3.1. Political
and Legal Environment
Singapore
practices a high level of transparency in the local business environment. Its
stable political structure with parliamentary democracy and a well-established
judicial system have attracted global investors to setup companies in Singapore
(Singapore Company Setup Benefits n.d.[i])
This is evident by the many international accolades Singapore has won.
Singapore
has been awarded and ranked by many international agencies for its political
climate, competent government and efficient business legislation. The below are the some of the awards which
Singapore has won as listed by the Economic Development of Singapore (n.d.)[ii]:
Government
- Singapore is ranked 3rd in the world and 1st in Asia
for having the least corruption in its economy.
- Singapore is ranked as the 2nd most transparent
country in the world and it is the most transparent Asian country.
Business Legislation and Efficiency
- Singapore is ranked 2nd in the world and 1st in Asia
for having the best protection of intellectual property.
- Singapore is the least bureaucratic place for doing
business in Asia.
In
addition, the statistics of the Worldwide Governance
Indicator 2004-2008[iii] by the World’s Bank project over the past 5 years, also rank Singapore above many other developed and
developing countries in the region, including Hong Kong, Australia, Japan
and China, suggesting that Singapore have a sound and stable political climate,
where the ruling party practices effective
governance with scores at 90-100 percentile except under the voice and
accountability indicator (participation in
selecting their government, as well as freedom of expression, freedom of
association, and a free media). Appendices: Figure 1 – World’s Bank Report:
Singapore Governance Indicator 2004-2008
The numerous
international rankings summarize that Singapore is a political stable country
with high international standards in its Law and Regulatory, as well as minimal
to none corruption in its government system, hence it is definitely a conducive
and safe country for MGM Mirage to open hotel.
The Singapore Government
aims to be a world leader in International business of finance, manufacturing,
telecommunication, tourism and trade. This strong determination was shown in
the growth of GDP, which expanded to 13.9 per cent for 3Q of 2009, and increase
by 0.8 per cent at 4Q of 2009. Growth was driven by the continued expansion of
biomedical and electronic manufacturing output, and improvements in the trade
related and tourism sectors of the economy on the back of the gradual
stabilization in global economic conditions (Singapore Department of Statistics
2009)[iv].
Singapore’s
economy has been consistent ranked one of the top in the world by many agencies
globally; some of these awards include (Economic Development of Singapore
n.d.):
Economic Performance
- Singapore is ranked No.2 worldwide as the city with
the best investment potential for 14 consecutive years.
- Singapore is the world leader in foreign trade and
investment.
Competitiveness & Business Environment
- Singapore is ranked first for having the most open
economy for international trade and investment
- Singapore is the world's easiest place to do business
- Singapore is ranked the most competitive country in
Asia - and is No. 5 worldwide
- Singapore is rated to have the best business
environment in Asia Pacific and is No. 3 worldwide.
- Singapore is Asia's 3rd most "network
ready" country.
Labor
- Singapore maintains top position in BERI's Labor
Force Evaluation Measure
- Singapore has the most motivated workforce in the
Asia and is ranked 3rd in the world.
- Singapore offers the best skilled labor in Asia
Pacific.
- Singapore's labor regulations are the most business
conducive in Asia.
- Singapore has the best labor/employer relations in
Asia.
Social
and cultural factors vary from country to country, and are important
consideration when making key business decisions. Therefore, it is important to
examine the socio-cultural environment of Singapore before MGM Mirage makes a
decision to enter the market.
An
analysis on the cultural dimensions of Singapore is using Geert Hodfstede’s
cultural framework. This can help to identify the key differences between the
countries which is crucial in deciding of the degree of standardization or
localization of the business in event MGM Mirage decide to enter the Singapore
market.
The
total population in Singapore as of 2008 is at 4.839,400, out of which
3,642,700 are residents. There are three major races in Singapore, the largest
being the Chinese population (74.7%), followed by the Malays (13.6%) and
finally Indians (8.9%). The common language used in Singapore is English, and
all citizens are required to pick up a second language that usually is their
mother tongue. (Singapore Department of
Statistics, 2009)[v].
(a) Ageing Population & Low Fertility Rate:
Like other developed country,
Singapore is similarly facing population challenges resulted by low fertility
rates (below replacement level) over the past 30 years and an ageing population
as seen below showing the change in portion in the different age categories:
Resident Population by Age Group (%)
|
|||||||
0-14
|
15-24
|
25-34
|
35-44
|
45-54
|
55-64
|
65 & over
|
|
2007
|
18.9%
|
13.3%
|
15.3%
|
17.4%
|
16.6%
|
9.9%
|
8.5%
|
2008
|
18.4%
|
13.4%
|
15.2%
|
17.1%
|
16.7%
|
10.5%
|
8.7%
|
The old age support
ratio, which is the number residents aged 15-64 years per elderly (65 years and
above) residents, has fell from 10.4 in 1998 to 8.4 in 2008. This is predicted
to reduce further in the future due to the low fertility rates coupled with the
ageing of baby boomers born between 1947 and 1964 leading to a rapidly ageing
population profile. The dependency ratio per 100 residents aged 15-64 has also
dropped to 37.2 in 2008. For more details of the ratios, please refer to
Appendices: Figure 3 (National
Population Secretariat , 2009) [vi].
(b) Increased in
singlehood rate: There is an increased in the number of citizens who remained single in
2008 with the biggest proportion in the 30-39 years old. In addition,
singlehood rates were the highest among males with below secondary education
and among females with university qualifications (National Population Secretariat , 2009)
The increased in the
singlehood can potentially translate to increase in demand of homecare services
like cleaning the house, cooking meals, taking care of pets etc.
(c) Longer working hours: Singapore residents worked
longer hours in 2005 than five years ago. The proportion of resident working
persons who worked 60 hours or more per week increased from 17% in 2000 to 19%
in 2005.
- Prevalence of long work hours over 60 hours or more per week in
2005 among Sales and Service Workers (31%), as well as Managers (29%), and
those in Production & Related (24.3%)
- In terms of industry, long workweek was common among residents
working in the Hotels and Restaurants (33%), followed by Transport &
Storage. (24%)
- In addition, residents who operate their own business are more
likely to work longer hours than salaried workers: Employers (40.4%) and
Own Account Workers (32.6%)
Source: Singapore Department of Statistics, 2005[vii]
(d) 80% of the household size is between 2-5
persons (Singapore Department of Statistics, 2009)[viii]
(e) Increased in Average Household Income among
residents: Average household income among residents increased by 11% from $6,300 in
2007 to $7,090 in 2008. In addition, there are now 39% of employed households
in higher income brackets that earned a monthly income of at least $7,000,
which is a 3% increased from 2007. (Singapore Department of Statistics, 2009)[ix]
With average household income increased, each household would have more
disposal income to hire to spend in activities that gives them pleasure such as
playing the casino or simply stay in a hotel that provides them with all sorts
of entertainment
The Greet Hofstede’s cultural framework is based on an analysis of a
large database of value scores collected from over 70 countries between the
periods from 1967 to1973. The model comprises of five cultural dimensions
provide an important framework in analyzing national culture. This section of
the report will examine the Power Distance (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance
(UAI) and Long-Term Orientation (LTO) of Singapore and the potential impact on
MGM Mirage marketing in Singapore. MGM Mirage need to take these cultural
dimensions into consideration and adapt its management and marketing strategies,
as accordingly should it decide to enter the Singapore market:
Power
distance is the extent to which society accepts hierarchical differences and
inequality amongst individuals as legitimate occurrences in the social
environment (Hofstede 1985)[xi].
Singapore has a high power distance score of 74, indicating that Singaporeans
generally adhere to a hierarchical relationship in society where people are
inherently unequal in rank and standing, and these differences in social status
are widely accepted and respected. Deference, respect and formality towards
elders, superiors, mentors and leaders are also deemed as the norm (Liu Qing
n.d.)[xii].
Strong dependency relationships prevail between parents and children bosses and subordinates,
professors and students, masters and learners. Thus, elders, superiors and
authority figures are important opinion leaders. Opinion leaders are strong,
informal sources of product information, who are usually role models and play a
crucial role in the process of diffusion of innovations (Marieke 2005)[xiii] MGM mirage
should adapt its marketing strategies as identifying these key opinion
leaders of each target segment can be a vital key to successfully penetrate
into the Singapore market.
In
addition, Singapore’s high PDI reflects the respect in accordance to the hierarchical chain of command within the organization where
subordinates and juniors are supposed to not question authority and keep their
opinions to themselves. However, MGM Mirage should still maintain its corporate
value of building an open and trusting relationship between the stakeholders in
Singapore. This can be done through encouraging two-way communications and
feedbacks to ensure problems are
resolved properly and excellence are maintained.
Hofstede (1984)[xiv]
defined Individualism (IDV) as the degree to which a society reinforces
individual or collective achievement and interpersonal relationships.
Individualistic cultures are low-context cultures with explicit verbal
communication while collectivistic cultures are high-context cultures (Marieke 2005). In addition, individualistic
cultures place bigger emphasis on internal self-controls due to its
“I”-conscious, which differs from the “We”-conscious in collectivistic cultures
that stresses more on the maintenance of surface harmony censure by the group
and face-saving (Victor 1992)[xv]
Singapore has a low IDV (20) as compared to the World’s Average (43)
indicating that it is a collectivistic society. Low IDV meant that in-group
social norms and beliefs are favored over individuals and conformity is expected
and perceived positively. Loyalty is also highly regarded. This implies strong
influencing power of opinion leaders on their group members.
In addition, family is the core of the society in Singapore as a
report by Kua and Yang (1991)[xvi]
mentioned that traditional Asian value of family ties remains paramount to the
average Singaporean. The low IDV and emphasis on “family needs come first” is
in favor for MGM Mirage hotel whose services caters all family units and, thus
making Singapore a viable option for expansion.
This dimension refers to the extent of Masculinity (MAS) or Femininity in
terms of the distribution of roles between sexes in a society. A masculine
society put emphasis on values such as assertiveness, competitiveness and
material success, while by contrast, the dominant values of feminine society
includes modesty, caring for others and emphasis on quality of life (Marieke 2005).
Singapore’s MAS is at 48, which is very close to the world’s average score
at 50, indicating that Singapore has a balanced gender roles in the
society. This infer the small role differentiation of men and women in a
household, hence MGM Mirage can market their services to target both sexes
since both can potentially be purchase decisions makers.
The uncertainty avoidance (UAI) refers to the extent to which members of a
society feel threatened by uncertainty and ambiguity and try to avoid these
situations (Marieke 2005). This cultural
dimension measures a society’s preference for rules and formality over
ambiguity and risk. People in uncertainty avoiding countries tend to be more
tolerant of others’ opinions, phlegmatic and contemplative, and not expected by
their environment to express emotions. (Itim International n.d.)[xvii]
Singapore is the least risk-adverse country with an extremely low
UAI (8). This means that Singapore population feel less threatened by ambiguous
situations and is generally more willing to take risks in life, probably due to
the high number of immigrants into the country.
The low UAI score can be further be interpreted as Singaporean’s willingness and readiness to new products and
innovation, therefore, the propensity
of product diffusion and adoption rate in Singapore could potentially move at a
greater pace.
As Singaporeans are less adverse to risks, it also meant that employees
have no qualms to job-hop every couple of years. Hence, MGM Mirage needs
to put in place good human resource management to ensure that good employees
are retained.
Long-term
orientation (LTO) refers to the extent to which a society exhibits a pragmatic
future-oriented perspective rather than a conventional historic or short-term
point of view (Marieke 2005). Cultures with long-term orientation values
thrift and perseverance and believe that building long-term relationships are
more important than receiving immediate gratification/rewards. On the other
hand, short-term oriented cultures focuses more on the pursuit of happiness
associating with values such as personal steadiness and stability, respect for
tradition and reciprocation of greetings, and favors and gifts (Marieke 2005).
Singapore’s LTO (48) is higher As compared to the World’s Average of 31,
it can be inferred that Singapore society is relatively long-term orientated,
implying that purchase decisions are often made after careful
consideration. In addition, the
combination of a collectivistic society with a long-term orientation, thus MGM
Migrage must emphasize further the fact that family ties is the most
important unit in a Singaporean life.
In order for MGM Mirage to be successful in the Singapore market, it has
to take into consideration the Singapore Population and Trends and understand
that Singapore is the world’s least risk-adverse country with a long-term
oriented, collectivistic culture, where hierarchical relationships and
inequalities exist, and there is small role differentiation between genders.
Hence, MGM Mirage must suit the core values and elements of its business in
Singapore and some localization might be needed in certain areas, especially
for marketing, so that it is applicable to the local market context sensitive
some cultural differences exist Singapore. In addition, opinion leadership
marketing strategy is strongly recommended to generate preference for MGM
Mirage 's services and aid product diffusion into the Singapore market. Strong
emphasis on family ties should also be highlighted in MGM Mirage's marketing
positioning and strategies.
Singapore
is a tropical island-state with a total land area of 682.7 sq km. It has one of the world’s best infrastructures
both internally within the country as well as externally connecting to the
globe and has consistently won international top rankings proving it is a good
place to do business (Economic Development of Singapore n.d.)[xviii]
Singapore is one of
the world’s top transportation hubs for sea and air cargo, which is well
connected globally. The Singapore port is one of the busiest in the world
linking to some 600 ports across 123 countries while the Singapore’s Changi International Airport
is linked to 182 cities in 57 countries with more than 4,000 weekly flights.
The country has a well-developed highly efficient public transportation
including the Mass Rapid Transit system, and bus and taxi services, so
travelling from one place to another would not pose any issue for MGM Mirage’s guests
Internet might be an effective marketing medium to reach out to MGM Mirage’s target market. More research
can be done to establish the viability of this channel.
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