G902 Professional Profiling Module Building a niche in the competitive food industry: An Analysis of the impact of the economic recession on Singapore food industry Student Name: Farah Shila Bte Mohd Zaini Student ID: 83751 School: School Of Hospitality Diploma: Diploma in Integrated Event Management Matriculation Year: 2009 Date: 22 September 2009 Contents • Executive Summary • Overview of the growth of Singapore food industries & SFI • Issues and Challenges: An analysis of the impact of Economic Recession on Singapore food industries. • Overcoming the Economic Recession • SWOT Analysis Recommendations • Resource Executive Summary It has always been known that Singapore is a small independent country that has little or practically no natural resources at all. Due to this particular fact, Singapore had been focusing more on industrialization since the 1960s. However, this idea has made with much opposition by the people of Singapore at the point of time. Most had doubt and questioned the government if it was the right track to follow. Nevertheless, history has proven it to be otherwise and that it was the right way to advance for most industries which also include the food industry.
The food industry has always been very competitive and is continuously changing to meet and adapt to consumer demands and technological developments. As the world population increases, companies always face challenges to find new and innovative ways to manufacture and package food in order to stay on edge with competitors. In this report, I will include an analysis of the impact of the economic recession on Singapore food industry and how to recover from it. I will also be focusing on Singapore Food Industries Limited (SFI) as a case study.
In addition this report will be touching on the challenges that Singapore food industry is facing and how they overcome it. To top it off, I will touch on how to build a niche in the competitive food industry. Overview of the growth of Singapore food industries & SFI Initial states (beginning) During the initial state of industrialization in Singapore, Multi National Companies (MNC’s) were the first to invest in the young and growing market. Singapore manufacturers feel that they could no longer stay ahead of their foreign competitors.
This is so because as soon as industrialization starts to develop, they gradually found that they were behind their competitor when they compare similar food products that they produced using their present equipment and traditionally packed. So as to stay competitive and to stay current with the advanced growth in Food Science & Technologies (FST), establish food manufacturers gradually realize that they must obtain new strategies such as producing higher and better quality products as well as being innovative at the same time.
This will enable companies to operate at a lesser cost but still able to produce products that have an advantage over their competitors as well as foreign companies. Singapore Food Industries Limited (SFI) [pic] Since its incorporation in 1973, Singapore Food Industries Limited (SFI ltd) has been one of the largest integrated food companies in Singapore. With a wide portfolio of food products and services and with more than thirty years of establishing itself in Singapore, SFI has grown in size, diversification and market reach. From being just a raw food material supplier it branches out to being a food distributer, food caterer.
In addition, it also provides food manufacturing and food processing. SFI was listed on the Main Board of the Singapore Exchange in November 1999 for its expansion and diversification. In the United Kingdom, SFI operations have contribute over 50% to Group turnover. Singapore’s businesses are often mainly focus on three areas; food distribution, food preparation, manufacturing and processing, and Abattoir and Hog Auction. Since it first started its operation, SFI has managed to get hold of and retain its continuous growth in the food industry.
In 2007, SFI had yet again demonstrated its strong growth by achieving profit before tax of S$48. 6 million on turnover of S$714. 9 million. The importance of high quality innovative and creative products and services is managed by a strong team of experienced people from different backgrounds with diversified skills which greatly attribute to the success of SFI in the industry. With their capable team, SFI is able to meet the ever-changing food needs and demands that are determined by the ever changing lifestyle and demographic patterns of target consumers.
Issues and Challenges: An analysis of the impact of Economic Recession on Singapore food industries. The problem due to the sub-prime housing loans from US commercial banks and the badly structured financial products from the US investment banks causes the world economies to be seriously hit during the last quarter of 2007. The world economy deteriorates tremendously since World War II as it has been badly hit by the downturn. Industries in Singapore have not been let off from the economic impact and they too had to suffer.
For example some companies were forced into bankruptcy which eventually crippled the industry. As a result, the government for the first time in history had to immediately come out with the substantial ‘Resilient Package’; S$4. 9 billion was withdrawn from national reserves to assist troubled companies. Fortunately for the food industry was not affected badly as food trading is an important industrial sector in Singapore. The food industry in Singapore continue to have a stable growth of manufacturing output from S$3. billion in 2000 to S$4. 6 billion in 2005. This is an increase of 28% growth in six years. As mentioned by Mr Sunny Koh, Council Member of SMa & Chairman of F Industry Group at the signing of MOU between SMa and RAS, “Our recent release on Singapore’s economy has indicated that we did better than predicted in the second quarter of this year. ” This proves that the food industry is doing much better as compare to other market industry due to the fact that it recovering and stealthily growing in the midst of an economic downturn.
Although the food industry had been said to be able to recover more quickly from severe economy fluctuations, studies on the economic data has shown that the Food and Beverages (F) industry had slightly decline in May this year as compared to the similar time period for 2008. Overcoming the Economic Recession One way to overcome the economic downturn is to wait for an economic upturn. However since SFI is Singapore food manufacturer, they should not just sit tight to wait for an economic upturn.
An alternative way is for Singapore food manufacturer to work on many preparations so that when the world economies recover, they can hence stay in the lead of their international competitors For example, they can enhance product facilities, develop innovative products, train staff and workers, improve sales and distributions network, evaluate and analyse business strategies, reinforce company resources and improve productivity. While undertaking this improvement, they must also be cautious and perceptive. The improvements made must be compatible with the manufacturer or industries’ requirements and abilities.
However, overstraining is extremely risky especially during the economic recession. SWOT Analysis – Singapore food industry [pic] Strength: An advantage that Singapore food industry has over the other sector is the fact that food itself is a necessity in human daily live. Therefore there will always be a constant demand in the food industry regardless of any downturn face by the economy and as a result, food industry is able to recover more quickly in drastic economy fluctuation as compare to other industry sector such as electrical engineering.
Furthermore as the world population is constantly growing, the demand in the market for food will not face fluctuation and will remain stable. Strength: The demand for food will naturally increase when the population increases. With this relationship the Singapore food industry will be ensured that the demand in the food industry will not slack and will have steady growth. It is safer and more stable when compared to others industry sector which is unpredictable and may have a sudden fluctuation which can cause heavy losses.
Opportunities: In order for Singapore food industry to thrive, we need to continuously produce innovative products and create opportunities for the industry to improve. An example, developing a centre for Food and Science technology so that industries in the food market will be constantly updated with the change in the target market want, needs and demand. Therefore in this way, companies will be able to provide better quality and availability to meet the target market needs. This can be done trough a collaboration between the National University of Singapore and Polytechnics and develop a centre for research and developments.
This collaboration will be further elaborate further down in the report. Opportunities: Companies should also find opportunity to be regularly updated of the food industry market and seize any opportunities that will allow them to grow or improve the standard of their product in the market. Reporting regularly on the industry market will also allow them to realize of any change in competitors’ strategies and make changes of their own so as to be continuously on par with their competitors. Weakness: Since there is a low barrier to enter food industry, companies usually face large competition from new and existing companies.
Furthermore, food products are widely available and as a result consumers are much more petty and decisive in purchasing products. Hence because of this, entrepreneurs will be discouraged to seek for business opportunities in the food industry. This can result in crippling the food industry economy when there are no new businesses. Weakness: Secondly, although the food industry is able to create opportunities to develop FST programme, the sector and demand for Food and Science Technology(FST) graduates in Singapore is not great even when the wider regional demand is took into considerations.
Therefore it might affect the research and development in the Food and Science technology. Threat: The food industry may be exposed to higher and increasingly unstable process due to scarcity of natural resources. For example, factors such as water shortages and energy incompetence which will lead to shortage of food supply and causing the price to increase sharply. There will then be a drop on the food demand. Threats: In today’s advanced world, most people do not stop to think if the meal they are eating may be their last meal. 20% of the foods borne disease are serious enough to require hospitalization.
To top that 2 to 3% develop life-long complications. This will definitely affect the food industry. For example, during the bird flu period, many of the food importations were affected hence there was a slowdown in the food industry due to this reason. The next section I will be touching on ways to build a niche in the Singapore food industries. Recommendation: Overcome huge competitions in the market • Firstly to overcome huge competitiveness due to the low barrier entry in the Singapore food industry, companies should work together with each other to come up with better quality products to offer to the target market.
In addition to creating better products, it will also lessen the competition in the market. Recommendation: Building a niche in Singapore food industry • NUS and polytechnics programmes; Since 1999 National University of Singapore (NUS) has decided to develop a Food and Science Technology (FST) Programme in 1999, only certain polytechnics are providing the FST learning opportunities in Singapore. Up to this date, the Polytechnics are those that only produced a range of good technicians for the food industry. However, it is know that almost or all of he senior people in the food sector in Singapore were foreigners or could be locals who had been trained to graduate in the overseas level. Currently up to date there are about 350 food companies in Singapore with a staff base of 10 or more and the sector is worth circa S$4 billion per year, which represents about 4% of total manufacturing output. It has been estimated around 18,000 people are employed in the food sector of which about 10% of these number are graduates. This has to be put in the setting of the worldwide value of the food industry, which is estimated to be around US$ 492 billion.
Due to this, the sector and demand for FST graduates in Singapore is not great. The Programme was always designed to be for a small specialist programme but one that will produced a high quality product that was always in demand and that the industry wanted and found useful. The Programme first began with the aim of acknowledge and addressing this niche market. It was decided to create a programme that suited with what was already available in both the University and at the Polytechnics.
Since FST is known to be a multi-disciplinary subject, the Programme was created to be interrelating and cross Faculty within the University. The FST staff is also needed to provide the integrative and specialist aspects. Due to administrative purposes and in part to reflect its reliance on Chemistry, the Programme will then sit within the Chemistry Department but will operates independently. The Programme is suited to be academically sound but also one that reflects the needs of the modern sophisticated and complex food industry. There was a Mission Statement produce for the NUS and Polytechnics collaboration programme; The Regional Centre of Excellence for Research and Teaching in Food Science and Technology and to be recognised as an innovative and valuable resource by the local, regional and international food industry. ” Therefore to overcome the second weakness faced by the Singapore food industry, polytechnics should create more awareness of the FST learning opportunities offered by them and collaborate with international universities established in food and science technology so that students will be able to gain better and proper training in the sector.
In this way locally trained FST students will be able to gain more recognition and provide their service in research and development. The fact that the food industry in Singapore grows and continues to become more and more advanced( an example; an introduction of a compulsory Hazard Analysis and Critical Control Points (HACCP) for food production established by the Agri-Veterinary Authority) must be acknowledge by the government so that there will be an urgent need to produce more FST personnel that are locally trained and able to provide a proper focus for the food industry in Singapore.
Conclusion In conclusion, I feel that Singapore is well-equip when something undesirable happens. It has gone through many changes to become a great force in the food industry. With their experience, Singapore has battled through the hard-times and achieve tremendously. In times of difficulties it has constantly found way to improve itself. Now, Singapore no longer needs to depend on other country for support with their food industry. Through its research and development, strategic development and growth of the food industries, and commitment, it has paid off massively.
With the amount of capital invested in the food industry and the government drive from their initial state Singapore has all but to success in future. By education and more innovation, more people are aware about the food industry and are willing to contribute to its success. As the environment gets more competitive, Singapore should have more plans to improve and enhance the industry. By doing so, I will improve the efficiency and strengthen their resource and productivity. References and Plaudits 1. Food Science and Technology in Singapore : Innovative. Retrieved September 29, 2009 from http://www. sfi. com. g/about. htm 2. Opening adresss by Mr Sunny. Retrieved September 29, 2009 from http://www. smafederation. org. sg/Portals/0/Publications/Documents/PressReleases/Mr%20Sunny%20Koh%20Speech%20_20Jul09_. pdf 3. Singapore Food Manufacturers’ Association. Retrieved September 29, 2009 from http://www. agri-biz. com/indprof/SABD/SABD_2009_IP19. pdf 4. Letter to Shareholders. Retrieved September 30, 2009 from http://www. sfi. com. sg/pdf/Annual%20Reports/2004/letrsshareholders. pdf 5. National Diploma in Food, Nutrition and Health. Retrieved September 30, 2009 from http://www. cafre. ac. uk/food-prospectus. pdf 6.
Resource scarcity poses major threat to food industry. Retrieved November 19, 2009 from http://www. bakeryandsnacks. com/Publications/Food-Beverage-Nutrition/FoodNavigator-USA. com/Financial-Industry/Resource-scarcity-poses-major-threat-to-food-industry [pic] ———————– . • Resource scarcity. • Contamination and health issues. • Developing a research and development centre for food and science Technology • Regular reporting of economic and market industry. • Low barrier entry in food industry • FST trained in Singapore does not have strong demand in Singapore food industry • Foods are a necessity for human in daily live