NTUC FairPrice PESTLE ANALYSIS

PESTLE analysis is used to see and analyze the macro-environmental factors that will
affect FairPrice, especially their strategic planning. By identifying NTUC FairPrice
business environment, it will help FairPrice to adapt to the environment and operating
efficiently. Fairprice will also be able to use the result of the analysis to minimize
their threats and maximize their opportunities. The environmental factors included are
Political, Economical, Social, Technological, Legal, and Environmental.

Political and Legal Factors

Political and legal factors are factors that affected by the government decisions, such
as government instability and government regulations that must be followed by a
business.

Singapore is known for its high quality governance, especially in terms of consistent
policy making and political stability. Therefore, the political risk of investment in
Singapore is low. Singapore also ranked as the third least corrupt country in Asia
(Datamonitor: Country Analysis Report Singapore).

Fairprice will be affected by any change in Government regulations and decisions. An

example of this would be when Singapore Government applying 3% Goods, Service
and Tax (GST) on all goods. However, FairPrice successfully counterattacking this
regulation in 1994, as FairPrice decided to absorb the GST to help the customer to
reduce their cost. FairPrice also introduced a basket of Everyday Low Price (EDLP)
items with lower price than their competitor to attract customers.
Another example of how political affect FairPrice is in 2004, when Avian Flu is
spreading to Asia, Government decided to do import ban, which resulted in egg
shortage, FairPrice works together with local supplier to bring down the price of eggs,
make it affordable.

Economical Factors
Singapore is one of the worlds leading economies with GDP of 274,4 billion USD in
2012. The GDP has shown that estimated value of Singapore’s economic output is
high and local income is strong. Even though Singapore has strong economy, it is still
affected by the global economic crisis in 2007. The GDP dropped from 7.8% to 1.1%
from 2007 to 2008. FairPrice is no exception for the Global economic crisis, However
even though affected by the crisis FairPrice was able to kept their product price low
while others has gradually increase the price. Thus, FairPrice is also assisting the
government to establish new supply chain relationship from all over the world, and
therefore, enable varying products in the market.

Social Factors
FairPrice prefer to consider themselves not only as a business corporation but also as
a social enterprise. Therefore, they are very cooperative in charity and various society
plans. This can be demonstrated by various charities that FairPrice contributed. First
of all, FairPrice established NTUC Foundation to manage all their community
projects such as FairPrice Food Voucher Scheme. This scheme has provided
improvements to many less fortunate families. The foundation also held a fundraising
for children’s cancer foundation in March 2008 that successfully raised S$10,000.

Secondly, FairPrice often contribute in aiding the environmental disaster victims. In

2004, they helped the Asian tsunami victims by contributing over S$50,000. They
also provide packages of staple foods, which later distributed to the victims.
Moreover, during 2005, when the dengue outbreak happens in Singapore, FairPrice
quickly set up anti mosquitos corner in every FairPrice outlet and distributed goody
bags to workers around Singapore.

Technological Factors
Singapore is a highly technology based country. Government has highly focused on R
& D and has increased the investments. The government has great interest in IT sector
and have the goal of becoming an information society by 2015. The population of
internet users is high and the growth its steady. Singaporeans regularly use Internet to
find information. Thus, FairPrice conform with the current trend and launch
MyFairPrice iPhone App in the iTunes application store. Within 2 weeks from its
launch, this application has reach more than 25,000 downloads in lifestyle section
(FairPrice, 2013). The purpose of this application is to ease the customers in planning
their groceries shopping ahead, which helps the customers the trips in case they
forgotten anything. FairPrice Wine App was also launched to help customers to pair
wines to the local dishes.

Environmental Factors

As a developed country, Singapore is highly concerned about the environmental

issues such as global warning and the cleanliness of the country. FairPrice as a
company also take part in preserving the environment. FairPrice have implemented
the recyclable plastic bags since 2006. The plastic bags are durable, washable,
reusable and using 100% polypropylene (FairPrice, 2014). To further promote this
campaign, FairPrice are giving out 20 shopping vouchers for customers that are using
them. In addition, FairPrice also encourage customers to bring their own shopping
bag in exchange for rebates.