Political Environment
Businesses are affected by the political structure of the country within which they operate. It is the political regime that enacts laws, decides priorities and sets regulations. Singapore’s parliamentary democracy system has resulted in a stable and orderly government. The government’s emphasis on efficiency and excellence in the public service ensures that businessman can efficiently conduct business without red tape and bureaucratic delays.The government has created a pro-business environment by enacting favourable tax laws and offering funding for business ventures. Singapore has been consistently ranked as one of the most competitive nations and best places for business in the world. In addition, Singapore has several initiatives supportive of business start-ups. SME 21 is a 10-year strategic plan to build up Small and Medium-sized Enterprises’ (SME’s) capabilities, with the goal of enhancing their contributions to Singapore’s competitiveness and economic growth. Other initiatives include Technopreneurship 21 and Franchise 21.
Economic Environment
Businesses are directly influenced by the economies that they operate in. Studying economic trends can assist entrepreneurs in forecasting possible future movement of the economies. Economic indicators relevant to businesses are:
- potential supplier’s pricing
- potential customer’s spending power
- interest rate
- consumer price index
- retail sales index
- wholesale and manufacturing indices
- inflation rate
- exchange rate
Other economic indicators such as national income, labour market, productivity, industrial production index, investment commitment and external trade are available at Statistics Singapore website. The Summary Findings from the Economic Surveys Series for various industries are highlighted in the side bar. More Summary Findings can be accessed here under statistics and data.
Social Environment
Business enterprises operate within social communities. Factors such as the education level of people, working patterns, leisure activities, and the role of women in the workforce affect the viability of a business entity. For example, how people react to a product or service will depend on their lifestyles. Singapore’s national past time has been described as eating and shopping. Hence, people are apt to welcome new restaurants and retail outlets. A fast food culture has ensured that fast food restaurants are always in demand. Parents anxious about good grades for their school-going children often send them for tuition, resulting in a demand for tuition centres, while a high percentage of working mothers in Singapore has led to a demand for childcare centres. Generally, the high spending power of Singaporeans translates into a demand for certain types of goods and services. Various statistics on Singapore’s social environment is available from the Department of Statistics.
Technological Environment
Technological advances have led to the invention of new products and influenced the manner in which business is conducted. For example, cell phone technology has resulted in a high demand for cell phones and accessories. Similarly, the advent of the Internet has led to home shopping and e-commerce. Technology also means that goods are delivered fast and more conveniently. Online stores have transformed the way retailers operate. Credit cards and emails ensure quick transaction and easy service. Marketing techniques using new technology ensure a better product reach. Innovations in production technology have led to the creation of new products at competitive prices. Singapore, described as a plug and play nation, is ranked as the third most wired nation in the world, and the most wired in Asia. Within Singapore, a broadband network reaches 99 percent of the population. The World Economic Forum has ranked Singapore among the top 10 in the world for network readiness in 2002. The Infocomm Development Authority (IDA) oversees the IT infrastructure in Singapore. For example, One-North, which is at the heart of scientific enquiry in Singapore, has research institutes and high-tech companies located next to each other. Such an environment can assist entrepreneurs to tap on the technological infrastructure in starting up their businesses.
Legal Environment
Businesses have to take into consideration government statutes pertaining to commerce, manpower and other business-related areas as these will have an impact on their companies. They have to abide by government laws on working hours, minimum wages, industrial production and taxation. These include the Employment Act, Taxation Act and the Central Provident Fund (CPF) Act. The various taxes paid by businesses such as sole proprietorship, companies and GST have a direct impact on firms, while the law on childcare leave affects women in the workforce.
Ecological Environment
Ecological concerns have begun to generate much public feeling. People’s views on issues such as pollution, radiation and depletion of the environment affect the business entity. Are target customers environment-friendly? Are they aware of environmental issues such as recycling and pollution? If there is a recycling culture in the community, businessmen can explore ways to use packaging that can be recycled. This will put the business in favourable light before target customers. For more on ecological concerns in Singapore, you can consult the National Environment Agency (NEA), which is the primary governmental body responsible for implementing environmental policies in Singapore.
