To make any business successful, proper planning and implementation of that plan is necessary (Lee, 2011; Clarke2010). From a management perspective, a business plan can be defined as an official testimonial of company’s goals, reasons for which those are achievable, and strategy for accomplishment of the same (Bennett, 2005; Kaufman, 2010). The paper focuses on the travel and tourism industry in Singapore and developing a business plan for a new organization Sephat Tours and Travels (ST&T).
Travel and Tourism Industry
Industry Overview: Global perspective
Across the globe, tourism industry has contributed $1364.8bn which is close to 3.1% of the total GDP in 2014. It is expected to grow at 3.9% annually between 2015-2025to reach $3593.2bn by 2025 which will be 3.3% of total GDP (direct contribution). From the total contribution perspective, the figure was $7580.9bn (9.8% of GDP) in 2014 and is expected to grow by 3.8% annually to reach 11,381bn (10.5% of total GDP). The total investment was $ 814.4bn (4.3% of total investment) which is likely to increase at the rate of 4.6 % to touch $1336.4bn by 2025 (Word Travel and Tourism Council, 2015a).
Image 1: Total Contribution of Travel and Tourism to GDP
(Source: Word Travel and Tourism Council, 2015a) Image 2: Capital investment in Travel and Tourism
(Source: Word Travel and Tourism Council, 2015a)
Comprehensive Market Analysis:
Travel and Tourism and its impact on the Economy of Singapore
The industry directly contributed SGD 18.8bn (4.9% of GDP) in the economy of the nation as on 2014 and it is expected to grow at a rate of 2.4% annually to reach SGD24.7 bn by 2025 with a 4.5% contribution to total GDP. In terms of total contribution, the total figure was SGD38.5bn (10.1% of GDP) as on 2014 which is expected to grow at a rate of 3.3% annually to touch SGD55.8bn by 2025(10.3% of GDP). In Singapore, the amount of investment associated with this segment is SGD17.5 bn (18.1% of total investment) as of 2014 and experts believe that it will grow at a rate of 6.2% annually to reach SGD34.1bn (21.6% of total investment) by 2025 (World Travel and Tourism Council, 2015b).
Image 3: Total contribution of Travel and Tourism to GDP in Singapore
(Source: World Travel and Tourism Council, 2015b)
Image 4: Capital Investment in Travel and Tourism Sector in Singapore
(Source: World Travel and Tourism Council, 2015b)
Analysis of Micro and Macro Environment:
While developing a business plan, any organization needs to conduct an in-depth micro and macro environment analysis to ensure that the business plan is up to the mark and every aspects of the business are being taken care of effectively. In this case, the organization needs to conduct 3 major analyses namely 4P, Porter 5 forces Model analysis and PEST analysis. Out of these 3, the Porter 5 forces and PEST analysis will help the organization to understand the macro environment and based on that, organization will design its 4P and STP and other financial strategies.
Porter 5 Force:
Bargaining power of the Buyers: In Singapore, travel and tourism industry is growing at a fast pace and, total numbers of travels and tourism service providers are increasing every year as the numbers of tourists are increasing. In Singapore, leisure spending by the travelers are increasing as it is close to 51% as of 2014, spending of the foreign visitors in 2014 was also 69.3%, more than double than that of the domestic travelers (World Travel and Tourism Council.2015b) As there are number of options available for the travelers in terms of getting services related to travel, hotel booking etc. the bargaining power is very high.
Bargaining Power of the Suppliers: For travel and tourism industry, the major service providers are the hotels, car and transport providers and people who act as professional guide during the tour. There are number of hotels available in Singapore. Apart from that, with increasing demand of the sector, local people are using this opportunity to earn some extra by providing their own home as an option for the travelers to stay and assist them in every possible way. All these are challenges for the travel solution providers as the new organizations needs to establish a good relation with hotels all across the city so that people get good service. As there are number of option available for the suppliers (hotel and car providers) to tie up with; therefore, the bargaining power is very high (Middleton and Clarke, 2012).
Threat of New Entrants: The possibility of new organization starting business in this sector is very high as travel and tourism industry is one of the highest performing industries in Singapore. The startup cost associated with this industry is also not on the higher side as by reputation any organization can increase the customer base at the initial level (Middleton and Clarke, 2012).
Threats of Substitute: There is no direct substitute in this industry as people either customize their tour plan or need to take help of the travel consultant to arrange their tour. If any travel agency initially like to promote themselves as an organization which provides diversified service as well as encourage people to enjoy offbeat destinations, then it will be easier for it to establish a position in the market. The only threat for the organization can be increasing number of online travel and tourism service providers as the availability of discounts can attract the consumers to get the services from that e-consultant (Middleton and Clarke, 2012).