PESTLE analysis is an essential asset to business since it helps in identifying political, economic, social, and technological elements in the market. The business can then use the information to develop an effective strategic management plan. The organization can also identify changes in the landscape of various external factors that affect the photography and portraiture business.
Political Factors
Governments intervene in the economy or industry at various levels through aspects such as policy, political stability, foreign trade policy, and tax policy. Governments intervene in the economy to encourage production in specific industries. A large sum of money was supported by the Productivity and Innovation Credit (PIC) from the government to help the businesses in technology for productivity gains.
Economic Factors
Economic aspects such as economic growth, exchange rates, inflation rates, and interest rates affect economic performance, determining its performance. In the case studies under exhibit 10, the median monthly household income has risen over the years from 2008($6,100) to 2017($9,023). A rise in the inflation rate also affects the purchasing power of a consumer. This is also seen under exhibit 11, the average monthly household expenditure has risen over the past 10 years.
Social Factors
Socio-cultural trends and population factors affect the demand for the products. With its fall in fertility rate, there will be a reduction in the population which also leads to lower demand. Under the challenges to growth, there is a huge shrinkage and expected to dip below 20% in 2030. However, the increase of foreign students formed about 15% of the undergraduate intake. Which will help in the rise of the number of graduates. University Graduands are jumping into the trend of organizing their own photoshoots with friends using their own devices such as smartphones. Taking their own candid and fun shots after collecting their gowns at places such as downtown Singapore, esplanade, or memorable places (Residential hall). In addition, customers’ opinions in the photography industry are significant because unfavourable evaluations of paid photography and the creative industry can be extremely detrimental to the brand image and financial performance of the business. Social attitudes towards photography and portraiture services are low, and this negatively impacts the business.
Technological Factors
Technology is continuously evolving, and a company that needs to remain competitive has to adopt the latest technological developments in photography. Companies that remain with outdated technology are likely to lose their competitive position in the industry. Raffles studio was the first to use 3D in photo taking in 2014 that introduced a new service to their clients and hence gaining competitive advantage over the rivals. Serangoon Broadway also moved into the digital arena giving a web portal for customers to make orders for their products and services such as graduation regalia and make online views of their photos. In addition, JGH is thinking about upgrading their technology such as using Vendor that specializes in SEO to improve their online visibility and also to include RFID for inventory tracking of gown.
Legal Factors
No information available in this case study.
Environmental Factors
No information available in this case study.
Five Forces Model Analysis
Power of Buyers
Many universities desire quality photos and services for their families, especially during events like graduations. First-time customers are often price extremely sensitive, while reappearance clients consider both price and loyalty depending on the past experiences with a product and service. Customers considered technological innovation such as the 3D photo taking of Raffle studio and the digital migration of Serangoon Broadway in selecting their providers (Kang & Lim, 2019). The industry, therefore, exhibits strong buyer power, with the large institutions having a higher bargaining power based on university-provider relationships. Despite quality being a significant factor, it is mostly applicable among universities that had earlier experience with providers such as Serangoon Broadway and Creative District.
Social attitudes and perception towards photography determine the power of the buyers and hence demand for products and services from the photography providers. The increase of foreign students formed about 15% of the undergraduate intake which will help in the rise of the number of graduates. Foreign students had a positive attitude towards photo sessions during graduation since they considered the events to be significant in a lifetime.
Power of Suppliers
Looking at the case study, there is insufficient of data found about JGH suppliers.
However, in general, the industry has many suppliers of raw materials and mostly includes large companies and competitors to JGH. The suppliers offer relatively similar materials and hence highly likely to be substituted. Also, the switching costs among the suppliers are minimal due to the availability of many suppliers. Therefore, the power of suppliers in the industry is weak.
The Threat of Substitute Product and Services
The customer preferences on the end quality are significant factors for substitutes on services. The threat of substitute products and services is high due to the presence of many substitutes for occasions print such as pictures taken by other visitors as well as other photo studios in the industry. While the customers may decide to produce the prints by themselves from a certain data storage device. For instance, the staff manages some events during graduations in Singapore, and hence the universities only needed photos and gown rentals. The substitute photos from guests also create less problem to portraits and headshot prints. The switching costs of customers to other services and products are minimal and hence posing a threat to the business. Therefore, the industry exhibits a serious threat of substitutes for products and services depending on customer’s quality preferences and also availability despite being of lesser quality.
The Threat of New Entrants
The threat of new entrants is low as entry into new markets requires experience and talent, which are acquired through significant investment in training. New providers in the University events in Singapore failed to compete favorably with existing providers such as Serangoon Broadway due to the universities’ belief in experience and capabilities to manage big events (Kang & Lim, 2019). The barriers to market entry include the level of talent and skills to make good photos and portraits with the ability to manipulate the photos with different colorization. However, social factors such as the attitude of the Universities that consider experience and the loyalty due to the established relationship with the providers limit the threats of new entrants.
Rivalry among Competitors
The industry in which JGH operates is highly competitive as there are a large number of rivals in the areas of portrait and headshot photography. The differences in photography depend on inclusive experience, which excludes any expenses of customers shift to alternatives. The inexpensive switching costs include rapport development with a different company and the time necessary to search for another provider deemed to be more skilled and compatible with the customer’s demands. Dominant providers such as Serangoon Broadway and Creative District were the dominant providers due to the high level of establishment (Kang & Lim, 2019). Therefore, the industry has a strong rivalry among the existing players in the market, with the majority of the competitors offering identical products and services with competition often based on client loyalty, reputation and price.
Analysis of Photography and Portraiture Industry Using the Five Force Model
Power of Buyers
Social factors determine the customers’ preferences for certain providers and demand for photography and portraiture services. The enthusiasm and perception of customers towards events such as graduation determine the demand for services such that growing perception of prestige and significance of professional courses would increase the demand for quality services. A significant portion of university grandaunts in Singapore are foreigners who offer substantial markets to the photography providers at a profitable cost.
Power of Suppliers
Technology is continuously changing, and the photography industry is highly adopting innovative practices in its operations. Changes in technology involving innovations would improve the products and services of the sector to give customers high-value products. Adopting new technology and resultant high-quality services would give the providers a high bargaining power on the cost of photos and portrait services.
The Threat of Substitute Product and Services
Changes in technology resulting in discoveries in photography and portraiture services may reduce the distinguishing aspects of products and services and limit the switching costs between service providers. New entrants in the market may offer services similar to the existing and experienced providers, such as Serangoon Broadway, Joyous Asia, and Werk’s, offering alternative services to universities and schools. Some universities manage some events and hence limit the providers to photos and gown rentals (Kang & Lim, 2019). Technological advancements on devices such as mobile smartphones may enhance the quality of pictures from family members’ devices and offer substitute products.
The Threat of New Entrants
Under the political factors, the government helps companies with subsidies (PIC). Many companies may think it is easy and have the urge to enter. However, as mentioned in the case, even new providers find it hard to challenge those companies that already exist in the market. Because universities value experiences and capabilities when selecting a provider. Therefore, although with the help of subsidies, it is still hard for new entrants to penetrate this industry. Rivalry among competitors can be low if companies use advanced technology for their services. Example: Having SEO services to improve the business enterprise’s visibility. As there are many competitors out there, having such features will be an advantage to the business. With that, the companies will be able to stand out from the rest of the competitors. This way, there will be a reduction in rivalry because competitors cannot keep up or have the capital to upgrade their technology to a better one.
Rivalry among Competitors
Rivalry among competitors could be low if firms in the industry leverage advanced technology for their services. Example: Having SEO services to improve the organization’s visibility. As there are many competitors out there, having such features will be an advantage to the business. With that, the companies will be able to stand out from the rest of the competitors. This way, there will be a reduction in the intensity of rivalry because competitors cannot keep up or have the capital to upgrade their technology to a better one.
Appropriate Strategy for JGH in the Industry
A business organization can use various strategies to enhance its business operations effectively, remain competitive in the existing market, and expand into new markets. Some of the approaches for expansion include prospector, Analyzer, Low-cost defender, and Differentiated defender, from which the companies in the photography industry may select to be the most appropriate. The Analyzer strategy would be the most suitable for JGH in its sector for successful business based on various aspects such as technology, market, competition, and the business strengths of the firm.
The analyzer strategy is a blend of defender and prospector strategies on dimensions of scope goals and objectives, adaptability, effectiveness, and efficiency. This approach would ensure that JGH effectively offers new and more competitive products and programs compared to those of the rivals in the market. The firm would achieve stability in its efficiency, increase market share, and experience the success of new products they put on the market. The photography and portraiture industry is in its late growth or early mature stage of the life cycle. The industry has few undeveloped potential segments in which JGH can explore as an opportunity. The maternity and newborn photo sessions and weddings form new areas in other markets such as Malaysia that JGH could explore to increase its market share.
JGH may also consider technology as a significant aspect of decision-making on suitable strategies. Basic technology in the industry is well developed, although innovations are still emerging. Product improvements and adjustments and the emergence of new technologies are possible in the industry. JGH can use the analyzer as an effective strategy to explore new technologies to improve its competitive position in the market. Recent technological advancements such as inventory tracking, event mobile application, and aerial photography are certain areas that other players have not exploited.
Competition in Singapore and other markets is high due to the presence of a large number of rivals, with the industry still experiencing transformation. Like Serangoon Broadway, one competitor holds large shares in the major segments, including large universities like the Singapore University of Social Sciences and the Singapore Institute of Technology. However, analysis and exploitation in new potential markets such as maternity and newborn photoshoots may offer JGH an opportunity to claim a considerable market share among other expansion areas in the segment.
Conclusion
Photography is an industry that is still evolving in various aspects of technology and customer demands. A company such as JGH has to continuously identify changes in factors that can influence its business and use the insights to develop new strategies that would enable it to remain competitive in the market. The market in Singapore is highly competitive for JGH due to the existing companies such as Serangoon Broadway that have acquired a large customer base. However, JGH still has several opportunities to develop and obtain a substantial customer base while remaining competitive and sustainable.
Reference
Kang, E. & Lim, W. (2019). Mementos that anchor homes: Growing Joyous Group in the business of photos and portraitures. Harvard Business Review. Web.