OSIM International

Introduction

This project report is an environmental analysis of a Singaporean health care company known as OSIM International. This report covers the backgrounds of the company as well as the country it was established and is operating in. This report also discusses the PESTEL analysis as well as the PORTER’s 5 forces analysis and includes recommendations and a conclusion at the end.

Company background

In 1980, OSIM International Ltd was initially created as a domestic and an electrical appliance company in Singapore. It was established by Ron Sim. With a small initial investment, OSIM International primarily focused on advertising of domestic products such as knives, drying rods, etc. After a few years, Health Check and Care became the main focus of the company. The company designed and marketed various healthy lifestyle goods and saw a great success ahead  (Nikkei Inc. , 2016).

Country background

Singapore is a money making giant despite being bodily small. Because of its well-organized and strong-minded government, it has become one of the most modern cities in a past few years. The country is excelling in tourism as well as in trade. Singapore is a big example for many nations which are still developing. Singapore is considered as one of the most hospitable places for the foreigners . A large part of the work force in Singapore comprises of foreigners itself. Globalization has taken a huge step in Singapore making it a largely globalized city-state  (Euromonitor Team, 2016).

PESTEL analysis

In order to recognize and analyze the main factors of change in the business environment, PESTEL Analysis plays a huge role. PESTEL analysis is the analysis of a company’s environment, including political, economical, social, technological, eco-environmental, and legal influences  (Team, 2012).

If all the required information needed by the company is in a single place together, then the process of making a decision and constructing a strategy becomes very easy as well as it takes lesser time to make those strategies. So PESTEL analysis brings all the information, needed by the company, together and helps in constructing the required strategies. In order to construct a business globally, it is important to realize that the various social, economic and legal issues differ from one country to another  (Lucintel, 2014). So if the company wants to enter a new market, there should be a wide knowledge of the market that the company needs to enter. This PESTEL analysis helps in understanding these different dynamics of different markets by considering various factors together.

Table 1 below emphasizes on the six main factors of the PESTEL analysis in reference to Singapore. It includes government stability, unemployment rate, Wi-Fi connections, water resources and law system in Singapore.

(Table 1.) PESTEL Analysis of Singapore

Political

In Singapore, the political risk is not high at all. In fact, Singapore is known for having the least political risk in the entire continent.

In Singapore, people elect their own leaders to run their nation as it is a country with democracy. Singapore has enjoyed political stability from very long time. The party that is ruling in Singapore at present is the People’s Action Party (PAP) in which the political authority is tremendously centralized. So it has resulted in increased business chances for Singapore and has improved the quality of life in Singapore.

 All these factors are extremely beneficial to OSIM as the government of Singapore is firm and dependable. Moreover the government of Singapore intends to increase the population of Singapore that will clearly broaden the market and affect the sales of OSIM positively.

Economic

The Economic condition of Singapore is considered one of the best of all. Singapore has seen a regular increase in its GDP. Singapore has a finely urbanized and flourishing market economy. Exports mainly comprise of the economy of Singapore.

OSIM can highly benefit from the economical condition of the country and the environment, being completely free of corruption, can always support a business in an excellent way. Singapore is known for its tourism so that positively increases the sales of OSIM on a very large scale.

Social

Singapore is a global country and has people of different cultures as well as different religions. The people of Singapore can freely choose their religion and enjoy freedom of speech.

Most of the population of Singapore is well educated and career oriented so they push themselves beyond their limits to be successful and happy. So in order to that, they work for long hours without paying much attention to their health and well being. So OSIM International can benefit from this situation by providing health care products at reasonable prices.

Technological

Technological advancement is a huge reason behind the glorious success and growth of Singapore. Technology is innovating at a very fast speed. The information technology advancement has highly benefited the country to stay ahead of the other countries.

About 71% of the total population of Singapore have access to the internet and almost everyone knows how to use a Smartphone. So in the context of OSIM international, the online bookings or the chance to provide a feedback is very tempting to the customers. Moreover, customers of OSIM can online track the shipments.

Environmental

The environment of Singapore is very safe, but one main drawback is that the country has a scarcity of many natural resources especially water resources. So the resources are mostly imported from the other countries. As the water is essential in almost every business sector, including health care so it could be a great disadvantage for OSIM because the company requires a lot of resources and they will have to import or invent a particular resource. As a result of which the cost price of products on OSIM increase resulting in decreased profits.

Legal

Singapore has a lot of laws that have to be followed by all the people as well as organizations. Singapore always caught the attention of foreign workers, but now it is starting to reduce the population of foreigners working in Singapore. The reduction in foreign workers could be disadvantageous to OSIM as they will have to hire the local workers and they usually ask for more pay as compared to that of foreigners.

Porter’s Five Forces

Michael E. Porter developed a very efficient business model known as Porter’s five forces so that the companies can get an idea about the existing competition and design business plans according to that. So using this structure, organizations can recognize and examine the basic forces that can help them positively.

In this model, Porter categorizes five essential forces which influence the organizations as well as the market. So with the knowledge of these forces, a company can get an idea about the existing rivalry in the market and hence make their decisions accordingly to succeed  (Martin, 2014). The plans can be made by the company to modify these forces to their benefit and to be at a giant step ahead of the competition.

The diagram below demonstrates the Porter’s five forces:

Threats of New Entrants

Not only the exiting competition is a threat, but also the possible chance of the entry of a new competition excelling in the same business sector. If OSIM international has highly benefited from the health care sector, then it might tempt other companies also for entering into the same field.

As the market of Singapore is very relaxed, so it is not very hard for a new company to enter the Singaporean market. So these companies could pose a little threat to OSIM International. But OSIM International is itself very efficient, reputed and famous  (Ghosh, 2013). So it will not easy for any new company to establish their ground as strong as that of OSIM International.

Bargaining power of buyers

The buyers have a little control on the industry in the form of the bargaining powers they have. So the buyers, having an authority to change certain prices in a company, play an essential role in every industry.

OSIM is a health care company selling luxury items such as massage chair, tables and exercise equipments  (OSIM International Ltd., 2016). These items are not essentially required items, but are luxury items for people’s comfort. So that is why the whole power and decision lies in the hands of buyers if they want to buy the product or not. So that is why it is hard for OSIM to firstly make a requirement for their goods and then convincing buyers to buy their products. Basically OSIM have to convince their customers that the products they offer are worth the buyer’s money will spend on it.

Bargaining power of suppliers

Suppliers play a very important role in any industry. They supply the raw material required by the industry to carry out their processes. As the suppliers possess a huge role, so the association with the suppliers has to be good. Suppliers can amplify the cost of raw materials any time or can decrease the quantity of material. So it is required to have healthy relations with them.

There are a lot of suppliers throughout Asia that supply the raw material to OSIM. Since OSIM is completely dependent on these materials to carry out their processes. Hence, OSIM needs to have good relations with its suppliers. But, OSIM International is located in the countries that are not fully developed yet so they are able to get decreased cost of construction and production of their products and can still uphold the quality standards.

Threats of substitutes

By substituting, Porter means the goods that may not exist in the same industry but satisfy the same requirements. So these substitutes can be a great threat to any organization and can decrease the profit made by a company to a very large level.

The IT development and fresh innovations may become a great danger to OSIM. As the medicine is evolving continuously, so the medicine can always take the place of the diet supplements that OSIM International is selling. Moreover, instead of buying the luxury health products of OSIM, customers can opt for joining a gym or buying the exercise equipments themselves. There are a lot of substitutes available in the market, but still customers choose to go for OSIM because of the company’s high standard products and lesser costs. But still OSIM International should not neglect these existing substitutes and consider them while making business strategies  (Williams, 2016).

Competitive rivalry

Competitive rivalry is a very important force described by Porter. It analyzes the extent of the competition between exiting industries in the market. So this competition results in affecting and altering prices, many plans, and earnings

OTO as well as OGAWA is also among the substitutes that pose great risk to OSIM. The buyers prefer to buy the products that are available to them at lower prices and that demand is satisfied by these substitutes. However, OSIM has established a strong ground for itself in Singapore by providing products of great quality and that is why the threat of competition is not that high for OSIM. Customers mostly go for a well known, reputed company that satisfies loyalty to its customers and OSIM satisfy that demand.

Recommendations

• The factor that plays very important role in any business is leadership. So Osim should hire business owners who can show leadership talents and can lead the workers  in an efficient way as the workers require the leadership of talented and knowledgeable people to offer assistance and to provide a solo direction for the workers to pursue. So that way these owners will be able to create an effective and considerate environment for work.
• The success of a business highly depends on the skill of an organization to accept workforce diversity and understand its profits. Diversity includes race, sex, age, individuality, culture, caste, education, and more. So Osim should hire employees from different backgrounds as they carry a diverse variety of skills and experiences. A diverse workflow will allow Osim to offer assistance to customers on a worldwide basis. Moreover, if Osim support this diversity as it will motivate the workers to work to their utmost skill. Broad plans can be made and completed; resulting in increased output and increased earnings.
• Organization plays a very important part in every company. The organization provides the feeling of power and increase the company’s outcome. Organizing basically means keeping stuff in appropriate order. So if Osim International practices these organizational skills, it will help to keep a check on the progress of the company and the work at Osim can be done more efficiently and effectively. If Osim hires organized employees then they will take less time in carrying out the processes of the company. Proper organization also results in effective management of the business. Good organization can help in creating a stress-free and more peaceful environment.
• Management control can also help Osim on a very large scale. Using management control, Osim can measure its performance in comparison to the predetermined strategies and goals and check if its performance  is in accordance with these strategies or not. After that the company can carry out the required actions effectively. Osim can use the feedforwad controls which are completed before any activity starts. With this, the company can make sure that the correct guidelines are set and the accurate resources are available  to achieve that guideline.

Conclusion

In conclusion, OSIM has been a very efficient in creating a strong position for them in the health care industry. Singapore has proved to be a very lively and favorable environment for OSIM to operate its business. There are still many threats to the company such as the competition and substitutes existing in the market. But the company can still do well by continuing to provide high quality products at a low price and being more bendable to satisfy the needs of the customers. OSIM can also extend their business internationally to achieve more.

Bibliography

Euromonitor Team. (2016). About Singapore. (Euromonitor) Retrieved from http://www.euromonitor.com/: http://www.euromonitor.com/singapore

Ghosh, P. (2013, February 26). Singapore Seeks To Cut Quota On Foreign Workers Amid Worries Over Immigration, Rising Labor Costs. Singapore Seeks To Cut Quota On Foreign Workers Amid Worries Over Immigration, Rising Labor Costs. Retrieved from http://www.ibtimes.com/singapore-seeks-cut-quota-foreign-workers-amid-worries-over-immigration-rising-labor-costs-1103229

Lucintel. (2014). Global Agrochemical Industry 2014-2019: Trend, Profit, and Forecast Analysis. Retrieved from http://www.marketresearch.com/product/sample-8362064.pdf

Martin. (2014, August 18). Porter’s Five Forces Model | Strategy framework. Porter’s Five Forces Model | Strategy framework. Retrieved from https://www.cleverism.com/porters-five-forces-model-strategy-framework/

Nikkei Inc. (2016). OSIM International Ltd.: Singapore. Retrieved from http://asia.nikkei.com: http://asia.nikkei.com/Company/05JLRY-E

OSIM International Ltd. (2016). Brand OSIM. Brand OSIM. Retrieved from http://corporate.osim.com/brand_osim.html

Reuters. (2016, April 05). Founder of Singapore’s OSIM sweetens bid to take company private. Founder of Singapore’s OSIM sweetens bid to take company private. Retrieved from http://www.reuters.com/article/us-singapore-osim-buyout-idUSKCN0X20BC

Sibbing, M. (2016). Quality of Life in Singapore. Quality of Life in Singapore. Retrieved from https://www.guidemesingapore.com/relocation/introduction/quality-of-life-in-singapore

Team, I. (2012). Singapore Market Overview. InMobi . Retrieved from http://info.inmobi.com: http://info.inmobi.com/rs/inmobi/images/InMobi_Network_Research_Singapore_QE_2012.pdf

Williams, A. (2016, April 29). Ron Sim’s Osim buyout bid crosses 90% mark, trading to be suspended after offer closes. Ron Sim’s Osim buyout bid crosses 90% mark, trading to be suspended after offer closes. Retrieved from http://www.straitstimes.com/business/companies-markets/ron-sims-osim-buyout-offer-crosses-90-threshold

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