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Using Pest Analysis In Singapore To Look At How The Political, Economics, Social And Technology Changes Are Impact The Needs Of Information Technology.

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The Macro Environment

Using PEST analysis in Singapore to look at how the Political, Economics, Social and Technology changes are impact the needs of Information Technology.

Political & Economy

Singapore’s GDP is on an accelerated growth beginning in late 2005 and early 2006, while the last 6 months has seen growth between 8.5% to 11%, the government is projecting a sustainable 5 ~ 7% GDP growth. This surge in business confidence is manifested in several sectors, the property market as well as the Straits Times Index (STI) is at valuation levels last seen in 1995 ~ 1996. ( )

Since Singapore is largely manufacturing-led (35% of GDP) and export driven, it is tied to global economies especially the US and regional economies such as India and China and other ASEAN countries (Malaysia, Thailand, Indonesia, Vietnam, Philippines, Myanmar and Cambodia). While there are signs of a slow-down in the US or at the least a “Goldilocks” soft-landing, the affect on Asia will not be like the 1997 financial crisis.

However, The manufacturing sector is slowly declining in its importance in Singapore as more FMCG (Fast moving consumer product) manufacturing are located to Indonesia and Thailand while High-tech manufacturing are relocated to the semi-conductor belt in Penang, Malaysia. In its place, the Financial Services is the fastest growing sector in Singapore, the growth areas are Private Banking, Consumer loans (Credit Card) and Investment banking. UBS and Deutsche Asset Management have recently announced their intention to relocate their Private Banking practice to Singapore.

Politically, issues in the restive south of Thailand and disturbances in the Mindanao province of Philippines are seen to be insulated to each country, the regional political atmosphere is largely stable. Even the ouster of ex-Prime Minister Thaksin Shinawatra and the investigation of the sale of his mobile operator AIS to Singapore’s Temasek holding has not dampened the business cooperation between Thailand and Singapore. ( ).

All this bodes well for the IT sector as companies are increasing the capital expenditure for capacity upgrades as well as technology refresh. While Singapore unit shipment volumes aren’t available, IDC expects that the overall unit volumes of hardware is expected to grow by 9.1% CAGR from end-2006 to 2011 for the while Asia Pacific region. (See Appendix for IDC projected Unit Volumes, page 82.)

Social and Technology Changes

To sustain the prevailing GDP growth rate, Singapore has had to rely on foreign talent in the past 10 years, this was accelerated since 2001, and Singapore has about 600,000 skilled workers mainly in the technology and financial services sector. (“Has Foreign talent contributed to Singapore’s economic growth ? ). This trend is expected to continue where half the workforce will be staffed by foreigners by 2034.

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