Wednesday, 24 April 2013

Sustainable Economic Profits for A Dynamic People’s Action Party?


Executive Summary

Introduction

Singapore Inc., as it is called internationally, is how Singapore as a country is run by People’s Action Party (PAP). Business excellence and strategic tools are frequently used in public administration and companies to achieve Singapore Quality Class and Award.      

Strategist’s toolkit is suitable and relevant to analyze the PAP performance. A ‘new normal’ political climate has arrived and more competitions are expected. The development will reduce the PAP’s economic profits in the coming elections.
   
Economic profits mean the PAP is getting more parliament seats in proportion to the votes obtained in the election.

Situations, Problems and Solutions

The PAP is a dominant political party and since 1959, it has been in power and faces little challenges except in the early years.

It usually controls more than 90% of the parliament seats and so this is called a ‘one-party’ state.  Things have begun to change and in the election in 2016, the PAP may lose its two-third majority in parliament. Or in the worst case scenario though a remote chance, the party may lose the government in a freak election.

Economic profits are derived mainly from monopoly power, design capability and innovation dynamics. When facing past political challenges, the PAP is always able to tackle the situations, solve the problems and come out with relevant solutions. Monopoly, by preventing entry or creating obstacles, is the key success factor contributing to PAP’s economic profits.   

External and internal environment do not paint a good picture for the PAP. Governments changes outside Singapore whether peacefully or violently are common and even take places in nearby countries.

The environment analysis indicates more dissatisfaction, more demands, and new technology challenges.

Young and educated voters are pro-oppositions. The social media and internet provide alternative communication channel to them.  The PAP controlled mass media has lost its effectiveness and reach. There are unsolved economic problems like high cost of living, medical care and rich-poor gap etc.


SWOT Analysis stresses the need to emphasize reputation and switching cost, strengthen supports and face more and stronger oppositions. 

The PAP has good reputation locally and internationally. However, grass roots support has weakened and the party is out of touch with people. It can continue to capitalize on switching cost as voters are still afraid of a change of government.  But the challenges from oppositions are getting stronger and stronger with improved image and good quality candidates.


From monopoly to open competition
This is the message of Five Forces Analysis.

Threat of Entry
The PAP finds it hard to prevent oppositions from contesting the election. The high sunk cost, competitive advantage and retaliation are no more effective strategies. More open competition is expected and the ‘threat of entry’ is gone.

Threat of Substitutes
Many young voters express their willingness to change, however the switching cost is high, especially for the older voters. If Singaporeans change their government, an ‘inexperience’ party will take over. This switching cost consideration can add value to the PAP.

Bargaining powers of buyers (voters)
This works against the PAP. The voters are more demanding than before. There are common national issues that voters can come together to voice their concerns. There are also more good quality opposition candidates. The past ‘divide and conquer’ tactics are not effective any more.  

Bargaining powers of suppliers (PAP associates)
The PAP has used up almost all the possible supports in the past 50 years. Although suppliers follow instructions, their willingness and commitments are passive.  Supporting organizations also complain about the inaction to their feedbacks.

Intensity of rivalry (oppositions)
Since the PAP cannot stop the entry, more and more opposition candidates are now standing for election.   At the same time, the PAP finds it hard to find good quality candidates due to potential losses in election. 


Alignment and Sustainability Challenges under Capability Analysis
 
The capability analysis shows that the PAP has alignment and sustainability issues.  In the capability value chain, there is little value created by real Design and Innovation.

Capability value chain
The usual value chain of ‘Supplier - Manufacture – Distribution – Buyer’ can be described as follows:

Supply: The PAP has good supply bases from various private and public bodies. For example, government funded People’s Association, trade union, election department, chambers of commerce, business associations, racial and cultural groups, and even some NGOs etc.

Manufacture: Potential candidates will invite to tea party and assign to grass roots for training, internal selection, background checks, promotion, etc.  

Distribution: Detailed study of electoral districts based on population and feedback including re-drawing of constituency boundary; election budget and deployment of candidates etc.

Buyer: Voters have little time to know alternative polices and opposition candidates due to short campaign period. The main stream media on the other hand provides publicity and coverage to PAP candidates.

No Dynamic PAP, No Competitive Life Cycle and the environment is good for a monopoly.

There is hardly any Competitive Life Cycle in Singapore. There is no shakeout or disruption in the parliament election. As a result, the PAP only needs to focus on management of changes (preventing entry, high cost for political participation, game rules to its advantages, press freedom and detention without trial).

The three phases of Emergent (Annealing) – Growth (shakeout) – Mature (disruption) have not happened. The “election’ market remains a single brand industry without strong alternative and competitor.  Shakeout and disruption only happen to the opposition parties.

In short,
-       Mature phase is long and dynamic change is incremental (controllable and manageable).
-       Emergent phase is short and a dominant brand (PAP) becomes the monopoly in the market.
-       Growth phase is short too and with just one general election in 1959, a situation of ‘winner takes all’ occurs.

Hence, the overall development for this unique political market is once the market leader is established, the ‘first mover advantage’ quickly moves in and the PAP becomes the monopoly. After they have consolidated their political positions, the market dynamism disappears leading to a slow evolving environment.  

The PAP can hold the position for a long period and even prolong the evolving process through monopoly-led and managed design and innovation.
Generic Competitive Position Analysis shows PAP will continue its Integrated Strategies

In order to enjoy economic profits, the PAP has to continue its integrated strategies.  The party has to position itself as a low-cost leader and be different from others. It will continue to contest all the parliament seats and most likely it is the only party to do so in 2016. 

The opposition parties instead will concentrate on the low-cost focused market and niche (focus differentiation) segment. The dilemma of “stuck in the middle” for the PAP is real as they need to defend all constituencies. In 2011 the main opposition party, The Workers’ Party (WP), made a breakthrough in one of the group constituencies, the first time since 1980s.

The political strategic maps in Singapore in the next election will likely to be:
    
PAP is the only big circle contesting all the seats, with high average percentage votes and credibility. They are adopting integrated strategies and want to maintain low-cost leader and differentiation competitive position. 

WP is the only mid-size circle contesting less than half of the seats, coming closer and matching the PAP in average percentage votes and credibility. But their competitive position will be different from the PAP. They will look for niche market and low-cost focused segment.

Other opposition parties will form different small circles with weaker positions in average percentage votes and credibility. Some may contest as many seats as WP and so more multi-corner competitions are expected.     

Recommendations:

Open competition will reduce the economic profits.  More than 90% parliament seats to the PAP are not sustainable. The PAP will fight to have two-third majority or even more, even though their averaged percentage votes obtained may fall below 60%.   

In order to continue enjoying economic profits (e.g. 80% parliament seats); the following strategies should be adopted:

Integrated strategies:
The PAP will go for low-cost leader and differentiation by contesting all the seats. It is still an outstanding brand with unique characters. Not to mention, it is the only party capable to send candidates to all constituencies.  

Switching cost:
Voters do want changes but have to face the consequences. The passing of an experienced government is an opportunity cost. A proper marketing and emphasis of switching cost will have handsome returns to the PAP.

Real design and innovation: 
Electoral boundary and rule changes to benefit incumbent; court and defamation lawsuits; and even media control etc. are not real design and innovation.  The value chain needs new real design and innovation to create value and maintain economic profits. Learning from other democracies, even neighboring Malaysia, will help to improve this weak link.

Accept evolution and change:         
Singapore is a strange market as there is no Competitive Life Cycle. There is no shakeout or disruption in the ‘election’ industry. The PAP will have to face new ‘normal’ and open politics.  This new challenge will change the culture, core value, missions and actions of the party (unchanged since 2003).

Accept smaller economic profits:
With the success of WP strategies of focused low-cost and niche market, other opposition parties will follow. Some possibilities of ‘wildcat’ breakthroughs will happen by other parties with their very outstanding candidates.  The PAP must psychologically prepare to lose more seats.

No freak election is expected in 2016. However, to have 90% parliament seats is equally a remote target.  The open competition and normal politics will lead to more strategies and dynamic changes.  The changes of Yin and Yang forces in both camps will decide the final outcome.   

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