Sunday, 17 March 2013

PAP Is Losing Economic Profits and Monopoly In Five Forces Analysis


The Five Forces Analysis developed by Michael Porter is usually used for business strategy analysis. For the money-minded PAP, it matches quite perfectly into the framework. Most importantly, as the competition moves towards a normal and perfect one, the economic profits or rents enjoyed by the PAP in the past will be gone.

The PAP will have to face more competitions and lose more market shares in future.  PAP monopoly status in Singapore politics is declining fast so do its past (enjoyed) economic profits.

A company can enjoy economic profits when it has monopoly power (prevent entry), or imitation power (prevent copying) or dynamic capability (prevent innovation).  

The current PAP leadership and organisation has lost all these powers:

  • 1.  Monopoly: it can no more prevent or discourage people joining and supporting oppositions.  This perhaps is the most important consideration as voters have more options as compared to the past.
  •  
  • 2.  Imitation: Oppositions are able to learn from past mistakes, project better image and learn to present good policy options.
  •  
  • 3.  Capability:  Oppositions are able to come out with innovative campaigns, more dynamic personalities and higher fighting spirit.


PM Lee Hsien Loong in his recent interview with The Washington Post has indirectly admitted the losing of monopoly control and the competition has gone to “normal”. 
["It's a different generation, a different society, and the politics will be different," said Mr Lee.  
 "We have to work in a more open way. We have to accept more of the untidiness and the to-ing and fro-ing, which is part of normal politics," he added.]
 http://www.singapolitics.sg/news/govt-must-work-more-openly-and-accept-more-untidiness-pm
“Different politics, more untidiness and normal politics” are the “normal” political competition environment in Singapore.  This also means that the huge economic profits (in parliament) the PAP has enjoyed in the past is now a history.

If there are only normal profits in general elections, the situation of 60% votes controlling more than 90% parliament seats will also become a history.   Normal profits mean normal distribution of parliament seats. Singaporeans have to be prepared for this outcome in future elections.   

Porter Five Forces Analysis wikipedia,org
Five Forces Analysis for the PAP

Here is a short summary of the analysis. You may add more if you wish.

Threat of Entry

Environment
Monopoly PAP
(in the past)
Normal PAP
(in future)
1.1 High sunk cost
Yes. Oppositions have to pay high price to enter politics.
No. It is difficult to use court case or other means to prevent people joining oppositions.
1.2 Competitive advantage
Yes. GRC, boundary re-draw and huge organization support.
No. Diminishing return begins to appear.
1.3 Retaliation
Yes. MSM and other means to discredit oppositions.
No. Social media can counter attack. It is hard to use old practice anymore.

Threat of Substitutes

Environment
Monopoly PAP
Normal PAP
2.1 Cross-price elasticity of demand


High. PAP can use economic growth as a substitute for less freedom, less open, less check and balance.  
Low. Singaporeans demand fairer distribution of wealth and more participation and involvement.
2.2 Switching cost
Yes. The cost of changing government is high.
Yes. It remains so but more willing to give it a try.

Bargaining powers of buyers (voters)

Environment
Monopoly PAP
Normal PAP
3.1 buyers not concentrated
Yes. Voters can be separated into race, education and income background.
No. Singapore citizen core appears.
3.2 buyers have few options
Yes. Few oppositions and low quality.
No. More opposition candidates with good quality.
3.3 buyers are segmented

Yes. Chinese or English educated. Lower or higher income groups.  HDB or private residences.  
No. There are common issues for different segments of citizens. E.g. education, transport, population etc.

Bargaining powers of suppliers (PAP associates)

Environment
Monopoly PAP
Normal PAP
4.1 Sellers are not concentrated
Yes.  NTUC, PA, business groups, associations, MSM and NGOs.  
No. Because of NS, common issues, consensus can be formed across different groups.  
4.2 Firms have many alternatives
Yes. PAP can even use government agencies, opinion surveys to help in campaigning.
No. It is harder and harder to find alternative supports.
4.3 Sellers do not treat segment differently  
e.g. information not available.
Yes. Even without full information, all supporting organizations know their rule and common target.  
No. There are unhappy and confusions in grass roots. More criticisms from elites.

Intensity of rivalry (oppositions)

Environment
Monopoly PAP
Normal PAP
5.1 small number of competitors
Yes. Few opposition candidates.
Walkovers.
No. More opposition candidates. Not likely to have walkovers.
5.2 incentive (political ambition) to fight are low,  
Yes for oppositions, especially in 1970s, 1980s or even 1990s.
There are so many obstacles, ISA, defamations, MSM etc.
Yes for PAP. PAP finds harder and harder to find suitable candidates. Will the (threat of) loss of power make PAP fight harder?
3.3 coordination is feasible, e.g. boundary fixing,
tacit coordination  
Yes. PAP encouraged low quality opposition candidates to contest in GE. Bad mouth good opposition candidates through MSM.   
No.  It is difficult for low quality opposition candidates to contest, especial independent. Voters recognize and build party loyalty.   

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