Low Cost Model For Long Haul Airlines

Low Cost Model For Long Haul Airlines As most industries reach a stage of maturation, the changing nature of the airline industry is evolving to integrate novel strategies and business models needed to comply with consumer needs. The low-cost airline sector is a model that generated large financial gains but saturation is observed, leading companies to discover new opportunities in the long-haul low-cost market. The article explains the principles behind the idea, justifying the failure of previous attempts and proposing a novel business model that can be adjusted to todays economy. 1. Introduction The airline industry is characterized by instability and unpredictability making it one of the most risky to invest in, succeeded only by the hospitality industry. Due to significant exposure to external factors, the airlines are subject to financial losses and damages, with the most recent being the terrorist attack on the US on September 11th in 2001. The global airline industry suffered greatly and any financial stability plummeted reports show losses of $10 billion only by US airlines in 2002 (Wensveen et al., 2007) In order to adapt with the continuously changing environment, airlines employed a cost-reduction policy by reducing capacity, in-flight amenities and management expenditure. The effectiveness of this method urged many companies to reconstruct their strategy to comply with consumer demand and lifestyle (Taneja, 2005). As a result, passengers were starting to prefer the more cost-effective approach of Low-cost carriers (LCCs) than conventional methods. A form of low-cost travelling had already emerged in the 1970s by Southwest Airlines, who kept low-unit costs by reducing aircraft turn-around time at the gate which inspired current companies follow its business strategy (Bamber, 2009). Today modern development of the strategy lead to a low-cost revolution with LCCs controlling 30 and 40% of the market capacity in the US and UK respectively since 2005 (Taneja, 2005). Due to the success of the model and the inevitable future saturation of the short-haul LCCs, companies focused their interest in converting the same business model for long-haul flights and turning it into a profitable business plan. However the concept of a low-cost long-haul airline is not new but previous attempts have not been successful. The earliest example is Freddie Lakers Skytrain which offered no frills transatlantic flights from London Gatwick to New York with single class tickets costing only  £59 one-way. The competitive pricing from established airlines that ensured after the relaxation of transatlantic market fare regulations, lead to debt accumulation of  £270 million and the company ultimately failed in 1982 (Calder, 2006). This review will examine the issues raised by the entrance of low-cost airlines to the long-haul route market and assess the factors that lead that prevented growth and establishment of such companies. By assessing how the elements of low-cost travelling are transferable to long-haul operations and the sustainability of such projects, solutions to building a successful business model could be found. 2. Other LCCs and proposals Shortly after the demise of Lakers venture, a US based low cost airline named People Express commenced flights from New York to London Gatwick in 1983 and later added Brussels. By providing connecting flights at its Newark hub and charging $3 for checked baggage, the company proceeded to expand from a successful low-cost carrier to offering economical long-haul flights. However, due to over-expansion and management problems the company was terminated in 1987. Recent attempts to adopt the Skytrain model of low-budget travelling include Oasis and Zoom Airlines. Oasis, based in Hong Kong, offered non-stop service between Hong Kong and London Gatwick in 2007, generating huge success due to the low cost of  £75 for one-way flights. Due to growing competition by leading airlines which landed in the more centrally located Heathrow and rapid accumulation of losses due to the unsustainable fares, the company failed just after 18 months. On the other hand, Zoom Airlines which operated between Toronto and several UK airports since 2006, had a longer lifespan but was forced to shut down after outstanding debts and bankruptcy were reported. A variety of ideas and proposals for long-haul travelling were suggested but were unable to raise the necessary finance. One of the most controversial cases is Civair, which was scheduled to start up a low cost flight between Cape Town and London Stansted in March 2004. However in December of that year, 7,400 passengers were left stranded when the company did not have an aircraft for the flight and no alternatives could be funded leading to closure. 2.1 Long-haul vs. short-haul flying Low-cost carriers have inherent differences in various factors when distinguishing between short-haul and long-haul flights. These include crew and security requirements, turn-around times, airport facilities, route authorities and route density. The competitive advantage acquired in short-haul LCCS cannot be transferred to long-haul, low-cost carriers because the only means of being profitable is optimizing aircraft capacity. Theories that could possibly create revenue by using the low-cost, long-haul model fall in two categories: either using a long haul airbus, charging higher baggage fees, buy-in food and beverages and fly to secondary airports or acquiring many cheap long-haul aircrafts with two-class service and secondary airport bases which will conduct multiple flights per week(Wensveen and Leick, 2009). The former theory would only be viable in practice if high volume city pairs could fill all the seats in the aircraft while the latter relies solely on getting cheap aircraft . However before developing hypotheses and specifications, attention should be given on the business side of airline operation. Judging from previous attempts, despite the original promising profits, most companies failed due to improper business planning. 3. Airline business planning and airline failure Every attempt of an airline entering the low-cost, long-haul flight market lead in failure, despite all the positive indications in the beginning. While there are hundreds of reasons leading in an airline failure, several common errors in business planning are shared between all of the cases. 3.1. Inability to maintain competitive advantage A company should be able to establish a sustainable, competitive advantage by analyzing and targeting the correct market while having the ability to compete with other carriers in the long-term. In the case of Skytrain, where Laker Airways entered the market of LCLH market without any competitors, it generated significant gains which were quickly diminished after the introduction of other airlines in the market. Uniqueness of an airlines business concept is important as it sets it apart from the competition otherwise will fail to raise necessary funds. 3.2. Inadequate income growth and profitability In most cases, many airlines business often dont demonstrate income growth and profitability. By displaying unrealistic financial projections in order to sell the business concept, the airline will fail. Bottom line growth is vital for the financial establishment of a company and that growth should be based on valid financial assumptions which can be backed up by quality measurements. 3.3 Incompetent leadership While the importance of a capable management team is underestimated, its one of the most imperative factors I gaining the interest of potential investors, as its believed that an average idea can be made profitable by the correct mindset. In most airlines the management team is overlooked in the business plan and this discourages investors from investing money. On the contrary, a good team is able to highlight any risks involved in the strategic objectives of the company and create a business plan that will ensure growth. A prime example is the introduction of Gordon Bethune as a new Chief Executive Officer of Continental Airlines the company had already filed for bankruptcy but Mr. Bethunes actions reinstated the fading airline into the most thriving carriers(Bethune et al., 1998). 3.4 Limited initial funding Most airlines require large funding throughout their development which cannot be obtained easily and combined with poor business plans lead to untimely failing. Airlines such as Oasis and Zoom were closed due to inadequate funding while competition by other companies was rising (Bradsher, 2008) . Correct estimations of the funding required and also taking into account the money lost during setup and initial operations, will lure investors for money investment as the potential for profitability will be significantly displayed. 3.5. Overexpansion and lacking flexibility Airlines often tend to expand their destination and aircraft base, with the impression that it will increase income revenue. In most of the cases, it was the limiting-step towards failure. Moderate growth and balanced route frequency can prevent overexpansion and sustain optimal gains. Additionally, the ability to compromise and adjust to the changing economical and social environment can subsequently increase the popularity of an airline among passengers. Continuous operation will lead to dependence on financial support from loans or subsidies and eventually bankruptcy. 4. Can the long-haul, low-cost model work? Studies have examined the possibility of the low-cost model integrating in long-haul flight business and clear advantages and disadvantages have been noted. At first, due to the absence of direct substitute for long-haul flights as well as the already competitive prices, there isnt adequate evidences that lower fares can increase demand in the same manner as in short-haul flights. Moreover, secondary airports cannot be used for the landing of large-aircrafts due to size and time limitations and also cost-effectiveness (Maertens, 2010). However, a cost advantage of 20 to 25% is possible if a carrier can offer online booking to reduce distribution costs and only point-to-point services where connective flights to the desired destination can be arranged by the individual passenger. Today, companies such as AirAsia X and Jet Star have managed to find a balance between price and service in order to provide low-cost flight opportunities. 4.1 Jetstar The Australian airline has managed to become one of the most successful start-ups in the recent years. While being a fully owned subsidiary of a legacy carrier, Quantas, is managed and operated separately. After commencing flights in the domestic Australian market in 2004, Jetstar operated its first international flight to from Melbourne to Singapore on December 2010, marking a new era for economical long-haul flights. Their low fares are based on the notion of offering point-to-point routes between Australia, Asia and the Pacific, in order to complement Quantas main international flight schedule. The company also offers choice between two ticket types, economy and premium economy, which various in-flight meals and snacks can be purchased or complimentary, respectively. 4.2 AirAsia X The Malaysian AirAsia which was the pioneer of low-cost carrier operations across Asia introduced the long-haul service AirAsia X in 2007 to provide more options and greater affordability to a wider marketing spectrum. Based in Kuala Lumpur, the worlds biggest low-cost hub, it has covered many destinations in Australia, Europe and Asia. A key principle in order to keep costs low is high frequency of flights and providing point-to-point medium or long haul services. As a true no-frills service it includes lots of seats and passengers purchasing in-flight meals and entertainment. It also offers a premium class which is similar to economy fare of legacy carriers while in June 2010, a US$10 million refurbishment was introduced introducing flat beds in the premium area with a small rise in the ticket fare (Anonymous, 2010). 5. Building an efficient low-cost long haul airline By evaluating the facts and figures of the previously mentioned airlines, Jetstar and AirAsia X, its evident that that reasonably priced long-haul travel can become a reality by utilizing specific cost-effective methods and business strategies. While this increase in long-haul travelling maybe attributed to the expanding economy in Asia (Hooper, 2005) and the rapidly increasing competition among emerging low-cost airlines in the continent, it has been shown that intercontinental travel as demonstrated by AirAsia can be profitable while maintaining low fares. These techniques can also be employed for any up-and-coming LCLH airline in Europe or US, to ensure their development. 5.1. Ensure faster turnaround of aircraft Short-hauls are considered to have more cost-advantage than long-hauls due to landing at secondary and less congested airports which allows higher crew and aircraft utilisation. Long-haul flights usually require more time refuelling and servicing, therefore less rotations can be performed compared to short-hauls. However, by landing at a specifically designated low-cost hub, such as Kuala Lumpur, can minimize refuelling times and costs of servicing while providing adequate support for larger aircrafts. 5.2. No frills services All-economy seating and in-flight food and beverage which can be purchased can aid in the revenue of sales while pre-booked in-flight entertainment such as hand-held devices could be useful in long-haul flights. 5.3. Point-to-point travelling only This method employed in short-haul flights ensures short turnaround times and prevention of time-consuming services which would affect timetables. Modern long-haul airlines could seek interline partners to expand their flight capabilities, similar to the co-operation of the Australian company Jetstar with its partner company Quantas (Jetstar, 2007). 5.4 High density cabins and lower input prices Gains from the long-haul flights will be possible if high seat densities exist which could make up for the low ticket fare, as more passengers equal to increased revenue. Also by importing dual-seating system with premium seats which can be charged at higher prices and have extra amenities, a market for passengers requiring conditions similar to business flights can be created resulting in more profit. New entries in the airline industry are benefited from very low unit aircraft prices in large orders as well as hiring younger and cheaper pilots. Moreover, costs of advertisings and website/call centres can be avoided to cut down expenses, since the low price is a sufficient reason for passengers to choose those companies. 6. Novel business models Because of the limited solutions and benefits on directly developing a low-cost, long-haul airline, new business models have been developed for potential exploitation into a low-cost model. 6.1. Network specialists These companies cater mainly to business passengers and are specifically operated as a corporate shuttle for routes with high-yield. A prime example is PrivatAir, a Geneva-based airline which has survived through contracts with major corporations to transport their employees between locations (Wensveen and Leick, 2009). It offers business class seating on trans-Atlantic flights using several Airbus and Boeing planes. It can also operate as an operator for existing airlines such as Lufthansa and KLM which utilize the company for their business class services in Germany. 6.2. Product specialists Airlines which focus on business and affluent leisure travel and are all-business class, all first class or both. These types of airlines are on par with legacy airline yields and offer premium cabins for long-haul flights. Companies in this market include Eos Airlines, MAXjet Airways, Silverjet and LAvion. While the first three carriers had gone bankrupt, LAvion which seemed promising and was recently acquired by British Airways did not make any profit as well (Lagrorce, 2008). Eos and Maxjet airways both operated between London Stansted and New York JFK using Boeing 757-200 while Silverjet operated between London Luton and Newark as well as Dubai. All three airlines ceased operations in 2008. LAvion operated between Paris Orly and Newark and is currently a subsidiary of British Airways OpenSkies unit. While the original offer of low fares and premium facilities seemed promising, all four companies filed for bankruptcy, citing rising fuel and oil prizes, limited funding resources an d newly formed competition on the specific routes by legacy carriers. While this business problem does not seem to be problematic, adjustments should be made in order to give motives to increase passenger preference. 6.3. Price specialists These airlines mainly adopt lower-costing strategies to compete with existing companies solely on price. This includes the low-cost, long haul flight plan which has been employed by various airlines such as Oasis Hong Kong, Zoom, Jetstar, Viva Macau and AirAsia X. In order to compete with legacy companies, larger aircrafts with high-seating configuration should be used to make profit. With the exception of Oasis and Zoom, which were bankrupt, the rest of the companies flourished with expanding their flight schedule beyond Asia and Australia. The problems leading to failure in the two named companies mainly involve insufficient business planning as discussed in a previous section. However long-term effects of the plan remain to be seen as sustaining low prices can be proven difficult with the current economy. 6.4. Long-haul charter carriers While unit costs for charter carriers is 10-20% more expensive than LCCs (Teckentrup, 2007), their increasing use for long-haul travelling made them an attractive alternative to network airlines, usually for summer destinations. Many European charter companies now target specifically long-haul destinations, such as Corsair which operates an all-economy Boeing 747-400 between Paris and Overseas French territories in the Caribbean; such high density planes are not used on other long-haul international travel by the company. Due to competition and projects bearing no success such as Britannia Airways, which discontinued flights from UK to Australia, charter airline long-haul flights have been restricted to limited time frames and leisure destinations. However, charter flights represent a large percentage of long-haul market and could potentially be exploited beneficially. 7. Sustainability of the low-cost model and future projects As the long-haul market becomes successfully grown and becomes profitable for major carriers again, it is likely that other carriers will be interested to obtain a share of the market. Due to the over-saturation of the low-cost short-haul airline industry in Europe, established LCCs such as Easyjet may utilize point-to-point flights by co-operating with long-haul flight companies to lower prices for distant travelling. Employing new aircraft types such as Airbus A350 and Boeing 787 can fly longer distances offer denser seating that would be possible to fit 800 seats flying between main hubs such as London-New York. Deregulation can also create a potential increase in new services, as many markets are limited to one or two national carriers. As this breaks down, the introduction of new entrants, such as Virgin Atlantic in the India-UK and India-USA markets can spur new competition and lower prices in international travel (Phadnis, 2012). For now, the low-cost, long-haul market appears to be decreasing as one of the pioneers of this sector AirAsia X pulled its European services citing the damaged economy of European countries and exorbitant government taxes affecting its ability to offer low-cost fares (Thomas, 2012). Even Ryanair, which declared that will commence transatlantic flights in 2007, has recently confirmed that long-haul flights are not happening for some years (Olorenshaw and Sturke, 2007). 8. Conclusions The substantial success of certain LCCs has certainly led to the perception of an attractive business model and its implementation is being utilised by various long-haul operators. Established LCCs are reluctant to join the long-haul market due to the dangers present but that is rapidly changing. Experience and expertise gained by short-haul markets can be transcribed successfully in the long-haul operating scheme, which will greatly compensate to the losses that will occur as the markets become saturated with myriads of low-cost carriers. On the other had, traditional airlines are equipped with an array of qualities such as established clientele, reducing economy seat fares to attract new passenger and experience in international flights puts the beginner low-cost carrier in a disadvantageous position. By employing a long haul point-to-point model to promote cross-selling and service integration with more established, traditional companies allow passengers to fly from smaller markets in other regions via LCCs. As with any new business model, achieving cost advantages is not enough to deem it successful. Theres a long history of competitors which offered subsidised low fares to combat new entrants in the long-haul market, leading them to financial difficulties and bankruptcy. Continuous innovation is needed in the evolving air transport market and adjusting to emerging carrier types could be beneficial. Combining a solid business plan which is flexible, manageable and competitive with a long term vision will guarantee a successful transition to the long-haul business.

Country Environment Analysis – Singapore

Country Environment Analysis – Singapore Date: 12/05/2012 Course: BUAD 6500 Prepared For: Dr. Stanford A. Westjohn Prepared By: Emtithal Alhumood, John Baker, Nora Dillon and Yuhong Fu Table of Contents: Page # Part 1 Macro Environment AnalysisAbstract ——————————————————————————————–3 Social Perspective ——————————————————————————–3 Economic Perspective —————————————————————————-5 Political Perspective †”—————————————————————————7 Challenges to Business in Singapore ———————————————————–9 Summation of Macro Environment Analysis ————————————————10 Part 2 Country Environment Analysis ——————————————–12 Country Environment Analysis Abstract —————————————————–12 Scope of the Tourism Industry ——————à ¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€œ12 Areas of Opportunity and Risk —————————————————————–16Challenges for US Business in Singapore’s Tourism Industry —————————-19 Country Environment Analysis Summation ————————————————–21 Part 1 Macro Environment Analysis Abstract: The country of Singapore enjoys a highly developed and successful free market economy. The first section of this report details the economic, social and political aspects of Singapore from a business perspective. Furthermore, this report will identify and analyze challenges which any business m ust consider upon entry to this growing marketplace. Social Perspective: Geographic Location: Situated in the northern part of the equator, Singapore lies between Indonesia and Malaysia.The island has a huge coastline of 193km. Half of the terrain contains metropolitan areas while reservoirs, open military areas, plantations, and parklands cover 40%. Covering an area of 699 sq. km. , the country is believed to be among the world’s most beautiful nations. Population: As of June 2011, Singapore's population stood at 5. 1 million, making it among the three most densely populated nations in the world (MediaCorp Pte Ltd, 2011). Singapore has a multicultural population with Mandarin, English, Tamil and Malay listed as the country’s four official languages. English is commonly used throughout Malaysia and is often referred to as the national language.Improved healthcare in the country has resulted in reduced infant mortality rate. However, the overall population growth rate i s relatively low at 2% from 2009 to 2010. Immigration is a significant driver of population fluctuation, as local population growth has actually declined in the past decade. Literacy: According to the United Nations Development Programme Report (2011), Singapore has a literacy rate of 94. 7%, which ranks 75th in global literacy by country. Education is regulated and supervised by the Ministry of Education which oversees both private and public schools. All public schools instruct students using the English language and their native tongue (referred to as â€Å"Mother Tongue Language†).According to Wikipedia, education spending typically accounts for 20% of the national annual budget in Singapore. Cultural Values: Singaporeans have a hierarchical history, and for the local population power distance is generally high. Respect for authority and social formalities are highly valued in Singapore’s local culture. Respect for parents, elders, teachers, and employers is held i n high regard. Due to the emphasis on family values, Singapore has developed a collectivist culture which focuses on the betterment of society; as opposed to the individual. Local residents generally express a modest humility when communicating with foreigners; which could be interpreted as â€Å"feminine† in reference to Hofstede’s cultural framework. Art / Music / Food:Held annually, the Singapore Arts Festival is a noteworthy event in the country’s celebration of the arts. The festival integrates visual arts, dance, and theatre. Besides home participants, global artists are also showcased. Today, the Festival is an international event. Additionally, the arts centre has traditional and classical music representation focusing on the four main cultures in the country. Singaporean cuisine signifies ethnic cultural diversity and food is seen as a uniting cultural strand that is fundamental to their national identity. Religion: Due to its strategic position, Singap ore is home to many religions. Once it was declared a port, several ethnicities and nationalities from around the globe immigrated to Singapore. 3% of the population practice Buddhism making it the core faith, 18% are Christians, 15% Muslims and 5% are Hindus. Besides, close to 17% of the populace do not practice any religion as they claim to be free-thinkers (Chong, 2010). Economic Perspective: Singapore has a highly developed and successful free-market economy. It enjoys a remarkably open and corruption-free environment, stable prices, and a per capita GDP higher than that of most developed countries. The economy depends heavily on exports, particularly in consumer electronics, information technology, pharmaceuticals, and financial services. Since the early 1990’s a focus on globalization has driven Singapore’s economy to new levels of growth and development.  Also you can read about  History of the Culinary Arts.It has signed 13 free trade agreements to encourag e international commerce and it boasts globally competitive tax incentives to draw international investors. Current GDP Breakdown: Singapore’s current GDP falls at $239. 7 billion. GDP per capita is roughly $60,000 which ranks fifth highest in the global community. According to trading economics. com, Singapore experienced an annual GDP growth rate average of 5. 54% between 2007 and 2011. Despite a 1. 5% GDP contraction in the third quarter of 2012, Singapore’s overall GDP is expected to follow historical growth around 5% this year. Export, Import and Trade: Singapore is the 14th largest exporter and the 15th largest importer in the world. According to the WTO, Singapore has the highest trade to GDP ratio in the world at 407. 9%.International trade is essential for Singapore, as it has virtually no natural resources. A large percentage of trade is conducted to meet domestic demand for energy, food, and other necessities. Singapore also regularly engages in trade, where by industries and businesses in the country import raw materials, before refining them for re-export. 47% of Singapore’s exports consist of re-exports. Singapore has relatively few barriers to trade. Trade partners have zero tariff rates applied to their products; other than alcoholic beverages. Some import restrictions exist, which are focused primarily on environmental regulation, health, and public security concerns.The import of rice also requires import licensing in order to ensure food security and price stability. In 2010, Singapore’s exports were valued at $351. 2 billion (USD). The primary export partners include Hong Kong (11. 6% of total exports), Malaysia (11. 5%), US (11. 2 %), Indonesia (9. 7%), China (9. 7%), Japan (4. 6%). Singapore’s imports were valued at $310. 4 billion. The U. S. was Singapore’s primary source of imports (14. 7% of total imports) followed by Malaysia (11. 6%), China (10. 5%), Japan (7. 6%), Indonesia (5. 8%), South Kor ea (5. 7%). Primary Industries: The petroleum and petrochemical industry in Singapore is one of the biggest in the world.Singapore imports oil from other countries before refining it for further use in other countries. Singapore has the third largest oil refinery in the world. The Singapore Petroleum Company (SPC) is also a leading player in the petroleum industry and is engaged in exploration, production, refining and distribution. Manufacturing is another major industry in Singapore. Although Singapore has specialized in digital and electronics manufacturing for the past forty years, the country has diversified into other forms of manufacturing. Thanks to government initiatives and subsidies, biomedical and pharmaceutical manufacturing is seen to be the future for Singapore's industries.Singapore is also a global leader in services, particularly in finance. Singapore’s banking system is considered to be among the strongest in the world. Singapore has the fourth largest fore ign exchange market in the world after London, New York and Tokyo. The Singapore Government Securities is the only Asian market, besides Japan, to be part of the Citigroup World Bond Index. The Singapore Exchange (SGX) was also the first demutualised, integrated securities and derivatives exchange in Asia-Pacific (Wikipedia, 2012). Economic Forecast: From 2011 onwards, Singapore’s GDP growth rate (constant prices, national currency) is expected to grow between the ranges of 4. 008 percent to 5. 162% in the next five years.According to the Ministry of Trade and Industry (MTI) in Singapore, 2012 may see a higher growth rate of 5 to 7% as its primary trade partners continue to recover economically. Political Perspective: Singapore's government is a blend of democracy and authoritarianism. It is a Parliamentary republic with a legal system modeled after English common law. The president is voted into office by the popular vote for a six year term. Voting in elections is required by law, so every citizen 21 years and older is legally obligated to cast a vote. The cabinet and the prime ministers are appointed by the president. There are 84 parliamentary seats and each person serves a term of five years. The judicial power belongs to the Supreme Court which is split into the Court of Appeals and the High Court.Judges in both of these courts are appointed by the president of Singapore (Government Structure, 2012). Political Parties: There are five main political parties: The Worker's Party of Singapore, the Reform Party, the Singapore Democratic Party, the Singapore Democratic Alliance, and finally the People's Action Party which happens to be the most dominant. This dominance is due to the fact that PAP brought Singapore from an impoverished nation to one with incredibly rapid economic growth. Although this party has brought a certain level of prosperity to the country, they have also instituted extremely strict laws and censorship on almost all aspects of lif e. Current Political Environment:In the past, Singapore was very conservative with spending and investment. However, in 2001 Singapore's government began structuring a stimulus package that included tax rebates for businesses and citizens, lower public service fees, a more expansive welfare program and financial assistance for smaller businesses. The monetary stance was changed to keep their currency competitive while assisting the increase in exporting. Since then, Singapore has relied less on government intervention and more on the liberalization of the economy. This came about due to the lack of improvement government intervention made and the requirements for a World Trade Organization membership (Politics & Government, 2007).Because the PAP holds over 90% of the seats in Parliament they have little trouble getting their policies approved by Parliament which only requires a two-thirds majority. As a result there is not a proper check and balance in Singapore's parliament against the PAP. However, recently their dominance may be lessening according to the outcomes of the 2011 elections that showed a significant decline since 2006. In order for the PAP to stay dominant they must focus on maintaining a strong economy and addressing immigration issues while gaining the trust of the younger generations. Due to Singapore's low birth-rate, immigration has been essential to their economic growth. The percentage of native citizens had gone down to 74% in 2010. This has forced native citizens to compete with immigrants for jobs.In the upcoming years it will be up to the government to legislate integration programs, lower the immigration rate, and smooth over ethnic tensions (Political Overview, 2011). Relationships Abroad: Singapore developed a good relationship with the United States during the Cold War due to the PAP's anti-communist platform and their ability to spread free trade through the Asian-Pacific region. In 2003, the United States and Singapore signed th e first bilateral agreement between the United States and an Asian country. Singapore's government has not only pursued good relationships with the United States they also focus on good working relationships with Australia, Jordan, India, Korea, New-Zealand, and Panama through the signing of Free Trade Agreements.The government is currently negotiating similar agreements with countries such as Bahrain, Canada, Egypt, Mexico, Sri Lanka, Kuwait, Qatar, and the UAE. (Politics & Government, 2007) Challenges to business in Singapore: According to the World Bank’s Ease of Doing Business Report, Singapore has the most conducive regulatory environment for business among 183 economies worldwide (guidemesingapore. com). While this exponentially expanding economy provides many opportunities for business development, there are a few challenges that must be considered by global entrepreneurs. Singapore has grown at a very rapid rate over the past few decades, and its economic success has attracted many industry leaders.This increase in business has created a very competitive marketplace, which presents challenges for new entrants. High competition is a barrier to entry for amateur organizations, and stiff competition often means reduced margins. Many companies who are considering an expansion into Singapore have concerns regarding economic growth and profitability. Many of these concerns stem from rising costs in the labor market and reductions in productivity. According to the Ministry of Trade and Industry, labor productivity fell 2. 2% in the first quarter of 2012, following a downward trend for the past 12 months. Also, manufacturing costs rose 4. 6% and overall labor costs are up 3. 7%.The productivity reductions can be attributed to contagion from struggling European and U. S. markets. Higher costs in goods and services are driving increases in both labor and operating expenses. Access to raw materials is also a concern for manufacturers considering business i n Singapore. Geographic limitations and limited access to resources often force manufacturers to import raw materials. Logistic costs associated with the delivery of raw materials can often become cost prohibitive. This problem grows increasingly prevalent as the cost of fuel continues to rise globally. Another barrier to entry for new business in Singapore is the government’s recent effort to restrict the inflow of foreigners.Singapore’s citizens are growing increasingly discontent with income inequality and rising costs of living. In response, the government has been enacting a series of benefit restrictions for permanent residents and foreign workers. For example, certain workers are not permitted to bring parents or in-laws into the country, and healthcare benefits are being reduced. In July 2012, Singapore’s parliament considered amendments to its immigration law which would make new residency or long-term work permits a criminal offense (Mahtani – W SJ). These social indicators are red flags for new businesses who fear the impact of legislative protectivism. Summation of Macro Environment Analysis:Singapore proves itself to be a promising location for businesses hoping to internationalize. It's diverse and vibrant culture welcomes newcomers as evidenced by its high rate of immigration. Singapore's technology focused economy is growing at a stable rate with little sign of slow-down. This can be partially attributed to its political stability. It has been run by the same political party for decades, allowing Singapore to keep steady international relationships with foreign countries and their business partners. While all of these factors encourage business investment, new entrants must also consider legislative protectivism and the increase costs of labor and manufacturing in their decision.Part 2 – Country Environment Analysis Country Environment Analysis Abstract: With its rich cultural tapestry and beautiful landscape, modern day Singapore has a lot to offer its tourists. The second section of this report details Singapore’s recent efforts to make their country a major travel destination. As the fastest growing sector of its economy, Singapore has recently made huge investments in its tourism industry. Singapore’s government has constructed a mass-rapid-transit-system (MRT) which serves as a means of transportation for sightseeing tourists. Singapore is also focused on building attractions such as amusement parks and botanical gardens.Singapore is a melting pot of different cultures; as a result it offers a cornucopia of cuisines and cultural events. Along with its high population of English speaking locals and low crime rate, it serves as an ideal travel destination for westerners. Scope of the Tourism Industry: Singapore has developed a rich tourism history over the past 300 hundreds of years. At the southern tip of Malaysia, Singapore is a primary destination for eastern trade. Th is bustling trade environment has attracted a culturally diverse population, and it is no surprise that this environmentally beautiful hub for international business has become one of the premiere tourist destinations. Singapore’s tourism industry is massive. The Singapore Tourism Board (STB) notes $22. billion in tourism revenue for 2011. In that same year, Singapore attracted over 13 million tourists, which was a 13% increase from 2010. This is an astounding number for a nation whose population is just above 5 million. 76% of these visitors were Asian; primarily from Indonesia, China and Malaysia. However, Australia, India and the Philippines also represented large percentages (see figure 1). Singapore has been experiencing double-digit percentage growth in tourism receipts for the past 6 years and is expected to grow another 12% in 2012 according to major Asian news organization Asiaone News. Fig 1: Singapore Tourist Levels per Country 2009-2011|Country or territory| 2009T ourists (ea)| 2010Tourists (ea)| 2011Tourists (ea)|   Germany| 183,681| 209,231| 219,952| Taiwan| 156,761| 191,173| 238,488| Vietnam| 265,414| 322,853| 332,231| South Korea| 271,987| 360,673| 414,879| United States| 370,704| 416,990| 440,576| United Kingdom| 469,756| 461,714| 442,611| Hong Kong| 294,420| 387,552| 464,375| Thailand| 317,905| 430,022| 472,708| Japan| 489,987| 528,817| 656,417| Philippines| 432,072| 544,344| 677,723| India| 725,624| 828,903| 868,991| Australia| 830,299| 880,486| 956,039| Malaysia| 764,309| 1,036,918| 1,140,935| China| 936,747| 1,171,337| 1,577,522| Indonesia| 1,745,330| 2,305,149| 2,592,222| *Data Source – Singapore Tourism Board 2012| Singapore attributes much of its growth to improvements in infrastructure and air connectivity. Investments in port access, roadways and air space have streamlined the movement of people and products throughout Singapore. The government has also invested heavily in railway for its MRTS which moves an average of 2. 4 million people per day (Wikipedia, 2012). Furthermore, developments in telecommunications have helped to improve information accessibility, which has improved the ease of travel for both business travelers and tourists. In the year 2000, Singapore’s government decided to liberalize its telecommunications sector.Previously, two companies controlled the entire telecommunications industry. In an effort to encourage global competitiveness, the government compensated the two companies, and opened the floodgates of telecommunication competition. Allowing market forces to drive this sector resulted in a revolution of progressive technology which has solidified Singapore’s current position as a technological hub. So why is Singapore growing increasingly popular as a â€Å"must visit† international destination for tourists? Many economists note the business friendly environment which has attracted top-tier investors from around the world. This environment has produc ed a cosmopolitan culture of engineering, art, food and music.Noting official languages of English, Malay, and Chinese, many international visitors also find it easy to communicate. Singapore’s government realized the unique opportunity for its tourism industry long ago, and developed the Singapore Tourism Board (STB) in 1964 to facilitate and develop its tourist activities. According to the STB, sightseeing and entertainment represented the largest spend for tourists in 2009 (see figure 2). Given its rich history of tourism, Singapore has developed many attractions over the years. Visitors can tour museums of contemporary art, explore Singaporean history, walk its pristine botanical gardens, and experience its science centers and exotic zoos.But some of the most impressive attractions have been developed in the past decade. The Marina Bay Sands Resort is a contemporary architectural masterpiece which opened in 2010, and holds the record as the most expensive casino property in the world at $8 billion (Wikipedia,2012). Fig 2: Singapore’s Gardens by the Bay has 250 acres of reclaimed land which holds state-of-the-art conservatories, horticulture themed gardens, flower markets, and massive â€Å"supertrees† which stand 82 feet high and house countless exotic ferns and plants. These artificial trees were aesthetically constructed with tourists in mind, and illuminate the park at night with spectacular LED displays.Singapore also has its own Universal Studios which opened to the public in 2009. This â€Å"Hollywood themed† amusement park attracts visitors from around the globe, and is popular with western tourists who find comfort in its familiarity. Tourist attractions are big business in Singapore, and the STB works to ensure that there is no shortage of entertainment. Another tourist attraction is Singapore’s annual Grand Prix motor racing, which has generated significant revenue for Singapore’s growing economy. Auto ra cing has been a significant part of Singapore’s history since the 1960’s, and in 2007 the STB signed a contract to bring Formula 1 racing to Singapore.According to Wikipedia, 110,000 tickets were made available for the first race, and the event quickly sold out filling every seat in the newly constructed raceway. This international event has since gained popularity as a premier racing competition. The Grand Prix weekend event generated over $200 million in overall local revenue in 2011. Areas of Opportunity and Risk: Future development: As previously detailed, Singapore is one of the fastest growing economies in the world. The connectivity of the country is vital to increasing competitiveness. Toward this end, one of the future plans for infrastructural development is the expansion of its MRTS, in an effort to connect all geographical areas in the country (GuideMeSingapore. com, 2012).Since, Singapore has slowly become a regional hub for petroleum production and explor ation and a tourist destination, the MRTS is aimed at providing a reliable, fast and cheap transportation of people and goods around the country. As previously discussed, communication facilities, particularly the telecommunications, have fueled growth in most parts of the country. Future plans related to communication include opening up most parts of the country by investing in the telecommunication sector. Satellite systems and submarine cables are projected to reach most parts of the country by 2014 to enhance geographic development. Other future developments plans include the transformation of the city into an exciting and buzz place by illuminating all areas with LED lights. The objective is to attract more tourists to the ity (GuideMeSingapore. com, 2012). The major areas of the city targeted for this transformation include Singapore River, Orchard Road, Marina Bay and the whole of the Central Business District. The projected number of tourists by 2015 is expected to reach 18 million (from 13 million in 2011). Hence, future plans include improving current tourist attractions. Funding/Investment: With its fast growing economy, Singapore is considered an important investment destination as compared to many countries in the world. Singapore has numerous funding opportunities for investors ranging from traditional banks to the grants provided by the government for investment purposes.Institutional support for both private and public funding is encouraged in Singapore. Funding opportunities are provided both to foreign and local investors. With the wide range of funding and financing opportunities, numerous investment opportunities are available in Singapore. As previously mentioned, one of the fastest growing sectors of the economy is the tourism industry. This sector provides numerous investment opportunities; particularly investments in tourist handling facilities such as guest houses, leisure resorts and hotels as well as investment in transportation faci lities. Oil production and exploration is another area of opportunity.With the rising demand for cheap gas and oil products in Singapore, oil exploration is an important investment opportunity for multi-national corporations dealing with onshore oil exploration activities. Other opportunities include investment in the financial sector such as providing financial services and trading in the stock market. Political Stability: While political stability is an area of risk in many countries of the world, it is an area of opportunity in Singapore. Singapore is ranked first as the most politically stable country in the Asian region (GuideMeSingapore. com, 2012). The political structure in Singapore makes the county an area of opportunity since the countries major sectors are not governed through political appointments. Important sectors of the economy are governed by bureaucrats.This means that performance, skills and loyalty to the policies of the nation qualify one to be appointed in any office in the country. Further, the dynamic nature of the country’s population contributes immensely to its political stability. The country has a multi-religious and multi-racial character where providing fair chances for all in terms of health, education and investment opportunities continues to maintain economic balance (GuideMeSingapore. com, 2012). Hence, Singapore’s political system is an area of opportunity rather than an area of risk. This is further investment incentive for U. S. MNE’s. Security of tourists: Singapore has a well-organized security system.The Internal security organ of the government is bestowed with the responsibility of ensuring the security of both local and foreign nationals. Hence, tourists are accorded utmost security by both private and government forces and protected from any instances of hate or racial utterances. Tourist sites and facilities are guarded by national law enforcement authorities to ensure that tourists move freel y without threats to their security (Ramesh, 2010). Singapore was recently noted as the number one â€Å"Ultra-Safe Destination† by Opentravel. com; which boasted its crime rates as the lowest in Asia. Hence, security of tourists is a major area of opportunity in Singapore. Financial Stability:The country’s projected revenue is expected to hit more than $40 billion according to the 2011 estimates. Expenditures are estimated at $35 billion leaving a trade surplus of more than 5 billion. In this regard, Singapore boasts of trade surplus rather than trade deficit. This means that the country is economically stable and it has stable resources for purchase of capital goods for the development of the country. The economic growth rate is an important indicator of the country’s economy. The projected economic growth rate is expected to hit more than 7. 5% by the end of 2012. With sound financial stability, international investors can have confidence in their expected re turn on investment.The tourism industry has seen similar growth in recent years (see Fig 3). Fig 3: Challenges for US Business in Singapore’s Tourism Industry: The STB is the countries’ leading economic development agency for tourism, and most opportunities for U. S. partnership in the tourism industry would be facilitated through this organization. The United States is a primary marketing point for the STB; which maintains office-space in both New York and Los Angeles. The government of Singapore prefers to use local firms to combine tourism with the ethnic lifestyles of Singapore. One concern for US firms who are considering opportunities in Singapore is the growing pressure of protectivism in its local culture.This is also a challenge for the STB who is aggressively recruiting visitors. The STB does work to promote local heritage, but it also strives to develop global tourism demand which often requires deviation from traditional culture. For example, Singapore†™s theater district regularly presents western musicals and dramas to satisfy western audiences. This is an area of opportunity for U. S. based organizations who wish to get in on Singapore’s booming tourism industry, but a legislative recent push to protect local heritage is prioritizing eastern values and culture. Singapore also relies on international investors and engineers to develop new world-class attractions.For example the Singapore Flyer, a 42 story high Ferris wheel located on Singapore’s southeastern tip, was designed by German engineers. Also, the design for its world famous Garden by the Bay Park was decided by an international competition which attracted more than 170 firms from 24 countries. The final design was awarded to two firms: Grant Associates from New York, and Gustafson Porter from London (Wikipedia, 2012). Another barrier to US business is the overwhelming Asian influence in Singapore. As previously stated, the majority of foreign tourists c ome from Asia (Japan 36%, Philippines 34% and China 31% – 2011). This is partially due to Asian airlines that have drastically reduced their airfares in an effort to encourage Singapore tourism.Collaborations of these Asian countries not only ensure that there is stability in Singapore’s tourism industry, but they also make it difficult for other countries to penetrate the market. Singapore is known for its â€Å"pro-business† culture, and in most cases it encourages international investment. Tourism, however, is a unique industry and the government is not as interested in incentivizing foreign tourism investment as it used to be. Some of the biggest challenge for U. S. firms and investors in Singapore’s tourism industry include: limited opportunity, competition, and government control. International firms are fighting to penetrate Singapore’s $20 billion tourism industry. The opportunity for substantial profit is attracting top-tier entertainment, culinary, construction, and engineering companies. However, Singapore is eographically small and well developed at this point. The STB is selecting from a pool of innovative firms when developing new projects and their preference to promote local firms is increasingly evident. This business environment is incredibly competitive, and the STB tends to award local firms when given the choice. One strategy for U. S. companies is to provide innovative proposals which cannot be easily replicated. U. S. based firms can also develop collaborative relationships or joint ventures with Singaporean organizations to gain a competitive edge. Country Environment Analysis Summation: The tourism industry in Singapore appears to have a lot of promise.Its diversity offers tourists a rich cultural experience while still allowing ease of the communication and transit. It also boosts a low crime rate, an increasing number of attractions, and stable political and economic environment. Those wanting to in vest in Singapore’s tourism industry through the construction of resorts and hotels will be welcomed by Singapore’s traditionally pro-business policies but potentially discouraged by its recent push towards protectivism. One thing is certain, the tourism industry in Singapore is booming, and the potential for growth is attracting the most innovative firms in the game. Works Cited: AsiaOne. com. 2012. http://www. asiaone. om/News/AsiaOne+News/Singapore/Singapore. html Chong, T. (2010). Management of Success: Singapore Revisited. Singapore: Institute of Southeast Asian. GuideMeSingapore. com. 2012. Why choose Singapore? Available from http://www. guidemesingapore. com/incorporation/introduction/singapore-incorporation-advantages Retrieved on 10th November 2012. GuideMeSingapore. com. 2012. Introduction to Singapore’s political system. http://www. guidemesingapore. com/relocation/introduction/singapores-political-system. Retrieved on 10th November 2012. Janus Resea rch Reports -Doing Business in Singapore vs USA – http://www. guidemesingapore. com/research-reports/usa/doing-business-singapore-usaRamesh, S. (2010). â€Å"Government goal is to ensure all citizens enjoy fruits of growth: PM Lee† Channel News Asia (Singapore) Mahtani, S & Raghuvanshi, G. , (2012) Singapore Restricts Foreigners web: http://online. wsj. com/article/SB10001424052702303567704577518591429808110. html MTI (Ministry of Trade and Industry) Singapore (2012) web http://www. mti. gov. sg/Pages/home. aspx MediaCorp Pte Ltd (2011). Singapore's population reaches 5. 1 million. Retrieved from http://www. channelnewsasia. com/stories/singaporelocalnews/view/1155998/1/. html Ministry of Trade and Industry – Economic Survey of Singapore First Quarter 2012 http://www. mti. gov. g/ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-First-Quarter-2012/Ch1_1Q12. pdf OpenTravel. com. 2010. http://opentravel. com/blogs/top-ten-ultra-safe-destinations-to-travel / Shibani Mahtani and Gaurav Raghuvanshi – WSJ – 06/101/2012 – Singapore Restricts Foreigners – http://online. wsj. com/article/SB1000142405270230356770457751 8591429808110. html Wikipedia. com (2012). http://en. wikipedia. org/wiki/Mass_Rapid_Transit_(Singapore) http://en. wikipedia. org/wiki/Singapore_Tourism_Board http://en. wikipedia. org/wiki/Gardens_by_the_Bay http://en. wikipedia. org/wiki/Tourism_in_singapore

Essay on The Dangers of Cell Phones in Society - 2678 Words

In today’s society, having a cell phone is almost a necessity to the average person. With the increase of modern technology, cell phones have become a handheld personal computer, with the ability to navigate, communicate, and store massive amounts of information. Although these tools are very useful, the question of whether the tools of the cell phone are safe or not are constantly raised. I believe that cell phones are dangerous, because of threat posed to safety, academic integrity, and communication skills in our society. The most prominent danger that exists with cell phones is threat they pose to safety. One threat to safety is the invasion of privacy. An invasion of privacy is defined as â€Å"the intrusion of one’s personal†¦show more content†¦This 21st century style pawn shop was a major cause in phone theft in places such as college campuses and neighborhoods. In a study conducted, crime in England was examined, in which phones were involved. 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Gender Is A Basis For Everything - 1638 Words

We use gender as a basis for everything in life, despite the possibility of gender stereotyping; gender still sets important guidelines for us to follow. As seen in â€Å"The genderless baby† when children who do not know what is truly best for them and their future get the power to do whatever they want, their lives begin to spin out of control. Also, as _______ stated in __________ males and females are fundamentally different, so it only makes sense that we treat males and females differently, equally but differently. Personally, I find that despite being brought up in a very gender strict household, I was taught to be â€Å"a man† with good intentions, and not in a way that made me believe that males and females are not equals. Although classifying and limiting people by gender has created segregation, I believe that it also brings order and simplicity to a very complicated idea. 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