its services for a lesser price. However, for a long time, the company has also monopolized security services in Changi airport, which means that it was able to establish a price that the airline companies are willing to accept and the price. With increased competitiveness and competing firms offering their services for lower prices, airport security operations were opened to other bidders. Overall, this means that the price for its services is less than that of its exclusively domestic operating competitors but its price is at par with that of international companies because of its ability to offer a similar value as these companies. Based on its price level, SSS is a Singapore based security company with international operations able to compete with international security services companies from Northern America or Western Europe.
f) Is the company competitively stronger or weaker than key rivals?
SSS holds relative competitive strength and weakness. In the Singaporean security market, the closest competitor of SSS is Commercial and Industrial Security Corporation (CISCO), with its staff members also considered as auxiliary officers similar to SSS so that these companies are both rooted in Singapore’s police force. CISCO also offers services to both public and private sector concentrating on land transport with government departments and private companies as its clients. Its services include secured transport for banks as well as securing premises of government installations and buildings. The strength of SSS relative to CISCO is its international operations because it concentrated on aviation security with great demand in foreign markets. Its relative weakness is the concentration of its operations in one industry alone.
Similarly, SSS also holds relative strengths and weakness when compared to its international competitors. There are a number of international security firms in Singapore usually offering hardware, software or logistics services. This means that SSS holds the strength of mastery of the domestic security environment and the provision of a complete security services from hardware and software to security personnel skilled in the application of security hardware and software. Its access to advanced technology also allows the company to be at par with the technological capability of international competitors. However, its weakness is in research and development leading to the creation of new security technology because of its provision of comprehensive services. International companies concentrating on hardware or software are able to engage in research and development to become providers of this type of security.
Overall, SSS is in an advantageous position that opens the company to opportunities for growth and expansion. Although it has relative strengths and weaknesses, there is room to direct the company towards worthwhile investments that could heighten its strengths and address its weaknesses.
Task 3: What future strategy might your selected company adopt?
Considering the current position of the company, its future strategy would likely to continue its tactic of diversifying its earnings base as well as improving its competitive position in the domestic and international market. With these goals, the company should expect to heighten its ability to meet industry downturns and expand its operations in the international market.
Diversification of earnings base involves the consideration of both horizontal and vertical expansion. Vertical expansion refers to the growth of the company in terms of scale through the acquisition of smaller firms to form part of the company. These small firms are engaged in business activities similar to the acquiring firm or within the same industry as the larger company. Horizontal expansion pertains to the acquisition or merger of a business firm with other firms engaged in different business activities. In this manner, the company grows through the diversification of its business activities enabling the firm to target different market segments by providing a variety of goods and services.
In terms of vertical expansion, the company can expand its operations through the acquisition of interests or ownership in small security service companies with values aligned with the company and potential of enhancing the position of the firm. In doing this, the SSS achieves additional personnel experienced in various areas of security service delivery, building and operating headquarters located in various areas in the country, and market base of the security company. Most small-scale security service companies in Singapore offer the skills of its security personnel to various private firms such as commercial office buildings, retail shops, banks and financial institutions, schools or educational institutions, and personal security to VIPs. SSS has not yet entered these areas of security services.
With the acquisition of small security companies, SSS will be able to expand the organization in terms of human resource skills. The integration of the staff of SSS with the employees of the small firms leads to the sharing of information, experience and skills resulting to the enhancement of the competencies of the company’s employees. Apart from information and skills sharing, the company will also be able to enter other market segments held by CISCO, its closest competitor. This would enhance the competitive position of the company in the Singapore market because of its wider field of security expertise and bigger market base. By reaching this position, the company will be able to gain greater control of the security market in Singapore and become a prime mover in the industry.
Another mode of vertical expansion is the acquisition of interests or ownership of security firms in other countries whether engaged in aviation or other forms of security. Again, the company should select companies in international markets with potential for internationalization by coming under SSS. Through the acquisition of security companies in international markets, SSS is able to enhance the competencies of the members of the organization in terms of information, skills and expertise sharing to enhance the global capabilities of the company. The acquired company will be able to provide SSS with information on the business and competitive environment in the international market together with an established brand equity, which the company can further enhance by aligning with SSS. Doing so would improve the position of SSS among international security companies because of its presence in different international markets.
With regard to horizontal expansion, SSS has the option to engage in other services closely related to its service offers. It has already done this by engaging in in-flight catering services, which is a distinct activity from security but is still related to aviation in general. Other areas of operation that the company can engage into include transportation system for tourists and VIP visitors, arms and weapons development, biochemical research, and management consultancy. Although, these comprise different activities, the company will be able to succeed because these areas of operation involve skills and logistics similar to its security service operations. In addition, these activities are aligned to security services and the company will be able to engage in R&D.
Improving its competitive position involves the consideration of actions that the company can take to assure its position in its Changi airport operations amidst the threat of new entrants. If the company cannot prevent the entry of new players in airport security, the company can do something to secure the company with the change in competitive environment. Quality service at a reasonable price coinciding with the value of its service offering constitutes a competitive edge for the company. It can defend its position by enhancing its service quality. A promising way of doing this is through its engagement in biometrics technology.
Biometrics market is fast becoming internationally competitive. With the interest of the Singaporean government in biometrics technology, the country has become a host for a number of companies developing this technology. In fact, the government has already awarded the Japanese firm NEC Solutions Asia Pacific Pte. Ltd. with the contract for the development of biometrics passport in 2005. The contract is worth million. The German IT company Siemens is also located in Singapore offering services to support the efforts of companies to integrate biometrics technology into their security management systems. The US firm Identix Incorporated, a market leader in biometrics is also active in the Singapore market. However, the biometrics market is still developing in Singapore. In Changi airport, the integration of biometrics in airport security is still underway. (Public Sector Technology and Management, 2007) This means that SSS can invest in the technology for the Changi airport in order to enhance security for airlines and passengers as well as improve the competitive status of the company despite of the opening of airport operations to new entrants.
Continuing the diversification of earnings base and the enhancement of competitive position of SSS is possible through the high level of competencies that the firm holds enabling the company to have a foundation for solidifying its present operations and resource support for expansion. Through these endeavors, the company is able to grow into an international firm while protecting its market base in the domestic market.
Appendices
Table 1: Statistical Data for Security Hardware in Singapore
Electric Burglar Alarms
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2001/2002)
Total Imports
,530
,282
,583
,973
-1.6%
53.7%
Local Production
,928
,983
,517
,462
-29.5%
26.9%
Total Exports
,547
,165
,751
,260
-4.7%
38.0%
Total Market
,911
,100
,349
5
-24.9%
59.5%
Imports from U.S.
7
5
,219
3
3.9%
147.9%
Control Panels
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2001/2002)
Total Imports
,408
,371
,691
,278
-28.6%
-6.8%
Local Production
,539
,208
,353
,515
-53.5%
8.7%
Total Exports
,765
,952
,943
,543
-41.9%
10.0%
Total Market
,182
,627
,101
,250
-33.6%
-10.8%
Imports from U.S.
,777
,622
,502
9
10.5%
-0.8%
Cards incorporating an electronic integrated circuit (“smart” cards)
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2000/2002)
Total Imports
,622
,469
,307
,994
76.9%
24.9%
Local Production
,233
,731
4,708
,670
-35.6%
119.4%
Total Exports
7,087
,518
3,587
,881
-32.4%
149.7%
Total Market
,768
,682
8
,783
1166%
-98.7%
Imports from U.S.
,226
,839
,588
,746
453%
90.8%
Proximity Cards & Tags
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2001/2002)
Total Imports
,358
,422
,460
0
-37.2%
72.9%
Local Production
5
8
8
5
119.9%
-7.8%
Total Exports
1
5
,787
1
96.2%
93.2%
Total Market
,112
,015
,151
-49.9%
13.3%
Imports from U.S.
,201
1
5
0
-47.0%
28.8%
Cards Incorporating A Magnetic Stripe Blank (Cen)
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2001/2002)
Total Imports
,593
,737
,782
,849
9.9%
-34.9%
Local Production
,559
,782
,099
,790
-55.5%
26.4%
Total Exports
,897
,318
,306
,884
-53.6%
21.3%
Total Market
,255
,201
,575
,755
1.59%
-28.4
Imports from U.S.
7
0
.7
-20.4%
-17.7%
Cards Incorporating A Magnetic Stripe Recorded (Cen)
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2001/2002)
Total Imports
,940
,818
,130
1
158.5%
-55.8%
Local Production
,463
,145
,067
1
52.5%
-3.6%
Total Exports
,659
,349
,823
,152
47.4%
20.2%
Total Market
,744
,614
,374
175.3%
-70.2%
Imports from U.S.
2
1
49.2%
-85.6%
Television Cameras
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2001/2002)
Total Imports
,092
,955
,283
,360
9.3%
49.6%
Local Production
,899
,046
,817
8
-77.8%
265.0%
Total Exports
,843
,099
,353
,115
-27.7%
299.6%
Total Market
,148
,902
,747
,743
20.9%
-63.8%
Imports from U.S.
,178
,235
,099
,072
6.8%
-6.1%
Still Image Video Cameras & Other Video Camera Recorder
(1,000′s of US$)
2000
2001
2002
Jan-May
2003
Growth Rate (2000/2001)
Growth Rate (2001/2002)
Total Imports
7,745
8,628
2,144
4,535
36.9%
27.3%
Local Production
,242
,008
,409
,478
-26.5%
-3.9%
Total Exports
1,013
1,970
8,691
1,223
54.3%
82%
Total Market
7,974
1,666
,862
,790
6.9%
-73.2%
Imports from U.S.
,918
,583
,149
,602
-31.4%
138%
Source: . (2003). . . Retrieved April 19, 2007, from
Table 2: SSS Operations Data
Full Year
Unit Services Handled (’000)
Flight Handled (’000)
Tonnage of Cargo & Mail Handled (’000)
FY2005 – 06
FY2004 – 05
% change
FY2005 – 06
FY2004 – 05
% change
FY2005 – 06
FY2004 – 05
% change
Apr – Mar
83.01
78.39
5.9
84.11
76.09
10.6
1,491.01
1,424.97
4.6
Full Year
No. of Passengers Handled (‘M)
Unit Meals Produced (‘M)
Gross Meals Produced (‘M)
FY2005 – 06
FY2004 – 05
% change
FY2005 – 06
FY2004 – 05
% change
FY2005 – 06
FY2004 – 05
% change
Apr – Mar
27.32
25.27
8.1
19.24
18.53
3.9
24.18
23.53
2.8
Full Year
Unit Services Handled (’000)
Flight Handled (’000)
Tonnage of Cargo & Mail Handled (’000)
FY2006 – 07
FY2005 – 06
% change
FY2006 – 07
FY2005 – 06
% change
FY2006 – 07
FY2005 – 06
% change
Apr – Mar
82.23
83.01
(0.9)
84.53
84.11
0.5
1,546.99
1,491.36
3.7
Full Year
No. of Passengers Handled (‘M)
Unit Meals Produced (‘M)
Gross Meals Produced (‘M)
FY2006 – 07
FY2005 – 06
% change
FY2006 – 07
FY2005 – 06
% change
FY2006 – 07
FY2005 – 06
% change
Apr – Mar
29.27
27.32
7.1
19.77
19.25
2.7
24.74
24.19
2.3
Source: (2007). 2005/2006. Retrieved April 20, 2007, from
Bibliography
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